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If the Scheme becoming Effective, New Insignia Shares will be issued to ASI (and/or its nominee(s)) whereupon Insignia will become a wholly owned subsidiary of the ASI Group.

2. Background to and reasons for recommending the Proposals

Given that the Group's operations are now exclusively based in the United States and the majority of the Company's shares are held by or on behalf of US residents, the Board has determined that it would be appropriate for the holding company of the Group to be incorporated and domiciled in the United States. The reasons for the move, and accordingly the Scheme to implement it, are as follows.

As noted above, the majority of the Company's beneficial shareholders are currently resident in the United States and the Group's operations, through the Company's wholly-owned subsidiary, Dollardays International, Inc., are almost exclusively based in that jurisdiction. Accordingly, the Directors believe it is no longer appropriate for a UK company to act as the holding company of the Group, and current Insignia Shareholders and Insignia ADS Holders resident in the United States will benefit from holding shares in a company incorporated in their home jurisdiction. It is the belief of the Directors that this will facilitate increased shareholder enfranchisement.

The Directors believe that considerable cost savings for the Group could be achieved by making it subject to a single legal and regulatory regime. Currently, Insignia is subject to the provisions of English law in addition to relevant provisions of United States laws, which significantly increases legal and regulatory compliance expenditure, including audit costs.

It is intended that Insignia will be re-registered as a private limited company shortly after the Scheme becomes Effective and its subsidiaries transferred to ASI. The Directors presently intend for Insignia to be wound up in due course.

Currently, Insignia Shares are quoted on the Pink Sheets. For US regulatory reasons, to facilitate trading in the US, Insignia Shares are held by a depositary who issues American Depositary Shares (“ADSs”) representing Insignia Shares, which can then be traded between US market participants. The Scheme will result in Insignia Shareholders holding shares in ASI, whose shares can be traded in the US without the need for an ADS facility to be maintained. The Directors believe this will afford the Group further cost savings and reduce its administrative burden.

In addition, under United Kingdom tax legislation, stamp duty reserve tax (“SDRT”) is payable when Insignia Shares are issued to an ADS depositary at the rate of 1.5 per cent. of the value of the securities issued to the depositary. This cost has historically been borne by the Company. Eliminating the need for an ADS facility by enabling direct trading in ASI Shares will avoid such costs in the future.

The Directors believe that, by streamlining the current structure of the Insignia Group, and by offering future investors the ability to invest directly in common stock in a US corporation (as opposed to acquiring ADSs in an English company), the Enlarged Group will present a clearer investment and business proposition for any future potential US and overseas investors and business partners.

The reorganisation is estimated to cost approximately US$195,000. However, as a result of the reorganisation, the Company estimates that it will save approximately US$80,000 per year in reduced attorney, audit and filing fees, and other related expenses.

The Board considers that the anticipated benefits of the Proposals justify the cost.

The Board does not anticipate that the Scheme will have any material effect on the trading operations of the Group.

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3. Issued share capital of ASI following implementation of the Scheme

The current issued share capital of Insignia comprises 119,924,943 Ordinary Shares, with an additional 33,108,785 Ordinary Shares reserved for issue under the Insignia Share Plans and in relation to Insignia Warrants.

The current issued share capital of ASI as at 2 November 2009 (being the latest practicable date prior to publication of this document), and the issued capital of ASI immediately following the implementation of the Scheme (assuming no exercise of outstanding rights under the Insignia Share Plans or Insignia Warrants, nor any other issue or offer of share capital by Insignia or ASI) is as follows:

		Issued
		Number				Amount (US$)
ASI Shares as at 2 November 2009			10				0.01
ASI Shares immediately following implementation of the Scheme			11,992,494				11,992.49

4. Irrevocable undertakings

The Company has received irrevocable undertakings to vote (or procure the vote) in favour of the resolutions to be proposed at the Meetings in respect of, in aggregate, 50,506,841 Insignia Shares, representing approximately 42 per cent. of Insignia's existing issued share capital.

Further details of these irrevocable undertakings received by Insignia are set out in paragraph 9 of Part VII of this document.

5. Taxation

The taxation consequences of the Scheme will depend upon the jurisdiction in which the relevant Insignia Shareholder is resident for tax purposes. Summaries of the UK consequences of the Scheme for Insignia Shareholders resident for tax purposes in the UK and the US tax consequences of the Scheme for Insignia Shareholders and Insignia ADS Holders resident for tax purposes in the US are set out in paragraph 18 of Part II. These summaries are intended as a general guide and are based upon the law and practice currently in force, which is subject to change. If you are in any doubt as to your tax position, you should consult an appropriate independent professional adviser.

6. Insignia Options and Insignia Warrants

Details in relation to the effect of the Scheme on options granted under the Insignia Share Plans are set out in paragraph 10 of Part II of this document. Details in relation to the effect of the Scheme on the Insignia Warrants are set out in paragraph 11 of Part II of this document.

7. Overseas Shareholders

Persons resident in, or citizens of, jurisdictions outside the United Kingdom should refer to paragraph 16 of Part II of this document.

8. The Scheme and the Meetings

The Proposals are being implemented by means of a scheme of arrangement between Insignia and the Insignia Shareholders pursuant to the provisions of Part 26 of the Act. The Scheme involves the cancellation of the Scheme Shares by way of a Court approved reduction of capital and the application of the reserve arising from such cancellation in paying up in full a number of New Insignia Shares which is equal to the number of cancelled Scheme Shares and issuing such shares to ASI in consideration for which Insignia Shareholders will receive one ASI Share for every 10 Insignia Shares held.

Upon the Scheme becoming Effective, ASI will become the owner of all of the issued and outstanding share capital of Insignia.

To become Effective, the Scheme requires, amongst other things, the approval at the Court Meeting of a majority in number representing not less than 75 per cent. in value of the Scheme Shareholders present and voting, either in person or by proxy, at the Court Meeting, or at any adjournment thereof, and the passing of the Special Resolution necessary to give effect to the Scheme at the General Meeting, or at any adjournment thereof.

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Following the Court Meeting and the General Meeting and the satisfaction (or, where applicable, waiver) of the other Conditions, the Scheme must also be sanctioned by the Court and the associated Capital Reduction must be confirmed by the Court at the Court Hearing. The Scheme will take effect when the Court Order has been delivered to the Registrar of Companies and registered by him. If the Scheme becomes Effective, it will be binding on all Scheme Shareholders irrespective of whether or not they attended or voted, and if they voted, whether they voted for or against the Scheme, at the Court Meeting or the General Meeting.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of Scheme Shareholder opinion. You are therefore strongly urged to complete, sign and return your Forms of Proxy or ADS Voting Instruction Card (as appropriate) as soon as possible.

Further details of the Scheme and the Meetings are set out in paragraph 12 of Part II of this document.

9. Action to be taken

9.1 Insignia Shareholders

Notices convening the Court Meeting and the General Meeting are set out in Parts IX and X of this document respectively. You will find accompanying this document, a blue Form of Proxy for use at the Court Meeting and a white Form of Proxy for use at the General Meeting.

Whether or not you intend to be present at either Meeting, you are requested to complete, sign and return both the accompanying Form of Proxy for the Court Meeting (blue) and the Form of Proxy for the General Meeting (white) in accordance with the instructions printed on the respective forms.

Your attention is drawn to paragraph 22 of Part II of this document which explains in detail the action you should take in relation to the Proposals and the Scheme, a summary of which is set out on page iv of this document.

If you have any questions relating to this document or the completion and return of the Forms of Proxy, please contact Capita Registrars on 0871 664 0321 or, if telephoning from outside the UK, on +44 20 8639 3399 between 9.00 a.m. and 5.00 p.m. Monday to Friday (London time). Calls to the Capita Registrars 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider’s network extras. Calls to the Capita Registrars +44 20 8639 3399 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Capita Registrars cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

Further details relating to settlement are set out in paragraph 19 of Part II of this document.

9.2 Insignia ADS Holders

Holders of Insignia ADSs should read paragraph 17 of Part II of this document for an explanation of the steps to be taken in order to instruct the Depositary as to how to vote the underlying Insignia Shares at the Meetings, or, alternatively how to remove the underlying Insignia Shares from the ADS facility in order to be entitled to attend and vote at the Meetings in person.

10. Further information

Your attention is drawn to Part II of this document, which gives further details about the Proposals and to the terms of the Scheme which are set out in full in Part VI of this document. Please note that the information contained in this letter is not a substitute for reading the remainder of this document.

11. Recommendation

The Insignia Directors unanimously consider the terms of the Proposals to be fair and reasonable and in the best interests of the Insignia Shareholders and Insignia ADS Holders as a whole.

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Accordingly, the Insignia Directors unanimously recommend that Insignia Shareholders vote, and that Insignia ADS Holders instruct the Depositary to vote, in favour of the resolutions to be proposed at the Court Meeting and the General Meeting, as they have irrevocably undertaken to do in respect of their own (and certain connected persons') entire legal and beneficial holdings of Insignia Shares amounting to, in aggregate, 50,506,841 Insignia Shares, representing approximately 42 per cent. of Insignia's existing issued share capital.

Yours sincerely,
  
Peter Engel
Chairman
for and on behalf of
Insignia Solutions plc

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PART II
  
EXPLANATORY STATEMENT

(Explanatory statement in compliance with the provisions of section 897 of the Act)

Recommended proposals relating to the introduction of a new US holding company

1. Introduction

Insignia today announced proposals relating to its intention to create a new holding company for the Group domiciled in the United States. It is intended that such proposals will be implemented by the insertion of ASI as the new holding company for the Group to be effected by means of a scheme of arrangement between Insignia and its shareholders pursuant to the provisions of Part 26 of the Act, involving a reduction of capital under section 641 of the Act.

Implementation of the Scheme in full will result in Insignia Shareholders exchanging their shares in Insignia for shares in ASI as the new holding company of the Group.

The Scheme will require the approval of Insignia Shareholders at the Court Meeting and the passing of a special resolution for, amongst other matters, the reduction of Insignia’s share capital at a separate general meeting of Insignia Shareholders, as explained under paragraph 12 of this Part II below.

A description of the action recommended to be taken by Insignia Shareholders and Insignia ADS Holders in relation to the Court Meeting and the General Meeting is set out in paragraph 22 of this Part II below. The full text of the Scheme is set out in Part VI of this document. The full text of each of the resolutions to be proposed at the Court Meeting and the General Meeting is set out in Parts IX and X of this document.

The Board has unanimously recommended that Insignia Shareholders vote in favour of the Scheme at the Court Meeting and in favour of the Special Resolution to be proposed at the General Meeting referred to in paragraph 12 below. The recommendation of the Board is set out in paragraph 11 of Part I of this document.

It is expected that, if approved, the Scheme will become Effective on 15 December 2009.

The terms of the Scheme are set out in full in Part VI of this document. Your attention is also drawn to the further information contained in this document which forms part of this Explanatory Statement.

The Scheme is conditional upon the Conditions set out in Part III of this document being satisfied or (if capable of waiver) waived.

Insignia Shareholders and Insignia ADS Holders should read the whole of this document before deciding whether or not to vote in favour of the Scheme at the Court Meeting and the Special Resolution to be proposed at the General Meeting.

2. The Proposals

It is intended that the Proposals will be implemented by way of the Scheme, the full details of which are set out in Part VI of this document.

Under the terms of the Scheme, which is subject to the Conditions and the further terms set out in Part III of this document, Scheme Shareholders on the register of members of Insignia at the Scheme Record Time will be entitled to receive:

for every 10 Insignia Shares      one ASI Share

The Scheme requires the Scheme Shareholders to vote in favour of the Scheme at the Court Meeting to be held at 12.00 noon (Arizona time) and the Insignia Shareholders to vote in favour of the Special Resolution to be proposed at the General Meeting to be held at 12.15 p.m. (Arizona time), both such meetings to be held on 30 November 2009 at 7575 E Redfield Road, Suite 201, Scottsdale, Arizona, 85260, USA. Further details of the Meetings are set out in paragraph 12 of this Part II.

If the Scheme becomes Effective, it will be binding on all Scheme Shareholders irrespective of whether or not they attended or voted and, if they voted, whether they voted for or against the Scheme, at the Court Meeting or the General Meeting.

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If the Scheme becoming Effective, New Insignia Shares will be issued to ASI (and/or its nominee(s)) whereupon Insignia will become a wholly owned subsidiary of the ASI Group.

The New ASI Shares will be allotted and issued credited as fully paid and will rank pari passu in all respects with the ASI Shares in issue at the time the New ASI Shares are allotted and issued pursuant to the Scheme, including the right to receive and retain dividends and other distributions declared, made or paid by reference to a record date falling after the Effective Date.

It is expected that the ASI Shares will be quoted on the Over-the-Counter Bulletin Board (“OTCBB”). It is expected that quotation of the New ASI Shares will commence with effect from 9.00 a.m. (New York time) on the Effective Date which, subject to the satisfaction of certain conditions, including the sanction of the Scheme by the Court, is expected to occur on 15 December 2009.

Insignia's place of central management and control is currently located in the United States, and accordingly the City Code will not apply to the Acquisition.

3. Effect of the Scheme

The effect of full implementation of the Scheme will be as follows:

4. Irrevocable undertakings

Insignia has received irrevocable undertakings to vote (or procure the vote) in favour of the resolutions to be proposed at the Meetings in respect of, in aggregate, 50,506,841 Insignia Shares, representing approximately 42 per cent. of Insignia's existing issued share capital.

Further details of these irrevocable undertakings received by Insignia are set out in paragraph 9 of Part VII of this document.

5. Information on Insignia and DollarDays

5.1 Insignia

The Company was incorporated in England and Wales in 1986. The Company’s registered office remains in England.

