##### Table of Contents









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, 2004                                                 
|   
|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)




|                                                                                                           |  |                                                                                                                                               
|---------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|41300 Christy Street
    Fremont
    California 94538-3115
    United States of America
    (510) 360-3700 |  | Insignia House
    The Mercury Centre
    Wycombe Lane, Wooburn Green
    High Wycombe, Bucks HP10 0HH
    United Kingdom
    (44) 1628-539500

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


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


None


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


(Title of class)


Ordinary Shares (£0.20 nominal value)


þ o


o


o þ






DOCUMENTS INCORPORATED BY REFERENCE












---










TABLE OF CONTENTS


|              |  |                                                                                                                       |  |      |    |  |  | 
|------------- |  | --------------------------------------------------------------------------------------------------------------------- |  | ---- | -- |  |  | 
|              |  |                                                                                                                       |  | Page |   
|              |  |                                                                                                                       |  |      |   
|PART I       
|Item 1.       |  | Business                                                                                                              |  |      | 1  | 
|Item 2.       |  | Properties                                                                                                            |  |      | 6  | 
|Item 3.       |  | Legal Proceedings                                                                                                     |  |      | 6  | 
|Item 4.       |  | Submission of Matters to a Vote of Security
    Holders                                                               |  |      | 6  | 
|PART II      
|Item 5.       |  | Market for Registrants Common Equity,
    Related Stockholder Matters, and Issuer Purchases of Equity
    Securities |  |      | 7  | 
|Item 6.       |  | Selected Consolidated Financial Data                                                                                  |  |      | 8  | 
|Item 7.       |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                             |  |      | 9  | 
|Item 7A.      |  | Quantitative and Qualitative Disclosures
    about Market Risk                                                        |  |      | 29 | 
|Item 8.       |  | Consolidated Financial Statements and
    Supplementary Data                                                          |  |      | 30 | 
|Item 9.       |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                              |  |      | 57 | 
|Item 9A.      |  | Controls and Procedures                                                                                               |  |      | 57 | 
|Item 9B.      |  | Other Information                                                                                                     |  |      | 57 | 
|PART III     
|Item 10.      |  | Directors and Executive Officers of the
    Registrant                                                                |  |      | 57 | 
|Item 11.      |  | Executive Compensation                                                                                                |  |      | 57 | 
|Item 12.      |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                    |  |      | 58 | 
|Item 13.      |  | Certain Relationships and Related
    Transactions                                                                    |  |      | 58 | 
|Item 14.      |  | Principal Accountant Fees and Services                                                                                |  |      | 58 | 
|Item 15.      |  | Exhibits and Financial Statement
    Schedules                                                                        |  |      | 58 | 
|EXHIBIT 21.01
|EXHIBIT 23.01
|EXHIBIT 23.02
|EXHIBIT 31.1 
|EXHIBIT 31.2 
|EXHIBIT 32.1 
|EXHIBIT 32.2 





---



##### Table of Contents






PART I


This Report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended (the Securities Act) and Section 21E of
the Securities Exchange Act of 1934, as amended (the
Exchange Act) regarding the Company and its
business, financial condition, results of operations and
prospects. Words such as expects,
anticipates, intends, plans,
believes, seeks, estimates
and similar expressions or variations of such words are intended
to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in
this Report.


Although forward-looking statements in this Report reflect
the good faith judgment of our management, such statements can
only be based on facts and factors currently known by us.
Consequently, forward-looking statements are inherently subject
to risks and uncertainties, and actual results and outcomes may
differ materially from the results and outcomes discussed 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. You are urged not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this Report. We undertake no obligation
to revise or update any forward-looking statements in order to
reflect any event or circumstance that may arise after the date
of this Report. You are urged to review and consider carefully
the various disclosures made by us in this Report, which
attempts to advise interested parties of the risks and factors
that may affect our business, financial condition and results of
operations.







|         |         
|-------- | --------
|Item 1  | Business

Company Overview


tm tm


Industry Overview






| |                                        
| | ---------------------------------------
| | The Trend Towards More Complex Software





1



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##### Table of Contents



tm




| |                              
| | -----------------------------
| | Evolution of Mobile Terminals







Products and Support




| |        
| | -------
| | Summary





| |             
| | ------------
| | SSP Platform





| |               
| | --------------
| | Jeode Platform



2



---



##### Table of Contents

















| |                       
| | ----------------------
| | Support  SSP Platform



Research and Development




Proprietary Rights




3



---



##### Table of Contents







Sales and Marketing




| |    
| | ---
| | SSP





|                                          |  |              |    |   |      |  |    |      |  |  |    |  
|----------------------------------------- |  | ------------ | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                                          |  | Year Ended   |   
|                                          |  | December 31, |   
|                                          |  |              |   
|                                          |  | 2004         |    |   | 2003 |  |    | 2002 | 
|                                          |  |              |    |   |      |  |    |      | 
|Distributors:                             |  |              |    |   |      |  |    |      |  |  |    |  
|Telemobile Corporation                    |  |              | 28 | % |      |  |   |      |  |  |   |  
|Esmertec A.G.                             |  |              | 17 | % |      |  | *  |      |  |  |   |  
|Insignia Asia Corporation                 |  |              | 14 | % |      |  |   |      |  |  |   |  
|Phoenix Technologies Ltd.                 |  |              | *  |   |      |  | *  |      |  |  | 58 | %
|All Distributors                          |  |              | 60 | % |      |  | 47 | %    |  |  | 70 | %
|OEMs:                                     |  |              |    |   |      |  |    |      |  |  |    |  
|Qindao Haier Telecom Company Limited      |  |              | 21 | % |      |  |   |      |  |  |   |  
|Sophast Inter Corporation Company Limited |  |              | 18 | % |      |  |   |      |  |  |   |  
|Hewlett Packard Company                   |  |              |   |   |      |  | 26 | %    |  |  | *  |  
|All OEMs                                  |  |              | 40 | % |      |  | 49 | %    |  |  | 29 | %






|  |              
|- | -------------
|* | Less than 10%

4



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Strategic Alliances




| |                                                  
| | -------------------------------------------------
| | International Business Machines Corp.
    (IBM)





| |        
| | -------
| | Symbian



Competition






Employees




Website Posting of SEC Filings


http://www.insignia.com/content/investor/sec.shtml


Incorporation




5



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##### Table of Contents








|         |           
|-------- | ----------
|Item 2  | Properties










|         |                  
|-------- | -----------------
|Item 3  | Legal Proceedings








|         |                                                    
|-------- | ---------------------------------------------------
|Item 4  | Submission of Matters to a Vote of Security Holders






Executive Officers of the Registrant




|                  |  |     |    |  |          |                                                      
|----------------- |  | --- | -- |  | -------- | -----------------------------------------------------
|Name              |  | Age |    |  | Position
|                  |  |     |    |  |         
|Mark E. McMillan  |  |     | 41 |  |          | Chief Executive Officer, President and a Director    
|Robert E. Collins |  |     | 58 |  |          | Chief Financial Officer, Secretary and Vice President
|Paul Edmonds      |  |     | 60 |  |          | Vice President Engineering                           
|Anders Furehed    |  |     | 36 |  |          | Senior Vice President of European Operations         









6



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PART II







|         |                                                                                                                      
|-------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5  | Market for Registrants Common Equity, Related
    Stockholder Matters, and Issuer Purchases of Equity
    Securities

Price Range of Ordinary Shares




|                                 |      |                     |   |      |         |  |   |         |  |  |        |      |  |  |   |      | 
|-------------------------------- | ---- | ------------------- | - | ---- | ------- |  | - | ------- |  |  | ------ | ---- |  |  | - | ---- | 
|                                 |      | 2004 Quarters Ended |  
|                                 |      |                     |  
|                                 |      | Dec 31              |   |      | Sept 30 |  |   | June 30 |  |  | Mar 31 |     
|                                 |      |                     |   |      |         |  |   |         |  |  |        |     
|Quarterly per share stock price: |      |                     |   |      |         |  |   |         |  |  |        |      |  |  |   |     
|                                 | High |                     | $ | 1.30 |         |  | $ | 0.92    |  |  | $      | 2.14 |  |  | $ | 3.47 | 
|                                 | Low  |                     | $ | 0.68 |         |  | $ | 0.50    |  |  | $      | 0.75 |  |  | $ | 0.88 | 

|                                 |      |                     |   |      |         |  |   |         |  |  |        |      |  |  |   |      | 
|-------------------------------- | ---- | ------------------- | - | ---- | ------- |  | - | ------- |  |  | ------ | ---- |  |  | - | ---- | 
|                                 |      | 2003 Quarters Ended |  
|                                 |      |                     |  
|                                 |      | Dec 31              |   |      | Sept 30 |  |   | June 30 |  |  | Mar 31 |     
|                                 |      |                     |   |      |         |  |   |         |  |  |        |     
|Quarterly per share stock price: |      |                     |   |      |         |  |   |         |  |  |        |      |  |  |   |     
|                                 | High |                     | $ | 1.62 |         |  | $ | 1.79    |  |  | $      | 0.80 |  |  | $ | 0.45 | 
|                                 | Low  |                     | $ | 0.80 |         |  | $ | 0.39    |  |  | $      | 0.19 |  |  | $ | 0.20 | 



Dividends




7



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|         |                                     
|-------- | ------------------------------------
|Item 6  | Selected Consolidated Financial Data





Selected Consolidated Financial Data


(In thousands, except per share data)


|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |         |        |   |   |        |        |  
|---------------------------------------------------------------- | -------------------------- | ----------------------- | ------ | ------ | ---- | - | ------ | ------ | - | - | ------- | ------ | - | ---- | ------- | ------ | - | - | ------ | ------ | -
|                                                                 |                            | Year Ended December 31, |       
|                                                                 |                            |                         |       
|                                                                 |                            | 2004                    |        |        | 2003 |   |        | 2002   |   |   | 2001    |        |   | 2000 |        
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|Consolidated Statement of Operations Data                        |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |         |        |   |   |        |       
|Net revenues                                                     |                            | $                       | 541    |        |      | $ | 710    |        |   | $ | 7,256   |        |   | $    | 10,273  |        |   | $ | 10,766 |       
|Cost of net revenues                                             |                            |                         | 42     |        |      |   | 340    |        |   |   | 2,584   |        |   |      | 4,275   |        |   |   | 3,291  |       
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|                                                                 | Gross profit               |                         |        | 499    |      |   |        | 370    |   |   |         | 4,672  |   |      |         | 5,998  |   |   |        | 7,475  |  
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|Operating expenses:                                              |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |         |        |   |   |        |       
|                                                                 | Sales and marketing        |                         |        | 2,511  |      |   |        | 1,757  |   |   |         | 5,558  |   |      |         | 7,058  |   |   |        | 5,376  |  
|                                                                 | Research and development   |                         |        | 2,807  |      |   |        | 3,373  |   |   |         | 5,640  |   |      |         | 6,220  |   |   |        | 5,960  |  
|                                                                 | General and administrative |                         |        | 2,579  |      |   |        | 2,676  |   |   |         | 3,356  |   |      |         | 4,155  |   |   |        | 3,733  |  
|                                                                 | Restructuring              |                         |        |       |      |   |        | 498    |   |   |         | 296    |   |      |         | 292    |   |   |        |       |  
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|Total operating expenses                                         |                            |                         | 7,897  |        |      |   | 8,304  |        |   |   | 14,850  |        |   |      | 17,725  |        |   |   | 15,069 |       
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|Operating loss                                                   |                            |                         | (7,398 | )      |      |   | (7,934 | )      |   |   | (10,178 | )      |   |      | (11,727 | )      |   |   | (7,594 | )     
|Interest and other income (expense), net                         |                            |                         | 255    |        |      |   | 3,101  |        |   |   | (356    | )      |   |      | 567     |        |   |   | (5     | )     
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|Loss before income taxes                                         |                            |                         | (7,143 | )      |      |   | (4,833 | )      |   |   | (10,534 | )      |   |      | (11,160 | )      |   |   | (7,599 | )     
|Benefit from income taxes                                        |                            |                         | (81    | )      |      |   | (510   | )      |   |   | (2,114  | )      |   |      | (152    | )      |   |   | (785   | )     
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|Net loss                                                         |                            | $                       | (7,062 | )      |      | $ | (4,323 | )      |   | $ | (8,420  | )      |   | $    | (11,008 | )      |   | $ | (6,814 | )     
|                                                                 |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |        
|Net loss per share:                                              |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |         |        |   |   |        |       
|                                                                 | Basic and diluted          |                         | $      | (0.23  | )    |   | $      | (0.20  | ) |   | $       | (0.42  | ) |      | $       | (0.57  | ) |   | $      | (0.47  | )
|Weighted average ordinary shares and ordinary share equivalents: |                            |                         |        |        |      |   |        |        |   |   |         |        |   |      |         |        |   |   |        |       
|                                                                 | Basic and diluted          |                         |        | 30,191 |      |   |        | 21,231 |   |   |         | 19,937 |   |      |         | 19,248 |   |   |        | 14,571 |  

