<SEC-DOCUMENT>0000897101-11-001573.txt : 20110909
<SEC-HEADER>0000897101-11-001573.hdr.sgml : 20110909
<ACCEPTANCE-DATETIME>20110909161156
ACCESSION NUMBER:		0000897101-11-001573
CONFORMED SUBMISSION TYPE:	10-Q/A
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20110331
FILED AS OF DATE:		20110909
DATE AS OF CHANGE:		20110909

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INSIGNIA SYSTEMS INC/MN
		CENTRAL INDEX KEY:			0000875355
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-ADVERTISING [7310]
		IRS NUMBER:				411656308
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13471
		FILM NUMBER:		111083644

	BUSINESS ADDRESS:	
		STREET 1:		8799 BROOKLYN BLVD.
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55445
		BUSINESS PHONE:		7633926200

	MAIL ADDRESS:	
		STREET 1:		8799 BROOKLYN BLVD.
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55445
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q/A
<SEQUENCE>1
<FILENAME>insignia114213_10-qa.htm
<DESCRIPTION>AMENDMENT TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2011
<TEXT>
<HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 3px 0px; text-align: left"><A HREF="#toc">Table of Contents</A></P>
<HR WIDTH="100%" SIZE="4" NOSHADE color=black STYLE="MARGIN-TOP: -5PX">
<HR WIDTH="100%" SIZE="1" NOSHADE color=black STYLE="MARGIN-TOP: -10PX">


<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="38%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="24%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="38%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=4><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>Washington, D. C. 20549</B></FONT></P>
 </TD>
 </TR>
<TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP colspan=3>
<HR align=center color=#000000 width="20%">
</TD>
 </TR>



 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=5><B>FORM
 10-Q/A</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
  <TR>
 <TD VALIGN=TOP colspan=3>
<HR align=center color=#000000 width="20%">
</TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3  FACE=WINGDINGS>x</FONT> <FONT  SIZE=3>QUARTERLY REPORT PURSUANT TO
 SECTION 13 OR 15(d) OF</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3>THE SECURITIES EXCHANGE
 ACT OF 1934</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>for the quarterly period ended
 March 31, 2011</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>or</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3  FACE=WINGDINGS>o</FONT><FONT  SIZE=3> TRANSITION REPORT PURSUANT
 TO SECTION 13 OR 15(d) OF THE SECURITIES<BR>
 EXCHANGE ACT OF 1934</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>for the transition period from ___________________ to
 _________________</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>Commission File Number: 1-13471</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
</tr>
  <TR>
 <TD VALIGN=TOP colspan=3>
<HR align=center color=#000000 width="20%">
</TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=6><B>INSIGNIA SYSTEMS, INC.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Exact
 name of registrant as specified in its charter)</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="50%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="50%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>Minnesota</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>41-1656308</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(State
 or other jurisdiction of incorporation or organization)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(IRS
 Employer Identification No.)</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="34%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="27%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 <TD WIDTH="37%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>8799 Brooklyn Blvd.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>Minneapolis, MN 55445</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Address
 of principal executive offices)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B> (763) 392-6200</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Registrant&#146;s
 telephone number, including area code)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>Not applicable.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Former
 name, former address and former fiscal year if changed since last report)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
   <TR>
 <TD VALIGN=TOP colspan=3>
<HR align=center color=#000000 width="20%">
</TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such report(s), and (2) has been subject to such filing requirements for the past
90 days. <BR>
Yes&nbsp;<FONT FACE=WINGDINGS>x</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT FACE=WINGDINGS>o</FONT></FONT></P>

<P><FONT SIZE=2>Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T (&sect;232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). <BR>
Yes&nbsp;<FONT FACE=WINGDINGS>o</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT FACE=WINGDINGS>o</FONT></FONT></P>

<P><FONT SIZE=2>Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer. See definition of &#147;accelerated filer and large
accelerated filer&#148; in Rule 12b-2 of the Exchange Act. (Check one):</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="100%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>Large
 accelerated filer&nbsp;&nbsp;<FONT FACE=WINGDINGS>o</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accelerated
 filer&nbsp;<FONT FACE=WINGDINGS>x</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated
 filer&nbsp;<FONT FACE=WINGDINGS>o</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Smaller
 Reporting Company&nbsp;<FONT FACE=WINGDINGS>o</FONT></FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). <BR>
Yes&nbsp;<FONT FACE=WINGDINGS>o</FONT>&nbsp;&nbsp;&nbsp;No&nbsp;<FONT FACE=WINGDINGS>x</FONT></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Number
of shares outstanding of Common Stock, $.01 par value, as of September 6, 2011,
was 15,025,904.</FONT></P>