In the late 1990s the Company’s headquarters were transferred to California. The Company was subsequently listed on the NASDAQ Stock Exchange. In April 2006 the Company de-listed from NASDAQ; the Company’s shares are currently quoted on the Pink Sheets, a US quotation facility for non-listed securities traded “over the counter”.

In 2006 the Company closed its UK office and laid off substantially all of its employees. On February 11 2007, Insignia entered into an asset purchase agreement with Smith Micro Software, Inc., pursuant to which Smith Micro agreed to acquire substantially all of the assets of Insignia for cash. The transaction completed in April 2007.

Following the disposal to Smith Micro, from April 2007 until 23 June 2008, Insignia was a public “shell” company with nominal assets whose sole business was to identify, evaluate and investigate various companies with the intent that, if such investigation warranted, a reverse acquisition transaction be negotiated and completed pursuant to which Insignia would acquire a target company with a similar operating business, with the intent of continuing the acquired company's business with the benefit of Insignia's status as a publicly held company.

5.2 Merger with DollarDays International, Inc.

Accordingly, on 23 June 2008, Insignia and its wholly-owned subsidiary, Joede, Inc., entered into an Agreement and Plan of Merger (the “Merger Agreement”) with DollarDays International, LLC, a Delaware limited liability

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company (“DDI LLC”), providing for the merger of DollarDays into Jeode (the “Merger”). For the purposes of the Merger, DDI LLC formed a wholly owned Delaware Corporation, DollarDays International, Inc. (“DollarDays”) and contributed all of its assets and liabilities in exchange for 100 per cent. of the stock of DollarDays. The Merger was completed on June 23 2008. Further details of the Merger Agreement are set out in paragraph 10 of Part VII.

5.3 Information on DollarDays International, Inc.

DollarDays is an online wholesaler offering smaller enterprises the opportunity to purchase goods at prices at or near to the prices paid by larger retail chains who benefit from large volume discounts, whilst only requiring relatively small minimum purchase orders to increase operational flexibility for these smaller operators.

DollarDays is headquartered in Scottsdale, Arizona, and employs approximately 30 full time employees. Its website address is www.dollardays.com. Further information on DollarDays' business is set out in paragraph 7 below.

6. Information on ASI

ASI was incorporated in the State of Delaware on 6 October 2009 under the Delaware General Corporation Law. ASI is a holding company and has not traded since incorporation. Its registered office is 7575 E Redfield Road, Suite 201, Scottsdale, Arizona, 85260, USA.

7. Information on the DollarDays business

7.1 Overview

DollarDays is an online wholesaler offering smaller enterprises the opportunity to purchase goods at prices at or near to the prices paid by larger retail chains who benefit from large volume discounts, whilst only requiring relatively small minimum purchase orders to increase operational flexibility for these smaller operators.

DollarDays customers can locate products on its website by utilising its proprietary search function or by navigating through online departments. The departments section is currently organized into approximately 32 main categories. Categories are typically further divided into subcategories to facilitate product identification. Individual products can be accessed and viewed from the category or subcategory pages. These specific product pages include product descriptions, colour photographs and pricing information.

The number of total products offered by DollarDays has grown from less than 5,000 in 2001, to more than 25,000 products in 2008. The number of products and product categories change throughout the year, as DollarDays periodically reorganises its departments and/or categories to better reflect its current product offerings.

7.2 Suppliers

DollarDays benefits from longstanding relationships with its suppliers, which include manufacturers, resellers and liquidation wholesalers. DollarDays offers both non-branded and branded products, including Calvin Klein, Colgate, Disney, Revlon and 3M.

DollarDays enter into standardised consignment specific vendor contracts with each of its suppliers rather than long-term supply contracts. Whilst this affords DollarDays with flexibility in terms of its product offering, there is no guarantee of long-term product supply. DollarDays retains control of the terms on which products are sold through its website.

7.3 Sales and Marketing

DollarDays uses a variety of methods to target its consumer audience, including online campaigns, direct marketing and trade-shows. However, its primary marketing consists of online marketing, such as advertising through portals, keywords, search engines, affiliate marketing programs, banners and email campaigns. DollarDays seek to identify and discontinue sales channels that do not meet expected sales targets. Sales campaigns are generally developed internally.

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DollarDays' marketing initiatives include, but are not limited to, the following:

DollarDays has a broad customer base, with no single customer accounting for more than 5 per cent. of its sales. DollarDays employs an average of 12 sales people, for approximately 11 hours of coverage per day, five days a week. The primary function of the sales staff is to receive incoming calls and make outgoing calls to solicit new customers, obtain additional sales from infrequent purchasers and re-contact lapsed customers.

DollarDays' primary distribution channel is online sales to small businesses, non-profits and home-based businesses located in the United States. During 2008, sales to domestic customers accounted for approximately 99 per cent. of its net sales.

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8. Reasons for the Proposals and intentions for Insignia

Given the Group's operations are now exclusively based in the United States and the majority of the Company's shares are held by or on behalf of by US residents, the Board has determined that it would be appropriate for the holding company of the Group to be incorporated and domiciled in the United States. The reasons for the move, and accordingly the Scheme to implement it, are as follows:

As noted above, the majority of the Company's beneficial shareholders are currently resident in the United States and the Group's operations, through the Company's wholly owned subsidiary, Dollardays International, Inc., are almost exclusively based in that jurisdiction. Accordingly, the Directors believe it is no longer appropriate for a UK company to act as the holding company of the Group, and current Insignia Shareholders and Insignia ADS Holders resident in the United States will benefit from holding shares in a company incorporated in their home jurisdiction. It is the belief of the Directors that this will facilitate increased shareholder enfranchisement.

The Directors believe that considerable cost savings for the Group could be achieved by making it subject to a single legal and regulatory regime. Currently, Insignia is subject to the provisions of English law in addition to relevant provisions of United States legislation, which significantly increases legal and regulatory compliance expenditure, including audit costs.

It is intended that Insignia Solutions plc will be re-registered as a private limited company shortly after the Scheme becomes effective and its subsidiaries transferred to ASI. The Directors presently intend for Insignia to be wound up in due course.

Currently, Insignia Shares are quoted on the Pink Sheets. For US regulatory reasons, to facilitate trading in the US, Insignia Shares are held by a depositary who issues ADSs representing Insignia Shares, which can then be traded between US market participants. The Scheme will result in Insignia Shareholders holding shares in ASI, whose shares can be traded in the US without the need for an ADR facility to be maintained. The Directors believe this will afford the Group further cost savings and reduce its administrative burden.

In addition, under United Kingdom tax legislation, SDRT is payable when Insignia Shares are issued to an ADS depositary at the rate of 1.5 per cent. of the value of the securities issued to the depositary. This cost has historically been borne by the Company. By obviating the need for an ADS facility by direct trading in ASI Shares, these costs can be avoided in the future.

The Directors believe that, by streamlining the current structure of the Insignia Group, and by offering future investors the ability to invest directly in common stock in a US corporation (as opposed to acquiring ADSs in an English company), the Enlarged Group will present a clearer investment and business proposition for any future potential US and overseas investors and business partners.

The reorganisation is estimated to cost approximately US$195,000. However, as a result of the reorganisation, the Company estimates that it will save approximately US$80,000 per year in reduced attorney, audit and filing fees, and other related expenses.

The Board considers that the anticipated benefits of the Proposals justify the cost.

The Board does not anticipate that the Scheme will have any material effect on the trading operations of the Group.

9. Insignia Directors and the effect of the Scheme on their interests

Details of the interests of the Insignia Directors in the share capital of Insignia are set out in paragraph 5 of Part VII of this document. Insignia Shares held by or on behalf of all of the Insignia Directors at the Scheme Record Time will be subject to the Scheme.

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The Insignia Directors have irrevocably undertaken to vote in favour of the resolutions to be proposed at the Meetings as described in paragraph 12 of this Part II below.

The effect of the Scheme on the interests of the Insignia Directors does not differ from its effect on the like interest of any other person.

In common with other employees who hold options granted pursuant to the Insignia Share Plans, it is intended that options and awards granted under the Insignia Share Plans will be assumed by ASI following the Effective Date.

10. Insignia Share Plans

Any Insignia Shares issued pursuant to the exercise of options under the Insignia Share Plans prior to the Scheme Record Time will be subject to the terms of the Scheme As the exercise price of the outstanding Insignia Options exceeds the current market price of an Insignia Share (being US$0.03 at 2 November 2009, the latest practicable date prior to the publication of this document) it is not anticipated that any Insignia Optionholders will wish to exercise this right prior to the Scheme Record Time. However, any Insignia Optionholder who wishes to exercise their Insignia Options should contact Michael Moore, the Chief Financial Officer of Dollardays, on 001 (480) 922 8155 (ext. 105) as soon as possible.

It is intended that, as permitted under the terms of the Insignia Share Plans, ASI will assume all outstanding options under those plans following the Scheme becoming Effective as set out below.

Once the Scheme becomes Effective, ASI will assume all options outstanding under the 1995 Plan on an equivalent basis. The assumed options will continue on the same terms and conditions, except that they will become options to purchase ASI Shares and will be adjusted such that each optionholder will receive an option over one ASI Share for every 10 Insignia Shares currently under option. The exercise price of the options will also be adjusted proportionately. Fractional entitlements shall be disregarded. The exercise price of the assumed options will be converted (where necessary) from pounds sterling to US dollars by reference to the exchange rate at the time the options are assumed by ASI.

Once the Scheme becomes Effective, ASI will assume all options outstanding under the 2009 Plan on an equivalent basis. The assumed options will continue on the same terms and conditions, except that they will become options to purchase ASI Shares and will be adjusted such that each optionholder will receive an option over one ASI Share for every 10 Insignia Shares currently under option. The exercise price of the options will also be adjusted proportionately. Fractional entitlements will be disregarded.

The tax consequences of the Scheme, and exercise of the Insignia Options and the ASI Options will be governed by the country in which the Insignia Optionholder is tax resident. Insignia Optionholders are recommended to consult their personal tax adviser with respect to the tax consequences in their country of residence of the Insignia Options and the ASI Options, as well as any other federal, foreign, state, provincial and local tax consequences that may be applicable to them. In addition, any Insignia Optionholder who is a citizen or resident of a country other than the country in which he or she works, or who is subject to the tax laws of more than one country, or who changes his or her residence or citizenship during the term of the options, should consult his or her personal tax adviser.

Any Insignia Shares issued pursuant to the exercise of options under the Insignia Share Plans prior to the Scheme Record Time will be subject to the terms of the Scheme. Save for the issue of the New Insignia Shares to ASI pursuant to the Scheme, Insignia will not issue any shares after the Scheme Record Time until the Effective Date.

As set out in the Special Resolution, the Articles will be amended to ensure that for every 10 Insignia Shares allotted and issued pursuant to the exercise of an option under the Insignia Share Plans after the Effective Date (to the extent not assumed by ASI under the terms of the Insignia Share Plans as currently anticipated) will be automatically transferred to, and purchased by, ASI (or its nominee(s)) for the allotment and issue of one New ASI Share.

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11. Insignia Warrants

ASI will assume all outstanding Insignia Warrants currently in issue. The assumed warrants will continue on the same terms and conditions, except that they will become warrants to purchase ASI Shares and will be adjusted such that each Insignia Warrantholder will receive a warrant over one ASI Share for every 10 Insignia Shares currently under warrant. The exercise price of the Insignia Warrants will also be adjusted proportionately. Fractional entitlements shall be disregarded.

As the exercise price of the outstanding Insignia Warrants (save for the Insignia Warrants issued to certain investors in connection with the Merger Agreement which have an exercise price of US$0.01) exceeds the current market price of an Insignia Share (being US$0.03 at 2 November 2009, the latest practicable date prior to the publication of this document) it is not anticipated that any Insignia Warrantholders will wish to exercise Insignia Warrants prior to the Scheme Record Time. However, any Insignia Warrantholder who wishes to exercise their Insignia Warrants to acquire Insignia Shares should contact Michael Moore, the Chief Financial Officer of DollarDays, on 001 (480) 922 8155 (ext. 105) as soon as possible.

Any Insignia Shares issued pursuant to the exercise of Insignia Warrants prior to the Scheme Record Time will be subject to the terms of the Scheme. Save for the issue of the New Insignia Shares to ASI pursuant to the Scheme, Insignia will not issue any shares after the Scheme Record Time until the Effective Date.

As set out in the Special Resolution, the Articles will be amended to ensure that for every 10 Insignia Shares allotted and issued pursuant to the exercise of an Insignia Warrant after the Effective Date (to the extent not assumed by ASI under the terms of the Insignia Warrants as currently anticipated) will be automatically transferred to, and purchased by, ASI (or its nominee(s)) for the allotment and issue of one New ASI Share.

12. The Scheme

12.1 Introduction

The Proposals are being implemented by means of a scheme of arrangement between Insignia and the Scheme Shareholders pursuant to the provisions of Part 26 of the Act, details of which are set out in full in Part VI of this document.

The purpose of the Scheme is to enable ASI to become the owner of the entire issued and to be issued share capital of Insignia. This is to be achieved by the cancellation of the Scheme Shares held by Scheme Shareholders by way of a reduction of capital approved by the Court and the application of the reserve arising from such cancellation in paying up in full a number of New Insignia Shares (which is equal to the number of Insignia Shares cancelled) and issuing them to ASI and/or its nominee(s) in consideration for which holders of Scheme Shares will receive New ASI Shares on the basis set out in paragraph 2 of this Part II.

To become Effective, the Scheme requires, amongst other things, the approval of a majority in number of those Scheme Shareholders, present and voting (and entitled to vote) either in person or by proxy at the Court Meeting, representing 75 per cent. or more in value of all Scheme Shares voted by such Scheme Shareholders and the passing of the Special Resolution to implement the Scheme at the General Meeting. The Scheme also requires the sanction of the Court as well as the satisfaction (or waiver (if capable of waiver)) of the other Conditions set out in Part III of this document. Upon the Scheme becoming Effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted and, if they voted, whether they voted for or against the Scheme, at the Court Meeting or the General Meeting.