|                                                                       |  |              |       |  |      |   |       |      |  |   |       |  |  |      |        |  |  |   |        | 
|---------------------------------------------------------------------- |  | ------------ | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ------ |  |  | - | ------ | 
|                                                                       |  | December 31, |      
|                                                                       |  |              |      
|                                                                       |  | 2004         |       |  | 2003 |   |       | 2002 |  |   | 2001  |  |  | 2000 |       
|                                                                       |  |              |       |  |      |   |       |      |  |   |       |  |  |      |       
|Consolidated Balance Sheet Data                                        |  |              |       |  |      |   |       |      |  |   |       |  |  |      |        |  |  |   |        | 
|Cash, cash equivalents, short-term investments and restricted
    cash |  | $            | 952   |  |      | $ | 2,232 |      |  | $ | 976   |  |  | $    | 8,893  |  |  | $ | 17,351 | 
|Working capital                                                        |  |              | 900   |  |      |   | 2,254 |      |  |   | 1,964 |  |  |      | 10,633 |  |  |   | 11,377 | 
|Total assets                                                           |  |              | 2,587 |  |      |   | 6,794 |      |  |   | 6,453 |  |  |      | 17,768 |  |  |   | 22,336 | 
|Mandatorily redeemable warrants                                        |  |              |      |  |      |   | 38    |      |  |   | 1,440 |  |  |      | 1,440  |  |  |   | 1,440  | 
|Total shareholders equity                                             |  | $            | 1,341 |  |      | $ | 2,589 |      |  | $ | 2,673 |  |  | $    | 9,895  |  |  | $ | 15,749 | 

8



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|         |                                                                                          
|-------- | -----------------------------------------------------------------------------------------
|Item 7  | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Except for the historical information contained in this
Annual Report on Form 10-K, the matters discussed herein
are forward-looking statements. Words such as
anticipates, believes,
expects, future, and
intends, and similar expressions are used to
identify forward-looking statements. These and other statements
regarding matters that are not historical are forward-looking
statements. These matters involve risks and uncertainties that
could cause actual results to differ materially from those in
the forward-looking statements. Factors that could cause or
contribute to such differences in results and outcomes include
without limitation those discussed below as well as those
discussed elsewhere in this Report. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
reflect managements analysis only as of the date hereof.
We assume no obligation to update these forward-looking
statements to reflect actual results or changes in factors or
assumptions affecting such forward-looking statements.


Overview






| |              
| | -------------
| | International





9



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| |                                     
| | ------------------------------------
| | Significant Financial Events in 2004









Critical Accounting Policies and Estimates






| |                    
| | -------------------
| | Revenue recognition





10



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##### Table of Contents

















| |                  
| | -----------------
| | Prepaid royalties





| |                                                            
| | -----------------------------------------------------------
| | Accounts receivable and allowance for doubtful
    accounts





11



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| |                            
| | ---------------------------
| | Accounting for Income Taxes



Sale of Java Virtual Machine Assets
















12



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Results of operations




Revenues


|                 |  |                  |     |          |              |  |     |      |          |   |              |  |  |      |     |    |  |   |       | 
|---------------- |  | ---------------- | --- | -------- | ------------ |  | --- | ---- | -------- | - | ------------ |  |  | ---- | --- | -- |  | - | ----- | 
|                 |  |                  |     | % Change |              |  |     |      | % Change |   |              | 
|                 |  | 2004             |     |          | 2003 to 2004 |  |     | 2003 |          |   | 2002 to 2003 |  |  | 2002 |    
|                 |  |                  |     |          |              |  |     |      |          |   |              |  |  |      |    
|                 |  | ($ in thousands) |    
|License revenues |  | $                | 521 |          |              |  | 0   | %    |          | $ | 522          |  |  |      | (91 | )% |  | $ | 5,714 | 
|Service revenues |  |                  | 20  |          |              |  | (89 | )%   |          |   | 188          |  |  |      | (88 | )% |  |   | 1,542 | 
|                 |  |                  |     |          |              |  |     |      |          |   |              |  |  |      |    
|Total revenues   |  | $                | 541 |          |              |  | (24 | )%   |          | $ | 710          |  |  |      | (90 | )% |  | $ | 7,256 | 
|                 |  |                  |     |          |              |  |     |      |          |   |              |  |  |      |    









13



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| |                               
| | ------------------------------
| | Sales to OEMs and Distributors



|                                          |  |              |    |   |      |  |    |      |  |  |    |  
|----------------------------------------- |  | ------------ | -- | - | ---- |  | -- | ---- |  |  | -- | -
|                                          |  | Year Ended   |   
|                                          |  | December 31, |   
|                                          |  |              |   
|                                          |  | 2004         |    |   | 2003 |  |    | 2002 | 
|                                          |  |              |    |   |      |  |    |      | 
|Distributors:                             |  |              |    |   |      |  |    |      |  |  |    |  
|Telemobile Corporation                    |  |              | 28 | % |      |  |   |      |  |  |   |  
|Esmertec A.G.                             |  |              | 17 | % |      |  | *  |      |  |  |   |  
|Insignia Asia Corporation                 |  |              | 14 | % |      |  |   |      |  |  |   |  
|Phoenix Technologies Ltd.                 |  |              | *  |   |      |  | *  |      |  |  | 58 | %
|All Distributors                          |  |              | 60 | % |      |  | 47 | %    |  |  | 70 | %
|OEMs:                                     |  |              |    |   |      |  |    |      |  |  |    |  
|Qindao Haier Telecom Company Limited      |  |              | 21 | % |      |  |   |      |  |  |   |  
|Sophast Inter Corporation Company Limited |  |              | 18 | % |      |  |   |      |  |  |   |  
|Hewlett Packard Company                   |  |              |   |   |      |  | 26 | %    |  |  | *  |  
|All OEMs                                  |  |              | 40 | % |      |  | 49 | %    |  |  | 29 | %






|  |              
|- | -------------
|* | Less than 10%

Cost of revenues and gross margin


|                               |  |                  |    |          |              |  |     |      |          |   |              |   |  |      |     |    |  |   |       |  
|------------------------------ |  | ---------------- | -- | -------- | ------------ |  | --- | ---- | -------- | - | ------------ | - |  | ---- | --- | -- |  | - | ----- | -
|                               |  |                  |    | % Change |              |  |     |      | % Change |   |              |  
|                               |  | 2004             |    |          | 2003 to 2004 |  |     | 2003 |          |   | 2002 to 2003 |   |  | 2002 |    
|                               |  |                  |    |          |              |  |     |      |          |   |              |   |  |      |    
|                               |  | ($ in thousands) |   
|Cost of license revenues       |  | $                | 28 |          |              |  | (90 | )%   |          | $ | 288          |   |  |      | (85 | )% |  | $ | 1,943 |  
|Gross margin: license revenues |  |                  | 95 | %        |              |  |     |      |          |   | 45           | % |  |      |     |    |  |   | 66    | %
|Cost of service revenues       |  | $                | 14 |          |              |  | (73 | )%   |          | $ | 52           |   |  |      | (92 | )% |  | $ | 641   |  
|Gross margin: service revenues |  |                  | 30 | %        |              |  |     |      |          |   | 72           | % |  |      |     |    |  |   | 58    | %
|Total cost of revenues         |  | $                | 42 |          |              |  | (88 | )%   |          | $ | 340          |   |  |      | (87 | )% |  | $ | 2,584 |  
|Gross margin: total revenues   |  |                  | 92 | %        |              |  |     |      |          |   | 52           | % |  |      |     |    |  |   | 64    | %









14



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Operating expenses


|                             |  |                  |       |          |              |  |      |      |          |   |              |   |  |      |     |    |  |   |       |  
|---------------------------- |  | ---------------- | ----- | -------- | ------------ |  | ---- | ---- | -------- | - | ------------ | - |  | ---- | --- | -- |  | - | ----- | -
|                             |  |                  |       | % Change |              |  |      |      | % Change |   |              |  
|                             |  | 2004             |       |          | 2004 to 2003 |  |      | 2003 |          |   | 2003 to 2002 |   |  | 2002 |    
|                             |  |                  |       |          |              |  |      |      |          |   |              |   |  |      |    
|                             |  | ($ in thousands) |      
|Sales and marketing          |  | $                | 2,511 |          |              |  | 43   | %    |          | $ | 1,757        |   |  |      | (68 | )% |  | $ | 5,558 |  
|Percentage of total revenues |  |                  | 464   | %        |              |  |      |      |          |   | 247          | % |  |      |     |    |  |   | 77    | %
|Research and development     |  | $                | 2,807 |          |              |  | (17  | )%   |          | $ | 3,373        |   |  |      | (40 | )% |  | $ | 5,640 |  
|Percentage of total revenues |  |                  | 519   | %        |              |  |      |      |          |   | 475          | % |  |      |     |    |  |   | 78    | %
|General and administrative   |  | $                | 2,579 |          |              |  | (4   | )%   |          | $ | 2,676        |   |  |      | (20 | )% |  | $ | 3,356 |  
|Percentage of total revenues |  |                  | 477   | %        |              |  |      |      |          |   | 377          | % |  |      |     |    |  |   | 46    | %
|Restructuring                |  |                  | 0     |          |              |  | (100 | )%   |          | $ | 498          |   |  |      | 68  | %  |  | $ | 296   |  
|Percentage of total revenues |  |                  | 0     | %        |              |  |      |      |          |   | 70           | % |  |      |     |    |  |   | 4     | %

Sales and marketing






Research and development






15



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General and administrative






Restructuring








Interest income (expense), net


|                               |  |                  |   |          |              |  |     |      |          |   |              |    |  |      |      |    |  |   |    |  
|------------------------------ |  | ---------------- | - | -------- | ------------ |  | --- | ---- | -------- | - | ------------ | -- |  | ---- | ---- | -- |  | - | -- | -
|                               |  |                  |   | % Change |              |  |     |      | % Change |   |              |   
|                               |  | 2004             |   |          | 2003 to 2004 |  |     | 2003 |          |   | 2002 to 2003 |    |  | 2002 |     
|                               |  |                  |   |          |              |  |     |      |          |   |              |    |  |      |     
|                               |  | ($ in thousands) |  
|Interest income (expense), net |  | $                | 6 |          |              |  | 115 | %    |          | $ | (40          | )  |  |      | (153 | )% |  | $ | 75 |  
|Percentage of total revenues   |  |                  | 1 | %        |              |  |     |      |          |   | (6           | )% |  |      |      |    |  |   | 1  | %





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Other income (expense), net


|                             |  |                  |     |          |              |  |    |      |          |   |              |   |  |      |     |   |  |   |      |  
|---------------------------- |  | ---------------- | --- | -------- | ------------ |  | -- | ---- | -------- | - | ------------ | - |  | ---- | --- | - |  | - | ---- | -
|                             |  |                  |     | % Change |              |  |    |      | % Change |   |              |  
|                             |  | 2004             |     |          | 2003 to 2004 |  |    | 2003 |          |   | 2002 to 2003 |   |  | 2002 |    
|                             |  |                  |     |          |              |  |    |      |          |   |              |   |  |      |    
|                             |  | ($ in thousands) |    
|Other income (expense), net  |  | $                | 249 |          |              |  | 92 | %    |          | $ | 3,141        |   |  |      | 829 | % |  | $ | (431 | )
|Percentage of total revenues |  |                  | 46  | %        |              |  |    |      |          |   | 442          | % |  |      |     |   |  |   | 6    | %







