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 year ended December 31, 2008





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
              Scottsdale,
      AZ
            85260(Address
      of principal executive offices)
            (Zip
      Code)(480)
      922-8155(Registrant’s
      telephone number)




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  þ
     No  o





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.  o





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 definitions 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 $3,040,000 as of June 30,
2008, 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
March 17, 2009, there were 101,227,045 ordinary shares of 1p each nominal value
issued.





DOCUMENTS INCORPORATED BY
REFERENCE




Portions
of our definitive Proxy Statement for our 2009 Annual Meeting of Stockholders
are incorporated by reference into Part III of this
Form 10-K.












TABLE
OF CONTENTS [Pagination to be revised]





PagePART IItem 1.
                  Business
                  2Item 1A.
                  Risk
      Factors
                  10Item 1B.
                  Unresolved
      Staff Comments
                  20Item 2.
                  Properties
                  20Item 3.
                  Legal
      Proceedings
                  20Item 4.
                  Submission
      of Matters to a Vote of Security Holders
                  20PART IIItem 5.
                  Market
      for Registrant’s Common Equity, Related Stockholder Matters, and Issuer
      Purchases of Equity Securities
                  21Item 6.
                  Selected
      Financial Data
                  23Item 7.
                  Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                  24Item 8.
                  Financial
      Statements and Supplementary Data
                  33Item 9.
                  Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                  33Item 9A.
                  Evaluation
      of Disclosure Controls and Procedures
                  34Item 9A(T).
                  Evaluation
      of Internal Controls over Financial Reporting
                  34Item 9B.
                  Other
      Information
                  36PART IIIItem 10.
                  Directors,
      Executive Officers and Corporate Governance
                  37Item 11.
                  Executive
      Compensation
                  37Item 12.
                  Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                  37Item 13.
                  Certain
      Relationships and Related Transactions, and Director
      Independence
                  37Item 14.
                  Principal
      Accountant Fees and Services
                  37PART IVItem 15.
                  Exhibits
      and Financial Statement Schedules
                  37Signatures
                  
                  39










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
 
 History
 
 Insignia was incorporated under the
laws of England and Wales on November 20, 1985 under the name Diplema
Ninety Three Limited. The Company changed its name to Insignia Solutions Limited
on March 5, 1986 and commenced operations on March 17,
1986.  Until April 2007, we 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.
  In April
2007, we sold substantially all of our assets to Smith Micro Software,
Inc.  From April 2007 until June 23, 2008, the Company did not
generate any revenues from operations and operated as a shell
company.
 
 On June
23, 2008, DollarDays International LLC (“DollarDays”) entered into a series of
transactions to effect a reverse merger with Insignia (the
“Merger”).  These transactions consisted of the
following:
 
 ·
              DollarDays
      was formed as a Delaware limited liability company on November 5,
      2001.  On June 20, 2008, DollarDays contributed all of its
      assets and liabilities to DollarDays International, Inc., a Delaware
      corporation, (“DDI Inc.”) pursuant to a contribution
      agreement.    In return for DollarDays’ assets and
      liabilities, DDI Inc. issued 100% of its common stock to
      DollarDays.  After the contribution, DDI Inc. became the
      operating company and DollarDays has no assets or liabilities except for
      the DDI Inc. common stock issued to
it.
 
 ·
              DDI
      Inc. merged with Jeode, Inc., a Delaware corporation and a wholly-owned
      subsidiary of Insignia, whereby DDI Inc. was the surviving corporation and
      a wholly-owned subsidiary of Insignia.   Insignia agreed to
      issue 73,333,333 American Depository Shares (“ADSs”),  in
      exchange for all of the outstanding common stock of DDI
    Inc.
 
 ·
              The
      combined entity was to issue an aggregate of 7,682,926 ADSs to a new
      investor DollarDays (“Amorin”) in exchange for $550,000 in cash and
      conversion of a $450,000 note.
 
 Under the
agreement and plan of merger (the “Merger Agreement”), Insignia shareholders
maintained approximately 37.1% ownership of the combined company, DDI Inc.
shareholders obtained 56.7%, and Amorin obtained 6.2% of the combined company
stock.  The Merger is accounted for as a reverse merger whereby DDI
Inc is the accounting acquirer resulting in a recapitalization of DDI Inc.
equity.
 
 Description
of Business
 
 We
develop software programs that allow us to provide general merchandise for
resale to businesses through our website at www.DollarDays.com.  We
have been recognized as a leader in the Internet wholesale market of discounted
merchandise by a leading business periodical and trade
associations.  Our objective is to provide a one-stop discount
shopping destination for general merchandise for smaller distributors, retailers
and non-profits nationwide seeking single and small cased-sized lots at bulk
prices.  We launched our first website in October 2001.  The
site offers customers an opportunity to shop for bargains conveniently, while
offering our suppliers an alternative sales channel.  We believe our
website offers a unique benefit to smaller businesses in that they are able to
purchase goods from wholesalers and importers in single and small case lots,
with no minimum purchase requirements at discounted prices.  We
believe the prevailing reason our business has been able to obtain bulk pricing
for single case lots is our ability to reach smaller distributors, retailers and
non-profits that most general merchandise suppliers cannot economically reach.
We provide all the logistics and customer support to serve this sales channel
and grow our customer base.
  2
  We
continually add new, limited inventory products to our website in order to
create an atmosphere that encourages customers to visit frequently and purchase
products before the inventory sells out.  Through our Internet
catalog, we offer approximately 25,000 products, including up to 10,000 closeout
items at further discounted prices.  Closeout merchandise is typically
available in inconsistent quantities and prices.
 
 We accept orders, either online or via
telephone sales staff, collect payment in the form of credit or debit card,
PayPal or similar means, and coordinate with manufacturers, importers and
close-out specialists regarding delivery particulars.  PayPal refers
to the online payment platform located at www.paypal.com and
its localized counterparts.  Our proprietary software and service
procedures allow us to sell merchandise to a single customer, and bill as a
singer order, items purchased and delivered from multiple
suppliers.  We do not take possession of inventory, but we are
responsible for processing customer claims and returns.
 
 Our
website has a registered base of approximately 1,250,000 small businesses and
receives approximately 2 million monthly page views.  We receive an
average of approximately 3,000 orders per month.  Our target audience
is smaller businesses.
 
 Our
historical success has resulted largely from the size of our community of active
users.  We had approximately 21,000 unique customers place an order
with us in 2008 as compared to approximately 22,000 unique customers who placed
an order with us in 2007.  We believe our sales and marketing efforts
make inefficient markets more efficient because:
 ·
              Our
      website includes more than 25,000 items on any given day and makes
      available to our users a wide variety of goods;
  and
 ·
              We
      bring buyers and sellers together for lower costs than traditional
      intermediaries.
 
 We have
had increased success throughout the years by attracting repeat
customers.  In 2007 and 2008, the sales volume of individuals who
purchased through our website four times or more increased to 27% and 38%,
respectively.
 
 Products
and Services
 
 Manufacturer, Supplier and
Distribution Relationships.  It is difficult to establish
wholesale and closeout buying relationships with manufacturers and
vendors.  Trust and experience gained through past interactions are
important.  We believe our business model reduces the risk to the
manufacturer because its discounted products are sold alongside its full-priced
products.  We enter into standardized vendor contracts with each of
our suppliers.  Our supplier relationships provide us with both
private label and recognized brand-name products.  The table below
identifies some of the brand names often found on our website.
 
 Avon
              Fruit
      of the Loom
              3MBlack
      & Decker
              Gillette
              Tommy
      HilfigerCalvin
      Klein
              Revlon
              TonkaColgate
              Kelloggs
              Victoria
      SecretDisney
              NFL
              Ziploc
 
 Our manufacturer and supplier
relationships are based on historical experience with manufacturers, vendors and
liquidation wholesalers. We are not obligated or entitled to receive merchandise
on a long–term or short-term basis, nor do our contractual terms guarantee the
availability of merchandise.  We control the terms on which products
are sold through our website.
 
 Online
Products
 
 Our customers can locate products on
our website by utilizing our proprietary search function or by navigating
through online departments. The departments section is currently organized into
approximately 32 main categories:
  3
  America’s
      Boutique Suppliers
              Custom
      Imprinting
              Medical
      ProductsArts
      & Crafts
              Electronics
      & Media
              Office
      & School SuppliesAs
      See on TV
              Food
      Pantry
              Pallet
      AssortmentAutomotive
              Gift
      Baskets
              Party
      SuppliesBaby
      Care
              Hardware
              PetsBath
      and Body
              Holiday
      & Seasonal
              ReligiousBooks
      & Calendars
              Dome
      Décor
              Sports
      & OutdoorsCandles
      & Home Fragrance
              Housewares
              Stationary
      & Gift WrapCleaning
      Supplies
              Jewelry
              Store
      FixturesClothing
              Lawn
      & Garden
              Toys
      & GamesCosmetics
      & Fragrances
              Licensed
      Team Products
 
 Our categories may change as our
business evolves and we may need to add or subtract categories to better serve
our suppliers and customers. Each of the departments has multiple categories
that more specifically define the products offered within that
department.  For example, the “Toys & Games” department currently
has the following product categories:
  Action
      Figures
                Games
                Remote
      Control ToysAction
      Toys
                Glow
      in the Dark
                Sport
      Related ToysBingo
      Accessories
                Licensed
      Toys
                Stuffed
      AnimalsBuilding
      Toys
                Novelty
      & fake Money
                Teddy
      BearsCars,
      Trucks & Vehicles
                Novelty
      Toys
                Toy
      AnimalsCostume
      Dress Up/Make Believe
                Outdoor
      Toys
                Toy
      Musical InstrumentsDolls
      & Doll Accessories
                Playing
      Cards & Accessories
                Water
      GunsElectronic
      Toys
                PuppetsFlashing
      Novelties
                Puzzles
 Categories are typically further
divided into subcategories to facilitate product
identification.  Individual products can be accessed and viewed from
the category or subcategory pages.  These specific product pages
include product descriptions, color photographs and pricing
information.
 
 The number of total products we offer
has grown from less than 5,000 in 2001, to more than 25,000 products in
2008.  The number of products and product categories change throughout
the year, as we periodically reorganize our departments and/or categories to
better reflect our current product offerings.
 
 Sales
and Marketing
 
 We use a variety of methods to target
our consumer audience, including online campaigns, direct marketing and
trade-shows.  However, our primary marketing consists of online
marketing, such as advertising through portals, keywords, search engines,
affiliate marketing programs, banners and email campaigns.  We seek to
identify and eliminate campaigns that do not meet our expectations. We generally
develop these campaigns internally.
 
 Marketing
 
 Our marketing initiatives include, but
are not limited to, the following:
 
 ·
              Web
      Positioning:  In order to maintain favorable positioning
      and to increase the likelihood of our website being “found” by customers
      looking for wholesale merchandise, we maintain a proactive search engine
      optimization effort to assure continued high search engine
      placement.  We currently have over 350,000 web pages indexed in
      various search engines, including Google, Yahoo, MSN and
      AOL.  Part of the continuing search engine optimization program
      involves evolution of page content and product descriptions for maximum
      indexing and rank possibilities.  We believe our newer
      categories and higher priced products in existing categories help to
      increase search engine visibility and should, therefore, increase visitor
      counts.  Approximately 73% of our gross sales in 2008 came from
      “organic” (i.e., unpaid) search engine
traffic.
  4
  ·
              Website Design: On
      April 15, 2008, we re-launched our website at www.DollarDays.com
      with considerable improved web design.  We believe this new
      design is significantly more user friendly and has resulted in more
      visitors.  We continually evaluate our website and make
      improvements as deemed necessary.  Periodically, we intend to
      re-design our website as market factors and technological advances
      necessitate.
 
 ·
              Banner
      Ads:  We place banner ads in many relevant wholesale
      directories.
 
 ·
              Pay-Per-Click
      Advertising:  Pay-per-click companies provide advertising
      space on various relevant websites and charge us based on actual user
      clicks on our ads.  We monitor the results of our various
      pay-per-click programs and evaluate alternative advertising
      outlets.
 
 ·
              Promotions:  We
      offer both broad based promotions on our website available to all users,
      and targeted promotions transmitted via email directly to select
      customers.  Promotions include, but are not limited to, price
      discounts, free merchandise or premiums, discount coupons, free shipping
      and combinations of different promotions.  Free shipping
      promotions have been our most popular
campaigns.
 
 ·
              E-mail
      Campaigns:  We send approximately 2.7 million emails per
      month offering a variety of promotions, as previously
      discussed.
 
 ·
              Platinum
      Program:  Under this subscription service, in return for
      a $30 joining fee and a $15.95 additional monthly fee, customers can
      receive a number of discounts and savings on goods, services, freight and
      other products sold on our website.  Our platinum program
      participants purchased more products through our website than
      non-participants and made purchases more frequently than prior to
      participating in the program.
 
 ·
              Affiliates:  We
      promote an “affiliate” program, where we pay a sales commission to
      affiliates for customers recommended to our website by such
      affiliates.  Approximately 700 affiliates have DollarDays’
      banners on their websites.
 
 ·
              Distributors:  We
      encourage Internet entrepreneurs to “clone” our website under the
      respective entrepreneurs’ names.  These “clones”, for which such
      entrepreneurs pay us a $199 annual fee and a $15.99 monthly fee, reflect
      our website at  www.DollarDays.com
      in every aspect except for the difference in name.  We have
      approximately 300 distributors who promote their websites, while we handle
      all related sales, promotional efforts, customer service, collection and
      other back office matters in the same manner we handle orders pertaining
      to our own website.  We pay distributors a commission on all
      sales generated through their independent
  websites.
 Sales
 
 No single
customer accounts for more than 5% of our sales.  We have on staff an
average of 12 sales people, for approximately 11 hours of coverage per day, five
days a week.  The primary function of the sales staff is to field
incoming calls and make outgoing calls to solicit new customers, obtain
additional sales from infrequent purchasers and re-contact lapsed
customers.
 
 To
facilitate our sales process, as part of our overall software program we have
implemented a vendor management system (“VMS”), which is an interface between us
and our vendors.  The VMS is the primary platform for a vendor to
place and remove its product on our website, as well as providing inventory
tracking ability for the vendor.  Once a product is listed on the
website, customers and sales staff are able to place and fulfill
orders.
  We have
established the DollarDays Institute, which coordinates with our vendors, via
regular telephone seminars, on how to better describe and illustrate their
products and how to best utilize our VMS to their
advantage.  Management believes the visual and verbal depiction of the
products on our website is crucial to sales and establishing a loyal consumer
base.  If a product’s picture is inadequate or its description
incomplete or unpersuasive, the product is unlikely to sell.  We
believe the DollarDays Institute enables our vendors to better promote their
products, and consequently, increase sales.
  5
  Our
product mix changes daily based on the availability of the products we buy and
sell, as dictated by retailer and product interest.
 
 Our
primary distribution channel is online sales to small businesses, non-profits
and home-based businesses located in the United States.  During 2008,
sales to domestic customers accounted for approximately 99% of our net
sales.
 
 Vendor
Relations
 
 Our ability to service our customers
quickly and efficiently is contingent upon vendor response time in fulfilling
orders for in-stock merchandise and promptly informing us of out-of-stock
products.  To facilitate our vendor relationships, we enter into
agreements with them whereby they agree to the following:
 
 ·
              Participation
      in the VMS program to automatically convey information about out-of-stock
      items, price changes, new products, changes in product description and
      other important information to be reflected by the vendor on our
      website;
 ·
              Use
      of one of our pre-approved shippers;
and
 ·
              Payment
      of a 2.5% marketing fee, which is automatically deducted from their
      invoice.
 
 Our
merchandising department monitors vendors for compliance with the terms of their
respective agreements.  In the event a vendor does not comply with the
terms of the agreement, such vendor’s products may be removed from our website
and replaced with products from a more suitable vendor.
 
 We have
over 300 vendors and no single vendor accounts for more than 10% of our
sales.
 
 Seasonality
 
 Our fourth quarter has historically
been our highest revenue quarter and the first quarter has historically been the
lowest revenue quarter.  We expect transaction activity patterns on
our website to increasingly mirror general consumer buying patterns as our
business continues to mature.
 