The last day of dealings in, and for registration of transfers of, Insignia Shares will be the day prior to the Court Hearing.

Prior to the Scheme becoming Effective, application will be made for the Insignia Shares to cease to be quoted on the Pink Sheets. It is expected that this will take effect on the Effective Date or shortly thereafter.

Prior to the Scheme Record Time, Insignia may allot and issue Insignia Shares pursuant to the exercise of options under the Insignia Share Plans and/or Insignia Warrants. Save for the issue of New Insignia Shares to ASI pursuant to the Scheme, Insignia will not issue any shares after the Scheme Record Time until after the Effective Date.

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12.2 The Meetings

The Scheme is subject to the satisfaction (or waiver (if capable of waiver)) of the Conditions set out in Part III of this document. To become Effective, the Scheme will also require the approval by Scheme Shareholders of a resolution at the Court Meeting and the passing of the Special Resolution by Insignia Shareholders at the General Meeting.

Notices of the Court Meeting and the General Meeting are set out in Parts IX and X of this document respectively. Save as set out below, all holders of Insignia Shares whose names appear on the register of members of Insignia at the start of the Court Meeting or the General Meeting (as the case may be) are entitled to attend and vote at the relevant meeting.

The Court Meeting

The Court Meeting, which has been convened for 12.00 noon (Arizona time) on 30 November 2009, is being held at the direction of the Court to seek the approval of Scheme Shareholders for the Scheme (with or without modification).

At the Court Meeting, voting will be by way of poll and not on a show of hands and each Scheme Shareholder present in person or by proxy will be entitled to one vote for each Scheme Share held. Scheme Shareholders have the right to raise any objections they may have to the Scheme at the Court Meeting. The Scheme must be approved by a majority in number of those Scheme Shareholders present and voting, either in person or by proxy, representing not less than 75 per cent. in value of all Scheme Shares held by such Scheme Shareholders. The result of the poll will be posted on Insignia's website.

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of Scheme Shareholder opinion. You are therefore strongly urged to complete and return your Forms of Proxy and/or ADS Voting Instruction Card (as appropriate) as soon as possible.

You will find the notice of the Court Meeting set out in Part IX of this document.

Insignia Shareholders are entitled to appoint a proxy in respect of some or all of their Scheme Shares at the Court Meeting. Scheme Shareholders are also entitled to appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares (so a Scheme Shareholder must have more than one Scheme Share to be able to appoint more than one proxy). A space has been included in the blue Form of Proxy to allow Scheme Shareholders entitled to attend and vote at the Court Meeting to specify the number of Scheme Shares in relation to which that proxy is appointed. Scheme Shareholders who return a blue Form of Proxy but fail to specify the number of Scheme Shares to which the proxy appointment relates, or who specify a number which exceeds the number of Scheme Shares held by the Scheme Shareholder when totalled with the number specified on other proxy appointments by the same Scheme Shareholder, will render all appointments invalid.

Insignia Shareholders who wish to appoint more than one proxy in respect of their shareholding should complete a separate Form of Proxy for each proxy appointed. Further copies of the blue Form of Proxy may be obtained from Capita Registrars on 0871 664 0321 or, if telephoning from outside the UK, on +44 20 8639 3399 between 9.00 a.m. and 5.00 p.m. Monday to Friday (London time), or photocopies of the blue Form of Proxy may be made. Calls to the Capita Registrars 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider’s network extras. Calls to the Capita Registrars +44 20 8639 3399 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Capita Registrars cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

Insignia ADS Holders should refer to paragraph 17 of this Part II for details on how to instruct the Depositary to vote at the Court Meeting in respect of their underlying Insignia Shares, or alternatively how they can become entitled to attend and vote at the Court Meeting in person by arranging for their Insignia ADSs to be cancelled and Insignia Shares transferred to them to become shareholders of record.

The General Meeting

The General Meeting has been convened for 12.15 p.m. (Arizona time) on 30 November 2009 (or as soon thereafter as the Court Meeting has been concluded or adjourned), to consider and, if thought fit, pass the Special

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Resolution (which requires votes in favour representing not less than 75 per cent. of the votes attached to Insignia Shares voted at the General Meeting, whether in person or by proxy) to approve various provisions necessary to implement the Scheme, including:

It is proposed that the Articles be amended so as to ensure that any Insignia Shares issued at any time on or after the Court Meeting but prior to the Scheme Record Time will be subject to the terms of the Scheme and that any Insignia Shares issued on or after the Scheme Record Time, including Insignia Shares issued pursuant to the exercise of Insignia Options and and Insignia Warrants (which are not subject to the terms of the Scheme), will automatically be acquired by ASI. This amendment will avoid any person (other than ASI) holding shares in the capital of Insignia after the Effective Date.

Voting on the Special Resolution will be by poll. You will find the notice of the General Meeting set out in Part X of this document. The quorum for the General Meeting will be two or more Insignia Shareholders present in person, by proxy or by corporate representative holding not less than one third of the entire issued Ordinary Share capital of Insignia.

Insignia Shareholders are entitled to appoint a proxy in respect of some or all of their Insignia Shares at the General Meeting. Insignia Shareholders are also entitled to appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares (so an Insignia Shareholder must have more than one Insignia Share to be able to appoint more than one proxy). A space has been included in the white Form of Proxy to allow Insignia Shareholders entitled to attend and vote at the General Meeting to specify the number of Insignia Shares in relation to which that proxy is appointed. Insignia Shareholders who return a Form of Proxy but fail to specify the number of Insignia Shares to which the proxy appointment relates, or who specify a number which exceeds the number of Insignia Shares held by the Insignia Shareholder when totalled with the number specified on other proxy appointments by the same Insignia Shareholder, will render all appointments invalid.

Insignia Shareholders who wish to appoint more than one proxy in respect of their shareholding should complete a separate Form of Proxy for each proxy appointed. Further copies of the white Form of Proxy may be obtained from Capita Registrars on 0871 664 0321 or, if telephoning from outside the UK, on +44 20 8639 3399 between 9.00 a.m. and 5.00 p.m. Monday to Friday (UK time), or photocopies may be made. Calls to the Capita Registrars 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider’s network extras. Calls to the Capita Registrars +44 20 8639 3399 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Capita Registrars cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

Insignia ADS Holders should refer to paragraph 17 of this Part II for details on how to instruct the Depositary to vote at the General Meeting in respect of their underlying Insignia Shares, or alternatively how they can become entitled to attend and vote at the General Meeting in person by arranging for their Insignia ADSs to be cancelled and Insignia Shares transferred to them to become shareholders of record.

12.3 The Court Hearing

Under the Act, the Scheme also requires the sanction of the Court.

The Court Hearing is expected to be held on 14 December 2009 at the Royal Courts of Justice, The Strand, London WC2A 2LL. All Insignia Shareholders are entitled to attend the Court Hearing in person or through counsel to support or oppose the sanctioning of the Scheme and the associated Capital Reduction.

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ASI has confirmed that it will be represented by counsel at the Court Hearing so as to consent to the Scheme and to undertake to the Court to be bound thereby.

The Scheme will become Effective in accordance with its terms on the delivery of an office copy of the Court Order (together with the Statement of Capital attached thereto) to, and its registration by, the Registrar of Companies. This is expected to occur on or around 15 December 2009.

If the Scheme becomes Effective, it will be binding on all Scheme Shareholders irrespective of whether or not they attended or voted in favour of the Scheme at the Court Meeting or in favour of the Special Resolution at the General Meeting.

Unless the Scheme shall have become effective on or before 21 December 2009 or such later date if any, as Insignia and ASI may agree and the Court may allow, it shall lapse.

13. Modifications to the Scheme

The Scheme contains a provision for Insignia and ASI to consent on behalf of all persons affected to any modification of, or addition to, the Scheme or to any condition approved or imposed by the Court. The Court would be unlikely to approve any modification of, or addition to, or impose a condition to the Scheme which might be material to the interests of the Scheme Shareholders unless Scheme Shareholders were informed of any such modification, addition or condition. It would be a matter for the Court to decide, in its discretion, whether or not a further meeting of Scheme Shareholders should be held in these circumstances. Similarly, if a modification, addition or condition is put forward which, in the opinion of the Insignia Directors, is of such a nature or importance that it requires the consent of Scheme Shareholders to a further meeting, the Insignia Directors will not take the necessary steps to enable the Scheme to become Effective unless and until such consent is obtained.

14. Section 593 valuation

As at 2 November 2009 (being the latest practicable date prior to the publication of this document), ASI did not own or control any Insignia Shares. It is intended that, in the period after the General Meeting and before the Court Hearing, ASI will acquire at least one Insignia Share which will mean that ASI will be a member of Insignia on the Effective Date. Accordingly, there will be no requirement under section 593 of the Act for an independent valuation of the New Insignia Shares to be allotted to ASI or any member of the ASI Group under the Scheme.

15. Conditions to the Proposals

The Proposals and, accordingly, the Scheme are subject to a number of conditions set out in full in Part III of this document. In summary, the implementation of the Scheme is conditional upon, amongst other things:

16. Overseas Shareholders

16.1 General

The implementation of the Scheme in respect of Overseas Shareholders may be affected by the laws of jurisdictions outside the United Kingdom. Overseas Shareholders should inform themselves about, and observe, any applicable legal requirements. It is the responsibility of any Overseas Shareholders to satisfy themselves as to the full observance of the laws and regulatory requirements of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes or duties or payments due in such jurisdiction.

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This document has been prepared for the purposes of complying with English law, and the applicable rules and requirements of US federal and state securities laws (except to the extent exempt from such requirements) and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws and regulations of any jurisdiction outside of England and Wales.

16.2 The United States

The ASI Shares will not be registered under the Securities Act, in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) thereof. ASI Shares issued to an Insignia Shareholder or to an Insignia ADS Holder who is neither an affiliate, for the purposes of the Securities Act, of the Company or ASI prior to the Effective Date, nor an affiliate of ASI after the Effective Date, may be resold without restriction under the Securities Act. Affiliates of the Company and ASI will be subject to timing, manner of sale and volume restrictions on the sale of ASI Shares received in connection with the Scheme under Rule 145(d) of the Securities Act. Persons who may be deemed to be affiliates of the Company or ASI include individuals who, or entities that, control directly or indirectly, are controlled by or are under common control with the Company or ASI and may include certain officers and directors of the Company and ASI, and principal shareholders (such as a holder of more than 10 per cent. of the issued share capital of Insignia or of the outstanding capital stock of ASI). Holders who are affiliates, in addition to reselling their ASI Shares in the manner permitted by Rule 145(d) under the Securities Act, may also sell their securities under any other available exemption under the Securities Act, including Regulation S under the US Securities Act. Insignia Shareholders and Insignia ADS Holders who believe they may be affiliates for the purposes of the Securities Act should consult their own legal advisers prior to any sale of ASI Shares received upon implementation of the Scheme.

For the purpose of qualifying for the exemption from the registration requirements of the Securities Act provided by Section 3(a)(10) therein with respect to the ASI Shares issued pursuant to the Scheme, the Company will advise the Court that Insignia and ASI will rely on the Section 3(a)(10) exemption based on the Court’s sanctioning of the Scheme and will view the Court’s sanctioning of the Scheme as an approval of the Scheme following a hearing on its fairness to Insignia Shareholders, at which hearing all such Insignia Shareholders are entitled to attend in person or by counsel to support or oppose the sanctioning of the Scheme and with respect to which notification has been given to all such Insignia Shareholders.

Insignia Shareholders who are citizens or residents of the United States or other jurisdictions outside the United Kingdom should consult their own legal and tax advisers with respect to the legal and tax consequences of the Scheme in their particular circumstances.

17. Treatment of Insignia ADSs

Each Insignia ADS currently represents one Insignia Share. The Bank of New York Mellon, as Depositary, is the record holder of the Insignia Shares underlying the Insignia ADSs. The Depositary, as an Insignia Shareholder, will receive, in exchange for Insignia Shares, ASI Scheme Shares on the following basis:

for every 10 Insignia Shares      one ASI Share

held by it at the Scheme Record Time.

Insignia ADS holders, after the satisfaction of certain pre-conditions set out below, will receive their proportionate entitlement to the ASI Shares, on the following basis:

for every 10 Insignia ADSs      one ASI Share

In respect of Insignia ADS Holders who hold certificates representing Insignia ADSs, as soon as reasonably practicable, and in any event within ten business days after the Effective Date, The Bank of New York Mellon will mail to each such holder a letter of transmittal which such Insignia ADS Holder must properly complete and deliver to The Bank of New York Mellon along with the relevant holder’s certificate representing the Insignia ADSs and instructions for effecting surrender of the Insignia ADSs.

Until properly surrendered as set out above, each certificate representing Insignia ADSs will, after the Effective Date, represent the right to receive, upon proper surrender, ASI Shares on the basis set out above. Upon receipt of such Insignia ADSs, The Bank of New York Mellon will transfer to the former Insignia ADS holder one ASI

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Share for every 10 Insignia ADSs cancelled by the issuance of a Direct Registration Statement to the former Insignia ADS Holder in respect of the relevant number of ASI Shares.

All documents shall be sent to Insignia ADS Holders at their own risk and will be sent by post either to the Insignia ADS Holder’s address as set out on the register of Insignia ADS Holders at the Scheme Record Time or to such other address of the Insignia ADS Holder as is notified as a change of address in writing by an Insignia ADS Holder to the Depositary prior to the Effective Date and, in the case of joint Insignia ADS Holders, to the ADS holder whose name stands first in such register in respect of the joint holdings concerned.