Benefit from income taxes


|                          |  |                  |     |          |              |  |     |      |          |   |              |    |  |      |     |    |  |   |        |   
|------------------------- |  | ---------------- | --- | -------- | ------------ |  | --- | ---- | -------- | - | ------------ | -- |  | ---- | --- | -- |  | - | ------ | --
|                          |  |                  |     | % Change |              |  |     |      | % Change |   |              |   
|                          |  | 2004             |     |          | 2003 to 2004 |  |     | 2003 |          |   | 2002 to 2003 |    |  | 2002 |    
|                          |  |                  |     |          |              |  |     |      |          |   |              |    |  |      |    
|                          |  | ($ in thousands) |    
|Benefit from income taxes |  | $                | (81 | )        |              |  | (84 | )%   |          | $ | (510         | )  |  |      | (76 | )% |  | $ | (2,114 | ) 
|Effective income tax rate |  |                  | (1  | )%       |              |  |     |      |          |   | (11          | )% |  |      |     |    |  |   | (20    | )%









Quarterly financial data




17



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|      |                                               |               |   |        |         |  |   |              |   |  |             |        |   |  |   |        |  
|----- | --------------------------------------------- | ------------- | - | ------ | ------- |  | - | ------------ | - |  | ----------- | ------ | - |  | - | ------ | -
|      |                                               | Quarter Ended |  
|      |                                               |               |  
|      |                                               | March 31      |   |        | June 30 |  |   | September 30 |   |  | December 31 |       
|      |                                               |               |   |        |         |  |   |              |   |  |             |       
|      |                                               | (Unaudited)   |  
|2004: |                                               |               |   |        |         |  |   |              |   |  |             |        |   |  |   |       
|      | Revenues                                      |               | $ | 319    |         |  | $ | 107          |   |  | $           | 107    |   |  | $ | 8      |  
|      | Gross profit (loss)                           |               |   | 296    |         |  |   | 102          |   |  |             | 107    |   |  |   | (6     | )
|      | Net loss                                      |               |   | (1,910 | )       |  |   | (1,304       | ) |  |             | (1,729 | ) |  |   | (2,119 | )
|      | Basic and diluted net loss per share          |               | $ | (0.07  | )       |  | $ | (0.04        | ) |  | $           | (0.06  | ) |  | $ | (0.06  | )
|2003: |                                               |               |   |        |         |  |   |              |   |  |             |        |   |  |   |       
|      | Revenues                                      |               | $ | 379    |         |  | $ |             |   |  | $           | 201    |   |  | $ | 130    |  
|      | Gross profit (loss)                           |               |   | 212    |         |  |   | (36          | ) |  |             | 131    |   |  |   | 63     |  
|      | Net income (loss)                             |               |   | (3,199 | )       |  |   | 2,273        |   |  |             | (1,656 | ) |  |   | (1,741 | )
|      | Basic and diluted net income (loss) per share |               | $ | (0.16  | )       |  | $ | 0.11         |   |  | $           | (0.08  | ) |  | $ | (0.07  | )

Liquidity and capital resources


|                                                          |  |                |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------------- |  | -------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                          |  | 2004           |        |   | 2003 |   |        | 2002 | 
|                                                          |  |                |        |   |      |   |        |      | 
|                                                          |  | (in thousands) |       
|Cash, cash equivalents and restricted cash at December 31 |  | $              | 952    |   |      | $ | 2,232  |      |  | $ | 976    |  
|Working capital at December 31                            |  | $              | 900    |   |      | $ | 2,254  |      |  | $ | 1,964  |  
|Net cash used in operating activities                     |  | $              | (7,583 | ) |      | $ | (4,235 | )    |  | $ | (8,446 | )





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|                         |  |           |       |  |       |   |       | 
|------------------------ |  | --------- | ----- |  | ----- | - | ----- | 
|                         |  | Operating |       |  |      
|                         |  | Leases    |       |  | Total |  
|                         |  |           |       |  |       |  
|Year ending December 31, |  |           |       |  |       |   |       | 
|2005                     |  | $         | 317   |  |       | $ | 317   | 
|2006                     |  |           | 226   |  |       |   | 226   | 
|2007                     |  |           | 198   |  |       |   | 198   | 
|2008                     |  |           | 198   |  |       |   | 198   | 
|2009                     |  |           | 198   |  |       |   | 198   | 
|Thereafter               |  |           | 918   |  |       |   | 918   | 
|                         |  |           |       |  |       |  
|                         |  | $         | 2,055 |  |       | $ | 2,055 | 
|                         |  |           |       |  |       |  













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20



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##### Table of Contents



New accounting pronouncements












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Risk Factors






| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | We may need additional financing to sustain our
    operations, and we may not be able to continue to operate as a
    going concern.











22



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| |                                         
| | ----------------------------------------
| | Our stock could be delisted from Nasdaq.





| |                                                                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The sale of our shares to Fusion Capital may cause
    dilution, and the sale of the shares by Fusion Capital could
    cause the price of our shares to decline.







| |                                                                    
| | -------------------------------------------------------------------
| | We have achieved minimal sales of our SSP product line to
    date.







23



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| |                                                                                               
| | ----------------------------------------------------------------------------------------------
| | The long and complex process of licensing our SSP product
    makes our revenue unpredictable.





| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | We rely on third parties for software development tools,
    which we distribute with some of our products.





| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If handset manufacturers (and other third parties) do not
    achieve substantial sales of their products that incorporate our
    SSP technology, we will not receive royalty payments on our
    licenses.





| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | We have a history of losses and we must generate
    significantly greater revenue if we are to achieve
    profitability.





| |                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We need to increase our sales and marketing expenditures
    in order to achieve sales of our SSP product; however, this
    increase in expenses is expected to decrease our cash
    position.



24



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| |                                                                                     
| | ------------------------------------------------------------------------------------
| | Our business strategy is focused on our sole product line,
    the SSP product line.





| |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to stay abreast of technological changes,
    evolving industry standards and rapidly changing customer
    requirements, our business reputation will likely suffer and
    revenue may decline.





| |   |                                                                                
| | - | -------------------------------------------------------------------------------
| |  | accurately anticipate industry trends and changes in technology
    standards; 
|
| |  | complete and introduce new product designs and features in a
    timely manner;
|
| |  | continue to enhance our existing product lines; and                            
|
| |  | respond promptly to customers requirements and preferences.                   





| |                                           
| | ------------------------------------------
| | Our targeted market is highly competitive.







| |                                   
| | ----------------------------------
| | Our revenue model may not succeed.



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| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| | Fluctuations in our quarterly results could cause the
    market price of our shares to decline.





| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | the volume and timing of orders received during the quarter;                                       
|
| |  | the mix of and changes in customers to whom our products are
    sold;                             
|
| |  | the mix of product and service revenue received during the
    quarter;                            
|
| |  | the mix of development license fees and commercial use royalties
    received;                     
|
| |  | the timing and acceptance of new products and product
    enhancements by us or by our competitors;
|
| |  | changes in product pricing;                                                                        
|
| |  | foreign currency exchange rate fluctuations; and                                                   
|
| |  | ability to recognize revenue on orders received.                                                   





| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | We have engineering and other operations both in the
    United States and foreign countries, which is expensive and can
    create logistical challenges.









| |                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | International sales of our products, which we expect to
    comprise a significant portion of total revenue, expose us to
    the business and economic risks of international
    operations.



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| |   |                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | longer receivable collection periods and greater difficulty in
    accounts receivable collection;                                                                                      
|
| |  | foreign government regulation;                                                                                                                                                          
|
| |  | reduced protection of intellectual property rights in some
    countries where we do business;                                                                                          
|
| |  | unexpected changes in, or imposition of, regulatory
    requirements, tariffs, import and export restrictions and other
    barriers and restrictions;                                  
|
| |  | potentially adverse tax consequences;                                                                                                                                                   
|
| |  | the burdens of complying with a variety of foreign laws and
    staffing and managing foreign operations;                                                                               
|
| |  | general geopolitical risks, such as political and economic
    instability, terrorism, hostilities with neighboring countries
    and changes in diplomatic and trade relationships; and
|
| |  | possible recessionary environments in economies outside the
    United States.                                                                                                          



| |                                                                                
| | -------------------------------------------------------------------------------
| | Product defects can be expensive to fix and may cause us
    to lose customers.







| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we lose key personnel or are unable to hire additional
    qualified personnel as necessary, we may not be able to
    successfully manage our business or sell our products.



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| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we fail to protect our intellectual property rights,
    competitors could introduce similar or superior products, and we
    could lose market share.





| |                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our products may infringe the intellectual property rights
    of third parties, which may result in lawsuits and prevent us
    from selling our products.





| |                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are at risk of securities litigation which, regardless
    of the outcome, could result in substantial costs and divert
    management attention and resources.





| |                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our investors may have difficulty enforcing judgments
    against us in U.S. courts because many of our assets and
    some of our management are located in England.



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| |                                                                                                    
| | ---------------------------------------------------------------------------------------------------
| | Insignia has undergone a class action lawsuit and an SEC
    investigation in the past eight years.








|          |                                                               
|--------- | --------------------------------------------------------------
|Item 7A  | Quantitative and Qualitative Disclosures about Market
    Risk





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|         |                                                             
|-------- | ------------------------------------------------------------
|Item 8  | Consolidated Financial Statements and Supplementary
    Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                                                                                                                          |  |      |    | 
|------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|Document                                                                                                                  |  | Page |   
|                                                                                                                          |  |      |   
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                                          |  |      | 31 | 
|Consolidated Statements of Operations for
    each of the three years in the period ended December 31,
    2004           |  |      | 32 | 
|Consolidated Statements of
    Shareholders Equity for each of the three years in the
    period ended December 31, 2004 |  |      | 33 | 
|Consolidated Statements of Cash Flows for
    each of the three years in the period ended December 31,
    2004           |  |      | 34 | 
|Notes to Consolidated Financial
    Statements                                                                            |  |      | 35 | 
|Reports of Independent Registered Public
    Accounting Firms                                                             |  |      | 55 | 

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INSIGNIA SOLUTIONS PLC





CONSOLIDATED BALANCE SHEETS


|                                                                          |                                                                                                                                                                           |                        |       |         |      |   |       |         |  
|------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------- | ----- | ------- | ---- | - | ----- | ------- | -
|                                                                          |                                                                                                                                                                           | December 31,           |      
|                                                                          |                                                                                                                                                                           |                        |      
|                                                                          |                                                                                                                                                                           | 2004                   |       |         | 2003 |  
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|                                                                          |                                                                                                                                                                           | (Amounts in thousands, |      
|                                                                          |                                                                                                                                                                           | except share and per   |      
|                                                                          |                                                                                                                                                                           | share data)            |      
|ASSETS                                                                   
|Current assets:                                                           |                                                                                                                                                                           |                        |       |         |      |   |       |        
|                                                                          | Cash and cash equivalents                                                                                                                                                 |                        | $     | 902     |      |   | $     | 2,212   |  
|                                                                          | Restricted cash                                                                                                                                                           |                        |       | 50      |      |   |       | 20      |  
|                                                                          | Accounts receivable                                                                                                                                                       |                        |       | 175     |      |   |       | 50      |  
|                                                                          | Other receivables                                                                                                                                                         |                        |       | 241     |      |   |       | 1,153   |  
|                                                                          | Tax receivable                                                                                                                                                            |                        |       | 322     |      |   |       | 391     |  
|                                                                          | Prepaid royalties                                                                                                                                                         |                        |       |        |      |   |       | 2,185   |  
|                                                                          | Prepaid expenses                                                                                                                                                          |                        |       | 456     |      |   |       | 410     |  
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|                                                                          | Total current assets                                                                                                                                                      |                        |       | 2,146   |      |   |       | 6,421   |  
|Property and equipment, net                                               |                                                                                                                                                                           |                        | 140   |         |      |   | 154   |        
|Investment in affiliate                                                   |                                                                                                                                                                           |                        | 68    |         |      |   |      |        
|Other noncurrent assets                                                   |                                                                                                                                                                           |                        | 233   |         |      |   | 219   |        
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|                                                                          |                                                                                                                                                                           | $                      | 2,587 |         |      | $ | 6,794 |        
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|                                                                         
|LIABILITIES, MANDATORILY REDEEMABLE WARRANTS AND
    SHAREHOLDERS EQUITY
|Current liabilities:                                                      |                                                                                                                                                                           |                        |       |         |      |   |       |        
|                                                                          | Accounts payable                                                                                                                                                          |                        | $     | 241     |      |   | $     | 428     |  
|                                                                          | Accrued liabilities                                                                                                                                                       |                        |       | 995     |      |   |       | 1,279   |  
|                                                                          | Note payable                                                                                                                                                              |                        |       |        |      |   |       | 1,000   |  
|                                                                          | Deferred revenue                                                                                                                                                          |                        |       | 10      |      |   |       | 1,460   |  
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|                                                                          | Total current liabilities                                                                                                                                                 |                        |       | 1,246   |      |   |       | 4,167   |  
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|Mandatorily redeemable warrants                                           |                                                                                                                                                                           |                        |      |         |      |   | 38    |        
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|Commitments and contingencies (Note 6)                                    |                                                                                                                                                                           |                        |       |         |      |   |       |        
|Shareholders equity:                                                     |                                                                                                                                                                           |                        |       |         |      |   |       |        
|                                                                          | Preferred shares, £0.20 par value:
    3,000,000 shares authorized; no shares issued                                                                                      |                        |       |        |      |   |       |        |  
|                                                                          | Ordinary shares, £0.20 par value:
    75,000,000 shares authorized; 35,722,205 shares and
    25,169,494 shares issued and outstanding in 2004 and 2003,
    respectively |                        |       | 11,939  |      |   |       | 8,111   |  
|                                                                          | Additional paid-in capital                                                                                                                                                |                        |       | 64,459  |      |   |       | 61,898  |  
|                                                                          | Common stock subscription                                                                                                                                                 |                        |       |        |      |   |       | 575     |  
|                                                                          | Accumulated deficit                                                                                                                                                       |                        |       | (74,596 | )    |   |       | (67,534 | )
|                                                                          | Accumulated other comprehensive loss                                                                                                                                      |                        |       | (461    | )    |   |       | (461    | )
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|                                                                          | Total shareholders equity                                                                                                                                                |                        |       | 1,341   |      |   |       | 2,589   |  
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  
|                                                                          |                                                                                                                                                                           | $                      | 2,587 |         |      | $ | 6,794 |        
|                                                                          |                                                                                                                                                                           |                        |       |         |      |  