 Customer
Service and Sales
 
 We are committed to providing superior
customer service.  We staff our customer service and sales department
with dedicated in-house professionals who respond to phone and e-mail inquiries
on products, ordering, shipping status and returns.  Our customer
service staff processes approximately 2,500 calls per week and up to
approximately 3,000 calls per week during peak periods.
  Technology
 
 We use our internally developed
software and to support our operations.  We have developed intuitive
user interfaces and customer tools to create a user-friendly website and
developed transaction processing, database and network applications that help
enable our users to reliably and securely complete transactions on our
sites.  Our technology infrastructure simplifies the storage and
processing of large amounts of data, eases our operation, and automates much of
the administration.    We use multiple servers to obtain
connectivity over the Internet with one full-time dedicated server and
additional servers housed off-site by third-party providers.
 
 We also use a third-party application
to provide search, navigation and merchandising techniques to guide customers
through our website.  We currently employ three full time IT engineers
to monitor and maintain the functionality of our website.
  6
  We also developed a web-based eCommerce
property specially tailored for vendors listing products on our
website.  The technology is designed to permit our vendors to list
their own products on our website, subject to our approval, and remove such
products once the respective inventory is depleted.  This technology
eases the burden on  merchandising personnel to maintain accurate
product information and available quantities.
 
 We are continually improving our
technology to enhance the customer experience and increase efficiency,
scalability and security.  We are currently investigating whether our
proprietary software is patentable.
 
 Competition
 
 The online wholesale market is rapidly
evolving, intensely competitive and has relatively low barriers to entry, as new
competitors can launch websites at relatively low costs.  We believe
competition in the online wholesale market is based predominately
on:
 
 ·
              price;
 
 ·
              product
      quality and selection;
 
 ·
              ease
      of shopping experience;
 
 ·
              order
      processing and fulfillment;
 
 ·
              customer
      service; and
 
 ·
              company
      brand recognition.
 
 Our
wholesale services compete with other online retailers and traditional
wholesalers, liquidation “brokers”, importers and manufacturers that sell
general merchandise, some of which may specifically adopt our methods and target
our customers.  We currently or potentially compete with a variety of
companies that can be divided into several broad categories:
 
 ·
              local
      wholesalers tailored to service and supply small independent retailers
      that carry “fast-selling” general brands, provide personal delivery and
      who often have interpersonal relations with
      smaller  retailers;
 
 ·
              catalog
      sellers, including suppliers from whom we purchase product, such as
      SMC;
 
 ·
              liquidation
      e-tailers;
 
 ·
              online
      general retailers with discount departments such as Amazon.com, Inc.,
      eBay, Inc. and Buy.com, Inc.;
 
 ·
              online
      specialty retailers such as BlueNile and BackCountry;
  and
 
 ·
              traditional
      small business wholesalers such as Costco Wholesale
      Corporation.
 
 As the
market for online wholesale and liquidation grows, we believe that companies
involved in online retail, as well as traditional retailers and liquidation
brokers, will increase their efforts to develop services that compete with our
online services.  We are unable to anticipate which other companies
are likely to offer products and services in the future that will compete with
us.
  In
addition, many of our current and potential competitors have greater brand
recognition, longer operating histories, larger customer bases and significantly
greater financial, marketing and other resources than we do, and may enter into
strategic or commercial relationships with larger, more established and
well-financed companies.  Some of our competitors could devote greater
resources to marketing and promotional campaigns and devote substantially more
resources to their websites and systems development than we
can.   New technologies and the continued enhancement of existing
technologies also may increase competitive pressures.  We cannot
ensure that we will be able to compete successfully against current and future
competitors or address increased competitive pressures.
  7
  Intellectual
Property
 
 We own
the rights associated with the trademarks “DollarDays”, “DollarDay$” and the
logo for DollarDays.  We have filed trademark applications with the
United States Patent and Trademark Office seeking registration of certain
service marks and trademarks.  We regard our domain names and similar
intellectual property as critical to our success.  We rely on a
combination of laws and contractual restrictions with our employees, customers,
suppliers, affiliates and others to establish and protect our proprietary
rights.  Despite these precautions, it may be possible for a third
party to copy or otherwise obtain and use our intellectual property without
authorization.  There can be no assurance that our applications will
be successful or that we will be able to secure significant protection for our
service marks or trademarks in the United States or elsewhere.  In
addition, we cannot ensure that others will not independently develop similar
intellectual property.  Although we have registered and are pursuing
the registration of our key trademarks in the United States and internationally,
some of our trade names are not eligible to receive trademark
protection.  In addition, effective trademark protection may not be
available or may not be sought by us in every country in which our products and
services are made available online, including the United States.
 
 Third
parties may in the future recruit our employees who have had access to our
proprietary technologies, processes and operations.  These recruiting
efforts expose us to the risk that such employees will misappropriate our
intellectual property.
 
 Legal
and Regulatory Matters
 
 From time
to time, we may receive claims of and become subject to consumer protection,
employment, intellectual property and other commercial litigation related to the
conduct of our business.  Also, we may receive related inquiries from
state and federal agencies which might relate to our business practices, or the
activity of our customers or suppliers.  Such regulatory matters and
commercial litigation could be costly and time consuming and could divert our
management and key personnel from our business operations.  The
uncertainty of litigation increases these risks.  In connection with
such litigation or regulatory inquiries, we may be subject to significant
damages or equitable remedies or fines relating to the operation of our business
and the sale of products on our website.  Any such litigation may
materially harm our business, prospects, results of operations, financial
condition or cash flow.  We are not aware of any outstanding
litigation or any pending or threatened litigation that would be expected to
have a material adverse effect on our financial condition or results of
operations.
 
 These and
other types of claims could result in increased costs of doing business through
legal expenses, adverse judgments, settlements or require us to change our
business practices.
 
 Additional
litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets or to determine the validity and scope of
the proprietary rights of others.  Any litigation, regardless of
outcome or merit, could result in substantial costs and diversion of management
and technical resources, any of which could materially harm our
business.
  Government
Regulation
 
 Our services are subject to federal and
state consumer protection laws, including laws protecting the privacy of
non-public consumer information and regulations prohibiting unfair and deceptive
trade practices.  In particular, under federal and state financial
privacy laws and regulations, we must provide notice to consumers of our
policies on sharing non-public information with third parties, provide advance
notice of any changes to our policies and, with limited exceptions, give
consumers the right to prevent sharing of their non-public personal information
with unaffiliated third parties.  Furthermore, the growth and demand
for online commerce could result in more stringent consumer protection laws that
impose additional compliance burdens on online companies.  These
consumer protection laws could result in substantial compliance costs and could
interfere with the conduct of our business.
  8
  In many states, there is currently
great uncertainty whether or how existing laws governing issues such as property
ownership, sales and other taxes, libel and personal privacy apply to the
Internet and commercial online services and whether additional laws and
regulations will be enacted.  In addition, new state tax regulations
may subject us to additional state sales and income taxes.  New
legislation or regulation, the application of laws and regulations from
jurisdictions whose laws do not currently apply to our business, or the
application of existing laws and regulations to the Internet and commercial
online services could result in significant additional taxes on our
business.  These taxes could have an adverse effect on our cash flows
and results of operations.  Furthermore, there is a possibility we may
be subject to significant fines or other payments for any past failures to
comply with these requirements.
 
 The Consumer Product Safety Improvement
Act became effective February 10, 2009.  This law prohibits resellers
from selling children’s’ products that exceed specified levels of lead and
certain other chemicals.  Resellers are not required to test the
products themselves.  However, if they do sell such products, they
could be subject to civil and/or criminal penalties.  Since we do not
take legal title to the merchandise sold through our website (it is shipped
directly from the manufacturer/importer to the retailer), we never take
possession of any merchandise and could not test the
products.  Accordingly, to minimize our risk, we have undertaken the
following steps:
 
 (a)
              We
      have discontinued all items which, in our judgment, have any significant
      likelihood of being out of compliance with the Act.  The limited
      exception to this is that certain closeouts may date back to a period
      before testing was commonplace.  We have discontinued all items
      we believe constitute a significant risk of containing inappropriate
      chemicals; and
 
 (b)
              We
      have requested that all our vendors certify that the products they sell
      are in compliance with the Act.    They have all
      complied except for certain vendors of close-outs who cannot know whether
      the products they are buying may have been produced before these maximum
      levels of permissible lead and other chemicals were
      established.
 
 Employees
 
 As of December 31, 2008, we had a total
of 30 full time employees.  We seasonally augment our workforce with
temporary employees during our fourth quarter to handle increased workload in
our customer service operations.  We have never had a work stoppage,
and none of our employees are represented by a labor union.  We
consider our employee relationships to be positive.
 
 Reports
to Security Holders
 
 We file reports with the Securities and
Exchange Commission, or SEC, including annual reports, quarterly reports and
other information we are required to file pursuant to US federal securities
laws.  You may read and copy materials we file with the SEC at the
SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information from the Public Reference Room by calling the SEC at
1-800-SEC-0330.  The SEC maintains a website that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC, which is http://www.sec.gov.
  9
 
 Item
1A – Risk
Factors
 
 We
have a history of significant losses. If we do not achieve profitability, our
financial condition and our stock price could suffer.
  We have a
history of losses and accumulated deficit. We will need to generate significant
revenues increases to achieve profitability, and we may not be able to do so.
Even if we do achieve profitability, we may not be able to sustain or increase
profitability on a quarterly or annual basis in the future. If our revenues grow
more slowly than we anticipate, or if our operating expenses exceed our
expectations, our financial results would be harmed.
 
 We will
continue to incur significant operating expenses and capital expenditures to
continue to improve our software and technologies, and:
  ·
              enhance
      our distribution and order fulfillment
  capabilities;
 ·
              further
      improve our order processing systems and
  capabilities;
 ·
              expand
      our customer service capabilities to better serve our customers’
      needs;
 ·
              expand
      or modify our product offerings;
 ·
              rent
      office space;
 ·
              increase
      our general and administrative functions to support our operations;
      and
 ·
              maintain
      or increase our sales, branding and marketing activities, including
      maintaining existing, or entering into new, online marketing or marketing
      analytics arrangements, and continuing or increasing our direct mail
      campaigns.
 
 Because
we may incur many of these expenses before we receive any revenues from our
efforts, our losses may be greater than the losses we would incur if we
developed our business more slowly. Further, we base our expenses in large part
on our operating plans and future revenue projections. Many of our expenses are
fixed in the short term, and we may not be able to quickly reduce spending if
our revenues are lower than we project. Therefore, any significant shortfall in
revenues would likely harm our business, prospects, operating results and
financial condition. In addition, we may find that these efforts are more
expensive than we currently anticipate, which would further increase our losses.
Also, the timing of these expenses may contribute to fluctuations in our
quarterly operating results.
  A
downturn in general economic conditions may adversely affect our results of
operations.
  The
success of our operations depends to a significant extent upon a number of
factors relating to discretionary consumer spending, including economic
conditions affecting disposable consumer income such as employment, business
conditions, interest rates and taxation. There can be no assurance that consumer
spending will not be adversely affected by economic conditions, thereby
impacting our growth, financial condition and results of
operations.
  We
may experience significant fluctuations in our operating results and growth
rate.
  We may
not be able to accurately forecast our growth rate. We base our expense levels
and investment plans on sales estimates. A significant portion of our expenses
and investments is fixed, and we may not be able to adjust our spending quickly
enough if our sales are less than expected.
  Our
revenue growth may not be sustainable, and our percentage growth rates may
decrease. Our revenue and operating profit depends on the continued growth of
demand for our products and services, and our business is affected by general
economic and business conditions worldwide. A softening of demand, whether
caused by changes in customer preferences or a weakening of the U.S. or global
economies, may result in decreased revenue or growth.
  Our net
sales and operating results will also fluctuate for many other reasons,
including due to risks described elsewhere in this section and the
following:
  ·
              our
      ability to retain and increase sales to existing customers, attract new
      customers and satisfy our customers’
demands;
  ·
              our
      ability to expand our network of
vendors;
  10
  ·
              our
      ability to access vendor merchandise and fulfill
  orders;
  ·
              the
      introduction of competitive websites, products and
    services;
  ·
              changes
      in usage of the Internet and e-commerce, both domestically and
      internationally;
  ·
              timing,
      effectiveness and costs of expansion and upgrades to our systems and
      infrastructure;
  ·
              the
      success of our geographic, service and product line
      expansions;
  ·
              the
      outcomes of legal proceedings and
claims;
  ·
              variations
      in the mix of products and services we
sell;
  ·
              variations
      in our level of merchandise and vendor
returns;
  ·
              the
      extent to which we offer free shipping, continue to reduce product prices
      worldwide, and provide additional benefits to our
    customers;
  ·
              increases
      in the prices of fuel and gasoline, as well as increases in the prices of
      other energy products and commodities like paper and packing
      supplies;
  ·
              the
      extent to which operators of networks between our customers and our
      website charge fees to grant our customers unimpaired and unconstrained
      access to our online services;
  ·
              our
      ability to collect amounts that may become owed to
  us;
  ·
              the
      extent to which use of our services is affected by spyware, viruses,
      “phishing” and other spam emails, “denial of service” attacks, data theft,
      computer intrusions and similar events;
and
  ·
              terrorist
      attacks and armed hostilities.
  We
may not be able to obtain shareholder approval to increase our authorized
capital.  As a result, the full amount of consideration due pursuant
to the Merger Agreement may never be issued.
 
 Pursuant
to the Merger, Insignia acquired all of the issued and outstanding capital stock
of DollarDays in exchange for: (1) 73,333,333 ADSs to be issued to DollarDays’
stockholders, (2) a warrant for 8,551,450 ADSs at a price of $0.01 per ADS to
Peter Engel, (3) a warrant for 3,603,876 ADSs at a price of $0.13 per ADS to a
financial advisor to DollarDays and (4) options to purchase 7,360,533 ADSs, in
replacement of outstanding DollarDays options.  In addition, Insignia
agreed to issue 7,682,926 ADSs at a price of $0.13 to Amorin in exchange for
cash and repayment of a note.  As a result of Insignia not having
enough authorized capital to issue all of the consideration due pursuant to the
Merger Agreement, as a closing condition to the Merger Agreement, Insignia was
required to (1) issue 46,978,375 ADSs to DollarDays’ stockholders at the time of
the closing of the Merger, (2) issue 4,921,791 ADSs to Amorin and (3) take all
necessary actions, including obtaining stockholder approval, as may be
necessary, to authorize and deliver the remaining consideration due under the
terms of the Merger Agreement.
  As of the
date of this report on Form 10-K, Insignia has issued 44,695,981 ADSs to
DollarDays stockholders and 5,596,984 ADSs to Amorin, representing approximately
49.7% of the issued  ordinary shares of Insignia.  We intend
to propose to stockholders, for their approval, to increase the authorized
capital of the Company at our next Annual General Meeting so that we can fulfill
our obligations to issue the remaining consideration under the terms of the
Merger Agreement.  If we do not obtain the necessary stockholder
consent to increase the authorized capital, we may never be able to issue the
full amount of consideration due pursuant to the Merger Agreement or may have to
seek authorization for the creation and issuance of another class of equity to
grant in lieu of the Merger consideration initially contemplated.
  11
  Failure
to issue the additional consideration pursuant to the Merger Agreement can be
expected to have some or all of the following effects, any of which can be
expected to have a material adverse impact on our liquidity, trading price and
future operating prospects:
 
 ·
              a
      lower trading volume for our ADS', which could make it more difficult for
      a stockholder to buy or sell shares on the open
  market;
 ·
              a
      decreased market price for our
ADS’;
 ·
              less
      interest from the general investment
community;
 ·
              an
      inability to grant options, warrants or other forms of equity-based
      compensation which we believe are important as part of our overall
      compensation package to employees, consultants, officers and
      directors;
 ·
              limits
      our flexibility with respect to any future fundraising
      efforts;
 ·
              increased
      time and effort on the part of management to address concerns of the
      former DollarDays stockholders; and
 ·
              increased
      exposure to litigation.
  We
are dependent on a limited number of shipping companies.
  We rely
on a limited number of shipping companies to deliver inventory to us and
completed orders to our customers.  If we are not able to negotiate
acceptable terms with these companies or they experience performance problems or
other difficulties, it could negatively impact our operating results and
customer experience.  In addition, our ability to ship completed
orders to customers may be negatively affected by inclement weather, fire,
flood, power loss, earthquakes, labor disputes, acts of war or terrorism, acts
of God and similar factors.  Third parties either drop-ship or
otherwise fulfill our customers’ orders, and we are increasingly reliant on the
reliability, quality and future procurement of their services. The inability of
these other companies to accurately forecast product demand would result in
unexpected costs and other harm to our business and reputation.
  The
seasonality of our business places increased strain on our
operations.
  We expect
a disproportionate amount of our net sales to occur during our fourth quarter.
If our suppliers do not stock or restock popular products in sufficient amounts
such that we fail to meet customer demand, it could significantly affect our
revenue and our future growth. If too many customers access our website within a
short period of time due to increased demand, we may experience system
interruptions that make our website unavailable or prevent us from efficiently
fulfilling orders, which may reduce the volume of goods we sell and the
attractiveness of our products and services. In addition, we may be unable to
adequately staff our fulfillment and customer service centers during peak
periods.
  We pay
vendors on extended trade terms, but collect from our customers via credit card
or other form of electronic payment.  As a result of holiday sales in
November and December, our cash, cash equivalents, and marketable securities
balances typically reach their highest level (other than as a result of cash
flows provided by or used in investing and financing activities) in the fourth
quarter.  This operating cycle results in a corresponding increase in
accounts payable at December 31. Our accounts payable balance generally
declines during the first three months of the year, resulting in a corresponding
decline in our cash, cash equivalents, and marketable securities
balances.
  Our
business could suffer if we are unsuccessful in making, integrating and
maintaining acquisitions and investments.
  We may
acquire, or invest in or enter into joint ventures with additional companies.
These transactions create risks such as:
  •        disruption
of our ongoing business, including loss of management focus on existing
businesses;
  12
  •        problems
retaining key personnel;
  •        additional
operating losses and expenses of the businesses we acquired or in which we
invested;
  •        the
potential impairment of amounts capitalized as intangible assets as part of the
acquisition;
  •        the
potential impairment of customer and other relationships of the company we
acquired or in which we invested or our own customers as a result of any
integration of operations;
  •        the
difficulty of incorporating acquired technology into our offerings and
unanticipated expenses related to such integration;
  •        the
difficulty of integrating a new company’s accounting, financial reporting,
management, information, human resource and other administrative systems to
permit effective management, and the lack of control if such integration is
delayed or not implemented;
  •        the
difficulty of implementing the controls, procedures and policies appropriate for
a larger public company;
  •        potential
unknown liabilities associated with a company we acquire or in which we invest;
and
  •        for
foreign transactions, additional risks related to the integration of operations
across different cultures and languages, and the economic, political, and
regulatory risks associated with specific countries.
  Finally,
as a result of future acquisitions or mergers, we may need to issue additional
equity securities, spend our cash, or incur debt, contingent liabilities, or
amortization expenses related to intangible assets, any of which could reduce
our profitability and harm our business.
 