<P ALIGN=CENTER><FONT SIZE=2>1</FONT></P>


<HR WIDTH="100%" SIZE="1" noshade color=black style="margin-top: -2px">
<HR WIDTH="100%" SIZE="4" noshade color=black style="margin-top: -10px">

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>

<P ALIGN=CENTER><FONT SIZE=2><B>EXPLANATORY
NOTE</B></FONT></P>

<P><FONT SIZE=2>This Form 10-Q/A is being
filed to amend the registrant&#146;s Form 10-Q for the quarter ended March 31, 2011,
to: (1) correct for a miscalculation made related to deferred income taxes, as
announced by the Company on August 3, 2011, and (2) modify the portions of Exhibit
10.1 for which confidential treatment is requested, in response to comments
received from the Commission on the registrant&#146;s request for confidential
treatment.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>2</FONT></P>


<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>


<P STYLE="font: bold 10pt Times New Roman, Times, Serif; text-align: center"><A NAME="toc">Insignia Systems, Inc.</A></P>

<P ALIGN=CENTER><FONT SIZE=2><B>TABLE OF CONTENTS</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="10%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="83%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A  HREF="#A114213A001_V1">PART I.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A  HREF="#A114213A001_V1">FINANCIAL INFORMATION</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>4</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A  HREF="#A114213A002_V1">Item 1.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A  HREF="#A114213A002_V1">Financial Statements</A> </B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>4</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A HREF="#A114213A003_V1">Condensed Balance Sheets &#150; March 31, 2011 (unaudited)
 and December 31, 2010</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>4</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A HREF="#A114213A004_V1">Statements of Operations &#150; Three months
 ended March 31, 2011 and 2010 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>5</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A HREF="#A114213A005_V1">Statements of Cash Flows &#150; Three months
 ended March 31, 2011 and 2010 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>6</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><A HREF="#A114213A006_V1">Notes to Financial Statements &#150; March 31,
 2011 (unaudited)</A></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>7</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A007_V1">Item 2.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A007_V1">Management&#146;s Discussion and Analysis
 of Financial Condition and Results of Operations</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>12</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A008_V1">Item 3.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A008_V1">Quantitative and Qualitative
 Disclosures About Market Risk</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>16</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A009_V1">Item 4.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A009_V1">Controls and Procedures</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>16</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A010_V1">PART II.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A010_V1">OTHER INFORMATION</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A011_V1">Item 1.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A011_V1">Legal Proceedings</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A012_V1">Item 1A.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A012_V1">Risk Factors</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>17</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A013_V1">Item 2.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A013_V1">Unregistered Sales of Equity
 Securities and Use of Proceeds</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>18</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A014_V1">Item 3.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A014_V1">Defaults Upon Senior Securities</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>18</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A015_V1">Item 4.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A015_V1">Removed and Reserved</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>18</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A016_V1">Item 5.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A HREF="#A114213A016_V1">Other Information</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>18</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A  HREF="#A114213A017_V1">Item 6.</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B><A  HREF="#A114213A017_V1">Exhibits</A></B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=2>18</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>3</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>

<P><FONT SIZE=3><B>P<A NAME="A114213A001_V1"></A>ART I.&nbsp;&nbsp;&nbsp;&nbsp;FINANCIAL INFORMATION</B></FONT></P>

<P><FONT SIZE=3><B>I<A NAME="A114213A002_V1"></A>tem
1.&nbsp;&nbsp;Financial Statements</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc.<BR>
C<A NAME="A114213A003_V1"></A>ONDENSED BALANCE SHEETS</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR STYLE="FONT-SIZE:1PX">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=CENTER><FONT SIZE=1><B> (Restated)<BR>
March 31,<BR>
2011<BR>
(unaudited)</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=CENTER><FONT SIZE=1><B> (Restated)<BR>
December 31,<BR>
2010</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2><B>ASSETS</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2><B>Current Assets:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Cash and cash equivalents</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>90,240,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>13,196,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Short-term investments</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>500,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accounts receivable, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>2,822,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>3,227,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Inventories</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>433,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>414,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Deferred tax assets, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>151,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>151,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Prepaid expenses and other</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>658,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>360,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Total Current Assets</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>94,304,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>17,848,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2><B>Other Assets:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Property and equipment, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>928,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>975,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Non-current deferred tax assets, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>166,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>5,551,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Other</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>3,875,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>227,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=2><B>Total Assets</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>99,273,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>24,601,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2><B>Current Liabilities:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accounts payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>2,152,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>2,335,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Dividend payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>31,335,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Income tax payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>25,922,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accrued liabilities</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Compensation</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>1,407,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>809,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Legal</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>167,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>376,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Employee stock purchase plan</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>49,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>170,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Retailer payments</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>37,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>1,119,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Other</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>284,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>400,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Deferred revenue</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>159,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>134,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Total Current Liabilities</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>61,512,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>5,343,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2><B>Long-Term Liabilities:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accrued income taxes</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>400,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accrued compensation</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>800,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:.6IN;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Total Liabilities</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>62,712,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>5,343,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2><B>Commitments and Contingencies</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2><B>Shareholders&#146; Equity</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>36,561,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>19,258,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=2><B>Total Liabilities and Shareholders&#146; Equity</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>99,273,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>24,601,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
</TABLE>