It should be noted that Insignia ADS Holders will not be entitled to attend the Meetings. However, Insignia ADS Holders will be able to have the votes attaching to the underlying Insignia Shares which their Insignia ADSs represent cast at the Court Meeting and the General Meeting by proxy through procedures established pursuant to the Deposit Agreement. Insignia ADS Holders who wish to attend the Meetings as Insignia Shareholders should take steps to present their Insignia ADSs to the Depositary for cancellation and delivery of Insignia Shares so as to become holders of record of Insignia Shares prior to the Meetings. If Insignia ADS Holders wish to attend the Meetings, they must present their Insignia ADSs to the Depositary for cancellation no later than 16 November 2009, although no guarantee can be given by the Depositary that it will be able to procure that the relevant Insignia ADS Holder becomes a holder of record of Insignia Shares in time for the relevant meetings.

Pursuant to the Deposit Agreement, the Depositary has fixed 5.00 p.m. (New York time) on 30 October 2009 as the ADS Record Date. All Insignia ADS Holders of record at the ADS Record Date will be sent a notice containing: (i) this document; (ii) a statement that the Insignia ADS Holders as of the ADS Record Date will be entitled to instruct the Depositary as to the exercise of the voting rights pertaining to the number of Insignia Shares represented by their respective Insignia ADSs; and (iii) a statement that such instructions may be given by returning a properly executed ADS Voting Instruction Card (in the form enclosed with this document) to the Depositary. Insignia Shares represented by properly executed ADS Voting Instruction Cards received by the Depositary before 5.00 p.m. (New York time) on 20 November 2009, unless such ADS Voting Instruction Cards have been revoked, will be voted by the Depositary in accordance with the instructions set forth on such ADS Voting Instruction Card. In accordance with the provisions of the Deposit Agreement, if no instructions are indicated, or an Insignia ADS Holder does not return the ADS Voting Instruction Card, the Depositary will not exercise the voting rights pertaining to the Insignia Shares represented by their respective Insignia ADSs and such Insignia Shares will not be counted towards the number of shares considered present at the Meetings and will not have an effect on the outcome of the vote.

Any Insignia ADS Holder giving instructions to the Depositary has the power to revoke or modify the instructions by delivery of a revocation or new ADS Voting Instruction Card to the Depositary at BNYM Shareholder Services, P.O. Box 3549, S. Hackensack, NJ 07606-9249 by no later than 5.00 p.m. (New York time) on 20 November 2009.

In addition, a completed ADS Voting Instruction Card returned by an Insignia ADS Holder will authorise the disclosure to Insignia of the name and address of such Insignia ADS Holder together with details of the instructions on the ADS Voting Instruction Card.

The Depositary is entitled to charge the ADS holders for the cancellation of the Insignia ADSs in accordance with the terms of the Deposit Agreement, however, ASI has agreed in these circumstances to bear such fee on behalf of the holders.

18. Taxation

18.1 UK taxation

The following paragraphs, which are intended as a general guide only, are based on current UK legislation and the published practice of HM Revenue & Customs at the date of this document, either of which is subject to change at any time. They summarise certain limited aspects of the UK taxation consequences of the implementation of the Scheme and relate only to the position of Scheme Shareholders who hold their Scheme Shares beneficially as an investment, unless otherwise indicated, and who are resident and, in the case of individuals, ordinarily resident in the UK for taxation purposes at all relevant times. Special rules or considerations may be applicable to shareholders who have (or are deemed to have) acquired their shares by reason of their or another’s office or employment within the Insignia Group of companies including the exercise or vesting of share options and awards. If you are in any doubt as to your taxation position, or if

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you are subject to taxation in any jurisdiction other than the UK or the US, you should consult an appropriate professional adviser without delay.

Scheme Shareholders should not be treated as making a disposal of their Scheme Shares as a result of receiving New ASI Shares in exchange for Scheme Shares pursuant to the Scheme and so no chargeable gain or allowable loss should arise. The New ASI Shares should be treated as the same asset, and having been acquired at the same time and for the same consideration as those Scheme Shares from which they are derived less any amounts deducted from the allowable original cost of the Scheme Shares due to any receipt of cash arising from fractional entitlements which result from the share consolidation aspect of the Scheme.

Scheme Shareholders who hold (either alone or together with persons connected with them) more than five per cent of, or any class of, shares in or debentures of Insignia are advised that no clearance application has been, or will be, made to HMRC under s138 of the Taxation of Chargeable Gains Act 1992 to confirm that it is satisfied that the Scheme is being effected for bona fide commercial reasons and does not form part of a scheme or arrangement of which the main purpose, or one of the main purposes, is an avoidance of liability to UK corporation tax or capital gains tax. Therefore, without such clearance it is not certain that any such Insignia Shareholder to whom this paragraph applies will be treated in the manner described in the preceding paragraph.

A disposal or deemed disposal of New ASI Shares by a shareholder may give rise to a chargeable gain (or allowable loss) for the purposes of UK capital gains tax (when the shareholder is an individual) and UK corporation tax on chargeable gains (when the shareholder is within the charge to UK corporation tax) depending on their circumstances and subject to any available exemption or relief. On the basis that the New ASI Shares are treated as the same asset such chargeable gain or allowable loss should be calculated taking into account the allowable original cost as necessarily adjusted for cash receipts arising from fractional entitlements which are received as a result of the share consolidation to the holder of acquiring the Insignia Shares which they exchanged for the relevant New ASI Shares pursuant to the Scheme. For a shareholder within the charge to UK corporation tax indexation allowance will continue to be available in respect of their allowable cost as necessarily adjusted for cash receipts arising from fractional entitlements which are received as a result of the share consolidation of the Scheme Shares which they exchanged for the relevant New ASI Shares pursuant to the Scheme until the date of disposal of the New ASI Shares but any such indexation allowance cannot create or increase an allowable loss.

Provided that, in general, the proceeds received by an Insignia Shareholder under the Scheme in respect of a fractional entitlement does not exceed the lower of either £3,000 or the original cost of their Insignia Shares then no disposal or part disposal should occur for the purposes of UK taxation on chargeable gains unless the shareholder submits an appropriate election.

No Stamp Duty or SDRT should, as a result of opinions received from HMRC Stamp Taxes, be payable by Scheme Shareholders as a result of the cancellation of Scheme Shares and the issue of New ASI Shares or the issue of the New Insignia Shares by Insignia to ASI pursuant to the Scheme.

As would be the case in relation to Scheme Shares there may be a charge to UK inheritance tax when an individual who is domiciled (or deemed domiciled) in the UK dies owning New ASI Shares or in respect of certain lifetime transfers of the shares.

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An individual who holds New ASI Shares (other than an individual who is carrying on a trade, profession or vocation in the UK through a branch or agency in connection with which the New ASI Shares are held) who is resident for tax purposes in the UK will, in general, be subject to UK income tax on the gross amount of the dividends paid on the New ASI Shares (rather than on the amount actually received net of any applicable US withholding tax) plus an imputed non repayable tax credit equal to one ninth of the gross dividend. The imputed non repayable tax credit should cover any UK income tax chargeable at the dividend ordinary rate (currently 10 per cent.) such that no further liability to UK income tax should arise for any such individual shareholder who is only liable to UK income tax at the dividend ordinary rate. An individual (as above) who is liable to pay UK income tax at the dividend upper rate (currently 32.5 per cent.) should be eligible for credit relief for the imputed non repayable tax credit such that the effective rate of UK income tax on the gross amount of the dividends paid on the New ASI Shares is 25 per cent. before any available additional relief for the US withholding tax deducted in accordance with the provisions of the UK/US double taxation treaty. An individual who holds New ASI Shares who is resident for tax purposes in the UK by carrying on a trade, profession or vocation in the UK through a branch or agency in connection with which the New ASI Shares are held will not receive the benefit of the imputed non repayable tax credit referred to above but will be liable to UK income tax at the applicable rates on the gross amount of the dividends paid on the New ASI Shares with appropriate relief for any US withholding tax deducted in accordance with the provisions of the UK/US double taxation treaty.

A shareholder who is within the charge to UK corporation tax should, in general, be exempt from UK corporation tax in respect of any dividend paid on the New ASI Shares, with no relief given or repayment available in respect of any US withholding tax deducted in accordance with the terms of the UK/US double taxation treaty. Special rules or considerations, including possible exception from the exemption, may be applicable to shareholders within the charge to UK corporation tax who are carrying on a trade, profession or vocation in the UK through a permanent establishment in connection with which the New ASI Shares are held.

Any Insignia shareholders who receive New ASI Shares and who do not currently receive notice from HMRC requiring them to submit a tax return are advised that if any dividend is paid on their New ASI Shares they will need to notify HMRC that they have acquired a source of overseas income.

Non UK shareholders who are not, or who do not become, actual or deemed resident or ordinarily resident or domiciled in the UK for any UK Taxation purpose should be outside of the scope of UK Taxation, as described above, as a result of the implementation of the Scheme.

Non UK shareholders who are, or who become, actual or deemed resident or ordinarily resident in the UK for income or chargeable gains purposes will broadly be subject to UK Taxation on their dividends on, and/or subsequent disposal of, New ASI Shares as described in the appropriate sections above except that they may, if they are not domiciled in the UK, under certain circumstances and as appropriately elected, only be liable to UK Taxation to the extent that such dividends or chargeable gains are, or are deemed to be, remitted to the UK. Non UK shareholders who are domiciled or deemed domiciled in the UK at the relevant time for inheritance tax purposes will be liable to UK inheritance tax as described in the relevant section above.

THE INFORMATION GIVEN IN THIS SUB-PARAGRAPH (E) IN RELATION TO NON UK SHAREHOLDERS IS ONLY A GENERAL GUIDE AND IS NOT EXHAUSTIVE. IF YOU ARE IN ANY DOUBT AS TO YOUR TAXATION POSITION AS A NON UK SHAREHOLDER YOU SHOULD CONSULT AN APPROPRIATE PROFESSIONAL ADVISER WITHOUT DELAY.

18.2 US taxation

United States federal tax

TO ENSURE COMPLIANCE WITH US TREASURY DEPARTMENT CIRCULAR 230, INVESTORS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF US FEDERAL TAX ISSUES IN THIS DOCUMENT IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY INVESTORS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON INVESTORS

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UNDER THE US INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”); (B) SUCH DISCUSSION IS INCLUDED HEREIN BY THE COMPANY IN CONNECTION WITH THE PROMOTION OR MARKETING (WITHIN THE MEANING OF CIRCULAR 230) BY THE COMPANY OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) INVESTORS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT ADVISER, NOTHING HEREIN SHOULD BE CONSIDERED TO IMPOSE ON THE RECIPIENT OF THIS DOCUMENT ANY LIMITATION ON DISCLOSURE OF THE TAX TREATMENT OR TAX STRUCTURE OF THE TRANSACTION OR MATTERS DESCRIBED HEREIN.

The following discussion is a summary of certain US federal income tax considerations relevant to the Scheme.

For US income tax purposes, the Scheme will be treated as if the Insignia Shares and Insignia Options are exchanged directly for ASI Shares and ASI Options, respectively. In addition, the following discussion will address certain US federal income tax considerations relevant to the exchange of stock options in Insignia for options in ASI. The discussion is based on the current provisions of the US Internal Revenue Code of 1986, as amended, its legislative history, applicable existing and proposed Treasury Regulations promulgated thereunder, administrative rulings and pronouncements and judicial decisions, as well as on the double taxation treaties between the US and the UK, all as of the date hereof, all of which are subject to change, possibly on a retroactive basis. The summary is not a complete description of all the tax considerations that may be relevant to a particular holder of Insignia Shares.

To the extent the discussion addresses US Holders, the discussion addresses only a US Holder that holds the Insignia Shares and ASI Shares as capital assets and that uses the US Dollar as its functional currency. This discussion does not address all aspects of US federal, state or local income taxation that may be relevant to any particular holder based on such holder’s circumstances. In particular, it does not address the potential application of the alternative minimum tax or the US federal income tax consequences to holders subject to special rules, such as brokers, dealers, traders in securities that elect mark to market treatment, insurance companies, tax-exempt entities, holders of 10 per cent. or more of the Insignia Shares or ASI Shares (including options as though exercised), persons holding Insignia Shares or ASI Shares as part of a hedge, straddle, conversion, or other integrated financial transaction and US holders resident or ordinarily resident in the UK. This discussion does not address the tax consequences to holders that are partnerships for US federal income tax purposes. This discussion does not address any aspect of taxes other than US federal income taxes.

Each Insignia Shareholder and Insignia ADS Holder is urged to consult his or her tax adviser about US federal, state and local income tax and any foreign tax consequences of exchanging Insignia Shares for ASI Shares pursuant to the Scheme.

As used in this paragraph 18.2, “US Holder” means a beneficial owner of Insignia Shares or ASI Shares that is, for US federal tax purposes (i) a US citizen or resident, (ii) a corporation organised under the laws of the US, (iii) a trust subject to the control of a US person and the primary supervision of a US Court or (iv) an estate the income of which is subject to US federal income tax regardless of its source. A “Non-US Holder” is a beneficial owner of Insignia Shares that is not a US Holder or an entity organised under the laws of the United States.

A US Holder should not recognise any gain or loss in the Scheme since the US Holder will receive only ASI Shares and will not receive any cash or other property as a part of the transaction. A US Holder’s basis in the ASI Shares received should be equal to the US Holder’s basis in the Insignia Shares contributed. The holding period associated with the shares received by the US Holder should include the holding period of the shares surrendered since such shares surrendered are capital assets.