 The
loss of key senior management personnel could negatively affect our
business.
  We depend
on our senior management and other key personnel, particularly Peter Engel, our
Chairman and Chief Executive Officer and Marc Joseph, our President and Chief
Operating Officer.  The loss of these and any of our other executive
officers or key employees could harm our business, future operating prospects
and results of operations.
  Additionally,
we do not currently maintain “key person” life insurance policies on the lives
of any of our executive officers.  This lack of insurance means that
we may not have adequate compensation for the loss of the services of these
individuals.
  Our
vendor relationships subject us to a number of risks.
  We have
significant vendors that are important to our sourcing, manufacturing and
related ongoing servicing of merchandise and content. We do not have long-term
arrangements with most of our vendors to guarantee availability of merchandise,
content, components, or services.  If our current vendors were to stop
selling merchandise, components or services to us on acceptable terms, we may be
unable to procure adequate replacements from other vendors in a timely and
efficient manner or on acceptable terms, or at all.
  13
  We
depend on our relationships with third party vendors for the products that we
sell on our website. If we fail to maintain these relationships, our business
will suffer.
  At
December 31, 2008, we had fulfillment partner relationships with approximately
300 third parties whose products we offer for sale on our website. We depend on
our fulfillment partners to provide the product selection we offer. We plan to
continue to expand the number of fulfillment partner relationships and the
number of products offered for sale by our fulfillment partners on our
website.  In general, we agree to offer the third parties’ products on
our website and these third parties agree to provide us with information about
their products, honor our customer service policies and ship the products
directly to the customer. If we do not maintain our existing relationships or
build new relationships with third parties on acceptable commercial terms, we
may not be able to offer a broad selection of merchandise, and customers may
refuse to shop at our website. In addition, manufacturers may decide not to
offer particular products for sale on the Internet. If we are unable to maintain
our existing fulfillment partner relationships, or build new ones, or if other
product manufacturers refuse to allow their products to be sold via the
Internet, our business and prospects would suffer severely.
 
 We
depend upon third-party delivery services to deliver our products to our
customers on a timely and consistent basis. Deterioration in our relationship
with any one of these third parties could decrease our ability to track
shipments, cause shipment delays and increase shipping costs.
  We rely
upon multiple third parties for the shipment of our products. We cannot be sure
these relationships will continue on terms favorable to us, if at all.
Unexpected increases in shipping costs or delivery times could harm our
business, prospects, financial condition and results of operations. If our
relationships with these third parties are terminated or impaired or if these
third parties are unable to deliver products for us, whether through labor
shortage, slow down or stoppage, deteriorating financial or business condition,
responses to terrorist attacks or for any other reason, we would be required to
use alternative carriers for the shipment of products to our customers. In
addition, conditions such as adverse weather can prevent carriers from
performing their delivery services, which can have an adverse effect on our
customers’ satisfaction with us. In any of these circumstances, we may be unable
to engage alternative carriers on a timely basis, upon favorable terms, or at
all. Changing carriers would likely have a negative effect on our business,
operating results and financial condition. Potential adverse consequences
include:
  ·
              reduced
      visibility of order status and package
tracking;
 ·
              delays
      in order processing and product
delivery;
 ·
              increased
      cost of delivery, resulting in reduced gross margins;
  and
 ·
              reduced
      shipment quality, which may result in damaged products and customer
      dissatisfaction.
  A
significant number of merchandise returns could harm our business, financial
condition and results of operations.
  We allow
our customers to return products. If merchandise returns are significant, our
business, prospects, financial condition and results of operations could be
harmed. We modify our policies relating to returns from time to time and any
policies intended to reduce the number of product returns may result in customer
dissatisfaction and fewer repeat customers.
  If
the products that we offer on our website do not reflect our customers’ tastes
and preferences, our sales and profit margins may decrease.
 
 Our
success depends in part on our ability to offer products that reflect consumers’
tastes and preferences. Consumers’ tastes are subject to frequent, significant
and sometimes unpredictable changes. Because some of the products we sell
consist of manufacturers’ and retailers’ excess inventory, we have limited
control over some of the specific products we are able to offer for sale. If our
merchandise fails to satisfy customers’ tastes or respond to changes in customer
preferences, our sales could suffer. In addition, any failure to offer products
in line with customers’ preferences could allow our competitors to gain market
share. This could have an adverse effect on our business, prospects, results of
operations and financial condition.
  14
  We
will have to attract and retain customers.
 
 Our
success depends on our ability to attract and retain customers. We have
relationships with online services, search engines, directories and other
website and e-commerce businesses to provide content, advertising banners and
other links that direct customers to our website. We rely on these relationships
as significant sources of traffic to our website and to generate new customers.
If we are unable to develop or maintain these relationships on acceptable terms,
or to develop suitable alternatives, our ability to attract new customers may be
impaired and our financial condition could be harmed. We cannot assure you we
will be able to increase our revenues, if at all, in a cost-effective
manner.
  Further,
many online advertisers on whom we may wish to, or presently do, rely on for
services, may be reluctant to enter into or maintain relationships with us
because our competitors may be more attractive advertising clients.
Additionally, failure to achieve sufficient traffic or generate sufficient
revenue from purchases originating from online advertisers may cause online
advertisers to terminate their relationship with us. Without these
relationships, our revenues, business, prospects, financial condition and
results of operations could suffer.
  We
may not be able to compete successfully against existing or future
competitors.
  The
online liquidation services market is rapidly evolving and intensely
competitive. Barriers to entry are minimal, and current and new competitors can
launch new websites at a relatively low cost.
 
 We expect
the online liquidation services market to become even more competitive as
traditional liquidators and online retailers develop services that compete with
ours. In addition, manufacturers and retailers may decide to create their own
websites to sell their own excess inventory and the excess inventory of third
parties. Competitive pressures created by any one of our competitors, or by our
competitors collectively, could harm our business, prospects, financial
condition and results of operations.
  Further,
as a strategic response to changes in the competitive environment, we may from
time to time make certain pricing, service or marketing decisions or
acquisitions that could harm our business, prospects, financial condition and
results of operations. To the extent we enter new lines of businesses, we expect
that we would be competing with many established businesses.
  Many of
our current and potential competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial,
marketing and other resources than we do. In addition, online retailers and
liquidation e-tailers may be acquired by, receive investments from or enter into
other commercial relationships with larger, well-established and well-financed
companies. Some of our competitors may be able to secure merchandise from
manufacturers on more favorable terms, devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing or inventory availability
policies and devote substantially more resources to website and systems
development than we do. Increased competition may result in reduced operating
margins, loss of market share and a diminished brand. We cannot assure you we
will be able to compete successfully against current and future
competitors.
  Our
operating results depend on our website, network infrastructure and
transaction-processing systems. Capacity constraints or system failures would
harm our business and reputation.
 
 Any
system interruptions that result in the unavailability of our website or reduced
performance of our transaction systems would reduce our transaction volume and
the attractiveness of our services to both our customers and vendors and can be
expected to harm our business, prospects, operating results and financial
condition.
  15
  We use
internally developed software and systems for our website and certain aspects of
our transaction processing systems. We have experienced periodic systems
interruptions due to server failure, which we believe will continue to occur
from time to time. If the volume of traffic on our website or the number of
purchases made by customers substantially increases, we will need to further
expand and upgrade our technology, transaction processing systems and network
infrastructure. We have experienced and expect to continue to experience
temporary capacity constraints due to sharply increased traffic during sales or
other promotions and during the holiday shopping season. Capacity constraints
can cause unanticipated system disruptions, slower response times, and
degradation in levels of customer service, impaired quality and delays in
reporting accurate financial information.
  Our
transaction processing systems and network infrastructure may be unable to
accommodate increases in traffic in the future. We may be unable to project
accurately the rate or timing of traffic increases or successfully upgrade our
systems and infrastructure to accommodate future traffic levels. In addition, we
may be unable to upgrade and expand our transaction processing systems in an
effective and timely manner or to integrate any newly developed or purchased
functionality with our existing systems. Any such difficulties with our
transaction processing systems or other difficulties upgrading, expanding or
integrating various aspects of our systems may cause unanticipated system
disruptions, slower response times, and degradation in levels of customer
service, additional expense, impaired quality and speed of order fulfillment or
delays in reporting accurate information.
  If
the facility where substantially all of our computer and communications hardware
is located fails, our business, results of operations and financial condition
will be harmed.
  Our
success, and in particular, our ability to successfully receive and fulfill
orders and provide high-quality customer service, largely depends on the
efficient and uninterrupted operation of our computer and communications
systems. Substantially all of our computer and communications hardware is
located at a single co-location facility in the eastern United States, with a
partially redundant back-up system located in the western United States.
Although we have designed our back-up system in an effort to be able to provide
limited back-up website functionality in the event of a failure of our main
facility, our systems and operations are vulnerable to damage or interruption
from fire, flood, power loss, telecommunications failure, terrorist attacks,
acts of war, break-ins, earthquake and similar events, and our back-up systems
are not designed to handle the volume of transactions normally handled by our
primary systems. Our disaster recovery plan may be inadequate, and our business
interruption insurance may be insufficient to compensate us for losses that may
occur. Despite the implementation of network security measures, our servers are
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptions, which could lead to interruptions, delays, loss or public
disclosure of critical data or the inability to accept and fulfill customer
orders. The occurrence of any of the foregoing risks could harm our reputation,
business, prospects, financial condition and results of operations.
  We
may be unable to protect our proprietary technology or keep up with that of our
competitors.
  Our
success depends to a significant degree upon the protection of our software and
other proprietary intellectual property rights. We may be unable to deter
misappropriation of our proprietary information, detect unauthorized use or take
appropriate steps to enforce our intellectual property rights. In addition, our
competitors could, without violating our proprietary rights, develop
technologies that are as good as or better than our technology.
  Our
failure to protect our software and other proprietary intellectual property
rights or to develop technologies that are as good as our competitors’ could put
us at a disadvantage to our competitors. These failures could harm our business,
results of operations and financial condition.
 
 We
may be accused of infringing intellectual property rights of third
parties.
  Third
parties may claim we infringe their intellectual property rights. The ready
availability of damages, royalties and potential for injunctive relief has
increased the defense litigation costs of patent infringement claims. Such
claims, whether or not meritorious, may result in significant expenditure of
financial and managerial resources, and the payment of damages or settlement
amounts. Additionally, we may become subject to injunctions prohibiting us from
using software or business processes we currently use or may need to use in the
future, or requiring us to obtain licenses from third parties when such licenses
may not be available on terms acceptable to us or at all. In addition, we may
not be able to obtain on favorable terms, or at all, licenses or other rights
with respect to intellectual property we do not own in providing e-commerce
services.
  16
  If
we do not respond to rapid technological changes, our services could become
obsolete and we could lose customers.
  To remain
competitive, we must continue to enhance and improve the functionality and
features of our business. We may face material delays in introducing new
services, products and enhancements. If this happens, our customers may forgo
the use of our website and use those of our competitors. The Internet and the
online commerce industry are rapidly changing. If competitors introduce new
products and services using new technologies or if new industry standards and
practices emerge, our existing website and our proprietary technology and
systems may become obsolete. Our failure to respond to technological change or
to adequately maintain, upgrade and develop our computer network and the systems
used to process customers’ orders and payments could harm our business,
prospects, financial condition and results of operations.
  We
may not be able to obtain trademark protection for our service marks or
trademarks, which could impede our efforts to build brand identity.
  We have
filed trademark applications with the Patent and Trademark Office seeking
registration of certain service marks and trademarks. There can be no assurance
that our applications will be successful or that we will be able to secure
significant protection for our service marks or trademarks in the United States
or elsewhere. Our competitors or others could adopt product or service marks
similar to our marks, or try to prevent us from using our marks, thereby
impeding our ability to build brand identity and possibly leading to customer
confusion. Any claim by another party against us or customer confusion related
to our trademarks, or our failure to obtain trademark registration, could
negatively affect our future business prospects.  We may need to apply
for future trademark protection and there can be no assurance that our future
applications will be successful or that we will be able to secure significant
protection for our service marks or trademarks in the United States or
elsewhere.
  Our
business and reputation may be harmed by the listing or sale of pirated,
counterfeit or illegal items by third parties.
  We have
received in the past, and we anticipate we will receive in the future,
communications alleging that certain items listed or sold through our website
infringe third-party copyrights, trademarks and trade names or other
intellectual property rights or that we have otherwise infringed third parties’
past, current or future intellectual property rights.
  We may be
unable to prevent third parties from listing unlawful goods, and we may be
subject to allegations of civil or criminal liability for unlawful activities
carried out by third parties through our website. Any costs incurred as a result
of liability or asserted liability relating to the sale of unlawful goods could
harm our revenues, business, prospects, financial condition and results of
operations.
  Resolving
litigation or claims regarding patents or other intellectual property, whether
meritorious or not, could be costly, time-consuming, cause service delays,
divert our management and key personnel from our business operations, require
expensive or unwanted changes in our methods of doing business or require us to
enter into costly royalty or licensing agreements, if available. As a result,
these claims could harm our business. Negative publicity generated as a result
of the foregoing could damage our reputation, harm our business and diminish the
value of our brand name.
  We
may be liable if third parties misappropriate our customers’ personal
information.
  If third
parties are able to penetrate our network security or otherwise misappropriate
our customers’ personal information or credit card information, or if we give
third parties improper access to our customers’ personal information or credit
card information, we could be subject to liability. This liability could include
claims for unauthorized purchases with credit card information, impersonation or
other similar fraud claims or damages for alleged violations of state or federal
laws governing security protocols for the safekeeping of customers’ personal
information. This liability could also include claims for other misuses of
personal information, including unauthorized marketing purposes. Liability for
misappropriation of this information could adversely affect our business. In
addition, we could incur additional expenses if new regulations regarding the
use of personal information are introduced or if government agencies investigate
our privacy practices.
  17
  We rely
on encryption and authentication technology licensed from third parties to
provide the security necessary to effect secure transmission of confidential
information such as customer credit card numbers. We cannot assure you that
advances in computer capabilities, new discoveries in the field of cryptography
or other events or developments will not result in a compromise or breach of the
algorithms we use to protect customer transaction data. If any such compromise
of our security were to occur, it could harm our reputation, business,
prospects, financial condition and results of operations. A party who is able to
circumvent our security measures could misappropriate proprietary information or
cause interruptions in our operations. We may be required to expend significant
capital and other resources to protect against such security breaches or to
alleviate problems caused by such breaches. We cannot assure you that our
security measures will prevent security breaches or that failure to prevent such
security breaches will not harm our business, prospects, financial condition and
results of operations.
  Our
success is tied to the continued use of the Internet and the adequacy of the
Internet infrastructure.
  Our
future revenues and profits, if any, substantially depend upon the continued
widespread use of the Internet as an effective medium of commercial business.
Factors which could reduce the widespread use of the Internet
include:
  ·
              actual
      or perceived lack of security of information or privacy
      protection;
 ·
              possible
      disruptions, computer viruses or other damage to Internet servers or to
      users’ computers;
 ·
              significant
      increases in the costs of transportation of goods;
  and
 ·
              governmental
      regulation.
  Credit
card fraud could adversely affect our business.
  We do not
carry insurance against the risk of credit card fraud, so the failure to
adequately control fraudulent credit card transactions could reduce our net
revenues and our gross margin. We have implemented technology to help us detect
the fraudulent use of credit card information. However, we may in the future
suffer losses as a result of orders placed with fraudulent credit card data even
though the associated financial institution approved payment of the orders.
Under current credit card practices, we may be liable for fraudulent credit card
transactions because we do not obtain a cardholder’s signature. If we are unable
to detect or control credit card fraud, our liability for these transactions
could harm our business, results of operation or financial
condition.
  If
one or more states successfully assert that we should collect sales or other
taxes on the sale of our merchandise or the merchandise of third parties that we
offer for sale, our business could be harmed.
  We do not
currently collect sales or other similar taxes for physical shipments of goods
into states, other than Arizona. One or more local, state or foreign
jurisdictions may seek to impose sales tax collection obligations on us even
though we are engaged in online commerce, and have no physical presence in those
jurisdictions. The location of our fulfillment centers and customer service
center networks, or any other operations of the Company, establishing a physical
presence in states where we are not now present, may result in additional sales
and other tax obligations. Our business could be adversely affected if one or
more states or any foreign country successfully asserts that we should collect
sales or other taxes on the sale of our merchandise.
  18
  Existing
or future government regulation could harm our business.
  Today
there are relatively few laws specifically directed towards conducting business
on the Internet. However, due to the increasing popularity and use of the
Internet, many laws and regulations relating to the Internet are being debated
at the state and federal levels. These laws and regulations could cover issues
such as user privacy, freedom of expression, pricing, fraud, quality of products
and services, taxation, advertising, intellectual property rights and
information security. Applicability to the Internet of existing laws governing
issues such as property ownership, copyrights and other intellectual property
issues, taxation, libel, obscenity and personal privacy could also harm our
business. For example, United States and foreign laws regulate our ability to
use customer information and to develop, buy and sell mailing lists. The vast
majority of these laws was adopted prior to the advent of the Internet and do
not contemplate or address the unique issues raised thereby. Those laws that do
reference the Internet are only beginning to be interpreted by the courts and
their applicability and reach are therefore uncertain. These current and future
laws and regulations could harm our business, results of operation and financial
condition.
 