<P><FONT SIZE=2><I>See accompanying notes to financial
statements.</I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>4</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc.<BR>
S<A NAME="A114213A004_V1"></A>TATEMENTS OF OPERATIONS<BR>
</B>(Unaudited)</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR STYLE="FONT-SIZE:1PX">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1><B>Three Months Ended March 31</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=CENTER><FONT SIZE=1><B>2011</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>Services
revenues</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>4,374,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>5,137,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>Products
revenues</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>573,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>746,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Total Net Sales</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>4,947,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>5,883,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>Cost of
services</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,543,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,436,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>Cost of
goods sold</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>368,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>517,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Total Cost of Sales</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>2,911,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>2,953,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Gross Profit</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>2,036,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>2,930,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2><B>Operating Expenses:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Selling</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>1,555,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>1,636,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Marketing</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>414,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>395,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>General and administrative</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>2,026,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>1,347,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Gain from litigation settlement, net</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(89,762,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Total Operating Expenses</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(85,767,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>3,378,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Operating Income (Loss)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>87,803,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(448,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2><B>Other Income (Expense):</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Interest income</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>21,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>18,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Interest expense</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(5,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Total Other Income</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>21,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>13,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Income (Loss) Before Taxes</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>87,824,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(435,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>Income tax
expense</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(33,951,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net Income (Loss)</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>53,873,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>(435,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>Net income
(loss) per share:</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Basic</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>3.37</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(0.03</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Diluted</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>3.17</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>(0.03</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>Shares used
in calculation of net income (loss) per share:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Basic</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>15,990,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>15,381,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Diluted</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>16,986,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>15,381,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
</TABLE>

<P><FONT SIZE=2><I>See accompanying notes to financial
statements.</I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>5</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc.<BR>
S<A NAME="A114213A005_V1"></A>TATEMENTS OF CASH FLOWS<BR>
</B>(Unaudited)</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
<TR STYLE="FONT-SIZE:1PX">
<TD WIDTH="70%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="3%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
<TD WIDTH="10%" VALIGN=BOTTOM>
<P ALIGN=RIGHT>&nbsp;</P>
</TD>
<TD WIDTH="1%" VALIGN=BOTTOM>
<P>&nbsp;</P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1><B>Three Months Ended March 31</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=CENTER><FONT SIZE=1><B> (Restated</B><FONT SIZE=1>)<BR>
<B>2011</B></FONT></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2><B>Operating Activities:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net income (loss)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>53,873,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>$</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(435,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Depreciation and amortization</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>88,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>79,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Deferred income tax expense</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>5,385,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Stock-based compensation</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>145,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>113,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Changes in operating assets and
liabilities:</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accounts receivable</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>405,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(229,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Inventories</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(19,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(93,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Prepaid expenses and other</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>54,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>125,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accounts payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(183,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(382,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accrued liabilities</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(130,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(1,223,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Income tax payable</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>28,145,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Accrued income taxes</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>400,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Excess tax benefits from stock-based
payments</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(2,222,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Deferred revenue</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>25,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(247,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:.6IN;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net cash provided by (used in) operating activities</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>85,966,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(2,292,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2><B>Investing Activities:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Purchases of property and equipment</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(41,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(198,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Acquisition of selling arrangement</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>(4,000,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Purchases of investments</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(1,300,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Proceeds from sale of investments</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>500,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>1,400,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:.6IN;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net cash provided by (used in) investing activities</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(3,541,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(98,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2><B>Financing Activities:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Proceeds from issuance of common stock, net</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>3,069,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>638,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Excess tax benefits from stock-based
payments</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>2,222,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Repurchase of common stock, net</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(10,672,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(412,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:.6IN;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Net cash provided by (used in) financing activities</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>(5,381,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=2>)</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>226,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Increase (decrease) in cash and cash
equivalents</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>77,044,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P ALIGN=RIGHT><FONT SIZE=2>(2,164,000</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=2>)</FONT></P>
</TD>
</TR>
<tr>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</tr>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Cash and cash equivalents at beginning of
period</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>13,196,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
<P ALIGN=RIGHT><FONT SIZE=2>8,797,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Cash and cash equivalents at end of period</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>90,240,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>6,633,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2><B>Supplemental disclosures for cash flow
information:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Cash paid during period for income taxes</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>12,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>40,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<tr>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</tr>
<TR>
<TD VALIGN=BOTTOM>
<P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2><B>Non-cash investing and financing
activities:</B></FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Dividend payable</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>31,335,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


