1002390--7/7/2006--INSIGNIA_SOLUTIONS

related topics

{property, intellectual, protect}

{product, market, service}

{system, service, information}

{control, financial, internal}

{operation, international, foreign}

{product, liability, claim}

{stock, price, share}

{personnel, key, retain}

{stock, price, operating}

{loss, insurance, financial}

{financial, litigation, operation}

Our stock was recently delisted from NASDAQ. The sale of our shares to Fusion Capital and other investors may cause dilution, and the sale of the such shares by Fusion Capital and other investors could cause the price of our shares to decline. Our future performance depends upon sales of products of our IDMS and OMC product lines, which are our sole products. The long and complex process of licensing our IDMS and OMC products 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 IDMS and OMC 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 OMC and IDMS products; however, this increase in expenses is expected to decrease our cash position. If we are unable to stay abreast of technological changes, evolving industry standards and rapidly changing customer requirements, our business will likely suffer and revenue may decline. Our targeted market is highly competitive. Our revenue model may not succeed. Fluctuations in our quarterly results could cause the market price of our shares to decline. 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. Our technology depends on the adoption of standards such as those set forth by the Open Mobile Alliance ( OMA ). If such standards are not effectively established our business could suffer. Use of open industry standards, however, may also make us more vulnerable to competition. Product defects can be expensive to fix and may cause us to lose customers. If we lose key personnel or are unable to hire additional qualified personnel as necessary, we may not be able to successfully manage our business or sell our products. Our performance depends significantly on our ability to protect our intellectual property and proprietary rights in the technologies used in our products. If we are not adequately protected, our competitors could use the technologies that we have developed to enhance their products and services, which could harm our business. Our products may infringe the intellectual property rights of third parties, which may result in lawsuits and prevent us from selling our products. If we fail to deploy our products successfully or to an agreed schedule, our customers may seek damages. We are at risk of securities litigation which, regardless of the outcome, could result in substantial costs and divert management attention and resources. If we are unable to favorably assess the effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified attestation report on our assessment our stock price could be adversely affected. Our investors may have difficulty enforcing judgments against us in U.S. courts because many of our assets and some of our directors and management are located in England and Sweden.

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1002390--7/7/2006--INSIGNIA_SOLUTIONS_PLC