 The Consumer Product Safety Improvement
Act became effective February 10, 2009 and prohibits resellers from selling
children’s products that exceed specified levels of lead and certain other
chemicals.  Resellers are not required to test the products
themselves, however, if they do sell such products, they could be subject to
civil and/or criminal penalties.  Since we do not take legal title to
the merchandise sold through our website (it is shipped directly from the
manufacturer/importer to the retailer), we never take possession of any
merchandise and could not test the products.  Accordingly, to minimize
our risk, we have undertaken the following steps:
 
 (a)
              We
      have discontinued all items which, in our judgment, have any significant
      likelihood of being out of compliance with the Act.  The limited
      exception to this is that certain closeouts may date back to a period
      before testing was commonplace.  We have discontinued all items
      we believe constitutes a significant risk of containing inappropriate
      chemicals.  However, some products or a garment with an
      inappropriate thread or button may slip through;
  and
 
 (b)
              We
      have insisted that all our vendors certify that the products they sell are
      in compliance with the Act.    They have all complied
      except for certain vendors of close-outs who cannot know whether the
      products they are buying may have been produced before these maximum
      levels of permissible lead and other chemicals were
      established.
 
 Despite
our efforts, it is possible we may become subject to litigation under the
Consumer Product Safety Improvement Act.  Any such litigation could be
expected to harm our reputation and may impact our future business prospects and
results of operations.
  Laws
or regulations relating to privacy and data protection may adversely affect the
growth of our Internet business or our marketing efforts.
  We are
subject to increasing regulation at the federal, state and international levels
relating to privacy and the use of personal user information. For example, we
are subject to various telemarketing laws that regulate the manner in which we
may solicit future suppliers and customers. Such regulations, along with
increased governmental or private enforcement, may increase the cost of growing
our business. In addition, many jurisdictions have laws that limit the uses of
personal user information gathered online or offline or require companies to
establish privacy policies. The Federal Trade Commission has adopted regulations
regarding the collection and use of personal identifying information obtained
from children under 13. Proposed legislation in this country and existing laws
in foreign countries require companies to establish procedures to notify users
of privacy and security policies, obtain consent from users for collection and
use of personal information, and/or provide users with the ability to access,
correct and delete personal information stored by us. Additional legislation
regarding data security and privacy has been proposed in Congress. These data
protection regulations may restrict our ability to collect demographic and
personal information from users, which could be costly or harm our marketing
efforts, and could require us to implement new and potentially costly processes,
procedures and/or protective measures.
  19
  We
may be subject to product liability claims if people or property are harmed by
the products we sell or if the products do not comply with government
regulations.
  Although
we do not take legal title to any of the merchandise sold on our website, some
of the products we sell may expose us to product liability claims relating to
personal injury, death or property damage, and may require product recalls or
other actions. If the products we sell do not comply with government
regulations, we may also be exposed to product liability
claims.  Although we maintain liability insurance, we cannot be
certain that our coverage will be adequate for liabilities actually incurred or
that insurance will continue to be available to us on economically reasonable
terms, or at all. In addition, some of our agreements with vendors and sellers
do not indemnify us from product liability.
  We
are subject to payment related risks.
  We accept
payments using a variety of methods, including credit card, debit card, credit
accounts (including promotional financing), gift certificates, direct debit from
a customer’s bank account, physical bank check and payment upon delivery. For
certain payment methods, including credit and debit cards, we pay interchange
and other fees, which may increase over time and raise our operating costs and
lower our profit margins. We rely on third parties to provide payment processing
services, including the processing of credit cards, debit cards, electronic
checks, and promotional financing, and it could disrupt our business if these
companies become unwilling or unable to provide these services to us. We are
also subject to payment card association operating rules, certification
requirements and rules governing electronic funds transfers, which could change
or be reinterpreted to make it difficult or impossible for us to comply. If we
fail to comply with these rules or requirements, we may be subject to fines and
higher transaction fees and lose our ability to accept credit and debit card
payments from our customers, process electronic funds transfers, or facilitate
other types of online payments, and our business and operating results could be
adversely affected.
 
 Item 1B — 
Unresolved Staff
Comments
 
 None.
  Item 2 — 
Properties
 
 Insignia,
through its wholly-owned subsidiary DollarDays, leases approximately 5,500
square feet in Scottsdale, Arizona, which houses the corporate headquarters and
all business functions.  The lease term expires October 31,
2012.  Rent payable in 2009 is $126,071, with incremental
increases.  Insignia believes this facility is adequate to meet its
current operating needs.
 
 In March
2006, Insignia relocated its headquarters and principal management facility to
Campbell, California. In connection with the sale of substantially all of
Insignia’s assets in April 2007, Smith Micro assumed Insignia’s lease
obligations in Campbell, California, Stockholm, Sweden and Seoul, South Korea,
and contracted to allow Insignia to occupy an office in the Campbell
facility.  The Company no longer utilizes the Campbell
facility.
 
 In 2006,
Insignia entered into a sub-lease agreement for its UK office in High Wycombe,
United Kingdom with Norwest Holt Limited.  The original lease was
signed in 1998 for a term of 15 years at an annual rent of 105,000 British
Pounds, subject to periodic price adjustments.
  Item 3 — 
Legal
Proceedings
 
 We have
no material proceedings pending nor are we aware of any pending investigation or
threatened litigation by any third party.
 
 Item 4 — 
Submission of Matters to a
Vote of Security Holders
 
 None.
  20
  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:
 
 2008 Quarters EndedDec 31
                  
                  
                  Sept 30
                  
                  
                  June 30
                  
                  
                  Mar 31Quarterly
      per share stock price:High
                  
                  $
                  0.03
                  
                  
                  $
                  0.04
                  
                  
                  $
                  0.05
                  
                  
                  $
                  0.07Low
                  
                  $
                  0.01
                  
                  
                  $
                  0.02
                  
                  
                  $
                  0.02
                  
                  
                  $
                  0.05
  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
 
 As of
December 31, 2008 our transfer agents reported there were approximately 233
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, 2008 and
2007, we had accumulated deficits of approximately $6.1 million and $6.2
million, respectively, 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 a
1995 Incentive Stock Option Plan for U.S. employees (the “1995 Plan”), which
provide for the issuance of stock options to employees and outside consultants
of Insignia to purchase ordinary shares. As of the date of this report, no
shares are available for issuance under the 1995 Plan.  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.
  21
  Pursuant
to the terms of the Merger Agreement, Insignia will issue options to purchase
7,360,533 ADSs in replacement of outstanding DollarDays
options.  Insignia intends to propose to stockholders, for their
approval and adoption, a new 2009 Long-Term Incentive Stock Option Plan at its
next Annual General Meeting so that Insignia can fulfill its obligations to
issue the 7,360,533 options pursuant to the Merger Agreement, as well as have a
sufficient number of additional options available for future
issuances.
 
 Recent
Sales of Unregistered Securities
 
 Please
see the Current Report on Form 8-K, filed March 19, 2009.
  22
  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 unaudited 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, 2008, and 2007 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.
  Quarter Ended31-Dec
                    
                    
                    30-Sep
                    
                    
                    30-Jun
                    
                    
                    31-Mar(Unaudited,
      in thousands, except per share amounts)2008Revenues
                    
                    $
                    3,199
                    
                    
                    $
                    3,624
                    
                    
                    $
                    2,863
                    
                    
                    $
                    2,371Gross
      profit
                    
                    
                    1,075
                    
                    
                    
                    1,110
                    
                    
                    
                    828
                    
                    
                    
                    698Loss
      from operations
                    
                    
                    (461
                    )
                    
                    
                    (337
                    )
                    
                    
                    (294
                    )
                    
                    
                    (193
                    )Other
      income (expense)
                    
                    
                    449
                    
                    
                    
                    83
                    
                    
                    
                    1,079
                    
                    
                    
                    (223
                    )Net
      income (loss)
                    
                    
                    (12
                    )
                    
                    
                    (254
                    )
                    
                    
                    785
                    
                    
                    
                    (416
                    )Basic
      net income (loss) per share
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    0.03
                    
                    
                    $
                    (0.03
                    )Diluted
      net income (loss) per share
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    0.03
                    
                    
                    $
                    (0.03
                    )2007Revenues
                    
                    $
                    2,960
                    
                    
                    $
                    2,789
                    
                    
                    $
                    2,853
                    
                    
                    $
                    2,285Gross
      profit
                    
                    
                    654
                    
                    
                    
                    790
                    
                    
                    
                    894
                    
                    
                    
                    800Loss
      from operations
                    
                    
                    (209
                    )
                    
                    
                    (123
                    )
                    
                    
                    (208
                    )
                    
                    
                    (364
                    )Other
      income (expense)
                    
                    
                    (189
                    )
                    
                    
                    (272
                    )
                    
                    
                    (156
                    )
                    
                    
                    (239
                    )Net
      income (loss)
                    
                    
                    (398
                    )
                    
                    
                    (395
                    )
                    
                    
                    (364
                    )
                    
                    
                    (603
                    )Basic
      net income (loss) per share
                    
                    $
                    (0.03
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.04
                    )Diluted
      net income (loss) per share
                    
                    $
                    (0.03
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.02
                    )
                    
                    $
                    (0.04
                    )
  23
  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.
 
 Executive
Overview
  Until April 2007, we 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.
  In April
2007 the we sold substantially all of our assets to Smith Micro Software,
Inc.  From April 2007  until June 23, 2008, we did not
generate any revenues from operations and operated as a shell
company.  On June 23, 2008, we entered into the Merger with
DollarDays.  The Merger was accounted for as a reverse merger where
DollarDays is the accounting acquirer.  As a result, the amounts
presented in this form 10-K are those of DollarDays prior to the Merger and the
combined results of Insignia and DollarDays subsequent to the
Merger.  See “Recent Developments”.
 
 We
develop software programs that allow us to provide general merchandise for
resale to businesses through our website at www.DollarDays.com.  We
have been recognized as a leader in the Internet wholesale market of discounted
merchandise by a leading business periodical and trade
associations.  Our objective is to provide a one-stop discount
shopping destination for general merchandise for smaller distributors, retailers
and non-profits nationwide seeking single and small cased-sized lots at bulk
prices.  We launched our first website in October 2001.  The
site offers customers an opportunity to shop for bargains conveniently, while
offering our suppliers an alternative sales channel.  We believe our
website offers a unique benefit to smaller businesses in that they are able to
purchase goods from wholesalers and importers in single and small case lots,
with no minimum purchase requirements at discounted prices.  We
believe the prevailing reason our business has been able to obtain bulk pricing
for single case lots is our ability to reach smaller distributors, retailers and
non-profits that most general merchandise suppliers cannot economically reach.
We provide all the logistics and customer support to serve this sales channel
and grow our customer base.
 
 We
continually add new, limited inventory products to our website in order to
create an atmosphere that encourages customers to visit frequently and purchase
products before the inventory sells out.  Through our Internet
catalog, we offer approximately 25,000 products, including up to 10,000 closeout
items at further discounted prices.  Closeout merchandise is typically
available in inconsistent quantities and prices.
 
 We accept orders, either online or via
telephone sales staff, collect payment in the form of credit or debit card,
PayPal or similar means, and coordinate with manufacturers, importers and
close-out specialists regarding delivery particulars.  PayPal refers
to the online payment platform located at www.paypal.com and
its localized counterparts.  Our proprietary software and service
procedures allow us to sell merchandise to a single customer, and bill as a
singer order, items purchased and delivered from multiple
suppliers.  We do not take possession of inventory, but we are
responsible for processing customer claims and returns.
  24
 
 Our
website has a registered base of approximately 1,250,000 small businesses and
receives approximately 2 million monthly page views.  We receive an
average of approximately 3,000 orders per month.  Our target audience
is smaller businesses.
 
 Recent
Developments
  Merger
Agreement with DollarDays 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 DollarDays, providing for the merger of DollarDays
into Jeode, which was completed on June 23, 2008. Under the terms of the Merger
Agreement, Insignia will (1) issue ADSs for approximately 73.3 million ordinary
shares to DollarDays’ shareholders, (2) issue ADSs for approximately 7.7 million
ordinary shares to Amorin in representing repayment of a note payable, as well
as an additional investment in DollarDays, (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 DollarDays, (4) issue a warrant to
purchase 3.6 million ordinary shares at an exercise price of $0.13 per ADS to a
financial advisor to DollarDays, and (5) issue options to purchase approximately
7.3 million ADSs, in replacement and cancellation of  outstanding
DollarDays options. The closing of the Merger Agreement did not require Insignia
shareholder approval.
 
 Under the
Merger Agreement, Insignia shareholders maintained approximately 37.1%,
DollarDays shareholders obtained 56.7%  and Amorin obtained 6.2% of
the stock of the combined company.  The merger will be accounted for
as a reverse merger whereby DollarDays is the accounting acquirer resulting in a
recapitalization of DollarDays’ equity.  Approximately 64% of the ADSs
contemplated by the Merger were to be issued subsequent to the closing of the
Merger, and the remaining ADSs will be issued following shareholder
authorization of 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 $500,000 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 Chief Financial
Officer.  The then current Board of Directors of Insignia appointed
Larry Schafran as a director of Insignia.
  25
  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 and Director 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. From 2003 through
2005, Mr. Engel was President of Affinity Publishing, a book packaging company.
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 Bachelors of Commerce 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.
  Critical
Accounting Estimates and Assumptions
  The preparation of our consolidated
financial statements in conformity with accounting principles generally accepted
in the United States of America requires our management to make certain
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.  As such, in accordance with the use of
accounting principles generally accepted in the United States of America, our
actual realized results may differ from management’s initial estimates as
reported.  Summaries of our significant accounting policies are
detailed in the notes to the consolidated financial statements, which are an
integral component of this filing.
  The
following summarizes critical estimates made by management in the preparation of
the consolidated financial statements.
  26
 
 Accounts
Receivable
 
 Accounts
receivable represent amounts earned but not collected in connection with our
sales. Trade receivables are carried at their estimated collectible amounts and
generally consist of amounts due from credit card transactions.
 