</TD>
<TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
<TR>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P STYLE='MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT SIZE=2>Cashless exercise of options</FONT></P>


</TD>
<TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>
</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>800,000</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P><FONT SIZE=2>$</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
<P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


</TD>
<TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
<P><FONT SIZE=1>&nbsp;</FONT></P>


</TD>
</TR>
</TABLE>

<P><FONT SIZE=2><I>See accompanying notes to financial
statements.</I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>6</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>

<P ALIGN=CENTER><FONT SIZE=2><B>Insignia Systems, Inc.<BR>
N<small>O<A NAME="A114213A006_V1"></A>TES</small> T<small>O</small> F<small>INANCIAL</small> S<small>TATEMENTS</small><BR>
</B>(Unaudited) </FONT></P>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Summary of Significant Accounting Policies.</B></FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Description of Busines</B></I><I>s. </I>Insignia Systems, Inc. (the
 &#147;Company&#148;) markets in-store advertising products, programs and services to
 consumer packaged goods manufacturers (customers) and retailers. The Company
 has been in business since 1990. The Company&#146;s products and services includes
 the Insignia POPSign&reg; program, thermal sign card supplies for the Company&#146;s
 SIGNright and Impulse systems, Stylus software and laser printable cardstock
 and label supplies. Since 1998, the Company has been focusing on providing
 in-store services through the Insignia Point-of- Purchase Services (Insignia
 POPS&reg;) in-store advertising program. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Basis of Presentatio</B></I><I>n. </I>Financial statements for the interim
 periods included herein are unaudited; however, they contain all adjustments,
 including normal recurring accruals, which in the opinion of management, are
 necessary to present fairly the financial position of the Company at March
 31, 2011, and its results of operations and cash flows for the three months
 ended March 31, 2011 and 2010. Results of operations for the periods
 presented are not necessarily indicative of the results to be expected for
 the full year. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>The
 financial statements do not include certain footnote disclosures and
 financial information normally included in financial statements prepared in
 accordance with accounting principles generally accepted in the United States
 of America and, therefore, should be read in conjunction with the financial
 statements and notes included in the Company&#146;s Annual Report on Form 10-K/A
 for the year ended December 31, 2010. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>The Summary
 of Significant Accounting Policies in the Company&#146;s 2010 Annual Report on Form
 10-K/A describes the Company&#146;s accounting policies. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Inventories</B></I><I>. </I>Inventories are primarily comprised of
 parts and supplies for Impulse and SIGNright machines, sign cards, rollstock
 and POPSign supplies. Inventory is valued at the lower of cost or market
 using the first-in, first-out (FIFO) method, and consists of the following: </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="60%" style=margin-left:5%>
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="61%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="14%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="14%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>March 31,<BR>
 2011</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>December 31,<BR>
 2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Raw materials</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>93,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>132,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>Work-in-process</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>31,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>25,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>Finished goods</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>309,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>257,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>433,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>414,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>7</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Property and Equipment</B></I><I>. </I>Property and equipment consists of the
 following: </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="90%" style=margin-left:5% >
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="69%" VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>March 31,<BR>
 2011</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>December 31,<BR>
 2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2><B>Property and Equipment:</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Production tooling, machinery and equipment</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>2,346,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>2,344,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Office furniture and fixtures</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>258,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>258,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Computer equipment and software</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>975,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>936,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Web site</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>38,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>38,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Leasehold improvements</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>351,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>351,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3,968,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>3,927,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Accumulated depreciation and amortization</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(3,040,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(2,952,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:34.55PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net Property and Equipment</FONT></P>