31



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INSIGNIA SOLUTIONS PLC





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                        |                             |                         |     |        |      |  |       |        |   |  |        |         |  
|------------------------------------------------------- | --------------------------- | ----------------------- | --- | ------ | ---- |  | ----- | ------ | - |  | ------ | ------- | -
|                                                        |                             | Year Ended December 31, |    
|                                                        |                             |                         |    
|                                                        |                             | 2004                    |     |        | 2003 |  |       | 2002   |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        |                             | (Amounts in thousands,  |    
|                                                        |                             | except per share data)  |    
|Net revenues:                                           |                             |                         |     |        |      |  |       |        |   |  |        |        
|                                                        | License                     |                         | $   | 521    |      |  | $     | 522    |   |  | $      | 5,714   |  
|                                                        | Service                     |                         |     | 20     |      |  |       | 188    |   |  |        | 1,542   |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        | Total net revenues          |                         |     | 541    |      |  |       | 710    |   |  |        | 7,256   |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|Costs of net revenues:                                  |                             |                         |     |        |      |  |       |        |   |  |        |        
|                                                        | License                     |                         |     | 28     |      |  |       | 288    |   |  |        | 1,943   |  
|                                                        | Service                     |                         |     | 14     |      |  |       | 52     |   |  |        | 641     |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        | Total costs of net revenues |                         |     | 42     |      |  |       | 340    |   |  |        | 2,584   |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        | Gross profit                |                         |     | 499    |      |  |       | 370    |   |  |        | 4,672   |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|Operating expenses:                                     |                             |                         |     |        |      |  |       |        |   |  |        |        
|                                                        | Sales and marketing         |                         |     | 2,511  |      |  |       | 1,757  |   |  |        | 5,558   |  
|                                                        | Research and development    |                         |     | 2,807  |      |  |       | 3,373  |   |  |        | 5,640   |  
|                                                        | General and administrative  |                         |     | 2,579  |      |  |       | 2,676  |   |  |        | 3,356   |  
|                                                        | Restructuring               |                         |     |       |      |  |       | 498    |   |  |        | 296     |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        | Total operating expenses    |                         |     | 7,897  |      |  |       | 8,304  |   |  |        | 14,850  |  
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        | Operating loss              |                         |     | (7,398 | )    |  |       | (7,934 | ) |  |        | (10,178 | )
|Interest income (expense), net                          |                             |                         | 6   |        |      |  | (40   | )      |   |  | 75     |        
|Other income (expense), net                             |                             |                         | 249 |        |      |  | 3,141 |        |   |  | (431   | )      
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        | Loss before income taxes    |                         |     | (7,143 | )    |  |       | (4,833 | ) |  |        | (10,534 | )
|Benefit from income taxes                               |                             |                         | (81 | )      |      |  | (510  | )      |   |  | (2,114 | )      
|                                                        |                             |                         |     |        |      |  |       |        |  
|                                                        | Net loss                    |                         | $   | (7,062 | )    |  | $     | (4,323 | ) |  | $      | (8,420  | )
|                                                        |                             |                         |     |        |      |  |       |        |  
|Net loss per share:                                     |                             |                         |     |        |      |  |       |        |   |  |        |        
|                                                        | Basic and diluted           |                         | $   | (0.23  | )    |  | $     | (0.20  | ) |  | $      | (0.42   | )
|                                                        |                             |                         |     |        |      |  |       |        |  
|Weighted average shares and ordinary share equivalents: |                             |                         |     |        |      |  |       |        |   |  |        |        
|                                                        | Basic and diluted           |                         |     | 30,191 |      |  |       | 21,231 |   |  |        | 19,937  |  
|                                                        |                             |                         |     |        |      |  |       |        |  



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INSIGNIA SOLUTIONS PLC





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


|                            |                                                              |                                           |            |           |            |   |        |         |  |             |              |       |       |               |     |        |          |   |         |        |   |   |      |   |  |   |       |        |  
|--------------------------- | ------------------------------------------------------------ | ----------------------------------------- | ---------- | --------- | ---------- | - | ------ | ------- |  | ----------- | ------------ | ----- | ----- | ------------- | --- | ------ | -------- | - | ------- | ------ | - | - | ---- | - |  | - | ----- | ------ | -
|                            |                                                              |                                           |            |           |            |   |        |         |  | Accumulated |              |       | Total |              
|                            |                                                              | Ordinary Shares                           |            |           | Additional |   |        | Common  |  |             |              |       | Other |               |     | Share- |         
|                            |                                                              |                                           |            |           | Paid-In    |   |        | Stock   |  |             | Accumulated  |       |       | Comprehensive |     |        | holders |  
|                            |                                                              | Shares                                    |            |           | Amount     |   |        | Capital |  |             | Subscription |       |       | Deficit       |     |        | Loss     |   |         | Equity |  
|                            |                                                              |                                           |            |           |            |   |        |         |  |             |              |       |       |               |     |        |          |   |         |        |  
|                            |                                                              | (Amounts in thousands, except share data) |           
|Balances, December 31, 2001 |                                                              |                                           | 19,500,313 |           |            | $ | 6,278  |         |  | $           | 58,869       |       |       |               |    |        |          | $ | (54,791 | )      |   | $ | (461 | ) |  | $ | 9,895 |       
|                            | Shares issued under employee stock plans                     |                                           |            | 183,226   |            |   |        | 53      |  |             |              | 122   |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 175    |  
|                            | Shares issued upon exercise of warrants                      |                                           |            | 400,000   |            |   |        | 113     |  |             |              | 367   |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 480    |  
|                            | Warrant issue costs per Black-Scholes model                  |                                           |            |          |            |   |        |        |  |             |              | 544   |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 544    |  
|                            | Shares issued under private placement, net of issuance costs |                                           |            | 60        |            |   |        |        |  |             |              | (1    | )     |               |     |       |          |   |         |       |   |   |      |  |  |   |       | (1     | )
|                            | Net loss                                                     |                                           |            |          |            |   |        |        |  |             |              |      |       |               |     |       |          |   |         | (8,420 | ) |   |      |  |  |   |       | (8,420 | )
|                            |                                                              |                                           |            |           |            |   |        |         |  |             |              |       |       |               |     |        |          |   |         |        |  
|Balances, December 31, 2002 |                                                              |                                           | 20,083,599 |           |            |   | 6,444  |         |  |             | 59,901       |       |       |               |    |        |          |   | (63,211 | )      |   |   | (461 | ) |  |   | 2,673 |       
|                            | Shares issued under employee stock plans                     |                                           |            | 25,673    |            |   |        | 8       |  |             |              | 1     |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 9      |  
|                            | Shares issued upon exercise of warrants                      |                                           |            | 2,446,677 |            |   |        | 796     |  |             |              | 45    |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 841    |  
|                            | Warrant issue costs per Black-Scholes model                  |                                           |            |          |            |   |        |        |  |             |              | 121   |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 121    |  
|                            | Reclassification of mandatorily redeemable warrants          |                                           |            |          |            |   |        |        |  |             |              | 1,407 |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 1,407  |  
|                            | Shares issued under private placement, net of issuance costs |                                           |            | 2,613,545 |            |   |        | 863     |  |             |              | 423   |       |               |     | 575    |          |   |         |       |   |   |      |  |  |   |       | 1,861  |  
|                            | Net loss                                                     |                                           |            |          |            |   |        |        |  |             |              |      |       |               |     |       |          |   |         | (4,323 | ) |   |      |  |  |   |       | (4,323 | )
|                            |                                                              |                                           |            |           |            |   |        |         |  |             |              |       |       |               |     |        |          |   |         |        |  
|Balances, December 31, 2003 |                                                              |                                           | 25,169,494 |           |            |   | 8,111  |         |  |             | 61,898       |       |       |               | 575 |        |          |   | (67,534 | )      |   |   | (461 | ) |  |   | 2,589 |       
|                            | Shares issued under employee stock plans                     |                                           |            | 142,079   |            |   |        | 52      |  |             |              | 24    |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 76     |  
|                            | Shares issued upon exercise of warrants                      |                                           |            | 470,000   |            |   |        | 172     |  |             |              | 218   |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 390    |  
|                            | Warrant issue costs per Black-Scholes model                  |                                           |            |          |            |   |        |        |  |             |              | 353   |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 353    |  
|                            | Shares issued upon the exercise of employee stock options    |                                           |            | 602,906   |            |   |        | 220     |  |             |              | 314   |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 534    |  
|                            | Shares issued under private placement, net of issuance costs |                                           |            | 9,337,726 |            |   |        | 3,384   |  |             |              | 1,614 |       |               |     | (575   | )        |   |         |       |   |   |      |  |  |   |       | 4,423  |  
|                            | Reclassification of expired mandatorily redeemable warrants  |                                           |            |          |            |   |        |        |  |             |              | 38    |       |               |     |       |          |   |         |       |   |   |      |  |  |   |       | 38     |  
|                            | Net loss                                                     |                                           |            |          |            |   |        |        |  |             |              |      |       |               |     |       |          |   |         | (7,062 | ) |   |      |  |  |   |       | (7,062 | )
|                            |                                                              |                                           |            |           |            |   |        |         |  |             |              |       |       |               |     |        |          |   |         |        |  
|Balances, December 31, 2004 |                                                              |                                           | 35,722,205 |           |            | $ | 11,939 |         |  | $           | 64,459       |       |       | $             |    |        |          | $ | (74,596 | )      |   | $ | (461 | ) |  | $ | 1,341 |       
|                            |                                                              |                                           |            |           |            |   |        |         |  |             |              |       |       |               |     |        |          |   |         |        |  