 We follow
the allowance method of recognizing uncollectible accounts receivable. The
allowance method recognizes bad debt expense as a percentage of accounts
receivable based on a review of individual accounts outstanding, and prior
history of uncollected accounts receivable. The allowance for doubtful accounts
at December 31, 2008 and 2007 was $0 as DollarDays expected to collect
substantially all amounts due.  Bad debt expense for the years ended
December 31, 2008 and 2007 was $0 and $64,437, respectively.
 
 We follow
the allowance method of recognizing sales returns. The allowance method
recognizes sales returns as a percentage of sales based on a prior history of
sales returns. The allowance for sales returns at December 31, 2008 and 2007 was
$17,601 and $13,206, respectively.  Sales returns expense for the
years ended December 31, 2008 and 2007 was $66,832 and $105,123,
respectively.
  Property
and Equipment
 
 Property
and equipment are stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization is computed using the straight-line
method over the estimated useful lives of the respective assets, generally three
to five years. Leasehold improvements and assets recorded under capital leases
are amortized on a straight-line basis over the shorter of the assets' useful
lives or lease terms. Depreciation and amortization expense was $43,320 and
$51,584 for the years ended December 31, 2008 and 2007.
 
 We
capitalize website development costs in accordance with the provisions of
Emerging Issues Task Force (EITF) 00-02.  Generally, we capitalize
costs incurred to develop its website applications and
infrastructure.  Capitalized website development costs totaled $52,987
and $27,605 for the years ended December 31, 2008 and 2007,
respectively.
 
 Long-lived
Assets
 
 In
accordance with Statement of Financial Accounting Standards (SFAS) No.
144  "Accounting  for the
Impairment or Disposal
of  Long-Lived  Assets"  which  requires
that  long-lived assets to be held and used be reviewed for impairment
whenever events or changes
in  circumstances  indicate  that
the  carrying  amount  of an asset  may
not be recoverable.
  We
evaluate our long-lived assets for impairment whenever changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future undiscounted cash flows expected to be
generated by the asset. If assets are considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amounts exceed
the fair values of the assets. Assets to be disposed of are reported at the
lower of carrying values or fair values, less costs of disposal. No impairment
of our long-lived assets existed at December 31, 2008 and 2007.
 Convertible
Debt
 
 We issued
convertible instruments, which contained embedded conversion features. We
evaluated the application of SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” and EITF Issue 00-19, “Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company’s Own Stock,”
to its embedded conversion feature within its convertible debt
instruments.  We determined that the conversion feature did not meet
the definition of a liability and therefore did not bifurcate the conversion
feature and account for it as a separate derivative liability.
  27
 
 We
evaluated the conversion feature under EITF 98-5 and EITF 00-27 for a beneficial
conversion feature at inception.  The effective conversion price was
then computed based on the allocation of the proceeds to the convertible debt to
determine if a beneficial conversion feature exists.  The effective
conversion price was compared to the market price on the date of the original
note and was deemed to be less than the market value of our stock at the
inception of the note.  A beneficial conversion feature was recognized
and gave rise to a debt discount that is amortized over the stated maturity of
the convertible debt instrument or the earliest potential conversion
date.
 
 Prior to
the Merger, the Company was unable to repay its existing debt obligations, many
of its notes were past due, and management was unable to obtain additional
financing.  Consequently, management entered into an agreement with
the debt holders to convert all existing debt and accrued interest into
equity.
 
 In
accordance with the provisions of SFAS No 15, “Accounting by Debtors and Creditors
for Troubled Debt Restructurings”, the Company has recognized a gain of
$1,113,849 ($0.01 per share on both a basic and diluted basis) on such
restructuring transactions with non-related parties based on the difference
between the carrying value of the debt of $1,298,198 and the fair value of the
equity securities issued of $184,349.  No gain or loss was recognized
on restructuring transactions with related parties.
  Revenue
Recognition
 
 Revenue
is recognized when the four criteria for revenue recognition are met: (1)
persuasive evidence of an arrangement exists; (2) shipment or delivery has
occurred; (3) the price is fixed or determinable and (4) collectability is
reasonably assured.    Cash payments received in advance of
product shipment are deferred as reflected as a deferred revenue liability in
the accompanying balance sheets.  Allowances for sales returns and
discounts are recorded as a component of net sales in the period the allowances
are recognized.
 
 All
amounts billed to customers for shipping and handling costs are included in net
revenues in the accompanying statements of operations.  Actual
shipping costs incurred are reflected as a component of cost of sales in the
accompanying statements of operations.  Total shipping expense
included in cost of sales was $1,661,517 and $1,612,098 for the years ended
December 31, 2008 and 2007, respectively.
 
 We
evaluated the provisions of EITF 99-19, “Reporting Revenue Gross as a
Principal or Net as an Agent,” noting that the task force determined that
it is a matter of judgment and a preponderance of the evidence as to whether a
company satisfies the gross versus net indicators.  As a result of our
analysis, we determined that it qualifies for “gross” revenue
recognition
 
 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 its 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.
 
 Fair
Value of Financial Instruments
 
 Our
financial instruments include cash and cash equivalents, short-term investments,
receivables and payables and short-term debt.  The fair value of the
short-term instruments approximates fair value due to the short-term maturities
of such instruments.  Fair value for the convertible debt instruments
and other short-term debt instruments cannot be reasonably estimated as no
market exists for such instruments and competitive market rates for similar
instruments cannot be determined with any reasonable assurance.
  28
 
 As the
total number of ordinary shares to be issued, 126,682,430, exceeds the currently
authorized number of ordinary shares, we recognized a liability of $134,252 at
December 31, 2008 for the fair value of unauthorized, unissued shares based on
the quoted market prices available at the date of the legal
commitment.  The fair value of the liability for unauthorized,
unissued shares has been recorded at market value as of December 31, 2008, and a
corresponding gain of $207,337 has been recognized due to changes in the fair
value of the liability during the year.
 
 Stock-
Based Compensation
  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 upon
the adoption of SFAS 123R.
 
 The
Company uses the Black-Scholes option pricing model to determine the fair value
of stock options and employee stock purchase plan shares.  The
assumption for the expected term was determined using the simplified method
outlined in Staff Accounting Bulletin No. 110.  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 a representative group of peer companies’ stock is used as the
basis for the volatility assumption.
  Results
of Operations
  The
following financial information relates to the results of operations and
analysis of financial condition of DollarDays.  While DollarDays
recently completed a reverse merger with Insignia, we do not believe the results
of operations for Insignia during 2007 and 2008 are meaningful to investors as
Insignia operated as a shell company subsequent to their sale of their operating
business in 2007.  Financial information regarding the financial
statements of DollarDays for the years ended December 31, 2008 and 2007 begin on
page F-1 of this current report.
  Net
Revenues
  Year Ended
                        December 31,
                      
                      Net
                        Revenues
                      
                      
                      Change from
                        Prior Year
                      
                      
                      Percent Change
                        from Prior Year2008
                      
                      $
                      12,057,076
                      
                      
                      $
                      1,169,630
                      
                      
                      
                      10.7
                      %2007
                      
                      $
                      10,887,446
  Net revenues increased from 2007 to
2008 due to increased marketing efforts, targeted advertising and increased
search optimization.
  Factors
that influence future revenue growth include general economic conditions, our
ability to attract vendors that offer compelling products and the impact of our
marketing activities.
  Cost
of Goods Sold
  Year Ended
                      December 31,
                    
                    Cost of Goods Sold
                    
                    
                    Change from
                      Prior Year
                    
                    
                    Percent Change
                      from Prior Year2008
                    
                    $
                    8,346,214
                    
                    
                    $
                    596,651
                    
                    
                    
                    7.7
                    %2007
                    
                    $
                    7,749,563
  29
  Cost of goods sold increased from 2007
to 2008 due to an increase in sales, along with cost efficiencies gained through
negotiations with vendors and other costs savings measures.
  Factors which may influence the cost of
goods sold include our general sales volumes, negotiated terms with vendors and
general economic conditions.
  Sales
and Marketing
  Year Ended
                      December 31,
                    
                    Sales and Marketing
                    
                    
                    Change from
                      Prior Year
                    
                    
                    Percent Change
                      from Prior Year2008
                    
                    $
                    2,380,604
                    
                    
                    $
                    533,580
                    
                    
                    
                    28.9
                    %2007
                    
                    $
                    1,847,024
  Sales and marketing expenses include
fees for attracting users to our site, including search engine optimization,
telemarketing and other marketing efforts as well as promotional activities to
increase sales by end users.  Sales and marketing expenses increased
from 2007 to 2008 due to increases in marketing, targeted advertising and web
search optimization efforts.
  Factors influencing sales and marketing
expenses include strategic decisions with respect to the cost-effectiveness of
each of our marketing activities.
  General
and Administrative
  Year Ended
                      December 31,
                    
                    General and
                      Administrative
                    
                    
                    Change from
                      Prior Year
                    
                    
                    Percent Change
                      from Prior Year2008
                    
                    $
                    2,614,814
                    
                    
                    $
                    420,186
                    
                    
                    
                    19.1
                    %2007
                    
                    $
                    2,194,628
  General and administrative expense
includes management fees, salaries and other compensation expenses, rent,
utilities, general office expenses, insurance and other costs necessary to
conduct business operations.  General and administrative expenses
increased from 2007 to 2008 due to an increase in merger related professional
fees.
  Factors that can influence the amount
of general and administrative expenses include the amount and extent by which we
compensate our consultants, executives and directors with stock-based or other
compensation, the rate of growth of our business and the extent to which we
outsource or bring certain activities in-house.
  Interest
Expense
  Year Ended
                      December 31,
                    
                    Interest Expense
                    
                    
                    Change from
                      Prior Year
                    
                    
                    Percent Change
                      from Prior Year2008
                    
                    $
                    176,874
                    
                    
                    $
                    (795,791
                    )
                    
                    
                    (81.8
                    )%2007
                    
                    $
                    972,665
  Interest expense decreased from 2007 to
2008 as the Company converted or repaid all outstanding debt during
2008.
  30
  Advertising
Revenue and Other
  Year Ended
                      December 31,
                    
                    Advertising Revenue
                      and Other
                    
                    
                    Change from
                      Prior Year
                    
                    
                    Percent Change
                      from Prior Year2008
                    
                    $
                    243,240
                    
                    
                    $
                    126,884
                    
                    
                    
                    109.0
                    %2007
                    
                    $
                    116,356
  Advertising revenue and other increased
from 2007 to 2008 as the Company increased its promotion and sale of banner and
other website advertising on its site.
  Net
Income (Loss)
  Year Ended
                      December 31,
                    
                    Net Income (Loss)
                    
                    
                    Change from
                      Prior Year
                    
                    
                    Percent Change
                      from Prior Year2008
                    
                    $
                    102,996
                    
                    
                    $
                    1,863,074
                    
                    
                    
                    105.9
                    %2007
                    
                    $
                    (1,760,078
                    )
  We achieved slight profitability in
2008 as compared to a net loss in 2007  due to increased sales,
improved operating efficiencies and a gain on debt conversion.  These
improvements were offset by increased merger related professional
fees.
  Liquidity
and Capital Resources
  Our operating cash outflows were
$1,058,014 for the year ended December 31, 2008 as compared to $814,484 for the
year ended December 31, 2007, a decrease of $243,530.  We experienced
a larger amount of net cash outflows in 2008 as we incurred greater operating
expenses, primarily related to merger related expenses.  Our net cash
outflows are significantly different than our net loss due to the substantial
amount of non-cash expenses, particularly debt-discount amortization and
interest paid in kind.
  We had net investing cash inflows
were $938,085 for the year ended December 31, 2008 as compared to net investing
cash outflows of $55,079 for the year ended December 31, 2007.  Our
2008 results are due to cash acquired during the merger.
  Financing cash inflows were $122,500
for the year ended December 31, 2008 as compared to $685,160 for the year ended
December 31, 2007.  Financing cash inflows in 2008 consisted of
proceeds from the issuance of debt and equity, offset by payments on outstanding
debt. Financing cash flows in 2007 consisted of additional proceeds from
issuance of long-term debt, partially offset by repayments of debt instruments
and repayments on our line of credit.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of
business.  The Company has a recent history of negative cash flow
generated from operations and an accumulated deficit at December 31,
2008.  These factors raise substantial doubt about the Company’s
ability to continue as a going concern.  The financial statements do
not include any adjustments that might result from this
uncertainty.
  The
Company intends to generate operating cash flows through the growth of its
existing business, the improvement of operating margins and by growth through
acquisitions. Although there can be no assurance, management believes that
such measures will provide it with enough liquidity to operate its current
business and continue as a going concern in the short term.
  31
  Off-balance
sheet arrangements
  The
Company did not have any off-balance sheet arrangements at December 31, 2008 and
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.  The adoption
of SFAS 141R did not have a material effect on our financial condition or
results of operations.
  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 did not 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 adoption of SFAS 159 did not have a material effect on our
consolidated 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 adoption of SFAS 157 did not have a
material effect on our consolidated financial condition or results of
operations.
  32
  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 our accumulated deficit.
 
 In
May 2008, FASB issued FSP APB 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 applies to
convertible debt securities that, upon conversion, may be settled by the issuer
fully or partially in cash.  FSP APB 14-1 specifies that
issuers of such instruments should separately account for the liability and
equity components in a manner that will reflect the entity's nonconvertible debt
borrowing rate when interest cost is recognized in subsequent
periods.  FSP APB 14-1 is effective January 1, 2009 and we
are currently evaluating the potential impact, if any, of the adoption of FSP
APB 14-1 on our consolidated financial statements.
 
 In
June 2008, FASB ratified EITF No. 07-05, “Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity's Own Stock” ("EITF
07-05").  EITF 07-05 provides that an entity should use a two-step
approach to evaluate whether an equity-linked financial instrument (or embedded
feature) is indexed to its own stock, including evaluating the instrument's
contingent exercise and settlement provisions.  EITF 07-05 is
effective January 1, 2009 and we are currently evaluating the impact of the
adoption of EITF 07-05 for certain financing warrants that contain exercise
price adjustment features.
  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.
 
 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 years ended December 31, 2007 and 2008. 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.
 
 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, 2007 and through September 12, 2008, neither
the Company nor anyone on behalf of the Company has consulted with Malone &
Bailey regarding either:
  33
  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
 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
conducted an evaluation under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
our principal accounting officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. The term "disclosure
controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended ("Exchange Act"), means controls
and other procedures of a company that are designed to ensure that information
required to be disclosed by the company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the SEC's rules and forms. Disclosure controls and
procedures also include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the company's management, including its principal executive and principal
financial officers, or persons performing similar functions, as appropriate, to
allow timely decisions regarding required disclosure. Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer concluded as of
December 31, 2008 that our disclosure controls and procedures were not
effective at the reasonable assurance level due to the untimely filings of our
quarterly financial statements and due to the material weaknesses discussed
immediately below.
 
 Our
management, including our principal executive officer and principal financial
officer, does not expect that our disclosure controls and procedures or 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.
  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, as amended.  Our management assessed the
effectiveness of our internal control over financial reporting as of December
31, 2008. 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.  We have identified the
following material weaknesses:
  34
  1.
              We
      did not maintain effective controls over the control
      environment.  Specifically, we did not adequately communicate to
      our employees our written code of business conduct nor did we establish a
      means for employees to anonymously report unethical behavior. 
      Further, the responsibilities of our Board of Directors and Audit
      Committee have not been formally documented nor did we maintain written
      accounting or information technology policies and procedures.  Since
      these entity level programs have a pervasive effect across the
      organization, management has determined that these circumstances
      constitute a material weakness.
 
 2.
              We
      did not maintain effective change controls and access controls over
      critical financial reporting applications.  This control deficiency
      could result in a material misstatement of significant accounts or
      disclosures that could result in a material misstatement of our interim or
      annual consolidated financial statements that would not be prevented or
      detected.
 