  <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>928,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>975,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Stock-Based Compensation</B></I>.
 The Company measures and recognizes compensation expense for all stock-based
 payments at fair value using the Black-Scholes option pricing model to
 determine the weighted average fair value of options and employee stock
 purchase plan rights. The Company recognizes stock&#150;based compensation expense
 on a straight-line method over the requisite service period of the award. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>There were
 no stock option awards granted during the three months ended March 31, 2011.
 The Company used the Black-Scholes option pricing model to estimate the fair
 value of stock-based rights granted during the three months ended March 31,
 2011, under the employee stock purchase plan using the following weighted
 average assumptions: expected life of 1 year, expected volatility of 30%,
 dividend yield of 0% and risk-free interest rate of 0.30%. Total stock-based
 compensation expense recorded for the three months ended March 31, 2011 and
 2010, was $145,000 and $113,000, respectively. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Dividend Payable</B></I>.
 On February 22, 2011, the Board of Directors approved a special $2.00 per
 common share dividend totaling $31,335,000. The dividend was accrued at March
 31, 2011, and paid on May 2, 2011. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Net Income (Loss) Per Share</B></I><I>. </I>Basic net income (loss) per share is
 computed by dividing net income by the weighted average shares outstanding
 and excludes any dilutive effects of options, warrants and convertible
 securities. Diluted net income (loss) per share gives effect to all diluted
 potential common shares outstanding during the period. Options and warrants
 to purchase approximately 315,000 and 438,000 shares of common stock with
 weighted average exercise prices of $8.80 and $8.01 were outstanding at March
 31, 2011 and 2010 and were not included in the computation of common stock
 equivalents for the three months ended March 31, 2011 and 2010 because their
 exercise prices were higher than the average fair market value of the common
 shares during the reporting period. During the three months ended March 31,
 2010, the effect of options and warrants outstanding was anti-dilutive due to
 the net loss incurred during the period. Had net income been achieved,
 approximately 1,324,000 of common stock equivalents would have been included
 in the computation of diluted net income per share. </FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>8</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Weighted
 average common shares outstanding for the three months ended March 31, 2011
 and 2010 were as follows: </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="90%" style=margin-left:5%>
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="64%" VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=1><B>Three Months Ended March 31</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2011</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Denominator for basic net income (loss) per share - weighted average
 shares</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>15,990,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>15,381,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Effect of dilutive securities:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Stock options and warrants</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>996,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Denominator for diluted net income (loss) per share - weighted
 average shares</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>16,986,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>15,381,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Restatement.</B> The Company has determined that
 there was an error made in connection with state income taxes payable as of
 March 31, 2011 as a result of disqualifying dispositions of incentive stock
 options and other exercises of nonqualified stock options. The amount of the
 restatement was to decrease income taxes payable by $58,000 and increase
 shareholders&#146; equity by $58,000.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>3.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Commitments and Contingencies.</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><I><B>Legal</B></I>. On
 September 23, 2004, the Company brought suit against News America and
 Albertson&#146;s Inc. (Albertson&#146;s) in Federal District Court in Minneapolis,
 Minnesota, for violations of federal and state antitrust and false
 advertising laws, alleging that News America has acquired and maintained
 monopoly power through various wrongful acts designed to harm the Company in
 the in-store advertising and promotion products and services market. The suit
 sought injunctive relief sufficient to prevent further antitrust injury and
 an award of treble damages for the harm caused to the Company. On September
 20, 2006, the State of Minnesota through its Attorney General intervened as a
 co-plaintiff in the business disparagement portion of the case. In December
 2006, News America filed counterclaims in the case that included claims of
 alleged interference with contracts and alleged libel and slander against
 Insignia and one of its officers. On February 4, 2008, the Court approved a
 consent decree entered into by News America and the State of Minnesota under
 which News America agreed to not violate Minnesota&#146;s statutes prohibiting
 commercial disparagement. On July 29, 2008, the Company and Albertson&#146;s
 entered into a settlement agreement and mutual release, in which they each
 agreed to release all claims against the other, and the Company agreed to
 dismiss its lawsuit against Albertson&#146;s. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>On February
 7, 2011, trial in the Company&#146;s lawsuit against News America commenced in U.S.
 District Court for the District of Minnesota. On February 9, 2011, the
 Company and News America entered into a Settlement Agreement to settle the
 lawsuit. Pursuant to the Settlement Agreement, News America paid the Company
 $125,000,000, and the Company paid News America $4,000,000 in exchange for a
 10-year arrangement to sell signs with price into News America&#146;s network of
 retailers as News America&#146;s exclusive agent. The Settlement Agreement
 included the dismissal with prejudice of the Company&#146;s lawsuit against News
 America. The definitive agreement for the 10-year arrangement was approved by
 the U.S. District Court on June 6, 2011, and signed by both parties. Certain
 issues have arisen since then in connection with the implementation of the
 definitive agreement. On August 25, 2011, the Magistrate Judge issued a
 supplemental Order defining and clarifying the business operations between
 the Company and News America relative to the definitive agreement. The
 Company expects that the definitive agreement and the supplemental Order will
 aid the Company in increasing its sale of signs-with-price to consumer
 packaged goods customers, but there is no guarantee that the definitive
 agreement will result in increased sales. </FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>9</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>A
 reconciliation of the settlement proceeds to the gain from litigation
 settlement recognized in the statement of operations is as follows: </FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="90%"  style=margin-left:5%>
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="66%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=5 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Three Months Ended<BR>
 March 31</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>