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INSIGNIA SOLUTIONS PLC





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- | ----------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                                                   |                                                                                       | Year Ended December 31, |  
|                                                                                   |                                                                                       |                         |  
|                                                                                   |                                                                                       | 2004                    |   |        | 2003 |  |   | 2002   |  
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|                                                                                   |                                                                                       | (Amounts in thousands)  |  
|Cash flows from operating activities:                                              |                                                                                       |                         |   |        |      |  |   |        |   |  |   |       
|                                                                                   | Net loss                                                                              |                         | $ | (7,062 | )    |  | $ | (4,323 | ) |  | $ | (8,420 | )
|Adjustments to reconcile net loss to net cash used in operating
    activities:    |                                                                                       |                         |   |        |      |  |   |        |   |  |   |       
|                                                                                   | Depreciation and amortization                                                         |                         |   | 104    |      |  |   | 143    |   |  |   | 242    |  
|                                                                                   | Allowance for doubtful accounts                                                       |                         |   |       |      |  |   | (50    | ) |  |   | (438   | )
|                                                                                   | Gain on sale of product line                                                          |                         |   | (302   | )    |  |   | (3,056 | ) |  |   |       |  
|                                                                                   | Non-cash charge for warrants                                                          |                         |   | 353    |      |  |   | 126    |   |  |   | 544    |  
|                                                                                   | Gain on sale of fixed assets                                                          |                         |   |       |      |  |   |       |   |  |   | 5      |  
|                                                                                   | Equity in net loss of affiliate                                                       |                         |   | 82     |      |  |   |       |   |  |   |       |  
|Net changes in assets and liabilities:                                             |                                                                                       |                         |   |        |      |  |   |        |   |  |   |       
|                                                                                   | Accounts receivable                                                                   |                         |   | (125   | )    |  |   | 931    |   |  |   | 5,522  |  
|                                                                                   | Other receivable                                                                      |                         |   | (40    | )    |  |   | (53    | ) |  |   |       |  
|                                                                                   | Tax receivable                                                                        |                         |   | 69     |      |  |   | 311    |   |  |   | (702   | )
|                                                                                   | Prepaid royalties                                                                     |                         |   |       |      |  |   | 196    |   |  |   | (1,242 | )
|                                                                                   | Prepaid expenses                                                                      |                         |   | (46    | )    |  |   | 163    |   |  |   | 156    |  
|                                                                                   | Other current assets                                                                  |                         |   |       |      |  |   |       |   |  |   | (20    | )
|                                                                                   | Other noncurrent assets                                                               |                         |   | (14    | )    |  |   | 319    |   |  |   |       |  
|                                                                                   | Accounts payable                                                                      |                         |   | (155   | )    |  |   | (187   | ) |  |   | (346   | )
|                                                                                   | Accrued liabilities                                                                   |                         |   | (392   | )    |  |   | 160    |   |  |   | (229   | )
|                                                                                   | Accrued royalties                                                                     |                         |   |       |      |  |   |       |   |  |   |       |  
|                                                                                   | Deferred revenue                                                                      |                         |   | (55    | )    |  |   | 1,085  |   |  |   | (3,520 | )
|                                                                                   | Income taxes payable                                                                  |                         |   |       |      |  |   |       |   |  |   | 2      |  
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|                                                                                   | Net cash used in operating activities                                                 |                         |   | (7,583 | )    |  |   | (4,235 | ) |  |   | (8,446 | )
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|Cash flows from investing activities:                                              |                                                                                       |                         |   |        |      |  |   |        |   |  |   |       
|                                                                                   | Proceeds from the sale of property and equipment                                      |                         |   |       |      |  |   |       |   |  |   | 2      |  
|                                                                                   | Investment in affiliate                                                               |                         |   | (150   | )    |  |   |       |   |  |   |       |  
|                                                                                   | (Increase) decrease in restricted cash                                                |                         |   | (30    | )    |  |   | 230    |   |  |   |       |  
|                                                                                   | Purchases of property and equipment                                                   |                         |   | (90    | )    |  |   | (89    | ) |  |   | (127   | )
|                                                                                   | Proceeds from sale of product line, net                                               |                         |   | 1,268  |      |  |   | 1,869  |   |  |   |       |  
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|                                                                                   | Net cash provided by (used in) investing activities                                   |                         |   | 998    |      |  |   | 2,010  |   |  |   | (125   | )
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|Cash flows from financing activities:                                              |                                                                                       |                         |   |        |      |  |   |        |   |  |   |       
|                                                                                   | Proceeds from note payable                                                            |                         |   |       |      |  |   | 1,000  |   |  |   |       |  
|                                                                                   | Proceeds from issuance of shares, net of issuance costs                               |                         |   | 4,275  |      |  |   | 1,861  |   |  |   | (1     | )
|                                                                                   | Proceeds from exercise of warrants, net of issuance costs                             |                         |   | 390    |      |  |   | 841    |   |  |   | 480    |  
|                                                                                   | Proceeds from exercise of stock options and employee stock
    purchase plan, net     |                         |   | 610    |      |  |   | 9      |   |  |   | 175    |  
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|                                                                                   | Net cash provided by financing activities                                             |                         |   | 5,275  |      |  |   | 3,711  |   |  |   | 654    |  
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|                                                                                   | Net increase (decrease) in cash and cash equivalents                                  |                         |   | (1,310 | )    |  |   | 1,486  |   |  |   | (7,917 | )
|                                                                                   | Cash and cash equivalents at beginning of the year                                    |                         |   | 2,212  |      |  |   | 726    |   |  |   | 8,643  |  
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|                                                                                   | Cash and cash equivalents at the end of the year                                      |                         | $ | 902    |      |  | $ | 2,212  |   |  | $ | 726    |  
|                                                                                   |                                                                                       |                         |   |        |      |  |   |        |  
|Supplemental non-cash investing and financing activities:                          |                                                                                       |                         |   |        |      |  |   |        |   |  |   |       
|                                                                                   | Reclassification of mandatorily redeemable warrants to
    additional paid-in capital |                         | $ | 38     |      |  | $ | 1,407  |   |  | $ |       |  
|Non-cash settlement of assets and liabilities related to sale of
    product line: |                                                                                       |                         |   |        |      |  |   |        |   |  |   |       
|                                                                                   | Change in assets                                                                      |                         |   | 2,400  |      |  |   |       |   |  |   |       |  
|                                                                                   | Change in liabilities                                                                 |                         |   | (2,904 | )    |  |   |       |   |  |   |       |  



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INSIGNIA SOLUTIONS PLC





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|         |                                            
|-------- | -------------------------------------------
|Note 1  | Summary of Significant Accounting Policies:

Organization and business


tm tm




Liquidity  going concern








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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Use of estimates




Principles of consolidation




Financial instruments






Revenue recognition






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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












Property and equipment




Impairment of long-lived assets




Foreign currency translation




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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Foreign currency financial instruments




Software development costs




Research and development




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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Stock-based compensation




|                                                                                   |  |                         |        |   |      |   |        |      |  |   |         |  
|---------------------------------------------------------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                                                                   |  | Year Ended December 31, |       
|                                                                                   |  |                         |       
|                                                                                   |  | 2004                    |        |   | 2003 |   |        | 2002 | 
|                                                                                   |  |                         |        |   |      |   |        |      | 
|Net loss-as reported                                                               |  | $                       | (7,062 | ) |      | $ | (4,323 | )    |  | $ | (8,420  | )
|Less stock based compensation expense determined under fair
    value based method |  |                         | (636   | ) |      |   | (1,131 | )    |  |   | (2,469  | )
|                                                                                   |  |                         |        |   |      |   |        |      | 
|Net loss pro forma                                                                 |  | $                       | (7,698 | ) |      | $ | (5,454 | )    |  | $ | (10,899 | )
|                                                                                   |  |                         |        |   |      |   |        |      | 
|Net loss per share-basic and diluted as reported                                   |  | $                       | (0.23  | ) |      | $ | (0.20  | )    |  | $ | (0.42   | )
|Net loss per share-basic and diluted pro forma                                     |  | $                       | (0.25  | ) |      | $ | (0.26  | )    |  | $ | (0.55   | )



|                              |  |                         |             |  |      |  |             |      |  |  |          | 
|----------------------------- |  | ----------------------- | ----------- |  | ---- |  | ----------- | ---- |  |  | -------- | 
|                              |  | Year Ended December 31, |            
|                              |  |                         |            
|                              |  | 2004                    |             |  | 2003 |  |             | 2002 | 
|                              |  |                         |             |  |      |  |             |      | 
|Stock Options:                |  |                         |             |  |      |  |             |      |  |  |          | 
|Expected volatility range     |  |                         | 139%-276%   |  |      |  | 47%-264%    |      |  |  | 68%      | 
|Risk-free interest rate range |  |                         | 1.11%-4.07% |  |      |  | 1.05%-3.16% |      |  |  | 1.8-4.4% | 
|Dividend yield                |  |                         | 0%          |  |      |  | 0%          |      |  |  | 0%       | 
|Expected life (years)         |  |                         | 4           |  |      |  | 4           |      |  |  | 4        | 
|Employee Stock Purchase Plan: |  |                         |             |  |      |  |             |      |  |  |          | 
|Expected volatility range     |  |                         | 66%-198%    |  |      |  | 59%         |      |  |  | 68%      | 
|Risk-free interest rate range |  |                         | 1.13%-1.25% |  |      |  | 1.17%       |      |  |  | 1.1-1.2% | 
|Dividend yield                |  |                         | 0%          |  |      |  | 0%          |      |  |  | 0%       | 
|Expected life (years)         |  |                         | 0.5         |  |      |  | 0.5         |      |  |  | 0.5      | 

Income taxes




Concentrations of risk




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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Comprehensive income




Net income (loss) per share






Reclassifications




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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


New accounting pronouncements












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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                      
|-------- | ---------------------
|Note 2  | Balance Sheet Detail:



|                             |                                                |              |       |       |      |   |       |       | 
|---------------------------- | ---------------------------------------------- | ------------ | ----- | ----- | ---- | - | ----- | ----- | 
|                             |                                                | December 31, |      
|                             |                                                |              |      
|                             |                                                | 2004         |       |       | 2003 |  
|                             |                                                |              |       |       |      |  
|Property and equipment, net: |                                                |              |       |       |      |   |       |      
|                             | Computers and other equipment                  |              | $     | 1,692 |      |   | $     | 1,604 | 
|                             | Leasehold improvements                         |              |       | 381   |      |   |       | 380   | 
|                             | Furniture and fixtures                         |              |       | 75    |      |   |       | 75    | 
|                             |                                                |              |       |       |      |  
|                             |                                                |              | 2,148 |       |      |   | 2,059 |      
|                             | Less accumulated depreciation and amortization |              |       | 2,008 |      |   |       | 1,905 | 
|                             |                                                |              |       |       |      |  
|                             |                                                | $            | 140   |       |      | $ | 154   |      
|                             |                                                |              |       |       |      |  
|Accrued liabilities:         |                                                |              |       |       |      |   |       |      
|                             | Accrued legal and professional services        |              | $     | 666   |      |   | $     | 559   | 
|                             | Accrued compensation and payroll taxes         |              |       | 242   |      |   |       | 301   | 
|                             | Accrued interest on note payable               |              |       |      |      |   |       | 58    | 
|                             | Accrued income taxes payable                   |              |       |      |      |   |       | 187   | 
|                             | Other                                          |              |       | 87    |      |   |       | 174   | 
|                             |                                                |              |       |       |      |  
|                             |                                                | $            | 995   |       |      | $ | 1,279 |      
|                             |                                                |              |       |       |      |  



|         |             
|-------- | ------------
|Note 3  | Stock Plans:



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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |  |               |          |   |               |  |           |       |  |          |            |   |  |   |      | 
|-------------------------------- |  | ------------- | -------- | - | ------------- |  | --------- | ----- |  | -------- | ---------- | - |  | - | ---- | 
|                                 |  | 1986 and 1996 |          |   | 1988 and 1995 |  |           |       |  | Weighted |           
|                                 |  | U.K.          |          |   | U.S.          |  |           |       |  | Average  |           
|                                 |  | Share Option  |          |   | Stock Option  |  |           |       |  | Exercise |           
|                                 |  | Schemes       |          |   | Plans         |  |           | Total |  |          | Price      |  
|                                 |  |               |          |   |               |  |           |       |  |          |            |  
|Outstanding at December 31, 2001 |  |               | 936,123  |   |               |  | 2,955,577 |       |  |          | 3,891,700  |   |  | $ | 3.15 | 
|Granted                          |  |               | 89,000   |   |               |  | 503,000   |       |  |          | 592,000    |   |  | $ | 1.49 | 
|Exercised                        |  |               | (3,124   | ) |               |  | (71,352   | )     |  |          | (74,476    | ) |  | $ | 1.06 | 
|Lapsed                           |  |               | (277,291 | ) |               |  | (546,594  | )     |  |          | (823,885   | ) |  | $ | 2.62 | 
|                                 |  |               |          |   |               |  |           |       |  |          |            |  
|Outstanding at December 31, 2002 |  |               | 744,708  |   |               |  | 2,840,631 |       |  |          | 3,585,339  |   |  | $ | 3.04 | 
|Granted                          |  |               | 611,400  |   |               |  | 1,687,700 |       |  |          | 2,299,100  |   |  | $ | 0.43 | 
|Exercised                        |  |               | (9,896   | ) |               |  | (10,667   | )     |  |          | (20,563    | ) |  | $ | 0.39 | 
|Lapsed                           |  |               | (633,199 | ) |               |  | (705,572  | )     |  |          | (1,338,771 | ) |  | $ | 2.94 | 
|                                 |  |               |          |   |               |  |           |       |  |          |            |  
|Outstanding at December 31, 2003 |  |               | 713,013  |   |               |  | 3,812,092 |       |  |          | 4,525,105  |   |  | $ | 1.69 | 
|Granted                          |  |               | 229,962  |   |               |  | 1,080,038 |       |  |          | 1,310,000  |   |  | $ | 1.23 | 
|Exercised                        |  |               | (48,958  | ) |               |  | (553,948  | )     |  |          | (602,906   | ) |  | $ | 0.89 | 
|Lapsed                           |  |               | (62,423  | ) |               |  | (708,702  | )     |  |          | (771,125   | ) |  | $ | 2.62 | 
|                                 |  |               |          |   |               |  |           |       |  |          |            |  
|Outstanding at December 31, 2004 |  |               | 831,594  |   |               |  | 3,629,480 |       |  |          | 4,461,074  |   |  | $ | 1.59 | 
|                                 |  |               |          |   |               |  |           |       |  |          |            |  