In addition, the US Holders holding options should not recognise any gain for federal income tax purposes on the rollover of options, and such rollover pursuant to the Scheme should not constitute a modification for Section 409A purposes as long as (1) the ASI stock options received by the US Holders contain all of the terms of the Insignia options other than terms rendered inoperative by the Scheme, if any, (2) the terms of the ASI stock options received by the US Holders are not more favourable to the

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US Holders than the terms of the Insignia options, (3) the ratio of the exercise price of the ASI stock options to the fair market value of the underlying ASI Shares, immediately after the rollover, does not exceed the ratio of the exercise price of the Insignia stock options to the fair market value of the underlying Insignia Shares immediately before the issuance of the ASI stock options, and (4) the aggregate intrinsic value of the ASI options, immediately after the Scheme, is not greater than the aggregate intrinsic value of the Insignia options immediately before the Scheme.

No adverse US tax consequences should arise with respect to Non-US Holders as a result of this transaction. It should be noted that this discussion does not address the local country tax consequences. Therefore, Non-US Holders should consult with their local country advisers in order to determine if any adverse tax consequences will result from the transaction from a local country tax perspective.

Dividends paid on ASI Shares will be included in the gross income of a corporate US Holder as ordinary income from sources within the US. Dividends received by non-corporate US Holders will be taxed at the same preferential rate allowed for long-term capital gains if the US Holder meets certain eligibility requirements (including a holding period requirement).

Dividends paid on New ASI Shares to Non-US Holders will be subject to US withholding tax. Non-US Holders may qualify for a reduced withholding rate on dividends pursuant to an income tax treaty with the US. Although Non-US Holders may be able to claim a reduced withholding rate under their respective tax treaties on dividend payments from ASI, certain tax treaties contain a limitation on benefits (“LOB”). The requirements of the LOB clause would also have to be met in order to obtain any benefits under the income tax treaty. A LOB clause is generally intended to prevent the misuse of treaties by residents of countries that are not party to the treaty. Most recent US income tax treaties contain a LOB clause, such as the US-UK income tax treaty (Article 23).

A Non-US Holder must certify its residency to ASI on a properly executed IRS Form W-8BEN to claim the benefits of a treaty. A Form W-8BEN may be obtained through the IRS website at www.irs.gov. As long as the New ASI Shares are traded on an established financial market, a Non-US Holder will not be required to provide a US taxpayer identification number on the Form W-8BEN to claim treaty benefits.

If the dividends are effectively connected with a trade or business and, if an income tax treaty applies, are otherwise attributable to a permanent establishment in the US, a Non-US Holder will be subject to US federal income tax on a net basis on the amount of the distribution. In addition, a Non-US Holder that is a corporation may be subject to the US branch profits tax.

A US Holder generally will recognise capital gain or loss on the sale or other disposition of the ASI Shares in an amount equal to the difference between its adjusted tax basis in the ASI Shares and the amount realised from the sale or other disposition. Any gain or loss generally will be long-term capital gain or loss if the holding period in the ASI Shares (including the holding period of the Insignia Shares surrendered) is more than one year on the date of sale or exchange. Long-term capital gain will be eligible for reduced rates of taxation for individuals and certain non-corporate taxpayers. The deductibility of capital losses is subject to limitations. Any gain or loss generally will be treated as arising from US sources.

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Any gain realised by a Non-US Holder on the disposition of New ASI Shares will not be subject to US federal income tax unless (i) the gain is effectively connected with the holder’s conduct of a US trade or business and, if an income tax treaty applies, is otherwise attributable to a permanent establishment in the US (in which case, if the Non-US Holder is a foreign corporation, the US branch profits tax may apply), (ii) the holder is an individual present in the US for at least 183 days during the taxable year of disposition and certain other conditions are met or (iii) ASI is or has been a US real property holding company (“USRPHC”) for US federal income tax purposes, unless the Non-US Holder owns actively or constructively less than 5 per cent. or more of the class of shares sold and such class is regularly traded on an established securities market. The Board has been advised that ASI is not a USRPHC for US federal income tax purposes nor does it anticipate ASI will become a USRPHC. However, no assurance can be given that ASI will not become a USRPHC.

Further, in order to not be subject to withholding tax on the disposal of a non-USRPHC interest, the Non-US Holder must take certain actions when disposing of an interest in a US domestic corporation. A foreign person disposing of an interest in a domestic corporation must establish that the interest was not a U.S. real property interest as of the date of disposition, either by: (A) obtaining a statement from the corporation pursuant to the provisions of §1.897-2(g)(1)(ii), or (B) obtaining a determination by the director, Foreign Operations District pursuant to §1.897-2(g)(1)(iii).

Dividends from ASI Shares paid to a Non-US Holder will be reported annually to the IRS. Dividends from ASI Shares paid to a US Holder and proceeds from the sale, exchange or other disposition of ASI. Shares paid to a US Holder or a Non-US Holder should be reported to the IRS unless the holder (i) is a corporation, (ii) provides a properly executed IRS Form W-8BEN or (iii) otherwise establishes a basis for exemption. Backup withholding tax may apply to amounts subject to reporting if the holder fails to provide an accurate taxpayer identification number or otherwise establish an exemption. Backup withholding tax is not an additional tax. The holder can claim a credit against its US federal income tax liability for the amount of any backup withholding tax and a refund of any excess amount provided that certain information is furnished to the IRS.

THE ABOVE PARAGRAPHS ARE A GENERAL GUIDE ONLY AND ARE NOT EXHAUSTIVE.

IF YOU ARE IN ANY DOUBT AS TO YOUR TAXATION POSITION YOU SHOULD CONSULT AN APPROPRIATE PROFESSIONAL ADVISER WITHOUT DELAY.

19. Settlement

Direct Registration Statements for New ASI Shares will be despatched to the relevant Scheme Shareholders no later than 14 days after the Effective Date. Direct Registration Statements for New ASI Shares will be despatched to such Scheme Shareholders by first-class post to the address appearing in the register of members of Insignia at the Scheme Record Time (or in the case of joint holders, to the holder whose name stands first in such register in respect of the holdings concerned).

On the Effective Date, each certificate representing a holding of Insignia Shares subject to the Scheme will be cancelled and share certificates for such shares will cease to be valid and should be destroyed.

Insignia ADS Holders should refer to paragraph 16 above for details on how to surrender the Insignia ADSs for ASI Shares.

20. General

Temporary documents of title will not be issued pending the despatch by post of Direct Registration Statements for such New ASI Shares as referred to in paragraph 19 above. Pending the issue of Direct Registration Statements for such New ASI Shares, former Scheme Shareholders wishing to register transfers of such New ASI Shares may certify their share transfer forms against the register of members of ASI by contacting the Bank of New York Mellon on 1-888-BNY-ADRS or, if telephoning from outside the United States, on 001 201 680 6825. On the registration of any such transfers, the transferee will receive a Direct Registration Statement in respect of the New ASI Shares the subject of the relevant transfer.

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All documents and remittances sent through the post will be sent at the risk of the person(s) entitled thereto.

Settlement of the consideration to which any Scheme Shareholder is entitled under the Scheme will be implemented in full in accordance with the terms of the Scheme free of any lien, right of set-off, counterclaim or other analogous right to which ASI may otherwise be, or claim to be, entitled against such shareholder.

Mandates in force at the Effective Date relating to the payment of dividends and other instructions given by Scheme Shareholders in respect of their Scheme Shares will be deemed revoked as from the Effective Date.

21. Quotation facilities and re-registration

Unless the Meetings are adjourned, the last day of dealings in, and for registration of transfers of, Insignia Shares will be the last business day prior to the Court Hearing, which is expected to be 11 December 2009, following which Insignia Shares will be temporarily suspended from quotation on the Pink Sheets. No transfers of Insignia Shares will be registered after this date, other than the registration of the issue of New Insignia Shares in accordance with the Scheme.

A request will be made to remove the quotation of the Insignia Shares from the Pink Sheets with effect from the Effective Date. Application has been made for the ASI Shares to be traded on the OTCBB with effect from the Effective Date.

As part of the Acquisition, it is also intended that Insignia be re-registered as a private limited company and its subsidiaries be transferred to ASI following the Scheme becoming Effective and subsequently wound up in due course.

22. Action to be taken

It is important that, for the Court Meeting, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of Scheme Shareholder opinion. You are therefore strongly urged to complete, sign and return your Forms of Proxy and/or ADS Voting Instruction Card as soon as possible.

Notices convening the Court Meeting and the General Meeting are set out in Parts IX and X of this document respectively.

22.1 For Insignia Shareholders

You will find accompanying this document:

Whether or not you intend to attend the Court Meeting and/or the General Meeting, you are requested to complete and sign the accompanying blue and white Forms of Proxy and return them in accordance with the instructions printed thereon. Completed Forms of Proxy should be returned to Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU as soon as possible and, in any event, so as to be received by no later than 12.00 noon (Arizona time) on 28 November 2009 for the Court Meeting and 12.15 p.m. (Arizona time) on 28 November 2009 for the General Meeting (or in the case of an adjourned meeting, not less than 48 hours prior to the time and date set for the adjourned meeting).

This will enable your votes to be counted at the Meetings in your absence. If the blue Form of Proxy for use at the Court Meeting is not returned by such time, it may be handed to the chairman of the Court Meeting at the Court Meeting before the taking of the poll and will still be valid. However, in the case of the white Form of Proxy for the General Meeting, it will be invalid unless it is returned to Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, so as to be received no later than 12.15 p.m. (Arizona time) / 7.15 p.m. (London time) on 28 November 2009.

Completion and return of the Forms of Proxy will not preclude Insignia Shareholders from attending and voting in person at either the Court Meeting or the General Meeting, or any adjournment thereof, should they so wish and should they so be entitled.

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Insignia Shareholders are entitled to appoint a proxy in respect of some or all of their Scheme Shares. Insignia Shareholders are also entitled to appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares (so an Insignia Shareholder must have more than one Scheme Share to be able to appoint more than one proxy). A space has been included in the Forms of Proxy to allow Insignia Shareholders entitled to attend and vote at the relevant Meeting to specify the number of Scheme Shares in relation to which that proxy is appointed. Insignia Shareholders who return a Form of Proxy but fail to specify the number of Scheme Shares to which the proxy appointment relates, or who specify a number which exceeds the number of Scheme Shares held by the Insignia Shareholder when totalled with the number specified on other proxy appointments by the same Insignia Shareholder, will render all appointments invalid.

Insignia Shareholders who wish to appoint more than one proxy in respect of their shareholding should complete a separate Form of Proxy for each proxy appointed. Further copies of the Forms of Proxy may be obtained from Capita Registrars on 0871 664 0321 or, if telephoning from outside the UK, on +44 20 8639 3399 between 9.00 a.m. and 5.00 p.m. Monday to Friday (UK time). Calls to the Capita Registrars 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider’s network extras. Calls to the Capita Registrars +44 20 8639 3399 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Capita Registrars cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

22.2 For Insignia ADS Holders

You will find accompanying this document:

Insignia ADS Holders should read paragraph 17 of this Part II, which contains information as to how Insignia ADS Shareholders can direct the Depositary to vote on their behalf at the Meetings. Insignia ADS Holders are strongly urged to sign and return the ADS Voting Instruction Card as soon as possible.

23. Helpline

If you are Insignia Shareholder and have any questions relating to this document, the Court Meeting, the General Meeting, the Proposals or the Scheme or are in any doubt about the completion and return of the Forms of Proxy, please contact Capita Registrars on 0871 664 0321 or, if telephoning from outside the UK, on +44 20 8639 3399 between 9.00 a.m. and 5.00 p.m. Monday to Friday (UK time). Calls to the Capita Registrars 0871 664 0321 number are charged at 10 pence per minute (including VAT) plus any of your service provider’s network extras. Calls to the Capita Registrars +44 20 8639 3399 number from outside the UK are charged at applicable international rates. Different charges may apply to calls made from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. Capita Registrars cannot provide advice on the merits of the Proposals nor give any financial, legal or tax advice.

Insignia ADS Holders who require assistance and whose Insignia ADSs are registered in their name on the books of the Depositary should telephone 1-888-BNY-ADRS, or, if telephoning from outside the United States, on 001 201 680 6825 between 9.00 a.m. and 5.00 p.m. Monday to Friday (New York time).

Insignia ADS holders who hold their Insignia ADSs beneficially through a financial intermediary such as a broker, bank or custodian should contact that financial intermediary.

24. Further information

Your attention is drawn to the terms of the Scheme which are set out in full in Part VI of this document. Your attention is also drawn to the further information contained in this document which forms part of this Explanatory Statement.

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PART III
  
CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME

The Proposals are conditional upon the Scheme becoming unconditional and becoming Effective by no later than 21 December 2009, or such later date as Insignia and ASI may agree and (if required) the Court approves.

The Acquisition is governed by English law and is subject to the jurisdiction of the English courts, to the Conditions and to the terms set out in this document.

The Scheme is conditional upon:

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PART IV
  
FINANCIAL INFORMATION RELATING TO INSIGNIA SOLUTIONS PLC

Introduction

This Part IV includes audited financial information extracted from the Insignia Annual Report and Accounts for the financial year ended 31 December 2008.

The financial information contained in this Part IV does not constitute statutory accounts within the meaning of section 240 of the Companies Act 1985 and has been extracted from the full audited consolidated accounts of Insignia for the financial year ended 31 December 2008. Copies of the full audited consolidated accounts for the financial year ended 31 December 2008 have been delivered to the Registrar of Companies in England and Wales.

An unqualified audit report within the meaning of section 235 of the Companies Act 1985 has been given in respect of the audited consolidated accounts for the year ended 31 December 2008. The Auditors made the following statement in giving their unqualified report:

“EMPHASIS OF MATTER — GOING CONCERN

In forming our opinion on the financial statements, which is not qualified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the group’s ability to continue as a going concern. The group incurred a net loss of $2,838,000 during the year ended 31 December 2008. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group was unable to continue as a going concern.”