 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2011</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Settlement proceeds</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>125,000,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Less contingent attorney&#146;s fees</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(31,250,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" >
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Less bonuses paid to employees</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" >
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(3,988,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gain from litigation settlement, net</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
<P><FONT SIZE=1>&nbsp;</FONT></P>

 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>89,762,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
</TABLE>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>During the
 quarter ended March 31, 2011, the Company incurred legal fees of $32,076,000
 in connection with the News America lawsuit. A contingent fee payment of
 $31,250,000 was made to the Company&#146;s lead trial counsel out of the
 settlement proceeds. Additional legal fees of $826,000 were incurred in
 connection with the lawsuit as the Company prepared for trial, worked through
 settlement discussions, and post settlement activities. Management does not
 expect significant legal fees and expenses in future periods after
 post-settlement activities are concluded. Legal fees and expenses are
 expensed as incurred and are included in general and administrative expenses
 in the statements of operations, except for the contingent fee which was
 included as a reduction of the gain from the litigation settlement.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>The Company
 is subject to various other legal proceedings in the normal course of
 business. Management believes the outcome of these proceedings will not have
 a material adverse effect on the Company&#146;s financial position or results of
 operations.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>4.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Income Taxes.</B>
 As a result of the taxable income generated by the settlement proceeds,
 $5,385,000 of the Company&#146;s deferred tax assets was utilized during the first
 three months of 2011. For the three months ended March 31, 2011, the
 provision for income taxes was $33,951,000, or 38.7% of income before income
 taxes. The income tax provision during the three months ended March 31, 2011,
 is comprised of federal and state taxes. The primary difference between the
 Company&#146;s March 31, 2011, effective tax rate and the statutory federal rate
 is due to state income taxes. For the three months ended March 31, 2010, no
 provision for income taxes or tax benefit was recorded as a full valuation
 allowance existed on the Company&#146;s deferred tax assets.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>As of March
 31, 2011, the Company had unrecognized tax benefits totaling $400,000
 excluding interest which relate to state nexus issues. The amount of the
 unrecognized tax benefits, if recognized, that would affect the effective
 income tax rates of future periods is $400,000. Due to the current statute of
 limitations regarding the unrecognized tax benefits, the unrecognized tax
 benefits and associated interest is not expected to decrease significantly in
 2011.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>5.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Concentrations.</B> During the three months
 ended March 31, 2011, Nestle Co. and Valassis Sales and Marketing Services,
 Inc. accounted for 29% and 18%, respectively, of the Company&#146;s total net
 sales. At March 31, 2011, these two customers represented 26% and 12%,
 respectively, of the Company&#146;s total accounts receivable. During the three
 months ended March 31, 2010, General Mills, Inc., Valassis Sales and
 Marketing Services, Inc., and Nestle Co. accounted for 23%, 13% and 13%,
 respectively, of the Company&#146;s total net sales. At March 31, 2010 these three
 customers represented 14%, 14% and 15%, respectively, of the Company&#146;s total
 accounts receivable. Valassis Sales and Marketing Services, Inc. is a
 reseller of the Company&#146;s POPSign program to consumer packaged goods
 manufacturers.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Although
 there are a number of customers that the Company sells to, the loss of a major
 customer could adversely affect operating results. Additionally, the loss of
 a major retailer from the Company&#146;s retail network could adversely affect
 operating results.</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>10</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>