|                         |  |             |           |          |                  |  |           |          |  |   |      | 
|------------------------ |  | ----------- | --------- | -------- | ---------------- |  | --------- | -------- |  | - | ---- | 
|                         |  |             |           | Weighted |                  |  | Weighted  |         
|                         |  |             |           | Average  |                  |  | Average   |         
|                         |  | Number      |           |          | Remaining        |  |           | Exercise | 
|Range of Exercise Prices |  | Outstanding |           |          | Contractual Life |  |           | Price    | 
|                         |  |             |           |          |                  |  |           |          | 
|$0.01-$2.00              |  |             | 3,129,377 |          |                  |  | 8.1 years |          |  | $ | 0.73 | 
|$2.01-$4.00              |  |             | 869,697   |          |                  |  | 6.1 years |          |  | $ | 2.75 | 
|$4.01-$6.00              |  |             | 453,750   |          |                  |  | 4.5 years |          |  | $ | 5.17 | 
|$6.01-$8.00              |  |             | 8,250     |          |                  |  | 4.5 years |          |  | $ | 6.84 | 
|                         |  |             |           |          |                  |  |           |          | 
|                         |  |             | 4,461,074 |          |                  |  | 7.3 years |          |  | $ | 1.59 | 
|                         |  |             |           |          |                  |  |           |          | 



|                         |  |             |           |          |          |   |      | 
|------------------------ |  | ----------- | --------- | -------- | -------- | - | ---- | 
|                         |  |             |           | Weighted |         
|                         |  |             |           | Average  |         
|                         |  | Number      |           |          | Exercise |  
|Range of Exercise Prices |  | Exercisable |           |          | Price    |  
|                         |  |             |           |          |          |  
|$0.01-$2.00              |  |             | 1,474,643 |          |          | $ | 0.85 | 
|$2.01-$4.00              |  |             | 584,749   |          |          | $ | 2.78 | 
|$4.01-$6.00              |  |             | 452,865   |          |          | $ | 5.17 | 
|$6.01-$8.00              |  |             | 8,250     |          |          | $ | 6.84 | 
|                         |  |             |           |          |          |  
|                         |  |             | 2,520,507 |          |          | $ | 2.09 | 
|                         |  |             |           |          |          |  

|                                                       |  |              |           |  |      |   |           |      |  |   |           | 
|------------------------------------------------------ |  | ------------ | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                                                       |  | December 31, |          
|                                                       |  |              |          
|                                                       |  | 2004         |           |  | 2003 |   |           | 2002 | 
|                                                       |  |              |           |  |      |   |           |      | 
|Exercisable options                                    |  |              | 2,520,507 |  |      |   | 2,644,401 |      |  |   | 2,534,047 | 
|Weighted average exercise price of exercisable options |  | $            | 2.09      |  |      | $ | 2.41      |      |  | $ | 3.03      | 
|Weighted average fair value of options granted         |  | $            | 0.89      |  |      | $ | 0.26      |      |  | $ | 1.29      | 

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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|         |                                    
|-------- | -----------------------------------
|Note 4  | Employee Benefit and Pension Plans:





|         |              
|-------- | -------------
|Note 5  | Income Taxes:



|                                   |  |                         |        |   |      |   |        |      |  |   |         |  
|---------------------------------- |  | ----------------------- | ------ | - | ---- | - | ------ | ---- |  | - | ------- | -
|                                   |  | Year Ended December 31, |       
|                                   |  |                         |       
|                                   |  | 2004                    |        |   | 2003 |   |        | 2002 | 
|                                   |  |                         |        |   |      |   |        |      | 
|United States                      |  | $                       | (4,288 | ) |      | $ | (3,798 | )    |  | $ | (5,149  | )
|United Kingdom and other countries |  |                         | (2,855 | ) |      |   | (1,035 | )    |  |   | (5,385  | )
|                                   |  |                         |        |   |      |   |        |      | 
|                                   |  | $                       | (7,143 | ) |      | $ | (4,833 | )    |  | $ | (10,534 | )
|                                   |  |                         |        |   |      |   |        |      | 

44



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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|              |                                    |                         |     |      |      |   |      |      |   |   |        |        |  
|------------- | ---------------------------------- | ----------------------- | --- | ---- | ---- | - | ---- | ---- | - | - | ------ | ------ | -
|              |                                    | Year Ended December 31, |    
|              |                                    |                         |    
|              |                                    | 2004                    |     |      | 2003 |   |      | 2002 |  
|              |                                    |                         |     |      |      |   |      |      |  
|Current:      |                                    |                         |     |      |      |   |      |      |   |   |        |       
|              | U.S. federal                       |                         | $   |     |      |   | $    |     |   |   | $      |       |  
|              | U.S. state and local               |                         |     | (182 | )    |   |      | 2    |   |   |        | 20     |  
|              | United Kingdom and other countries |                         |     | 101  |      |   |      | (512 | ) |   |        | (2,134 | )
|              |                                    |                         |     |      |      |   |      |      |  
|Total benefit |                                    | $                       | (81 | )    |      | $ | (510 | )    |   | $ | (2,114 | )     
|              |                                    |                         |     |      |      |   |      |      |  



|                                                       |                    |                         |       |      |      |  |       |       |    |  |       |       |   
|------------------------------------------------------ | ------------------ | ----------------------- | ----- | ---- | ---- |  | ----- | ----- | -- |  | ----- | ----- | --
|                                                       |                    | Year Ended December 31, |      
|                                                       |                    |                         |      
|                                                       |                    | 2004                    |       |      | 2003 |  |       | 2002  |   
|                                                       |                    |                         |       |      |      |  |       |       |   
|U.S. federal statutory rate                            |                    |                         | (34.0 | )%   |      |  | (34.0 | )%    |    |  | (34.0 | )%   
|State and local taxes, net of U.S. federal benefit     |                    |                         | (2.5  | )    |      |  |      |       |    |  |      |      
|Foreign income taxes at other than U.S. rate           |                    |                         | 1.4   |      |      |  | (10.6 | )     |    |  | (20.1 | )    
|Valuation allowance for net deferred income tax assets |                    |                         | 34.0  |      |      |  | 34.0  |       |    |  | 34.0  |      
|                                                       |                    |                         |       |      |      |  |       |       |   
|                                                       | Effective tax rate |                         |       | (1.1 | )%   |  |       | (10.6 | )% |  |       | (20.1 | )%
|                                                       |                    |                         |       |      |      |  |       |       |   



|                                                            |  |                         |         |   |      |   |         |      |  |   |         |  
|----------------------------------------------------------- |  | ----------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                            |  | Year Ended December 31, |        
|                                                            |  |                         |        
|                                                            |  | 2004                    |         |   | 2003 |   |         | 2002 | 
|                                                            |  |                         |         |   |      |   |         |      | 
|Net operating loss carryforwards                            |  | $                       | 18,846  |   |      | $ | 15,998  |      |  | $ | 19,008  |  
|Tax credit carryforwards                                    |  |                         | 452     |   |      |   | 402     |      |  |   | 402     |  
|Accrued expenses, allowance and other temporary differences |  |                         | 109     |   |      |   | 98      |      |  |   | 200     |  
|                                                            |  |                         |         |   |      |   |         |      | 
|Net deferred income tax assets before valuation allowance   |  |                         | 19,407  |   |      |   | 16,498  |      |  |   | 19,610  |  
|Deferred income tax asset valuation allowance               |  |                         | (19,407 | ) |      |   | (16,498 | )    |  |   | (19,610 | )
|                                                            |  |                         |         |   |      |   |         |      | 
|Net deferred income tax asset                               |  | $                       |        |   |      | $ |        |      |  | $ |        |  
|                                                            |  |                         |         |   |      |   |         |      | 









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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|         |                               
|-------- | ------------------------------
|Note 6  | Commitments and Contingencies:





|                             |  |           |       | 
|---------------------------- |  | --------- | ----- | 
|                             |  | Operating |      
|Year Ending December 31,     |  | Leases    |      
|                             |  |           |      
|2005                         |  | $         | 213   | 
|2006                         |  |           | 122   | 
|2007                         |  |           | 95    | 
|2008                         |  |           | 95    | 
|2009                         |  |           | 95    | 
|Thereafter                   |  |           | 918   | 
|                             |  |           |      
|Total minimum lease payments |  | $         | 1,538 | 
|                             |  |           |      



Guarantee Agreements








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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Change of Control Severance Arrangements




Rent Agreement






|         |                   
|-------- | ------------------
|Note 7  | Segment Reporting:





|            |  |                         |     |  |      |   |     |      |  |   |       | 
|----------- |  | ----------------------- | --- |  | ---- | - | --- | ---- |  | - | ----- | 
|            |  | Year Ended December 31, |    
|            |  |                         |    
|            |  | 2004                    |     |  | 2003 |   |     | 2002 | 
|            |  |                         |     |  |      |   |     |      | 
|SSP         |  | $                       | 450 |  |      | $ | 20  |      |  | $ |      | 
|Jeode       |  |                         | 91  |  |      |   | 670 |      |  |   | 7,256 | 
|SoftWindows |  |                         |    |  |      |   | 20  |      |  |   |      | 
|            |  |                         |     |  |      |   |     |      | 
|Total       |  | $                       | 541 |  |      | $ | 710 |      |  | $ | 7,256 | 
|            |  |                         |     |  |      |   |     |      | 



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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                            |  |      |     |      |         |   |     |        |  |   |       |   |  |   |     |  
|--------------------------- |  | ---- | --- | ---- | ------- | - | --- | ------ |  | - | ----- | - |  | - | --- | -
|                            |  |      |     | U.S. |         |   |     |        | 
|                            |  | U.S. |     |      | Exports |   |     | Europe |  |   | Total |  
|                            |  |      |     |      |         |   |     |        |  |   |       |  
|OEM                         |  | $    |    |      |         | $ | 215 |        |  | $ |      |   |  | $ | 215 |  
|Distributor                 |  |      | 150 |      |         |   | 85  |        |  |   | 91    |   |  |   | 326 |  
|End user                    |  |      |    |      |         |   |    |        |  |   |      |   |  |   |    |  
|                            |  |      |     |      |         |   |     |        |  |   |       |  
|Total                       |  | $    | 150 |      |         | $ | 300 |        |  | $ | 91    |   |  | $ | 541 |  
|                            |  |      |     |      |         |   |     |        |  |   |       |  
|Percentage of total revenue |  |      | 28  | %    |         |   | 55  | %      |  |   | 17    | % |  |   | 100 | %



|                            |  |      |     |      |         |   |    |        |  |   |       |   |  |   |     |  
|--------------------------- |  | ---- | --- | ---- | ------- | - | -- | ------ |  | - | ----- | - |  | - | --- | -
|                            |  |      |     | U.S. |         |   |    |        | 
|                            |  | U.S. |     |      | Exports |   |    | Europe |  |   | Total |  
|                            |  |      |     |      |         |   |    |        |  |   |       |  
|OEM                         |  | $    | 69  |      |         | $ | 35 |        |  | $ | 232   |   |  | $ | 336 |  
|Distributor                 |  |      | 7   |      |         |   | 11 |        |  |   | 6     |   |  |   | 24  |  
|End user                    |  |      | 334 |      |         |   | 13 |        |  |   | 3     |   |  |   | 350 |  
|                            |  |      |     |      |         |   |    |        |  |   |       |  
|Total                       |  | $    | 410 |      |         | $ | 59 |        |  | $ | 241   |   |  | $ | 710 |  
|                            |  |      |     |      |         |   |    |        |  |   |       |  
|Percentage of total revenue |  |      | 58  | %    |         |   | 8  | %      |  |   | 34    | % |  |   | 100 | %



|                            |  |      |       |      |         |   |     |        |  |   |       |   |  |   |       |  
|--------------------------- |  | ---- | ----- | ---- | ------- | - | --- | ------ |  | - | ----- | - |  | - | ----- | -
|                            |  |      |       | U.S. |         |   |     |        | 
|                            |  | U.S. |       |      | Exports |   |     | Europe |  |   | Total |  
|                            |  |      |       |      |         |   |     |        |  |   |       |  
|OEM                         |  | $    | 1,876 |      |         | $ | 161 |        |  | $ | 98    |   |  | $ | 2,135 |  
|Distributor                 |  |      | 4,851 |      |         |   | 139 |        |  |   | 67    |   |  |   | 5,057 |  
|End user                    |  |      | 18    |      |         |   | 11  |        |  |   | 35    |   |  |   | 64    |  
|                            |  |      |       |      |         |   |     |        |  |   |       |  
|Total                       |  | $    | 6,745 |      |         | $ | 311 |        |  | $ | 200   |   |  | $ | 7,256 |  
|                            |  |      |       |      |         |   |     |        |  |   |       |  
|Percentage of total revenue |  |      | 93    | %    |         |   | 4   | %      |  |   | 3     | % |  |   | 100   | %