For the purposes of this Part IV, references to the “Company” should be taken as references to Insignia and references to the “group” should be taken as references to the Insignia Group. In addition, references in this Part IV to the “Board” or the “Board of Directors” and to “Directors” are to the Insignia Board and the Insignia Directors respectively.

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INSIGNIA SOLUTIONS PLC
  
Consolidated Profit and Loss Account for the Financial Year Ended 31 December 2008

						2008				2007
		Note				$000				$000
										(restated)
GROUP TURNOVER			2				12,057				10,887
Cost of sales							(8,346)				(7,749	)
GROSS PROFIT							3,711				3,138
Administrative expenses							(6,615)				(4,042	)
Other operating income							214				116
GROUP OPERATING LOSS			3				(2,690)				(788	)
Interest receivable			6				29				—
Interest payable and similar charges			6				(177)				(973	)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION							(2,838)				(1,761	)
Taxation			7				—				—
LOSS FOR THE FINANCIAL YEAR			14				(2,838)				(1,761	)

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INSIGNIA SOLUTIONS PLC
  
Consolidated Balance Sheet as at 31 December 2008

						2008								2007
		Note				$000				$000				$000
														(restated)
FIXED ASSETS
Goodwill			8								—				—
Tangible assets			9								161				127
											161				127
CURRENT ASSETS
Debtors			11				188								118
Current asset investments							2,119								—
Cash at bank and in hand							15								18
							2,322								136
CREDITORS: Amounts falling due within one year			12				1,968								8,358
NET CURRENT ASSETS/(LIABILITIES)											354				(8,222	)
TOTAL ASSETS LESS CURRENT LIABILITIES											515				(8,095	)
NET ASSETS/(LIABILITIES)											515				(8,095	)
CAPITAL AND RESERVES
Called-up equity share capital			13								848				848
Shares to be issued			13								1,507				—
Share premium account			14								76,105				67,930
Profit and loss account			14								(9,041)				(6,203	)
Reverse acquisition reserve			14								(82,858)				(84,624	)
Capital reserve			14								13,954				13,954
EQUITY SHAREHOLDERS' FUNDS/(DEFICIT)			15								515				(8,095	)

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INSIGNIA SOLUTIONS PLC
  
Company Balance Sheet as at 31 December 2008

						2008								2007
		Note				$000				$000				$000
FIXED ASSETS
Investments			10								—				—
CURRENT ASSETS
Debtors			11				940								7
Cash at bank and in hand							34								4
							974								11
CREDITORS: Amounts falling due within one year			12				(425)								(243	)
NET CURRENT LIABILITIES											549				(232	)
TOTAL ASSETS LESS CURRENT LIABILITIES											549				(232	)
NET ASSETS/(LIABILITIES)											549				(232	)
CAPITAL AND RESERVES
Called-up equity share capital			13								848				848
Shares to be issued			13								1,507				—
Share premium account			14								70,945				62,772
Profit and loss account			14								(86,653)				(77,754	)
Capital reserve			14								13,902				13,902
EQUITY SHAREHOLDERS' DEFICIT			15								549				(232	)

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INSIGNIA SOLUTIONS PLC
  
Consolidated Cash Flow Statement for the Financial Year Ended 31 December 2008

						2008								2007
		Note				$000				$000				$000				$000
																		(restated)
NET CASH OUTFLOW FROM OPERATING ACTIVITIES			A								(1,709)								(693	)
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received							29								—
Interest paid							(177)								(310	)
											(148)								(310	)
TAXATION											—								—
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets							(77)								(55	)
											(77)								(55	)
ACQUISITIONS AND DISPOSALS
Cash acquired on investment in subsidiary							3,134								—
											3,134								—
CASH INFLOW/(OUTFLOW) BEFORE LIQUID RESOURCES											1,200								(1,058	)
MANAGEMENT OF LIQUID RESOURCES
Purchase of short term investments							(2,119)								—
											(2,119)								—
FINANCING			B								916								936
DECREASE IN CASH			C								(3)								(122	)

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INSIGNIA SOLUTIONS PLC
  
Notes to the Consolidated Cash Flow Statement for the Financial Year Ended 31 December 2008

		2008				2007
		$000				$000
						(restated)
Operating loss			(2,690)				(787	)
Depreciation			43				51
Amortisation			1,613				—
Options issued on convertible debt			—				54
Loss on disposal of fixed assets			—				69
Decrease in stock			—				125
(Increase)/decrease in debtors			(8)				110
Decrease in creditors			(667)				(315	)
Net cash outflow from operating activities			(1,709)				(693	)

		2008				2007
		$000				$000
						(restated)
Issue of share capital			470				—
Amortisation of stock based compensation			—				60
Proceeds from issuing debt			—				876
Conversion of debt to shares			6,710				—
Repayment of convertible debt			(6,264)				—
Net cash inflow from financing			916				936

		2008				2007
		$000				$000
						(restated)
Decrease in cash in the period			(3)				(122	)
Cash flow from net debt			6,264				(876	)
Movement in net funds/debt in the period			6,261				(998	)
Net debt at 1 January 2008			(6,246)				(5,248	)
Net funds/(debt) at 31 December 2008			15				(6,246	)

ANALYSIS OF CHANGES IN NET FUNDS

		At 1 Jan 2008				Cash Acquired on Investment in Subsidiary				Cash Flows				At 31 Dec 2008
		$000				$000				$000				$000
		(restated)
Net cash:
Cash in hand and at bank			18				3,134				(3,137)				15
Overdraft			—				—				—				—
			18				3,134				(3,137)				15
Convertible debt			(6,264)				—				6,264				—
Net (debt)/funds			(6,246)				3,134				3,127				15

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

1.   PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PREPARATION OF THE FINANCIAL
    STATEMENTS

The accounts have been prepared on a going concern basis in US dollars and in accordance with applicable accounting standards in the United Kingdom. A summary of the principal group accounting policies, which have been applied consistently, is set out below.

The consolidated financial statements have been prepared assuming that the company will continue as a going concern. The group has a recent history of negative cash flow generated from operations and an accumulated deficit at 31 December 2008. These factors raise substantial doubt about the group and company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from this uncertainty.

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

Basis of accounting

The accounts have been prepared under the historical cost convention and going concern basis. On June 23, 2008, DollarDays International Inc. entered into a series of transactions to effect a reverse merger with Insignia. Under the agreement and plan of merger, Insignia Solutions plc shareholders maintained approximately 37.1% ownership of the combined company, DollarDays International Inc. shareholders obtained 56.7%, and a new investor obtained 6.2% of the combined company stock. In the opinion of the directors, accounting for the merger under the normal acquisition accounting methods with Insignia Solutions plc as the parent company would fail to give a true and fair view of the substance of the group, its results and position. Accordingly, the directors have adopted reverse acquisition accounting as the basis of consolidation in order to give a true and fair view. This is a departure from Companies Act 1985. The reverse acquisition accounting resulted in the accounts being restated with DollarDays International Inc. as the parent company and Insignia Solutions plc as the acquired subsidiary on 23 June 2008. The share capital, share premium and capital reserve were not restated and still show the balances relating to Insignia Solutions plc as the holding company.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and all Group undertakings. As a consolidated profit and loss account is published, a separate profit and loss account for the parent Company is omitted from the Group financial statements by virtue of section 230 of the Companies Act 1985.

Turnover

Turnover, which excludes value added tax and sales tax, represents sales of general merchandise that are receivable in the period. All amounts billed to customers for shipping and handling costs are included in net turnover.

Revenue recognition

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

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

1.   PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PREPARATION OF THE FINANCIAL
    STATEMENTS  – (continued)

Foreign currencies

Assets and liabilities in foreign currencies are translated into US dollars at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into US dollars at the rate of exchange ruling at the date of the transaction. Exchange differences are taken into account in arriving at the operating profit.

The directors have determined that the Group and Company’s functional currency is the US dollar. The year-end exchange rate used between Sterling and US dollars was $1.45/£1 (2007: $1.99/£1).

Goodwill

Consideration paid in connection with acquisitions is required to be allocated to the acquired assets, including identifiable intangible assets, and liabilities acquired. Acquired assets and liabilities are recorded based on an estimate of fair value, which requires significant judgment with respect to future cash flows and discount rates.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. An element of goodwill is amortised over ten year basis in respect of customer relationships identified on the acquisition of a subsidiary, the remainder of goodwill is not amortised but tested for impairment at least annually and more frequently if events or changes in circumstances suggest that the carrying amount may not be recoverable.

Tangible fixed assets

Tangible fixed assets are initially stated at their purchase price, together with any incidental expenses of acquisition.

The Company capitalizes website development costs in accordance with the provisions of Urgent Issues Task Force (UITF) Abstract 29. Generally, the Company capitalizes costs incurred to develop its website applications and infrastructure.

Provision for depreciation is made so as to write off the cost of tangible assets on a straight-line basis over the expected useful economic lives of the assets concerned. The principal annual rates used for this purpose are:

Equipment		5 years
Leasehold improvements		Life of lease, 5 years

Stock

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

Deferred taxation

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more tax, with the following exception:

Deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

1.   PRINCIPAL ACCOUNTING POLICIES AND BASIS OF PREPARATION OF THE FINANCIAL
    STATEMENTS  – (continued)

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

Operating leases

Rentals payable under operating leases are charged on a straight-line basis over the lease term in arriving at operating profit.

Financial instruments

All highly liquid investments with an original maturity of three months or less are accounted as cash equivalents. Short term investments consist principally of certificates of deposits (“CDs”) with original maturities more than three months. The Company invests in CDs issued by domestic banks.

Share-based payments

Share-based payments are accounted for in accordance with Financial Reporting Standard 20, Share-Based Payments. In accordance with FRS20, share-based payments are measured at the grant date based on the fair value of the award.

The Black-Scholes option pricing model is used to determine the fair value of share option and employee share purchase plan. The fair value of equity-based payment awards on the date of grant is determined by an option-pricing model using the number of complex and subjective variables. These variables include expected share price volatility over the term of the awards, actual and projected employee share option exercise behaviours, risk-free interest rate and expected dividends.

2.    SEGMENTAL ANALYSIS

The directors consider that all of the Group’s activities fall within one class of business and within the USA.

3.   OPERATING LOSS

Operating loss is stated after charging:

		2008				2007
		$000				$000
						(restated)
Depreciation of owned assets			43				52
Amortisation of goodwill			1,613				—
Hire of equipment under operating leases			14				—
Rental of land and buildings			228				235
Auditors’ remuneration as detailed below			259				115
Audit of parent and consolidated accounts			34				31
Audit of subsidiary by other auditors			124				68
Other non-audit services			5				16
Other non-audit services by other auditors			96				—
			259				115

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

4.   EMPLOYEE INFORMATION

The average number of persons employed by the Group during the year, including executive directors, was:

		2008				2007
		Number				Number
						(restated)
Management			2				2
Administration			3				3
Sales, customer service and marketing			18				18
Merchandising			4				3
IT			3				2
			30				28

Group employment costs of all employees including executive directors:

		2008				2007
		$000				$000
						(restated)
Wages and salaries			1,369				1,425
Share based compensation			135				60
			1,504				1,485

5.   DIRECTORS’ EMOLUMENTS

The directors' aggregate emoluments in respect of qualifying services were:

		2008				2007
		$000				$000
Emoluments receivable			551				872
Share based compensation			115				—
			666				872

Highest paid director:

		2008				2007
		$000				$000
Emoluments receivable			173				872
Share based compensation			115				—
			288				872

6.   INTEREST

Interest receivable		2008				2007
		$000				$000
						(restated)
Bank and other			29				—
			29				—

Interest payable		2008				2007
		$000				$000
						(restated)
Bank and other			177				973
			177				973

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

7.   TAXATION

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

		2008
		$000
Analysis of the tax charge
Current tax
UK Corporation tax @ 30%			—
Overseas taxation			(273)
Deferred tax			273
Total current tax
Profit/(loss) on ordinary activities at 41%			(109)
Effects of:
Expenses not deductible for tax purposes			(298)
Increase/(decrease) in unprovided tax asset			134
			(273)
Deferred tax unprovided consists of the following:
Stock based compensation			(50)
Differences between capital allowances and depreciation			(84)
Trade losses			(273)
Total deferred tax unprovided			(407)

The deferred tax asset principally consists of accumulated tax losses of $668,558 carried forward and available for offset against future profits expire beginning of 2029. No deferred tax assets have been recognised in respect of the above available losses, as in the opinion of the directors, it is not likely that suitable taxable profits will be available against which the carried forward tax losses can be recovered in the near future.

8.   GOODWILL

Group		Total
		$000
COST
At 1 January 2008 (restated)			—
Goodwill on acquisition			1,613
At 31 December 2008			1,613
AMORTISATION
At 1 January 2008 (restated)			—
Charge for the year			1,613
At 31 December 2008			1,613
NET BOOK VALUE
At 31 December 2008			—
At 31 December 2007 (restated)			—

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

8.   GOODWILL  – (continued)

On 23 June 2008 Insignia Solutions Plc acquired DollarDays International Inc. As stated in Note 1, the acquisition is accounted for in the consolidated accounts as a reverse acquisition with DollarDays International Inc. as the acquirer.

		$000
Fair value of consideration			1,000
Book value of assets and liabilities of Insignia Solutions Plc at 23 June 2008
Debtors			62
Creditors			(675	)
Total net liabilities			(613	)
Fair value adjustment			Nil
Fair value of assets acquired			(613	)
Goodwill on acquisition			1,613

There were no adjustments required to bring the assets and liabilities in line with group policies, or to adjust to fair value.