<BR>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>6.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>New Accounting Pronouncements</B>. In October
 2009, the Financial Accounting Standards Board (FASB) issued Accounting
 Standards Update (&#147;ASU&#148;) No. 2009-13, <I>Multiple-Deliverable
 Revenue Arrangements&#151;a consensus of the FASB Emerging Issues Task Force</I>,
 that provides amendments to the criteria for separating consideration in
 multiple-deliverable arrangements. As a result of these amendments,
 multiple-deliverable revenue arrangements will be separated in more
 circumstances than under previous U.S. GAAP. The ASU does this by
 establishing a selling price hierarchy for determining the selling price of a
 deliverable. The selling price used for each deliverable will be based on
 vendor-specific objective evidence (&#147;VSOE&#148;) if available, third-party
 evidence if VSOE is not available, or estimated selling price if neither VSOE
 nor third-party evidence is available. A vendor will be required to determine
 its best estimate of selling price in a manner that is consistent with that
 used to determine the price to sell the deliverable on a standalone basis.
 This ASU also eliminates the residual method of allocation and will require
 that arrangement consideration be allocated at the inception of the
 arrangement to all deliverables using the relative selling price method,
 which allocates any discount in the overall arrangement proportionally to
 each deliverable based on its relative selling price. This standard became
 effective for the Company in January 2011 and did not have a material impact
 on the Company&#146;s results of operations or financial condition.</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>In October
 2009, the FASB issued ASU 2009-14, <I>Certain
 Revenue Arrangements That Include Software Elements &#151; a consensus of the FASB
 Emerging Issues Task Force</I>. This ASU removes tangible products
 containing software components and nonsoftware components that function
 together to deliver the tangible product&#146;s essential functionality from the
 scope of the software revenue guidance in Subtopic 985-605 of the
 Codification. Additionally, ASU 2009-14 provides guidance on how a vendor
 should allocate arrangement consideration to deliverables in an arrangement
 that includes both tangible products and software that is not essential to
 the product&#146;s functionality. This standard became effective for the Company
 in January 2011 and did not have a material impact on the Company&#146;s results
 of operations or financial condition. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>In December
 2009, the Financial Accounting Standards Board (FASB) issued Accounting
 Standards Update (ASU) No. 2010-06, <I>Fair
 Value Measurements and Disclosures Topic 820 &#147;Improving Disclosures about
 Fair Value Measurements&#148;.</I> This ASU requires some new disclosures
 and clarifies some existing disclosure requirements about fair value
 measurement as set forth in Codification Subtopic 820-10. The FASB&#146;s
 objective is to improve these disclosures and, thus, increase the
 transparency in financial reporting. Some of the new disclosures were
 effective for reporting periods beginning after December 15, 2009, with the
 remaining new disclosures effective for reporting periods beginning after
 December 15, 2010. The Company adopted the amended guidance and it did not
 have a significant impact on the Company&#146;s financial statements. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>In July
 2010, the FASB issued ASU No. 2010-20,<I>
 Receivables Topic 310 &#147;Disclosures about the Credit Quality of Financing
 Receivables and the Allowance for Credit Losses,&#148;</I> to enhance the
 disclosures required for financing receivables (for example, loans, trade
 accounts receivable, notes receivable, and receivables relating to a lessor&#146;s
 leveraged, direct financing, and sales-type leases) and allowances for credit
 losses. The amended disclosures are designed to provide more information to
 financial statement users regarding the credit quality of a creditor&#146;s
 financing receivables and the adequacy of its allowance for credit losses.
 The amended guidance is effective for period-end balances beginning with the
 first interim or annual reporting period ending on or after December 15,
 2010. The amended guidance is effective for activity during a reporting
 period beginning on or after December 15, 2010. The Company adopted the
 amended guidance and it did not have a significant impact on the Company&#146;s
 financial statements. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>In May 2011,
 the FASB issued ASU 2011-04,<I> Fair Value
 Measurement (Topic 820) &#151; Amendments to Achieve Common Fair Value Measurement and Disclosure
 Requirements in U.S. GAAP and IFRSs.</I> This ASU
 provides a consistent definition of fair value between U.S. GAAP and
 International Financial Reporting Standards. Additionally, the ASU changes
 certain fair value measurement principles and expands the disclosures for fair
 value measurements. ASU 2011-04 is effective for interim and annual periods
 beginning after December 15, 2011 and is to be applied prospectively. The
 adoption of this ASU is not expected to have a material impact on the
 Company&#146;s financial statements.</FONT></P>
 </TD>
 </TR>

</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>11</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P><FONT SIZE=3><B>I<A NAME="A114213A007_V1"></A>tem 2. Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations </B></FONT></P>