Note 8  Equity Transactions and Warrants:


Recent Sales of Unregistered Securities








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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














49



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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








Subscription Agreement






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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                           |           |                 |           |            |                |  |                      |                | 
|-------------------------- | --------- | --------------- | --------- | ---------- | -------------- |  | -------------------- | -------------- | 
|                           |           | Warrants        |           |            | Warrants       | 
|                           |           | Outstanding     |           |            | Outstanding    | 
|                           |           | and Exercisable |           |            | Exercise Price | 
|                           |           |                 |           |            |                | 
|Balance, December 31, 2001 |           |                 | 2,591,334 |            |                |  | $4.77 - $6.00(1)     |               
|                           | Granted   |                 |           | 2,000,000  |                |  |                      | par value      | 
|                           | Exercised |                 |           | (400,000   | )              |  |                      | $1.24          | 
|                           |           |                 |           |            |                | 
|Balance, December 31, 2002 |           |                 | 4,191,334 |            |                |  | par value - $6.00(1) |               
|                           | Granted   |                 |           |           |                |  |                      |               | 
|                           | Exercised |                 |           | (2,446,677 | )              |  |                      | $0.345-$0.8371 | 
|                           | Lapsed    |                 |           | (1,005,000 | )              |  |                      | $6.00(1)       | 
|                           |           |                 |           |            |                | 
|Balance, December 31, 2003 |           |                 | 739,657   |            |                |  | $4.77-$6.00(1)       |               
|                           | Granted   |                 |           | 1,880,911  |                |  |                      | $0.92-$1.09    | 
|                           | Exercised |                 |           | (470,000   | )              |  |                      | $6.00(1)       | 
|                           | Lapsed    |                 |           | (19,657    | )              |  |                      | $4.77(1)       | 
|                           |           |                 |           |            |                | 
|Balance, December 31, 2004 |           |                 | 2,130,911 |            |                |  | $0.92 - $5.00(1)     |               
|                           |           |                 |           |            |                | 






|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | The $6.00 warrants are the lesser of $6.00 or 90% of 10-day
    average market value.

Note 9  Sale of Java Virtual Machine
Assets:








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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|          |                
|--------- | ---------------
|Note 10  | Line of Credit:





|          |               
|--------- | --------------
|Note 11  | Related Party:







52



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INSIGNIA SOLUTIONS PLC


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |                         
|--------- | ------------------------
|Note 12  | Joint Venture Agreement:





|          |               
|--------- | --------------
|Note 13  | Restructuring:





|          |                                       
|--------- | --------------------------------------
|Note 14  | Significant Post Balance Sheet Events:







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Insignia Solutions plc


Schedule II


Valuation and Qualifying Accounts


|                                 |  |                |     |  |           |   |              |  |            |        |      |   |  |   |    | 
|-------------------------------- |  | -------------- | --- |  | --------- | - | ------------ |  | ---------- | ------ | ---- | - |  | - | -- | 
|                                 |  | Balance at     |     |  |           |   |              |  | Balance at |       
|                                 |  | Beginning of   |     |  |           |   | Deductions   |  |            | End of |     
|                                 |  | Period         |     |  | Additions |   | (Write-offs) |  |            | Period |     
|                                 |  |                |     |  |           |   |              |  |            |        |     
|                                 |  | (in thousands) |    
|Allowance for doubtful accounts: |  |                |     |  |           |   |              |  |            |        |      |   |  |   |    | 
|Year ended December 31, 2004     |  | $              |    |  |           | $ |             |  |            | $      |     |   |  | $ |   | 
|Year ended December 31, 2003     |  | $              | 50  |  |           | $ |             |  |            | $      | (50  | ) |  | $ |   | 
|Year ended December 31, 2002     |  | $              | 488 |  |           | $ |             |  |            | $      | (438 | ) |  | $ | 50 | 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |                             
| | ----------------------------
| | /s/ Burr, Pilger & Mayer LLP









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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








PricewaterhouseCoopers
LLP






56



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##### Table of Contents








|         |                                                                                         
|-------- | ----------------------------------------------------------------------------------------
|Item 9  | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|          |                        
|--------- | -----------------------
|Item 9A  | Controls and Procedures








|          |                  
|--------- | -----------------
|Item 9B  | Other Information






PART III







|          |                                                   
|--------- | --------------------------------------------------
|Item 10  | Directors and Executive Officers of the Registrant



Section 16(a) Beneficial Ownership Reporting
Compliance




Shareholder Nominations




Code
of Ethics




Audit
Committee and Audit Committee Financial Experts









|          |                       
|--------- | ----------------------
|Item 11  | Executive Compensation



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|          |                                                                                                   
|--------- | --------------------------------------------------------------------------------------------------
|Item 12  | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters








|          |                                               
|--------- | ----------------------------------------------
|Item 13  | Certain Relationships and Related Transactions








|          |                                       
|--------- | --------------------------------------
|Item 14  | Principal Accountant Fees and Services








|          |                                           
|--------- | ------------------------------------------
|Item 15  | Exhibits and Financial Statement Schedules



Financial Statements and Reports




Financial Statements Schedule










|        |    |               |  |                                                                                                                                                                  
|------- | -- | ------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |              
|Number  |    | Exhibit Title
|        |    |              
|        | 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(4)        |  | American Depositary Shares Purchase Agreement dated
    January 5, 2004.                                                                                         
|        | 4  | .05(4)        |  | Registration Rights Agreement dated January 5, 2004.                                                                                                             
|        | 4  | .06(4)        |  | Form of Warrant to Purchase American Depositary Shares dated
    January 5, 2004 and issued to the purchasers of American
    Depositary Shares.                 
|       
|        | 4  | .07(4)        |  | Form of Warrant to Purchase American Depositary Shares dated
    January 5, 2004 and issued to the principals of Nash
    Fitzwilliams, Ltd., as placement agent.
|       
|        | 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.                                                                                                                             

58



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|        |    |        |               |                                                                                                                                                                                                                                                                                                                                                         
|------- | -- | ------ | ------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |        |              
|Number  |    |        | Exhibit Title
|        |    |        |              
|       
|        | 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 such
    obligations are immediately accelerated, with no required
    notice, if the default results from the dissolution, winding up
    or liquidation of Hartford Life.                                                          
|       
|        | 10 | .28    |               | Registrants U.K. Employee Share Option Scheme 1996, as
    amended (incorporated by reference to Exhibit 4.05 to
    Registrants Registration Statement on Form S-8 filed
    on December 13, 2000 (File No. 333-51760).                                                                                                                              
|       
|        | 10 | .34(3) |               | Consulting Agreement effective April 1, 1997 between
    Registrant and Nicholas, Viscount Bearsted.                                                                                                                                                                                                                                                    
|       
|        | 10 | .38    |               | Lease Agreement between Insignia Solutions, Inc. and
    Lincoln-Whitehall Pacific, LLC, dated December 22, 1997
    (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).                                                                        
|       
|        | 10 | .42(5) |               | Registrants 1995 Employee Share Purchase Plan, as amended.                                                                                                                                                                                                                                                                                             
|       
|        | 10 | .44    |               | Lease agreement between Registrant and Comland Industrial and
    Commercial Properties Limited dated
    August 12th,
    1998 for the Apollo House premises and the Saturn House premises
    (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).
|       
|        | 10 | .62    |               | Warrant Agreement, dated as of November 24, 2000, between
    Registrant and Jefferies & Company, Inc. (incorporated
    by reference to Exhibit 10.53 to Registrants Current
    Report on Form 8-K filed on November 29, 2000).                                                                                                                      
|       
|        | 10 | .63    |               | Form of ADSs Purchase Warrant issued November 24, 2000
    (incorporated by reference to Exhibit 4.11 to
    Registrants Current Report on Form 8-K filed on
    November 29, 2000).                                                                                                                                                                   
|       
|        | 10 | .64    |               | ADSs Purchase Warrant issued to Jefferies & Company,
    Inc., dated November 24, 2000 (incorporated by reference to
    Exhibit 4.12 to Registrants Current Report on
    Form 8-K filed on November 29, 2000).                                                                                                                                       
|       
|        | 10 | .67    |               | Warrant Agreement, dated as of February 12, 2001, between
    Registrant and Jefferies & Company, Inc. (incorporated
    by reference to Exhibit 10.55 to Registrants Current
    Report on Form 8-K filed on February 15, 2001).                                                                                                                      
|       
|        | 10 | .68    |               | Form of ADSs Purchase Warrant issued February 12, 2001
    (incorporated by reference to Exhibit 4.13 to
    Registrants Current Report on Form 8-K filed on
    February 15, 2001).                                                                                                                                                                   
|       
|        | 10 | .69    |               | ADSs Purchase Warrant issued to Jefferies & Company,
    Inc., dated February 12, 2001 (incorporated by reference to
    Exhibit 4.14 to Registrants Current Report on
    Form 8-K filed on February 15, 2001).                                                                                                                                       
|       
|        | 10 | .74    |               | Form of Registration Rights Agreement by and between Registrant
    and Fusion Capital II, LLC (incorporated by reference to
    Exhibit 10.74 to Registrants Current Report on
    Form 8-K filed on October 22, 2002).                                                                                                                               
|       
|        | 10 | .85(7) |               | Warrant Agreement between Insignia Solutions plc and
    International Business Machines Corporation dated
    November 24, 2003**                                                                                                                                                                                                                      
|       
|        | 10 | .87    |               | American Depositary Shares Purchase Agreement between the
    Registrant and the Purchasers, as defined therein, dated
    October 18, 2004 (the October 2004 ADS Purchase
    Agreement) (incorporated by reference to
    Exhibit 10.87 to Registrants Current Report on
    Form 8-K filed on October 18, 2004).                                  
|       
|        | 10 | .88    |               | Form of Warrant issued to Purchasers, as defined in the October
    2004 ADS Purchase Agreement (incorporated by reference to
    Exhibit 10.88 to Registrants Current Report on
    Form 8-K filed on October 18, 2004).                                                                                                                              
|       
|        | 10 | .89    |               | Registration Rights Agreement between the Registrant and the
    Purchasers, as defined in the October 2004 ADS Purchase
    Agreement, dated October 18, 2004 (incorporated by
    reference to Exhibit 10.89 to Registrants Current
    Report on Form 8-K filed on October 18, 2004).                                                               
|       
|        | 10 | .90(8) |               | Stock Purchase and Sale Agreement dated February 9, 2005
    between, among others, Insignia Solutions plc, Kenora Ltd and
    the Sellers (as defined therein).                                                                                                                                                                                        