9.  TANGIBLE FIXED ASSETS

Group		Equipment				Leasehold Improvements				Total
		$000				$000				$000
COST
At 1 January 2008 (restated)			135				34				169
Additions			77				—				77
At 31 December 2008			212				34				246
DEPRECIATION
At 1 January 2008 (restated)			38				4				42
Depreciation			34				9				43
At 31 December 2008			72				13				85
NET BOOK VALUE
At 31 December 2008			140				21				161
At 31 December 2007 (restated)			97				30				127

10.  INVESTMENTS

Company		2008
		$000
COST
At 1 January 2008 (restated)			—
Additions			8,761
At 31 December 2008			8,761
PROVISION FOR DIMINUTION
At 1 January 2008 (restated)			—
Provision for year			8,761
At 31 December 2008			8,761
NET BOOK VALUE
At 31 December 2008			—
At 31 December 2007			—

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

10.  INVESTMENTS  – (continued)

The Company’s subsidiary undertaking is:

Name of Company and Country of Incorporation and Operation		Description of Shares Held		Proportion of Shareholding and Voting Rights Held
DollarDays International Inc (USA)		Common stock, no par value		100%

The principal activity of the subsidiary is the development of Internet-based software programmes for wholesale general merchandise to small independent resellers.

11.  DEBTORS

		Group								Company
		2008				2007				2008				2007
		$000				$000				$000				$000
						(restated)
Trade debtors			75				50				—				—
Amounts due from group undertakings			—				—				923
Other debtors			27				39				17				7
Prepayments			79				22				—				—
			181				111				940				7
Amounts falling due after more than one year:
Lease deposits			7				7				—				—
			7				7				—				—
Total debtors			188				118				940				7

12.  CREDITORS: Amounts falling due within one year

		Group								Company
		2008				2007				2008				2007
		$000				$000				$000				$000
						(restated)
Trade creditors			1,176				1,231				5				11
Amounts owing to subsidiary undertakings			—				—				420				—
Convertible debts and other notes payable			—				6,264				—				—
Accruals and deferred income			792				863				—				232
			1,968				8,358				425				243

13.  SHARE CAPITAL

Authorised share capital:

		2008								2007
		No				£000				No				£000
Equity interests (Ordinary shares of 1p)			110,000,000				1,100				110,000,000				1,100
Non-equity interests (Preferred shares of 20p each)			3,000,000				600				3,000,000				600
							1,700								1,700

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

13.  SHARE CAPITAL  – (continued)

Allotted and called up:

		2008								2007
		No				$000				No				$000
Equity interests (Ordinary shares of 1p)			50,438,247				848				50,438,247				848

Shares to be issued:

		2008								2007
		No				$000				No				$000
Equity interests (Ordinary shares of 1p)			76,244,183				1,507				—				—

Allotment of shares

In January 2008, the Company issued 495,833 shares to certain warrant holders for previous warrant exercises and services rendered to the Company. The issuances did not result in any proceeds to the Company in January 2008.

On 23 June 2008, DollarDays International Inc. entered into a series of transactions to effect a reverse merger with Insignia Solutions Plc. These transactions consisted of the following:

The total authorised share capital at the year end was 110,000,000 ordinary shares, which was not sufficient to complete all the allotment of shares. At the year end, all the shares to be issued as detailed above had not yet been issued, but they were accounted for during the year as there was an obligation to issue the shares.

Under the agreement and plan of merger, Insignia Solutions Plc shareholders maintained approximately 37.1% ownership of the combined company, DollarDays International, Inc. shareholders obtained 56.7%, and a third party obtained 6.2% of the combined share capital.

Outstanding Warrants for Subscription for Ordinary Shares

		Warrants Outstanding and Exercisable				Warrants Outstanding Exercise Price
Outstanding at 31 December 2007			—				—
Granted			17,074,499			$	0.01 – 0.12	(1)
Exercised			—				—
Lapsed			—				—
Outstanding at 31 December 2008			17,074,499			$	0.01 – 0.12

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

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

13.  SHARE CAPITAL  – (continued)

the requisite service period has already been rendered, no compensation expense has been recorded during the nine-months ended 31 December 2008.

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

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

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

Option schemes

Prior to the merger, Insignia had four stock option plans which provided for the issuance of stock options to employees and outside consultants of Insignia to purchase ordinary shares. There have been no grants in these plans since 2006. In connection with the reverse merger, the Company expects to no longer issue options under these plans. Options that were outstanding by the Insignia shell company prior to the merger are reflected as grants during the year ended 31 December 2008, the year in which the merger occurred. Share options are granted at prices of not less than 100% of the fair market value of the Ordinary shares at the date of the grant, as determined by the Board of Directors.

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

		2008				2007
Expected dividends			—				None
Expected term			—				2.5 years
Risk free interest			—				4.4	%
Expected volatility			—				57 – 64	%
Forfeiture rate			—				0	%

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

13.  SHARE CAPITAL  – (continued)

The following table summarises activity in the year under the share option schemes:

		Total				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (Years)
Outstanding at 1 January 2007			3,614,646			$	0.27
Granted			3,745,887			$	0.17
Exercised			—				—
Lapsed			—				—
Outstanding at 31 December 2007			7,360,533			$	0.22
Granted			2,788,376			$	0.90
Exercised			—				—
Lapsed			(4,039,194	)		$	0.67
Outstanding at 31 December 2008			6,109,715			$	0.23				2.8
Exercisable at 31 December 2008			6,109,715			$	0.23				2.8

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

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

Options outstanding at 31 December 2008 (in thousands, except per share data):

Range of Exercise Prices		Number Outstanding				Weighted Average Remaining Contractual Life				Weighted Average Exercise Price
$0.10-$0.30			5,507				1.9				0.22
$0.31-$0.40			55				4.2				0.37
$0.41-$0.50			508				1.1				0.47
$0.51-$0.60			—				—				—
$0.61-$1.00			10				6.1				0.75
$1.01-$7.25			30				2.0				4.57
			6,110				1.8

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

14.  RECONCILIATION OF RESERVES

		Called Up Share Capital				Share Premium Account				Profit and Loss Account				Reverse Acquisition Reserve				Capital Reserve
		$000				$000				$000				$000				$000
Group
At 1 January 2008 (restated)			848				67,930				(6,203	)			(84,624	)			13,954
Shares issued in year			1,507				8,255				—				—				—
Costs of share issue			—				(80	)			—				—				—
Reverse acquisition reserve			—				—				—				1,766				—
Loss for year			—				—				(2,838	)			—				—
At 31 December 2008			2,355				76,105				(9,041	)			(82,858	)			13,954
Company
At 1 January 2008			848				62,772				(77,754	)			—				13,902
Shares issued in year			1,507				8,253				—				—				—
Costs of share issue			—				(80	)			—				—				—
Loss for year			—				—				(8,899	)			—				—
At 31 December 2008			2,355				70,945				(86,653	)			—				13,902

As permitted by Section 230(1) (b) of the Companies Act 1985, Insignia Solutions plc has not published its separate profit and loss account. The loss arising for the Company in 2008 is $8,899,000 (2007: $1,233,000).

15.  RECONCILIATION OF MOVEMENT IN TOTAL SHAREHOLDERS’ FUNDS

		Total Shareholders’ Funds
		2008				2007
		$000				$000
Group
At 1 January 2008 (restated)			(8,095	)			(6,586	)
Shares issued in year			9,762				251
Costs of share issue			(80	)			—
Reverse acquisition reserve			1,766				—
Loss for year			(2,838	)			(1,760	)
At 31 December 2008			515				(8,095	)
Company
At 1 January 2008			(232	)			1,001
Shares issued in year			9,760				—
Costs of share issue			(80	)			—
Loss for year			(8,899	)			(1,233	)
At 31 December 2008			549				(232	)

16.  LEASE COMMITMENTS

The Group has committed to the following annual charges under non-cancellable operating leases:

		Properties
		2008				2007
		$000				$000
Expiring:
Within one year			292				—
Within two to five years			826				—
After five years			—				—
			1,118				—

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

17.  Related Party Transactions

There is no ultimate controlling party of the group.

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

C Baker, a director, has given a personal guarantee for a line of credit of $150,000 to Wells Fargo Bank. At the year end, there were no overdrawn balances on these bank accounts.

The Company has taken advantage of the exemption in Financial Reporting Standard 8 not to disclose transactions and balances between Group entities that have been eliminated on consolidation.

18.  Financial Risks

The following risks are considered to be the key risks to the Group.

A downturn in general economic conditions may adversely affect the group’s results from operations

The success of the Group’s operations depends to a significant extent upon a number of factors relating to discretionary consumer spending, including economic conditions affecting disposable consumer income such as employment, business conditions, interest rates and taxation.

There can be no assurance that consumer spending will not be adversely affected by economic conditions, thereby impacting the Group’s growth, financial condition and results of operations.

Interest rate risk

The Group places its cash primarily in bank accounts and certificates of deposit with high quality financial institutions. Interest earned fluctuates in line with bank interest rates. The Group has no financial liabilities, other than short-term creditors.

Fair values of financial assets and liabilities

The fair values of all Group financial assets and liabilities are considered to be the same as book value.

The group has a history of significant losses. If the group does not achieve profitability, the financial condition and the stock price could suffer

The Group has a history of losses and accumulated deficit. The Group will need to generate significant revenues increases to achieve profitability, and may not be able to do so. Even if the Group does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis in the future. If the Group’s revenues grow more slowly than anticipated, or if operating expenses exceed expectations, the financial results would be harmed.

The Group will continue to incur significant operating expenses and capital expenditures to continue to improve software and technologies, and:

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

18.  Financial Risks  – (continued)

Because the Group may incur many of these expenses before it receives any revenues from its efforts, losses may be greater than the losses incurred if the Group developed business more slowly. Further, expenses are based in large on the Group’s operating plans and future revenue projections. Many of the expenses are fixed in the short term, and the Group may not be able to quickly reduce spending if revenues are below projections. Therefore, any significant shortfall in revenues would likely harm the Group’s business, prospects, operating results and financial condition. In addition, the Group may find that these efforts are more expensive than currently anticipated, which would further increase losses.

The group may experience significant fluctuations in operating results and growth rate

The Group may not be able to accurately forecast the growth rate. Expense levels are based on investment plans on sales estimates. A significant portion of expenses and investments are fixed, and it may not be possible to adjust the spending quickly enough if sales are less than expected.

The Group’s revenue growth may not be sustainable, and the percentage growth rates may decrease. The Group’s revenue and operating profit depends on the continued growth of demand for products and services, and the business is affected by general economic and business conditions worldwide. A softening of demand, whether caused by changes in customer preferences or the weakening of the U.S. or global economies, may result in decreased revenue or growth.

The Group’s net sales and operating results will also fluctuate for many other reasons, including due to risks described elsewhere in this section and the following:

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

18.  Financial Risks  – (continued)

The group is dependent on a limited number of shipping companies

The Group relies on a limited number of shipping companies to deliver inventory and complete orders to customers. If the Group is not able to negotiate acceptable terms with these companies or they experience performance problems or other difficulties, it could negatively impact on the operating results and customer experience. In addition, the Group’s ability to ship completed orders to customers may be negatively affected by inclement weather, fire, flood, earthquakes, disputes, acts of war or terrorism, acts of God and similar factors. Third parties either drop-ship or otherwise fulfil the customers’ orders, and the Group are increasingly reliant on the reliability, quality and future procurement of their services. The inability of these other companies to accurately forecast product demand would result in unexpected costs and other harm to the Group’s business and reputation.

The seasonality of the group’s business places increased strain on the group’s operations

The Group expects a disproportionate amount of the Group’s net sales to occur during the fourth quarter. If suppliers do not stock or restock popular products in sufficient amounts such that the Group fails to meet customer demand, it could significantly affect revenue and future growth. If too many customers access the website within a short period of time due to increased demand, system interruptions may make the website unavailable or prevent orders from efficiently fulfilled, which may reduce the volume of goods sold and the attractiveness of the products and services offered. In addition, it may not be possible to adequately staff the fulfilment and customer service centres during peak periods.

The Group pays vendors on extended trade terms, but collects from customers via credit card or other form of electronic payment. As a result of holiday sales in November and December, the cash, cash equivalents, and marketable securities balances typically reach their highest level (other than as a result of cash flows provided by or used in investing and financing activities) in the fourth quarter. This operating cycle results in a corresponding increase in accounts payable at 31 December. The accounts payable balance generally declines during the first three months of the year, resulting in a corresponding decline in the cash, cash equivalents, and marketable securities balances.

The group may not be able to compete successfully against existing or future competitors

The online liquidation services market is rapidly evolving and intensely competitive. Barriers to entry are minimal, and current and new competitors can launch new the websites at a relatively low cost.

The Group expects the online liquidation services market to become even more competitive as traditional liquidators and online retailers develop services that compete. In addition, manufacturers and retailers may decide to create their own the websites to sell their own excess inventory and the excess inventory of third parties. Competitive pressures created by any one of the competitors, or by competitors collectively, could harm the business, prospects, financial condition and results of operations.

Further, as a strategic response to changes in the competitive environment, the Group may from time to time make certain pricing, service or marketing decisions or acquisitions that could harm the business, prospects, financial condition and results of operations. To the extent the Group enter new lines of businesses, it would be expected that the Group would be competing with many established businesses.

Many of the Group’s current and potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources. In addition, online retailers and liquidation e-tailers may be acquired by, receive investments from or enter into other commercial relationships with larger, the well-established and the well-financed companies. Some of the

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INSIGNIA SOLUTIONS PLC
  
Notes to the Financial Statements for the Financial Year Ended 31 December 2008

18.  Financial Risks  – (continued)

competitors may be able to secure merchandise from manufacturers on more favourable terms, devote greater resources to marketing and promotional campaigns, adopt more aggressive pricing or inventory availability policies and devote substantially more resources to the website and systems development. Increased competition may result in reduced operating margins, loss of market share and a diminished brand. The Group cannot provide assurance that it will be able to compete successfully against current and future competitors.