 3.
              We
      did not maintain effective controls over our period end reporting process.
      Specifically, our 2008 quarterly financial results were not filed in a
      timely manner.  Additionally, there is no comprehensive close
      checklist used and no secondary review of account reconciliations which
      support the results presented in our financial
  statements.
 
 4.
              The
      Company did not have adequate controls surrounding the accounting for the
      reverse merger transaction with Insignia.  This transaction was
      highly complex and resulted in several audit adjustments associated with
      the accounting for transaction related costs, the establishment of a
      liability for unissued shares and the accounting for debt converted in
      anticipation of the reverse merger.  While this weakness is specific
      to a non-recurring transaction, Company management is aware of the
      potential accounting ramifications of such transactions and will take
      steps to identify and address such ramifications when entering into
      significant future transactions, including performing additional financial
      due diligence and hiring third-parties to help analyze and assess these
      implications.
 
 Because
of these material weaknesses, management has concluded that the Company did not
maintain effective internal control over financial reporting as of December 31,
2008, based on the criteria established in "Internal Control-Integrated
Framework" issued by the COSO.
 
 This
Report does not include an attestation report of our independent registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our independent registered
public accounting firm pursuant to temporary rules of the SEC that permit us to
provide only management's report in this Report.
  Changes
in Internal Control over Financial Reporting
  In our
efforts to continuously improve our internal controls, management has taken
steps to enhance the following controls and procedures subsequent to the end of
fiscal 2008 as part of our remediation efforts:
 
 ·
              Management
      has prepared an updated Employee Handbook and Code of Conduct and has
      circulated these documents throughout the organization with signed
      acknowledgements obtained from
employees.
  ·
              Management
      has implemented a means for employees to anonymously report
      misconduct.
 
 ·
              Management
      has increased documentation around certain authorization and review
      controls.
 
 ·
              Management
      has reviewed and updated access rights granted to critical accounting
      applications to better align with staff
  responsibilities.
  35
  Item 9B — 
Other
Information
 
 Recent
Events
 
 On
February 25, 2009, the Company’s Board of Directors approved the grant of an
aggregate of 14,756,360 shares of restricted stock vesting as
follows:
 ·
              Twenty percent at the date of
      grant;
 ·
              Twenty percent on the first
      anniversary of the date of grant conditional upon the achievement of a
      closing price not less than $0.06 and daily volume of 50,000 shares for 25
      days of the 30 day period  prior to the anniversary
      date;
 ·
              Thirty percent on the second
      anniversary of the date of grant conditional upon the achievement of a
      closing price not less than $0.10 and daily volume of 50,000 shares for 25
      days of the 30 day period prior to the anniversary date;
      and
 ·
              Thirty percent on the third
      anniversary of the date of grant conditional upon the achievement of a
      closing price not less than $0.15 and daily volume of 50,000 shares for 25
      days of the 30 day period prior to the anniversary
      date.
 
 As the
Company did not have available authorized shares available for the grant of
restricted stock, the Company will issue the shares at a future date when shares
are available.
  36
  PART III
 
 Item 10 — 
Directors, Executive Officers
and Corporate Governance
  The
information required by this item is incorporated by reference from the
information under the captions “Resolutions 4 Through 8 Re-Appointment of
Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance” to
the Company’s definitive proxy statement for the Annual General Meeting of
shareholders to be held later this year.
  Item 11 — 
Executive
Compensation
 
 The
information required by this item is incorporated herein by reference from the
information under the captions “2008 Director Compensation” “2008 Summary
Compensation Table” and “Resolution 13:  Approve the 2009 Long Term
Incentive Plan” to the Company’s definitive proxy statement for the Annual
General Meeting of shareholders to be held later this year.
 
 Item 12 —
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
 
 The
information required by this item is incorporated herein by reference from the
information under the captions “Security Ownership of Certain Beneficial Owners
and Management” to the Company’s definitive proxy statement for the Annual
General Meeting of shareholders to be held later this year.
 
 Item 13 — 
Certain Relationships and
Related Transactions
 
 The
information required by this item is incorporated herein by reference from the
information under the captions “Certain Relationships and Related Transactions”
“Directors’ Other Interest” and “Director Independence” to the Company’s
definitive proxy statement for the Annual General Meeting of shareholders to be
held later this year.
  Item 14 — 
Principal Accountant Fees and
Services
 
 The
information required by this item is incorporated herein by reference from the
information under the caption “Resolutions 2 & 3 Appointment of Independent
Auditors” to the Company’s definitive proxy statement for the Annual General
Meeting of shareholders to be held later this year.
 
 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, 2008 included
in Part II, Item 8 of this Annual Report on Form 10-K are filed
as part of this Report.
  37
  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.
  38
  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 March 31, 2009.
 
 INSIGNIA
      SOLUTIONS PLCBy:
                          /s/  Peter
  EngelPeter
      EngelPresident,
      Chairman  and Chief Executive Officer(Principal
      Executive Officer)By:
                          /s/Michael MooreMichael
      Moore(Principal
      Financial
Officer)
  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/  
      PETER ENGEL
                              
                              Chairman
      and CEO
                              
                              March
      31, 2009Peter
      Engel/s/  
      CHRISTOPHER BAKER
                              
                              Director
                              
                              March
      31, 2009Christopher
      Baker/s/  
      VINCENTPINO
                              
                              Director
                              
                              March
      31, 2009Vincent
      Pino/s/  
      LARRY SCHAFRAN
                              
                              Director
                              
                              March
      31, 2009Larry
      Schafran/s/  
      FILIPE SOBRAL
                              
                              Director
                              
                              March
      31, 2009Filipe
      Sobral
  39




INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS





Document
                
                PageReport
      of Independent Registered Public Accounting Firm
                
                
                F-2Consolidated
      Balance Sheets
                
                
                F-3Consolidated
      Statements of Operations
                
                
                F-4Consolidated
      Statements of Changes in Shareholders’ Equity (Deficit)
                
                
                F-5Consolidated
      Statements of Cash Flows
                
                
                F-6Notes
      to Consolidated Financial Statements
                
                
                F-7


F-1




REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Board of Directors


Insignia
Solutions plc, dba DollarDays International, Inc.




We have
audited the accompanying consolidated balance sheets of Insignia
Solutions plc, dba DollarDays International, Inc.(the “Company”) as of
December 31, 2008 and 2007 and the related consolidated statements of
operations, changes in shareholders’ equity (deficit) and cash flows for the
years 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 audits.





We
conducted our audits 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 audits provide 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, 2008 and 2007 and the consolidated results of its
operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of
America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note 2
to the consolidated financial statements, the Company has suffered an
accumulated deficit which raises substantial doubt about its ability to continue
as a going concern.  Management’s plans regarding those matters are
described in Note 2.  The consolidated financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.





/s/ MALONE & BAILEY,
PC





www.malone-bailey.com


Houston,
Texas


March 30,
2009


F-2





INSIGNIA
SOLUTIONS PLC dba DOLLARDAYS INTERNATIONAL, INC.


CONSOLIDATED
BALANCE SHEETS





December 31,
                    
                    
                    December 31,2008
                    
                    
                    2007AssetsCash
      and cash equivalents
                    
                    $
                    20,836
                    
                    
                    $
                    18,265Short
      term invesments
                    
                    
                    2,118,933
                    
                    
                    
                    -Accounts
      receivable, net
                    
                    
                    75,457
                    
                    
                    
                    50,227Prepaid
      expenses and other current assets
                    
                    
                    78,723
                    
                    
                    
                    22,475Total
      current assets
                    
                    
                    2,293,949
                    
                    
                    
                    90,967Property
      and equipment, net
                    
                    
                    160,641
                    
                    
                    
                    127,287Deposits
      and other assets
                    
                    
                    33,899
                    
                    
                    
                    45,199Total
      assets
                    
                    $
                    2,488,489
                    
                    
                    $
                    263,453Liabilities
      and Shareholders' Equity (Deficit)Accounts
      payable
                    
                    $
                    1,176,170
                    
                    
                    $
                    1,230,674Accrued
      expenses
                    
                    
                    771,407
                    
                    
                    
                    96,432Accrued
      interest
                    
                    
                    -
                    
                    
                    
                    732,926Deferred
      revenue
                    
                    
                    15,617
                    
                    
                    
                    33,259Convertible
      debt and other notes payable (including $0 and $5,569,525 due to
      related parties), net of discount
                    
                    
                    -
                    
                    
                    
                    6,263,972Liability
      for unauthorized, unissued shares
                    
                    
                    134,252
                    
                    
                    
                    -Other
      liabilities
                    
                    
                    4,652
                    
                    
                    
                    698Total
      current liabilities
                    
                    
                    2,102,098
                    
                    
                    
                    8,357,961Shareholders'
      equity (deficit):Ordinary
      shares, 1 pence par value, 110,000,000 shares authorized,126,682,430
      shares to be issued and outstanding at December 31, 2008  and
      16,209,663 issued and outstanding at December 31, 2007 (see Note
      1)
                    
                    
                    2,503,878
                    
                    
                    
                    320,384Additional
      paid in capital
                    
                    
                    3,982,711
                    
                    
                    
                    (2,211,698
                    )Accumulated
      deficit
                    
                    
                    (6,100,198
                    )
                    
                    
                    (6,203,194
                    )Total
      shareholders' equity (deficit)
                    
                    
                    386,391
                    
                    
                    
                    (8,094,508
                    )Total
      liabilities and shareholders' equity (deficit)
                    
                    $
                    2,488,489
                    
                    
                    $
                    263,453





See
accompanying notes to consolidated financial statements.




F-3


INSIGNIA
SOLUTIONS PLC dba DOLLARDAYS INTERNATIONAL, INC.


CONSOLIDATED
STATEMENTS OF OPERATIONS





Year Ended December 31,2008
                                  
                                  
                                  2007Net
      revenues
                                  
                                  $
                                  12,057,076
                                  
                                  
                                  $
                                  10,887,446Cost
      of goods sold
                                  
                                  
                                  8,346,214
                                  
                                  
                                  
                                  7,749,563Gross
      profit
                                  
                                  
                                  3,710,862
                                  
                                  
                                  
                                  3,137,883Operating
      expenses:Sales
      and marketing
                                  
                                  
                                  2,380,604
                                  
                                  
                                  
                                  1,847,024General
      and administrative
                                  
                                  
                                  2,614,814
                                  
                                  
                                  
                                  2,194,628Total
      operating expenses
                                  
                                  
                                  4,995,418
                                  
                                  
                                  
                                  4,041,652Operating
      loss
                                  
                                  
                                  (1,284,556
                                  )
                                  
                                  
                                  (903,769
                                  )Other
      income (expense):Interest
      expense
                                  
                                  
                                  (176,874
                                  )
                                  
                                  
                                  (972,665
                                  )Gain
      on debt conversion
                                  
                                  
                                  1,113,849
                                  
                                  
                                  
                                  -Mark
      to market gains (losses)on liability for unauthorized
      shares
                                  
                                  
                                  207,337
                                  
                                  
                                  
                                  -Advertising
      revenue and other
                                  
                                  
                                  243,240
                                  
                                  
                                  
                                  116,356Total
      other income (expense)
                                  
                                  
                                  1,387,552
                                  
                                  
                                  
                                  (856,309
                                  )Net
      income (loss)
                                  
                                  $
                                  102,996
                                  
                                  
                                  $
                                  (1,760,078
                                  )Net
      income (loss) per share:Basic
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (0.11
                                  )Diluted
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (0.11
                                  )Weighted
      average common shares outstandingBasic
                                  
                                  
                                  73,860,752
                                  
                                  
                                  
                                  16,209,663Diluted
                                  
                                  
                                  76,835,847
                                  
                                  
                                  
                                  16,209,663





See
accompanying notes to consolidated financial statements.




F-4


INSIGNIA
SOLUTIONS PLC dba DOLLARDAYS INTERNATIONAL, INC.


CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)


AdditionalOrdinary Shares
                            
                            
                            Paid in
                            
                            
                            AccumulatedShares
                            
                            
                            Amount
                            
                            
                            Capital
                            
                            
                            Deficit
                            
                            
                            TotalBalance
      at December 31, 2006
                            
                            
                            16,209,663
                            
                            
                            $
                            320,384
                            
                            
                            
                            (2,462,858
                            )
                            
                            
                            (4,443,117
                            )
                            
                            $
                            (6,585,590
                            )Net
      loss
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (1,760,078
                            )
                            
                            
                            (1,760,078
                            )Warrants issued
      for interest expense
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            136,452
                            
                            
                            
                            -
                            
                            
                            
                            136,452Amortization
      of stock based compensation awards
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            60,448
                            
                            
                            
                            -
                            
                            
                            
                            60,448Beneficial
      conversion feature and options
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            -issued
      with convertible debt
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            54,260
                            
                            
                            
                            -
                            
                            
                            
                            54,260Balance
      at December 31, 2007
                            
                            
                            16,209,663
                            
                            
                            $
                            320,384
                            
                            
                            $
                            (2,211,698
                            )
                            
                            $
                            (6,203,194
                            )
                            
                            $
                            (8,094,508
                            )Net
      income
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            102,996
                            
                            
                            
                            102,996Shares
      issued in connection with debt conversion
                            
                            
                            51,855,761
                            
                            
                            
                            1,024,929
                            
                            
                            
                            4,117,268
                            
                            
                            
                            -
                            
                            
                            
                            5,142,197Recapitalization
      from reverse merger - shares retained by Insignia's
      shareholders
                            
                            
                            50,934,080
                            
                            
                            
                            1,006,712
                            
                            
                            
                            1,513,078
                            
                            
                            
                            -
                            
                            
                            
                            2,519,790Shares
      issued for cash, net of offering costs of $80,000
                            
                            
                            4,225,609
                            
                            
                            
                            83,519
                            
                            
                            
                            386,481
                            
                            
                            
                            -
                            
                            
                            
                            470,000Shares
      issued as satisfaction of shareholder advance
                            
                            
                            3,457,317
                            
                            
                            
                            68,334
                            
                            
                            
                            381,666
                            
                            
                            
                            -
                            
                            
                            
                            450,000Reclassification
      for liability associated with
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            -unauthorized,
      unissued shares
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (341,589
                            )
                            
                            
                            -
                            
                            
                            
                            (341,589
                            )Amortization
      of stock based compensation awards
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            137,505
                            
                            
                            
                            -
                            
                            
                            
                            137,505Balance
      at December 31, 2008 (Note 1)
                            
                            
                            126,682,430
                            
                            
                            $
                            2,503,878
                            
                            
                            $
                            3,982,711
                            
                            
                            $
                            (6,100,198
                            )
                            
                            $
                            386,391





See
accompanying notes to consolidated financial statements.




F-5


INSIGNIA
SOLUTIONS PLC dba DOLLARDAYS INTERNATIONAL, INC.