59



---



##### Table of Contents



|        |    |         |               |                                                                                                                                                                                                                                                
|------- | -- | ------- | ------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |         |              
|Number  |    |         | Exhibit Title
|        |    |         |              
|       
|        | 10 | .91(9)  |               | Securities Subscription Agreement by and between Insignia and
    Fusion Capital II, LLC dated February 10, 2005.                                                                                                                              
|       
|        | 10 | .92(9)  |               | Registration Rights Agreement by and between Insignia and Fusion
    Capital II, LLC dated February 10, 2005.                                                                                                                                  
|       
|        | 10 | .93(9)  |               | Warrant by and between Insignia and Fusion Capital II, LLC.                                                                                                                                                                                    
|       
|        | 10 | .94(9)  |               | Warrant by and between Insignia and Fusion Capital II, LLC.                                                                                                                                                                                    
|       
|        | 10 | .95(9)  |               | Notice of termination of Securities Subscription Agreement by
    and between Insignia and Fusion Capital dated October 17,
    2002.                                                                                                          
|       
|        | 10 | .96(10) |               | Termination and Waiver Agreement dated June 30, 2004
    between the Registrant and esmertec A.G. (incorporated by
    reference to Exhibit 10.87 from Registrants Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2004).
|       
|        | 14 | .0(7)   |               | Code of Ethics.                                                                                                                                                                                                                                
|       
|        | 21 | .01     |               | List of Registrants subsidiaries.                                                                                                                                                                                                             
|       
|        | 23 | .01     |               | Consent of Burr, Pilger & Mayer LLP, Independent
    Registered Public Accounting Firm                                                                                                                                                         
|       
|        | 23 | .02     |               | Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.                                                                                                                                                      
|       
|        | 24 | .01     |               | Power of Attorney (included on signature page).                                                                                                                                                                                                
|       
|        | 31 | .1      |               | Section 302 certification of Chief Executive Officer                                                                                                                                                                                           
|       
|        | 31 | .2      |               | Section 302 certification of Chief Financial Officer                                                                                                                                                                                           
|       
|        | 32 | .1      |               | Section 906 certification of Chief Executive Officer                                                                                                                                                                                           
|        | 32 | .2      |               | Section 906 certification of Chief Financial Officer                                                                                                                                                                                           






|   |                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | 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 Annual Report on Form 10-K for the year
    ended December 31, 1997.                                                     
|   
|(4) | 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.                                  
|   
|(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 the exhibit of the same number from
    Registrants Current Report on From 8-K filed on
    February 10, 2005 (Items 1.01, 1.02 and 9.01)                                    
|   
|(7) | 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.                                                     
|   
|(8) | 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).                                         
|   
|(9) | 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).                                   



|     |                                                                                                 
|---- | ------------------------------------------------------------------------------------------------
|(10) | Renumbered from previously filed Exhibit 10.87 in order to
    correct duplicate exhibit number.

60



---



##### Table of Contents



SIGNATURES






| |                       
| | ----------------------
| | Insignia Solutions PLC



| |     |                     
| | --- | --------------------
| | By: | /s/ Mark E. McMillan

| |                                                        
| | -------------------------------------------------------
| | ______________________________________ Mark E. McMillan
| | Chief Executive Officer                                

POWER OF ATTORNEY






|                                                                   |  |                                                                                                          |  |                |  | 
|------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                                          |  | Capacity                                                                                                 |  | Date          
|                                                                   |  |                                                                                                          |  |               
|                                                                  
|/s/ Mark E. McMillanMark
    E. McMillan                           |  | Chief Executive Officer, President and a Director (Principal
    Executive Officer and Director)         |  | March 29, 2005
|                                                                  
|/s/ Robert E. CollinsRobert
    E. Collins                         |  | Chief Financial Officer and Secretary (Principal Financial
    Officer and Principal Accounting Officer) |  | March 29, 2005
|                                                                  
|Additional Directors:                                              |  |                                                                                                         
|                                                                  
|/s/ Nicholas, Viscount
    BearstedNicholas,
    Viscount Bearsted |  | Director                                                                                                 |  | March 29, 2005
|                                                                  
|/s/ Vincent S. PinoVincent
    S. Pino                             |  | Director                                                                                                 |  | March 29, 2005
|                                                                  
|/s/ David G. FrodshamDavid
    G. Frodsham                         |  | Director                                                                                                 |  | March 29, 2005
|                                                                  
|/s/ Richard M. NolingRichard
    M. Noling                         |  | Director                                                                                                 |  | March 29, 2005

61



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##### Table of Contents



INDEX TO EXHIBITS




|        |    |               |  |                                                                                                                                                                                                                                                                                                                                                         
|------- | -- | ------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |              
|Number  |    | Exhibit Title
|        |    |              
|        | 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(4)        |  | American Depositary Shares Purchase Agreement dated
    January 5, 2004.                                                                                                                                                                                                                                                                                
|        | 4  | .05(4)        |  | Registration Rights Agreement dated January 5, 2004.                                                                                                                                                                                                                                                                                                    
|        | 4  | .06(4)        |  | Form of Warrant to Purchase American Depositary Shares dated
    January 5, 2004 and issued to the purchasers of American
    Depositary Shares.                                                                                                                                                                                                        
|       
|        | 4  | .07(4)        |  | Form of Warrant to Purchase American Depositary Shares dated
    January 5, 2004 and issued to the principals of Nash
    Fitzwilliams, Ltd., as placement agent.                                                                                                                                                                                       
|       
|        | 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 such
    obligations are immediately accelerated, with no required
    notice, if the default results from the dissolution, winding up
    or liquidation of Hartford Life.                                                          
|       
|        | 10 | .28           |  | Registrants U.K. Employee Share Option Scheme 1996, as
    amended (incorporated by reference to Exhibit 4.05 to
    Registrants Registration Statement on Form S-8 filed
    on December 13, 2000 (File No. 333-51760).                                                                                                                              
|       
|        | 10 | .34(3)        |  | Consulting Agreement effective April 1, 1997 between
    Registrant and Nicholas, Viscount Bearsted.                                                                                                                                                                                                                                                    
|       
|        | 10 | .38           |  | Lease Agreement between Insignia Solutions, Inc. and
    Lincoln-Whitehall Pacific, LLC, dated December 22, 1997
    (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).                                                                        
|       
|        | 10 | .42(5)        |  | Registrants 1995 Employee Share Purchase Plan, as amended.                                                                                                                                                                                                                                                                                             
|       
|        | 10 | .44           |  | Lease agreement between Registrant and Comland Industrial and
    Commercial Properties Limited dated
    August 12th,
    1998 for the Apollo House premises and the Saturn House premises
    (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).
|       
|        | 10 | .62           |  | Warrant Agreement, dated as of November 24, 2000, between
    Registrant and Jefferies & Company, Inc. (incorporated
    by reference to Exhibit 10.53 to Registrants Current
    Report on Form 8-K filed on November 29, 2000).                                                                                                                      
|       
|        | 10 | .63           |  | Form of ADSs Purchase Warrant issued November 24, 2000
    (incorporated by reference to Exhibit 4.11 to
    Registrants Current Report on Form 8-K filed on
    November 29, 2000).                                                                                                                                                                   
|       
|        | 10 | .64           |  | ADSs Purchase Warrant issued to Jefferies & Company,
    Inc., dated November 24, 2000 (incorporated by reference to
    Exhibit 4.12 to Registrants Current Report on
    Form 8-K filed on November 29, 2000).                                                                                                                                       
|       
|        | 10 | .67           |  | Warrant Agreement, dated as of February 12, 2001, between
    Registrant and Jefferies & Company, Inc. (incorporated
    by reference to Exhibit 10.55 to Registrants Current
    Report on Form 8-K filed on February 15, 2001).                                                                                                                      

62



---



##### Table of Contents



|        |    |         |               |                                                                                                                                                                                                                                                                                                                       
|------- | -- | ------- | ------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |         |              
|Number  |    |         | Exhibit Title
|        |    |         |              
|       
|        | 10 | .68     |               | Form of ADSs Purchase Warrant issued February 12, 2001
    (incorporated by reference to Exhibit 4.13 to
    Registrants Current Report on Form 8-K filed on
    February 15, 2001).                                                                                                                                 
|       
|        | 10 | .69     |               | ADSs Purchase Warrant issued to Jefferies & Company,
    Inc., dated February 12, 2001 (incorporated by reference to
    Exhibit 4.14 to Registrants Current Report on
    Form 8-K filed on February 15, 2001).                                                                                                     
|       
|        | 10 | .74     |               | Form of Registration Rights Agreement by and between Registrant
    and Fusion Capital II, LLC (incorporated by reference to
    Exhibit 10.74 to Registrants Current Report on
    Form 8-K filed on October 22, 2002).                                                                                             
|       
|        | 10 | .85(7)  |               | Warrant Agreement between Insignia Solutions plc and
    International Business Machines Corporation dated
    November 24, 2003**                                                                                                                                                                                    
|       
|        | 10 | .87     |               | American Depositary Shares Purchase Agreement between the
    Registrant and the Purchasers, as defined therein, dated
    October 18, 2004 (the October 2004 ADS Purchase
    Agreement) (incorporated by reference to
    Exhibit 10.87 to Registrants Current Report on
    Form 8-K filed on October 18, 2004).
|       
|        | 10 | .88     |               | Form of Warrant issued to Purchasers, as defined in the October
    2004 ADS Purchase Agreement (incorporated by reference to
    Exhibit 10.88 to Registrants Current Report on
    Form 8-K filed on October 18, 2004).                                                                                            
|       
|        | 10 | .89     |               | Registration Rights Agreement between the Registrant and the
    Purchasers, as defined in the October 2004 ADS Purchase
    Agreement, dated October 18, 2004 (incorporated by
    reference to Exhibit 10.89 to Registrants Current
    Report on Form 8-K filed on October 18, 2004).                             
|       
|        | 10 | .90(8)  |               | Stock Purchase and Sale Agreement dated February 9, 2005
    between, among others, Insignia Solutions plc, Kenora Ltd and
    the Sellers (as defined therein).                                                                                                                                                      
|       
|        | 10 | .91(9)  |               | Securities Subscription Agreement by and between Insignia and
    Fusion Capital II, LLC dated February 10, 2005.                                                                                                                                                                                                     
|       
|        | 10 | .92(9)  |               | Registration Rights Agreement by and between Insignia and Fusion
    Capital II, LLC dated February 10, 2005.                                                                                                                                                                                                         
|       
|        | 10 | .93(9)  |               | Warrant by and between Insignia and Fusion Capital II, LLC.                                                                                                                                                                                                                                                           
|       
|        | 10 | .94(9)  |               | Warrant by and between Insignia and Fusion Capital II, LLC.                                                                                                                                                                                                                                                           
|       
|        | 10 | .95(9)  |               | Notice of termination of Securities Subscription Agreement by
    and between Insignia and Fusion Capital dated October 17,
    2002.                                                                                                                                                                                 
|       
|        | 10 | .96(10) |               | Termination and Waiver Agreement dated June 30, 2004
    between the Registrant and esmertec A.G. (incorporated by
    reference to Exhibit 10.87 from Registrants Quarterly
    Report on Form 10-Q for the quarter ended June 30,
    2004).                                                                       
|       
|        | 14 | .0(7)   |               | Code of Ethics.                                                                                                                                                                                                                                                                                                       
|       
|        | 21 | .01     |               | List of Registrants subsidiaries.                                                                                                                                                                                                                                                                                    
|       
|        | 23 | .01     |               | Consent of Burr, Pilger & Mayer LLP, Independent
    Registered Public Accounting Firm                                                                                                                                                                                                                                
|       
|        | 23 | .02     |               | Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.                                                                                                                                                                                                                             
|       
|        | 24 | .01     |               | Power of Attorney (included on signature page).                                                                                                                                                                                                                                                                       
|       
|        | 31 | .1      |               | Section 302 certification of Chief Executive Officer                                                                                                                                                                                                                                                                  
|       
|        | 31 | .2      |               | Section 302 certification of Chief Financial Officer                                                                                                                                                                                                                                                                  
|       
|        | 32 | .1      |               | Section 906 certification of Chief Executive Officer                                                                                                                                                                                                                                                                  
|        | 32 | .2      |               | Section 906 certification of Chief Financial Officer                                                                                                                                                                                                                                                                  






|   |                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | 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.

63



---



##### Table of Contents





|    |                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 Annual Report on Form 10-K for the year
    ended December 31, 1997.                   
|   
|(4) | 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.
|   
|(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 the exhibit of the same number from
    Registrants Current Report on From 8-K filed on
    February 10, 2005 (Items 1.01, 1.02 and 9.01)  
|   
|(7) | 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.                   
|   
|(8) | 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).       
|   
|(9) | 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). 



|     |                                                                                                 
|---- | ------------------------------------------------------------------------------------------------
|(10) | Renumbered from previously filed Exhibit 10.87 in order to
    correct duplicate exhibit number.

64