Credit card fraud could adversely affect the group’s business

The Group does not carry insurance against the risk of credit card fraud, so the failure to adequately control fraudulent credit card transactions could reduce the net revenues and gross margin. The Group has implemented technology to help us detect the fraudulent use of credit card information. However, the Group may in the future suffer losses as a result of orders placed with fraudulent credit card data even though the associated financial institution approved payment of the orders. Under current credit card practices, the Group may be liable for fraudulent credit card transactions because the cardholder’s signature is not obtained. If the Group is unable to detect or control credit card fraud, the Group’s liability for these transactions could harm the business, results of operation or financial condition.

The group is subject to payment related risks

The Group accepts payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift certificates, direct debit from a customer’s bank account, physical bank check and payment upon delivery. For certain payment methods, including credit and debit cards, the Group pays interchange and other fees, which may increase over time and raise the Group’s operating costs and lower the profit margins. Reliance on third parties to provide payment processing services, including the processing of credit cards, debit cards, electronic checks, and promotional financing, could disrupt the business if these companies become unwilling or unable to provide these services. The Group is also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for the Group to comply. If the Group fails to comply with these rules or requirements, the Group may be subject to fines and higher transaction fees and lose the ability to accept credit and debit card payments from customers, process electronic funds transfers, or facilitate other types of online payments, and the business and operating results could be adversely affected.

19.  Post Balance Sheet Events

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

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

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PART V
  
FINANCIAL INFORMATION RELATING TO AMERICA'S SUPPLIERS, INC.

Introduction

This Part V includes historical financial information relating to America's Suppliers, Inc. prepared by the ASI Directors.

Profit and loss account for the period from 6 October 2009 to 2 November 2009

During the period from incorporation on 6 October 2009 to 2 November 2009 (being the latest practicable date prior to the publication of this document) ASI has not traded and has received no income and incurred no expenditure. Consequently, during the current period ASI has made neither a profit nor a loss and hence no profit and loss account has been prepared.

Cash flow statement for the period from 6 October 2009 to 2 November 2009

During the period from incorporation on 6 October 2009 to 2 November 2009 (being the latest practicable date prior to the publication of this document) ASI received US$10 by way of cash subscription for 10 ASI Shares on incorporation. ASI did not otherwise receive or expend any cash and accordingly no cash flow statement has been prepared.

Balance sheet as at 2 November 2009

		US$
ASSETS
Cash			10
CAPITAL
Called-up equity share capital			0.01
Share premium account			9.99
EQUITY SHAREHOLDERS' FUNDS			10

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PART VI
  
THE SCHEME OF ARRANGEMENT

  
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT

No. 20027 of 2009
  
IN THE MATTER OF INSIGNIA SOLUTIONS PLC
  
and
  
IN THE MATTER OF THE COMPANIES ACT 2006
  

SCHEME OF ARRANGEMENT
(under Part 26 of the Companies Act 2006)
  
BETWEEN
  
INSIGNIA SOLUTIONS PLC
  
  
AND
  
THE SCHEME SHAREHOLDERS
(as defined below)

  
  
PRELIMINARY

“Acquisition”		the proposed acquisition by ASI of the entire issued and to be issued share capital of Insignia pursuant to this Scheme
“Act”		the Companies Act 2006
“Articles”		the articles of association of Insignia as at the date of this Scheme and “Article” shall mean any article of those Articles
“ASI”		America's Suppliers, Inc., (incorporated in the State of Delaware under the Delaware General Corporation Law on 6 October 2009), whose registered office is at 7575 E Redfield Road, Suite 201, Scottsdale, Arizona, 85260, USA
“ASI Shares”		common shares having a par value of US$0.001 each in the issued share capital of ASI
“business day”		a day (excluding Saturdays, Sundays and public holidays) on which banks are open for business in the City of London
“Capital Reduction”		the proposed reduction of the share capital of Insignia involving the cancellation and the extinguishing of the Scheme Shares pursuant to this Scheme under section 641 of the Act as described in this document
“Court”		the High Court of Justice in England and Wales

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“Court Hearing”		the hearing by the Court of the claim form for the sanctioning of the Scheme and to confirm the Capital Reduction under section 648 of the Act
“Court Meeting”		the meeting of the Scheme Shareholders to be convened pursuant to an order of the Court pursuant to the provisions of the Act and to be held at 7575 E Redfield Road, Suite 201, Scottsdale, Arizona, 85260, USA at 12.00 noon (Arizona time) on 30 November 2009 for the purposes of considering and, if thought fit, approving this Scheme (with or without amendment) and any adjournment of such meeting
“Direct Registration Statements”		direct registration statements issued by BNY Mellon Shareholder Services evidencing title to ASI Shares under the Direct Registration System
“Direct Registration System”		the direct registration system operated by DTC
“DTC”		Deposit Trust Company, a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the SEC
“Effective Date”		the date on which the Court Order (together with the Statement of Capital attached thereto) is registered by the Registrar of Companies
“Excluded Shares”		any Insignia Shares beneficially owned by ASI or its nominees at the relevant times
“General Meeting”		the general meeting of Insignia Shareholders to be held at 7575 E Redfield Road, Suite 201, Scottsdale, Arizona, 85260, USA at 12.15 p.m. (Arizona time) on 30 November 2009 (or as soon thereafter as the Court Meeting shall have been concluded or adjourned) and any adjournment of such meeting
“holder”		a registered holder of shares, including any person entitled by transmission
“members”		members of Insignia on the register of members at any relevant date
“Insignia”		Insignia Solutions plc (incorporated in England and Wales under the Companies Act 1985 with registered number 01961960), whose registered office is at New Bridge Street House, 30-34 New Bridge Street, London EC4V 6BJ
“Insignia Shareholders”		holders of Insignia Shares
“New ASI Shares”		the new common shares having a par value of US$0.001 each in the capital of ASI to be allotted and issued credited as fully paid to holders of Scheme Shares pursuant to this Scheme
“New Insignia Shares”		the new ordinary shares of 1 penny each in the capital of Insignia proposed to be allotted and issued credited as fully paid pursuant to this Scheme
“Proposals”		the acquisition by ASI of the entire issued capital of the Company pursuant to the Scheme
“Ordinary Shares” or “Insignia Shares”		ordinary shares of 1 penny each in the issued share capital of Insignia
“pounds”, “£”, “Sterling”, “pence” and “p”		the lawful currency of the United Kingdom

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“Registrar of Companies”		the Registrar of Companies in England and Wales, within the meaning of the Act
“Restricted Overseas Shareholder”		a person (including an individual, partnership, unincorporated syndicate, limited liability company, unincorporated organisation, trust, trustee, executor, administrator or other legal representative) in, or resident in, or any person whom Insignia (following consultation with ASI) reasonably believes to be in, or resident in, Australia, Canada or Japan and persons in any other jurisdiction (other than US Persons or persons in the UK) whom Insignia (following consultation with ASI) is advised to treat as restricted overseas persons in order to observe the laws of such jurisdiction or to avoid the requirement to comply with any governmental or other consent or any registration, filing or other formality which Insignia (following consultation with ASI) regards as unduly onerous
“Scheme”		this scheme of arrangement under Part 26 of the Act between Insignia and the Scheme Shareholders to implement the Proposals, with or subject to any modification thereof or addition thereto or condition approved or imposed by the Court and agreed by Insignia and ASI
“Scheme Document”		the document dated 6 November 2009 sent by Insignia to the Insignia Shareholders, of which this Scheme forms part
“Scheme Record Time”		6.00 p.m. (London time) on the business day immediately prior to the Court Hearing
“Scheme Shareholder”		a holder of a Scheme Share
“Scheme Shares”		Insignia Shares:
		(i) in issue at the date of the Scheme Document;
		(ii) issued after the date of the Scheme Document, but before the Court Meeting; and
		(iii) issued at or after the time of the Court Meeting but before the Scheme Record Time on terms that the original or any subsequent holders are, or shall have agreed in writing to be, bound by this Scheme,
		in each case, other than any Excluded Shares
“SEC”		the United States Securities and Exchange Commission
“Special Resolution”		the special resolution to be proposed at the General Meeting
“Statement of Capital”		the Statement of Capital (approved by the Court) showing, as altered by the Reduction Court Order, the information required by section 649 of the Act with respect to Insignia's share capital
“UK” or “United Kingdom”		the United Kingdom of Great Britain and Northern Ireland
“US$”		the lawful currency of the United States of America
“US Person”		a US person as defined in Regulation S promulgated under the United States Securities Act 1933, as amended

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THE SCHEME

The provisions of clauses 1, 2 and 3 shall be subject to any prohibition or condition imposed by law. Without prejudice to the generality of the foregoing, if in the case of any Insignia Shareholder who has a registered

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address outside of the United Kingdom (an “Overseas Shareholder“) ASI is advised that the delivery to such Overseas Shareholder of New ASI Shares under clause 3; or would or might infringe the laws of the relevant jurisdiction or would or might require ASI to obtain or observe any governmental or other consent or any registration, filing or other formality with which ASI is unable to comply, or compliance with which ASI regards as unduly onerous, then ASI may:

in either case, as soon as practicable after the Effective Date.

Any sale under sub-clauses 4(a) or (b) shall be carried out at the best price which can be reasonably obtained at the time of sale, and the net proceeds of such sale, after deduction of all expenses and commission, including any amount in respect of value added tax payable thereon, shall be delivered by cheque (by first class post) to such Overseas Shareholder. To give effect to any such sale, the person or nominee so appointed (as the case may be) shall be authorised as attorney on behalf of such Overseas Shareholder to execute and deliver a form of transfer and to give such instructions and do all such things which he may consider necessary or expedient in connection with such sale. In the absence of bad faith or wilful default, none of Insignia, ASI, the person or the nominee so appointed or any agent of any of them shall have any liability for any loss arising as a result of the timing or terms of any such sale.

With effect from and including the Effective Date, all certificates representing Scheme Shares shall cease to have effect as documents of title to the shares comprised therein and every holder thereof shall be bound at the request of Insignia to deliver up the same to Insignia, or as it may direct, or to destroy the same.

Insignia and ASI may jointly consent on behalf of all concerned to any modification of, or addition to, this Scheme or to any condition which the Court may approve or impose.

Insignia is authorised and permitted to pay all the costs and expenses relating to the negotiation, preparation and implementation of the Scheme.

Dated: 2 November 2009

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PART VII
  
ADDITIONAL INFORMATION

The Insignia Directors, whose names are set out in paragraph 2.1 below, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Insignia Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

Name		Function
Peter Engel		Chairman and Chief Executive Officer
Vincent Pino		Non-executive Director
Lawrence Schafran		Non-executive Director
Christopher Baker		Non-executive Director
Filipe Sobral		Non-executive Director

Insignia is a public company limited by shares and incorporated in England and Wales under the Companies Act 1985 with registered number 01961960. The registered office of Insignia is New Bridge Street House, 30-34 New Bridge Street, London EC4V 6BJ.

Name		Function
Peter Engel		Chairman and Chief Executive Officer
Vincent Pino		Non-executive Director
Lawrence Schafran		Non-executive Director
Christopher Baker		Non-executive Director
Filipe Sobral		Non-executive Director

ASI was incorporated in the State of Delaware on 6 October 2009 under the Delaware General Corporation Law. ASI is a holding company and has not traded since incorporation. Its registered office is 7575 E Redfield Road, Suite 201, Scottsdale, Arizona, 85260, USA.

The issued share capital, fully paid, of ASI at the Disclosure Date is as follows:

		Issued
		Number				Amount (US$)
ASI Shares at the Disclosure Date			10				0.01

Under the Scheme, ASI will issue on the Scheme Effective Date (which is expected to be 15 December 2009) ASI Shares, credited as fully paid up, to Insignia Shareholders on the basis of one ASI Share for every 10 Insignia Shares held at the Scheme Record Time save for Peter Engel who will be issued with 10 fewer ASI Shares than he would otherwise be entitled by virtue of the aggregate number of Insignia Shares held by him at the Scheme Record Time. Accordingly, the proposed, issued and fully paid share capital of ASI as it will be immediately following the implementation of the Scheme (assuming no exercise of outstanding rights under the Insignia Share Plans or the Insignia Warrants, or other issue or offer of share capital by Insignia or ASI) is as follows:

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		Issued
		Number				Amount (US$)
ASI Shares immediately following implementation of the Scheme			11,992,494				11,992.49

The proposed, issued and fully paid share capital of ASI as it will be immediately following the implementation of the Scheme and following the exercise of all outstanding Insignia Warrants, Insignia Options and Restricted Stock Awards (assuming no other issue or offer of share capital by Insignia or ASI) is as follows:

		Issued
		Number				Amount (US$)
ASI Shares immediately following implementation of the Scheme			11,992,494				11,992.49
ASI Shares issued pursuant to Insignia Share Plans			436,393				436.39
ASI Shares issued pursuant to Restricted Stock Awards			2,951,272				2,951.27
ASI Shares issued pursuant to Insignia Warrants			2,874,485				2,874.49
Total			18,254,644				18,254.64

As at the Disclosure Date, the interests of the ASI Directors and the Insignia Directors (within the meaning of Part 22 of the Act) and their immediate families, related trusts and connected persons, all of which are beneficial unless otherwise stated, in ASI Shares were (with the exception of Restricted Stock Awards which are set out in paragraph 4.2 below) as follows:

		Number of ASI Shares
Peter Engel			10
Christopher Baker			Nil
Filipe Sobral			Nil
Vincent Pino			Nil
Lawrence Schafran			Nil