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Year Ended December 31,2008
                                        
                                        
                                        2007Cash
      flows from operating activities:Net
      income (loss)
                                        
                                        $
                                        102,996
                                        
                                        
                                        $
                                        (1,760,078
                                        )Adjustments
      to reconcile net income (loss )tonet
      cash used in operating activities:Interest
      paid-in-kind
                                        
                                        
                                        -
                                        
                                        
                                        
                                        140,974Gain
      on debt conversion
                                        
                                        
                                        (1,113,849
                                        )
                                        
                                        
                                        -Mark
      to market gains /losses on liability forunauthorized
      shares
                                        
                                        
                                        (207,337
                                        )
                                        
                                        
                                        -Depreciation
      and amortization
                                        
                                        
                                        43,320
                                        
                                        
                                        
                                        51,584Amortization
      of debt discount
                                        
                                        
                                        12,479
                                        
                                        
                                        
                                        41,781Bad
      debt expense
                                        
                                        
                                        (8,736
                                        )
                                        
                                        
                                        64,437Loss
      on disposal of asset
                                        
                                        
                                        -
                                        
                                        
                                        
                                        68,958Stock-based
      compensation
                                        
                                        
                                        137,505
                                        
                                        
                                        
                                        60,448Warrants
      issued for interest expense
                                        
                                        
                                        -
                                        
                                        
                                        
                                        136,452Changes
      in assets and liabilities:Accounts
      receivable
                                        
                                        
                                        (16,494
                                        )
                                        
                                        
                                        6,038Inventory
                                        
                                        
                                        -
                                        
                                        
                                        
                                        124,630Prepaid
      and other current assets
                                        
                                        
                                        (39,599
                                        )
                                        
                                        
                                        39,220Deposits
      and other assets
                                        
                                        
                                        56,706
                                        
                                        
                                        
                                        -Accounts
      payable
                                        
                                        
                                        (128,544
                                        )
                                        
                                        
                                        (307,913
                                        )Accrued
      expenses
                                        
                                        
                                        73,058
                                        
                                        
                                        
                                        (5,524
                                        )Accrued
      interest
                                        
                                        
                                        44,169
                                        
                                        
                                        
                                        526,231Deferred
      revenue
                                        
                                        
                                        (17,642
                                        )
                                        
                                        
                                        20,694Other
      liabilities
                                        
                                        
                                        3,954
                                        
                                        
                                        
                                        (22,416
                                        )Net
      cash used in operating activities
                                        
                                        
                                        (1,058,014
                                        )
                                        
                                        
                                        (814,484
                                        )Cash
      flows from investing activities:Cash
      acquired in connection with reverse merger,net
      of acquisition costs
                                        
                                        
                                        3,133,692
                                        
                                        
                                        
                                        -Purchase
      of short term investments
                                        
                                        
                                        (2,118,933
                                        )
                                        
                                        
                                        -Purchases
      of equipment
                                        
                                        
                                        (76,674
                                        )
                                        
                                        
                                        (55,079
                                        )Net
      cash provided by (used in) investing activities
                                        
                                        
                                        938,085
                                        
                                        
                                        
                                        (55,079
                                        )Cash
      flows from financing activities:Proceeds
      from equity issuance, net of offering costs
                                        
                                        
                                        470,000
                                        
                                        
                                        
                                        -Advances
      on line of credit
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (62,344
                                        )Proceeds
      from issuance of long-term debt
                                        
                                        
                                        517,500
                                        
                                        
                                        
                                        1,047,504Repayments
      of long-term debt
                                        
                                        
                                        (865,000
                                        )
                                        
                                        
                                        (300,000
                                        )Net
      cash provided by financing activities
                                        
                                        
                                        122,500
                                        
                                        
                                        
                                        685,160Change
      in cash and cash equivalents
                                        
                                        
                                        2,571
                                        
                                        
                                        
                                        (184,403
                                        )Cash
      and cash equivalents, beginning of period
                                        
                                        
                                        18,265
                                        
                                        
                                        
                                        202,668Cash
      and cash equivalents, end of period
                                        
                                        $
                                        20,836
                                        
                                        
                                        $
                                        18,265Supplemental
      schedule of non-cash financing and investing activities cash flow
      disclosures:Conversion
      of convertible debt and othernotes
      payable to equity
                                        
                                        $
                                        6,256,046
                                        
                                        
                                        $
                                        54,260Conversion
      of shareholder advance to equity
                                        
                                        $
                                        450,000
                                        
                                        
                                        $
                                        -Net
      noncash liabilities assumed in reverse merger
                                        
                                        $
                                        613,902
                                        
                                        
                                        $
                                        -Cash
      paid for interest
                                        
                                        $
                                        120,250
                                        
                                        
                                        $
                                        127,227





See
accompanying notes to consolidated financial statements.




F-6


INSIGNIA
SOLUTIONS PLC dba DOLLARDAYS INTERNATIONAL, INC.


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS




NOTE
1: BACKGROUND





Insignia
Solutions plc (“Insignia”), 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 Insignia sold substantially all its assets to Smith Micro Software,
Inc.  From  April 2007 until June 23, 2008, Insignia did not
generate any revenues from operations and operated as a shell
company.





On June
23, 2008, DollarDays International LLC (“DollarDays”) entered into a series of
transactions to effect a reverse merger with Insignia (the
“Merger”).  These transactions consisted of the
following:





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





·
            DDI
      Inc. merged with Jeode, Inc., a Delaware corporation and a wholly-owned
      subsidiary of Insignia, whereby DDI Inc. was the surviving corporation and
      a wholly-owned subsidiary of Insignia and Insignia agreed to issue
      73,333,333 American Depository Receipts (“ADSs”), which are common stock
      equivalents of Insignia in exchange for all of the outstanding common
      stock of DDI Inc.





·
              The
      combined entity was to issue an aggregate of 7,682,926 ADSs to a new
      investor in exchange for cash of$550,000
      and the conversion of note payable of
$450,000.





Under the
agreement and plan of merger, Insignia shareholders maintained approximately
37.1% ownership of the combined company, DDI Inc. shareholders obtained 56.7%,
and a new investor obtained 6.2% of the combined company stock.  The
Merger is accounted for as a reverse merger whereby DDI Inc. is the accounting
acquirer resulting in a recapitalization of DDI Inc.
equity.  Accordingly, the Company has retroactively restated all
equity and per share amounts for periods prior to the Merger to reflect the
equivalent amounts based on the exchange ratio set forth in the
Merger.




DDI Inc.,
through its website, www.DollarDays.com, is an Internet based wholesaler of
general merchandise to small independent resellers.  Orders are placed
by customers through the website where, upon successful payment, the merchandise
is shipped directly from the vendors’ warehouses.





The
consolidated financial statements set forth herein include the accounts and
results of DDI Inc. and include the results of Insignia and its subsidiaries
beginning with the date of acquisition (collectively the
“Company”).  Because DDI Inc. is the accounting acquirer, all
historical financial information for periods prior to June 23, 2008 are those of
DDI Inc. and do not reflect the activities of Insignia.  All
intercompany amounts are eliminated in consolidation.





The
Company has not issued all of the consideration required to be issued in
connection with the Merger.  However, the accompanying financial
statements reflect as shares outstanding all amounts that are to be issued under
the terms of the Merger and the Company is presenting a liability for the shares
in excess of the authorized shares.  The Company believes this
presentation provides the most meaningful information to investors with respect
to the Company’s financial position, capitalization and per share financial
information.





Certain
reclassifications have been made to prior period reported amounts to conform to
current year presentation.


F-7


NOTE 2: GOING
CONCERN





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern, which contemplates the realization
of assets and the satisfaction of liabilities in the normal course of
business.  The Company has a recent history of negative cash flow
generated from operations and an accumulated deficit at December 31,
2008.  These factors raise substantial doubt about the Company’s
ability to continue as a going concern.  The consolidated financial
statements do not include any adjustments that might result from this
uncertainty.




The
Company intends to generate operating cash flows through the growth of its
existing business, the improvement of operating margins and by growth through
acquisitions. Although there can be no assurance, management believes that
such measures will provide it with enough liquidity to operate its current
business and continue as a going concern in the short term.





NOTE
3: 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





The
Company considers all highly liquid investments with maturities from date of
purchase of three months or less to be cash equivalents. Cash and cash
equivalents consist of cash on deposit with domestic banks and, at times, may
exceed federally insured limits.





Short
Term Investments





Short
term investments consist principally of certificates of deposits (“CDs”) with
original maturities more than three months.  The Company invests in
CDs issued by domestic banks and, at times, may exceed federally insured
limits.





Accounts
Receivable





Accounts
receivable represent amounts earned but not collected in connection with the the
Company sales. Trade receivables are carried at their estimated collectible
amounts and generally consist of amounts due from credit card
transactions.





The
Company follows the allowance method of recognizing uncollectible accounts
receivable. The allowance method recognizes bad debt expense as a percentage of
accounts receivable based on a review of individual accounts outstanding, and
prior history of uncollected accounts receivable. The allowance for doubtful
accounts at December 31, 2008 and 2007 was $0 as the Company expected to collect
substantially all amounts due.  Bad debt expense for the years ended
December 31, 2008 and 2007 was $0 and $64,437, respectively.





The
Company follows the allowance method of recognizing sales returns. The allowance
method recognizes sales returns as a percentage of sales based on a prior
history of sales returns. The allowance for sales returns at December 31, 2008
and 2007 was $17,601 and $13,206, respectively.  Sales returns expense
for the years ended December 31, 2008 and 2007 was $66,832 and $105,123,
respectively.


F-8


Inventory





Substantially
all of the Company’s sales orders are shipped directly from the Company’s
vendors and the Company never takes title to the
inventory.  Accordingly, such inventory is not reflected on the
financial statements at December 31, 2008 and 2007, respectively.





Property
and Equipment





Property
and equipment are stated at cost, net of accumulated depreciation and
amortization. Depreciation and amortization is computed using the straight-line
method over the estimated useful lives of the respective assets, generally three
to five years. Leasehold improvements and assets recorded under capital leases
are amortized on a straight-line basis over the shorter of the assets' useful
lives or lease terms. Depreciation and amortization expense was $43,320 and
$51,584 for the years ended December 31, 2008 and 2007,
respectively.





The
Company capitalizes website development costs in accordance with the provisions
of Emerging Issues Task Force (EITF) 00-02.  Generally, the Company
capitalizes costs incurred to develop its website applications and
infrastructure.  Capitalized website development costs totaled $52,987
and $27,605 for the years ended December 31, 2008 and 2007,
respectively.





Long-lived
Assets





In
accordance with Statement of Financial Accounting Standards (SFAS) No.
144  "Accounting  for the
Impairment or Disposal
of  Long-Lived  Assets"  which  requires
that  long-lived assets to be held and used be reviewed for impairment
whenever events or changes
in  circumstances  indicate  that
the  carrying  amount  of an asset  may
not be recoverable.





The
Company evaluates its long-lived assets for impairment annually whenever changes
in
circumstances  indicate  that  the  carrying  amount  of
the  asset  may  not be
recoverable.  Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future undiscounted cash
flows expected to be generated by the asset.  If assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amounts exceed the fair values of the
assets.  Assets to be disposed of are reported at the lower of
carrying values or fair values, less costs of disposal.  The Company
recognized no impairment loss at December 31, 2008 or 2007.





Convertible
Debt





The
Company has issued convertible instruments, which contained embedded conversion
features. The Company has evaluated the application of SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities,” and EITF Issue 00-19, “Accounting for Derivative Financial
Instruments Indexed to and Potentially Settled in a Company’s Own Stock,”
to its embedded conversion feature within its convertible debt
instruments.  The Company has determined that the conversion feature
did not meet the definition of a liability and therefore did not bifurcate the
conversion feature and account for it as a separate derivative
liability.





The
Company evaluated the conversion feature under EITF 98-5 and EITF 00-27 for a
beneficial conversion feature at inception.  The effective conversion
price was then computed based on the allocation of the proceeds to the
convertible debt to determine if a beneficial conversion feature
exists.  The effective conversion price was compared to the market
price on the date of the original note and was deemed to be less than the market
value of the Company’s stock at the inception of the note.  A
beneficial conversion feature was recognized and gave rise to a debt discount
that is amortized over the stated maturity of the convertible debt instrument or
the earliest potential conversion date.


F-9





Deferred
Rent





The
Company is a lessee under an operating lease with escalating lease payments (see
Note 7).  In accordance with the provisions of SFAS No. 13, “Accounting for Leases”, rent
expense is recognized on a straight line basis over the life of
lease.  Deferred rent was $4,652 and $698 at December 31, 2008 and
2007, respectively, and is included in other current liabilities in the
accompanying consolidated balance sheets.





Revenue
Recognition





Revenue
is recognized when the four criteria for revenue recognition are met: (1)
persuasive evidence of an arrangement exists; (2) shipment ore delivery has
occurred; (3) the price is fixed or determinable and (4) collectability is
reasonably assured.    Cash payments received in advance of
product shipment are deferred as reflected as a deferred revenue liability in
the accompanying balance sheet.  Allowances for sales returns and
discounts are recorded as a component of net sales in the period the allowances
are recognized.





All
amounts billed to customers for shipping and handling costs are included in net
revenues in the accompanying statement of operations.  Actual shipping
costs incurred are reflected as a component of cost of sales in the accompanying
consolidated statements of operations.  Total shipping expense
included in cost of sales was $1,661,517 and $1,612,098 for the years ended
December 31, 2008 and 2007, respectively.





The
Company has evaluated the provisions of EITF 99-19, “Reporting Revenue Gross as a
Principal or Net as an Agent,” noting that the task force determined that
it is a matter of judgment and a preponderance of the evidence as to whether a
company satisfies the gross versus net indicators.  As a result of its
analysis, the Company has determined that it qualifies for “gross” revenue
recognition





Advertising





The
Company’s advertising activities consist of telemarketing, search engine
optimization, Internet based advertising and other advertising
activities.  The Company expenses advertising costs as
incurred.  Advertising expense was $833,696 and $652,824 for the years
ended December 31, 2008 and 2007, respectively.





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.





Prior to
the Merger, the Company was an LLC, a pass-through entity for income tax
purposes.  In connection with the Merger, the Company formed a wholly
owned Delaware corporation and contributed all its assets and liabilities in
exchange for 100% of the stock of DDI Inc.   No provision for
income taxes have been reflected on the books of the Company prior to the Merger
based on the pass-through nature of the Company.





Fair
Value of Financial Instruments





The
Company’ financial instruments include cash and cash equivalents, short term
investments, short term receivables and payables and short-term
debt.  The fair value of the short-term instruments approximates fair
value due to the short-term maturities of such instruments.  Fair
value for the convertible debt instruments and other short-term debt instruments
cannot be reasonably estimated as no market exists for such instruments and
competitive market rates for similar instruments cannot be determined with any
reasonable assurance.


F-10


As the
total number of ordinary shares to be issued, 126,682,430, exceeds the currently
authorized number of ordinary shares, the Company recognized a liability of
$134,252 at December 31, 2008 for the fair value of unauthorized, unissued
shares based on the quoted market prices available at the date of the legal
commitment.  The fair value of the liability for unauthorized,
unissued shares has been recorded at market value as of December 31, 2008, and a
corresponding gain of $207,337 has been recognized due to changes in the fair
value of the liability during the year.





Stock-
Based Compensation




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 upon
the adoption of SFAS 123R.





The
Company uses the Black-Scholes option pricing model to determine the fair value
of stock options and employee stock purchase plan shares.  The
assumption for the expected term was determined using the simplified method
outlined in Staff Accounting Bulletin No. 110.  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 a representative group of peer companies’ stock is used as the
basis for the volatility assumption.





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 short-term
investments. The Company invests its excess cash primarily in certificates of
deposits with federally insured quality financial
institutions.





Recently
Issued 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.  The adoption
of SFAS 141R did not have a material effect on its financial condition or
results of operations.




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 did not have a material impact on its consolidated financial
statements.


F-11




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 adoption of SFAS 157 did not have a
material effect on its financial condition or results of operations.




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
May 2008, FASB issued FSP APB 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 applies to
convertible debt securities that, upon conversion, may be settled by the issuer
fully or partially in cash.  FSP APB 14-1 specifies that
issuers of such instruments should separately account for the liability and
equity components in a manner that will reflect the entity's nonconvertible debt
borrowing rate when interest cost is recognized in subsequent
periods.  FSP APB 14-1 is effective January 1, 2009 and the
Company is currently evaluating the potential impact, if any, of the adoption of
FSP APB 14-1 on its consolidated financial statements.





In
June 2008, FASB ratified EITF No. 07-05, “Determining Whether an Instrument
(or an Embedded Feature) Is Indexed to an Entity's Own Stock” ("EITF
07-05").  EITF 07-05 provides that an entity should use a two-step
approach to evaluate whether an equity-linked financial instrument (or embedded
feature) is indexed to its own stock, including evaluating the instrument's
contingent exercise and settlement provisions.  EITF 07-05 is
effective January 1, 2009 and the Company is currently evaluating the impact of
the adoption of EITF 07-05 for certain financing warrants that contain exercise
price adjustment features.





NOTE
4: EARNINGS (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
table includes the stock options and warrants that are dilutive for each of the
years presented and are therefore included in the Company’s diluted earnings per
share calculation.


F-12





Year
      Ended December 31,2008
                      
                      
                      2007Net
      income (loss)
                      
                      $
                      102,996
                      
                      
                      $
                      (1,760,078
                      )Basic
      weighted average common shares outstanding
                      
                      
                      73,860,752
                      
                      
                      
                      16,209,663Add
      incremental shares for:Stock
      options
                      
                      
                      -
                      
                      
                      
                      -Warrants
                      
                      
                      2,975,095
                      
                      
                      
                      -Diluted
      weighted average common shares outstanding
                      
                      
                      76,835,847
                      
                      
                      
                      16,209,663Net
      income per share:Basic
                      
                      $
                      -
                      
                      
                      $
                      (0.11
                      )Diluted
                      
                      $
                      -
                      
                      
                      $
                      (0.11
                      )





NOTE
5:  PROPERTY AND EQUIPMENT





The following table sets forth
information with respect to property and equipment at December 31, 2008 and
2007:





2008
                          
                          
                          2007Software
      and website development costs
                          
                          $
                          102,785
                          
                          
                          $
                          49,798Computer
      equipment
                          
                          
                          109,147
                          
                          
                          
                          85,460Leasehold
      improvements
                          
                          
                          33,844
                          
                          
                          
                          33,844245,776
                          
                          
                          
                          169,102Less:
      accumulated depreciationand
amortization
                          
                          
                          (85,135
                          )
                          
                          
                          (41,815
                          )$
                          160,641
                          
                          
                          $
                          127,287





During
the year ended December 31, 2007, the Company wrote off $68,958 of equipment in
connection with an office relocation.





Depreciation
and amortization expense for the years ended December 31, 2008 and 2007 was
$43,320 and $51,584, respectively.





F-13




NOTE
6: NOTES PAYABLE





Notes
payable at December 31, 2008 and 2007, are comprised of the
following:





December
      31,
                    
                    
                    December
      31,2008
                    
                    
                    2007Convertible
      notes payable to related parties, interest rate at 12%, due on demand,
      convertible at various rates into an aggregate of 1864.88 units at
      December 31, 2007
                    
                    $
                    -
                    
                    
                    $
                    4,546,250Convertible
      notes payable, interest rate at 12%, due on demand, convertible at various
      rates into an aggregate of 71.24 units at December 31,
2007
                    
                    
                    -
                    
                    
                    
                    165,000Notes
      payable to related parties, interest rate at 12%, due on
      demand
                    
                    
                    -
                    
                    
                    
                    446,255Convertible
      notes payable, interest rate at 12%, due on demand
                    
                    
                    -
                    
                    
                    
                    500,000Accrued
      interest converted to notes payable (paid in kind), interest rate at 12%,
      due on demand
                    
                    
                    -
                    
                    
                    
                    618,946-
                    
                    
                    
                    6,276,451Less:
      unamortized debt discount
                    
                    
                    -
                    
                    
                    
                    (12,479
                    )$
                    -
                    
                    
                    $
                    6,263,972




The
Company had several convertible notes outstanding, a few of which were issued
together with detachable options.  The allocation of a portion of the
proceeds to the conversion features and the options gave rise to the recognition
of a debt discount on these notes.  The Company allocated $1,990,193
of proceeds to the options and beneficial conversion feature based on the
guidance set forth in Emerging Issues Task Force (EITF) Nos 98-5 and
00-27.  These debt discounts are recognized on a straight-line basis
over the respective life of each of note.  During the years ended
December 31, 2008 and 2007, The Company recognized an aggregate of $12,479 and
$41,781, respectively, of additional interest expense associated with the
amortization of debt discount.





During
the year ended December 31, 2008, the Company engaged in the following
debt-related activities:




·
            Converted
      $6,256,046 of convertible and other notes payable into 51,855,761 shares
      of the Company;


·
            Recognized
      a gain of $1,113,849 related to the debt conversion associated with
      non-related party debt;


·
            Issued
      3,457,317 shares of the Company in satisfaction of $450,000 shareholder
      advance;


·
            Received
      $67,500 from new debt issuance; and


·
            Repaid
      $865,000 of notes payable.





During
the year ended December 31, 2007, the Company engaged in the following
debt-related activities:





·
            Repaid
      two note payable totaling $300,000;


·
            Received
      proceeds of $1,047,504 from the issuance of $551,250 of convertible notes
      payable to related parties, $246,254 from the issuance of notes payable to
      related parties and $250,000 from the issuance of another note
      payable.  All notes bear interest at a rate of 12
      percent.  At December 31, 2007, all such notes were due on
      demand except for $336,250 which is due on demand after February 28,
      2008.  The convertible notes are convertible into an aggregate
      of approximately 57,000,000 shares;


·
            Converted
      $140,974 of accrued interest into notes payable (interest paid in kind);
      and


·
            Recognized
      an additional $136,452 of interest expense associated with the granting of
      warrants to acquire an equity interest in The Company to note holders in
      exchange for an extension of amounts
owed.




F-14




Gain on Debt
Conversion





Prior to
the Merger, the Company was unable to repay its existing debt obligations, many
of its notes were past due, and management was unable to obtain additional
financing.  Consequently, management entered into an agreement with
the debt holders to convert all existing debt and accrued interest into
equity.





In
accordance with the provisions of SFAS No 15, “Accounting by Debtors and Creditors
for Troubled Debt Restructurings”, the Company has recognized a gain of
$1,113,849 ($0.01 per share on both a basic and diluted basis) on such
restructuring transactions with non-related parties based on the difference
between the carrying value of the debt of $1,298,198 and the fair value of the
equity securities issued of $184,349.  No gain or loss was recognized
on restructuring transactions with related parties.





NOTE
7:  LEASES





Operating
Leases





The
Company is a lessee to office space in Scottsdale, Arizona under an operating
lease.  Rent expense under these leases totaled $123,280 and $130,085
for the years ended December 31, 2008 and 2007, respectively.





In 2006,
Insignia entered into a sub-lease agreement for its UK office in High Wycombe,
United Kingdom with Norwest Holt Limited.  The original lease was
signed in 1998 for a term of 15 years at an annual rent of 105,000 British
Pounds, subject to periodic price adjustments.





In 2008,
the Company entered into an operating lease of its phone
systems.  Lease expense for December 31, 2008 was
$14,199.





Future
minimum annual lease payments under the operating lease agreements are as
follows for each of the years ended December 31:





2009
                      
                      $
                      292,2992010
                      
                      
                      295,0912011
                      
                      
                      275,5522012
                      
                      
                      166,2282013
                      
                      
                      88,684Thereafter
                      
                      
                      -Total
                      
                      $
                      1,117,854





NOTE
8:  STOCK OPTIONS





Prior to
the Merger, Insignia had four stock option plans which provided for the issuance
of stock options to employees and outside consultants of Insignia to purchase
ordinary shares.  There have been no grants in these plans since
2006.  In connection with the reverse merger, the Company expects to
no longer issue options under these plans. Options that were outstanding by the
Insignia shell company prior to the Merger are reflected as grants during the
year ended December 31, 2008, the year in which the Merger
occurred.





The fair
value of stock options was estimated at grant date using the Black-Scholes
option pricing model with the following assumptions:




F-15




Year
      Ended December 31,2008
                          
                          
                          2007Volatility
                          
                          
                          -
                          
                          
                          57%
      - 64%Expected
      life (years)
                          
                          
                          -
                          
                          
                          2.5Risk-free
      rate of return
                          
                          
                          -
                          
                          
                          4.4%Forfeiture
      rate
                          
                          
                          -
                          
                          
                          0%




The
following sets forth a summary of stock options:





Number
      of
                        Units
                      
                      
                      Weighted-
                        Average
                        Exercise
      Price
                      
                      
                      Weighted-
                        Average
                        Remaining
                        Contractual
      Term
                        (in
      years)Outstanding
      at December 31, 2006
                      
                      
                      3,614,646
                      
                      
                      $
                      0.27Grants
                      
                      
                      3,745,887
                      
                      
                      
                      0.17Outstanding
      at December 31, 2007
                      
                      
                      7,360,533
                      
                      
                      $
                      0.22Grants
                      
                      
                      2,788,376
                      
                      
                      
                      0.90Forfeitures
                      
                      
                      (4,039,194
                      )
                      
                      
                      0.67Exercises
                      
                      
                      -
                      
                      
                      
                      -Outstanding
      at December 31, 2008
                      
                      
                      6,109,715
                      
                      
                      $
                      0.23
                      
                      
                      
                      2.8Exerciseable
      at December 31, 2008
                      
                      
                      6,109,715
                      
                      
                      $
                      0.23
                      
                      
                      
                      2.8





Due to
the effects of the recapitalization, the above tables reflect the historical
options of the Company.  Options that were outstanding at December 31,
2007 (totaling 7,360,533) represent options to be issued as replacement options
for outstanding options in the Company.  Pursuant to the terms of the
Merger Agreement , Insignia intends to propose to stockholders for their
approval and adoption, a new 2009 Long-Term Incentive Stock Option Plan at its
next Annual General Meeting so that Insignia can fulfill its obligations to
issue the 7,360,533 options pursuant to the Merger Agreement, as well as have a
sufficient number of additional options available for future issuances. There
were no original grants of options during 2008.  The Company
recognizes expense based on the grant date fair value of such awards, and
records such expense a straight-line basis over the requisite service
period.  Stock-based compensation was $137,505 and $60,448 for the
years ended December 31, 2008 and 2007, respectively, and is included as general
and administrative expenses in the accompanying statements of operations for the
years then ended. The weighted average grant date fair value of awards granted
during the year ended December 31, 2007 was $0.05.  At December 31,
2008 and 2007, the Company has an aggregate of $0 and $22,060, respectively of
unrecognized stock compensation expense (net of estimated forfeitures) that will
be recognized over their respective vesting periods.





The
options have no intrinsic value as of December 31, 2008.





NOTE
9:  INCOME TAXES





Prior to
the Merger, The Company was an LLC, a pass-through entity for income tax
purposes.  In connection with the Merger, The Company formed a wholly
owned Delaware corporation and contributed all its assets and liabilities in
exchange for 100% of the stock of DDI Inc.   No provision for
income taxes have been reflected on the books of the Company prior to the Merger
based on the pass-through nature of the Company.





F-16




Income
taxes are summarized as follows for the year ended December 31,
2008:





2008Current
      benefit
                    
                    $
                    (273,289
                    )Deferred
      provision
                    
                    
                    273,289Net
      income tax provision
                    
                    $
                    -





A
reconciliation of the differences between the effective and statutory income tax
rates are as follows for the year ended December 31, 2008





2008Amount
                    
                    
                    PercentFederal
      statutory rates
                    
                    $
                    (129,644
                    )
                    
                    
                    49
                    %State
      income taxes
                    
                    
                    (26,691
                    )
                    
                    
                    10
                    %Valuation
      allowance
                    
                    
                    406,824
                    
                    
                    
                    (153
                    )%Permanent
      differences
                    
                    
                    (250,488
                    )
                    
                    
                    94
                    %Effective
      rate
                    
                    $
                    -
                    
                    
                    
                    0
                    %





Components
of deferred tax assets (liabilities) are as follows at December 31,
2008:





Deferred
      tax assets (liabilities) - current:Stock-based
      compensation
                        
                        $
                        49,945Book-tax
      differences in operating assets
                        
                        
                        83,590Total
      current deferred tax assets (liabilities)
                        
                        
                        133,535Deferred
      tax assets (liabilities) - long-term:Net
      operating loss carryforwards
                        
                        
                        273,289Total
      net deferred tax assets
                        
                        
                        406,824Valuation
      allowance
                        
                        
                        (406,824
                        )Net
      deferred tax assets
                        
                        $
                        -





Net
operating loss carryforwards of $668,558 expire beginning in 2029.





NOTE
10:  COMMITMENTS AND CONTINGENCIES





From time
to time, the Company is party to certain legal proceedings incidental to the
conduct of its business. Management believes that the outcome of pending legal
proceedings will not, either individually or in the aggregate, have a material
adverse effect on its business, financial position, results of operations, cash
flows or liquidity.





NOTE
11:  RELATED PARTY TRANSACTIONS





During
the years ended December 31, 2008 and 2007, the Company paid an aggregate of $0
and $66,331, respectively, to entities controlled by controlling
members  in exchange for managerial services.





F-17




NOTE
12:  WARRANTS





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





Number of
                      Units
                    
                    
                    Weighted-
                      Average
                      ExercisePrice
                    
                    
                    Weighted-
                      Average
                      Remaining
                      ContractualTerm
                      (in years)Outstanding
      at December 31, 2007
                    
                    
                    -
                    
                    
                    $
                    -Grants
                    
                    
                    17,074,499
                    
                    
                    
                    0.15Forfeitures
                    
                    
                    -
                    
                    
                    
                    -Exercises
                    
                    
                    -
                    
                    
                    
                    -Outstanding
      at December 31, 2008
                    
                    
                    17,074,499
                    
                    
                    $
                    0.15
                    
                    
                    
                    3.7Exerciseable
      at December 31, 2008
                    
                    
                    17,074,499
                    
                    
                    $
                    0.15
                    
                    
                    
                    3.7





The
Company had the following warrant activity for the year ended December 31,
2008:





·
            Warrants
      to purchase 4,348,211 shares that represent existing pre-Merger
      outstanding warrants that are reflected as grants as of the date of
      Merger.  As these represent existing outstanding awards for
      which the requisite service period has already been rendered, no
      compensation expense has been recorded during the nine-months ended
      December 31, 2008.


·
            Warrants
      to purchase 8,551,450 shares at an exercise price of $0.01 per share that
      were granted to the Company’s Chairman in connection with Merger related
      service.  All warrants were fully vested at the date of
      grant.  The Company recorded stock based compensation expense of
      $115,445 during the year ended December 31, 2008 associated with this
      award based on the following assumptions used in the Black Scholes
      model:


O
            Stock
      price: $0.02


O
            Volatility
      : 58%


O
            Expected
      life: 5 years


O
            Risk
      free rate: 3.5%


·
            Warrants
      to purchase 3,603,876 shares at an exercise price of $0.13 per share that
      were granted to an investment bank for Merger related
      services.  As these amounts were consideration associated with
      the recapitalization, they were recorded as a part of the recapitalization
      accounting and no expense was recognized during the year ended December
      31, 2008.


·
            Warrants
      to purchase 570,962 shares at an exercise price of $0.12 per share that
      were granted to an investment bank for Merger related
      services.  As these amounts were consideration associated with
      the recapitalization, they were recorded as part of the recapitalization
      accounting and no expense was recognized during the year ended December
      31, 2008.





All
warrants granted during the year ended December 31, 2008 are immediately
vested.  All pre-Merger outstanding warrants expire between February
2010 and December 2010, and the warrants granted for Merger related services
expire on June 23, 2013.





The
warrants have no intrinsic value as of December 31, 2008.





F-18





NOTE 13:  CONCENTRATIONS OF
CREDIT RISK





The
Company maintains cash balances at banks in the United
States.  Accounts are insured by the Federal Deposit Insurance
Corporation up to $250,000.   From time to time, bank balances
may exceed federally insured limits.





The
Company revenue consists primarily of sales to numerous small retailers and,
accordingly, there are no significant concentrations of revenue or accounts
receivable.





The
Company sources its products from numerous vendors of wholesale
merchandise.  The Company does not believe that the loss of any vendor
would have a significant effect on its business operations.





NOTE
14:  EMPLOYEE BENEFIT PLANS




The
Company has a 401(k) plan covering all full-time employees and participants may
contribute a percentage of their compensation to the plan.  The
Company does not currently match or make contributions to the
plan.  Employee contributions are fully vested and
nonforfeitable.  The assets of the plan are held separately from those
of the Company and is independently managed and administered.




NOTE
15:  SUBSEQUENT EVENTS




On
February 25, 2009, the Company’s Board of Directors approved  the
grant of an aggregate of 14,756,360 shares of restricted stock vesting as
follows:


·
            Twenty percent at the date of
      grant;


·
            Twenty percent on the first
      anniversary of the date of grant conditional upon the achievement of a
      closing price not less than $0.06 and daily volume of 50,000 shares for 25
      days of the 30 day period prior to the anniversary
      date;


·
            Thirty percent on the second
      anniversary of the date of grant conditional upon the achievement of a
      closing price not less than $0.10 and daily volume of 50,000 shares for 25
      days of the 30 day period prior to the anniversary date;
      and


·
            Thirty percent on the third
      anniversary of the date of grant conditional upon the achievement of a
      closing price not less than $0.15 and daily volume of 50,000 shares for 25
      days of the 30 day period prior to the anniversary
      date.





As the
Company did not have available authorized shares available for the grant of
restricted stock, the Company will issue the shares at a future date when shares
are available.





F-19




INDEX
TO EXHIBITS





Exhibit
                                        Number
                                      
                                      Exhibit
      Title2.1
                                      
                                      Agreement
      and Plan of Merger By and Among Insignia Solutions plc, Jeode Inc. and
      DollarDays International, Inc (33)3.02(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.


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.




II-2




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”).





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.31.1†
            
            Certification
      of Principal Executive Officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.




II-3




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.





(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.




II-4




(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.




II-5




(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.(33)
              
              Incorporated
      by reference to exhibit 2.1 from Registrant’s Current Report on Form 8-K
      filed on March 19, 2009.




II-6