<P><FONT SIZE=2><B>Overview </B></FONT></P>

<P><FONT SIZE=2>Insignia
Systems, Inc. (the &#147;Company&#148;) markets in-store advertising products, programs
and services to consumer packaged goods manufacturers (customers) and
retailers. The Company&#146;s products and services includes the Insignia POPSign&reg;
program, thermal sign card supplies for the Company&#146;s SIGNright and Impulse
systems, Stylus software and laser printable cardstock and label supplies. </FONT></P>

<P><FONT SIZE=2><B>Results of Operations </B></FONT></P>

<P><FONT SIZE=2>The following
table sets forth, for the periods indicated, certain items in the Company&#146;s
Statements of Operations as a percentage of total net sales. </FONT></P>

<TABLE border=0 CELLSPACING=0 CELLPADDING=0 WIDTH="76%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="66%" VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=1><B>Three Months Ended March 31</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2011</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net sales</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>100.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>%</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>100.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>%</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Cost of Sales</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>58.8</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>50.2</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gross Profit</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>41.2</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>49.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Operating expenses:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Selling</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>31.4</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>27.8</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Marketing</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>8.4</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6.7</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>General and administrative</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>41.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>22.9</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:25.9PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gain from litigation settlement, net</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(1,814.5</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM >
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Total operating expenses</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(1,733.7</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>57.4</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Operating income (loss)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,774.9</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(7.6</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Other income</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.4</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>0.2</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Income (loss) before taxes</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,775.3</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(7.4</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Income tax expense</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(686.3</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net income (loss)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>1,089.0</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>%</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(7.4</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM  STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>)%</FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>Decreased net
sales in the first three months of 2011 compared to the first three months of
2010, combined with the effect of fixed costs in the costs of sales, resulted
in a decrease in gross profit in the 2011 period. The decrease in gross profit
and increased operating expenses in the 2011 period were dramatically offset by
the litigation settlement, resulting in significant net income in 2011 as
compared to a net loss in the 2010 period. See the non-GAAP financial measures
information which follows later in this section for a comparison of the 2011
and 2010 periods non-GAAP net losses. </FONT></P>

<P><FONT SIZE=2><B>Three Months ended March 31, 2011, Compared
to Three Months Ended March 31, 2010 </B></FONT></P>

<P><FONT SIZE=2><I><B>Net Sales.</B></I> Net sales for the three months ended
March 31, 2011 decreased 15.9% to $4,947,000 compared to $5,883,000 for the
three months ended March 31, 2010. </FONT></P>

<P><FONT SIZE=2>Service
revenues from our POPSign programs for the three months ended March 31, 2011
decreased 14.9% to $4,374,000 compared to $5,137,000 for the three months ended
March 31, 2010. The decrease was primarily due to a 12.0% decrease in the
average sign price as well as a 5.7% decrease in the number of POPS signs
displayed for customers at stores in the Company&#146;s retail network. The decrease
in the number of signs displayed in the 2011 period was primarily related to
the expiration of the Kroger retailer contract at the end of 2010. During the
three months ended March 31, 2010, revenue recognized by advertising in Kroger
stores was $1,706,000. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>12</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P><FONT SIZE=2>Product sales
for the three months ended March 31, 2011 decreased 23.2% to $573,000 compared
to $746,000 for the three months ended March 31, 2010. This was primarily due
to lower sales volume of laser printer supplies. </FONT></P>

<P><FONT SIZE=2><I><B>Gross Profit.</B></I>
Gross profit for the three months ended March 31, 2011 decreased 30.5% to
$2,036,000 compared to $2,930,000 for the three months ended March 31, 2010.
Gross profit as a percentage of total net sales decreased to 41.2% for 2011
compared to 49.8% for 2010. </FONT></P>

<P><FONT SIZE=2>Gross profit
from our POPSign program revenues for the three months ended March 31, 2011
decreased 32.2% to $1,831,000 compared to $2,701,000 for the three months ended
March 31, 2010. The decrease was primarily due to decreased sales in 2011
combined with the effect of fixed costs. Gross profit as a percentage of
POPSign program revenues decreased to 41.9% for 2011 compared to 52.6% for
2010, primarily due to the effect of fixed costs against decreased revenues. </FONT></P>

<P><FONT SIZE=2>Gross profit
from our product sales for the three months ended March 31, 2011 decreased
10.5% to $205,000 compared to $229,000 for the three months ended March 31,
2010. The decrease was primarily due to decreased sales. Gross profit as a
percentage of product sales increased to 35.8% for 2011 compared to 30.7% for 2010.
The decreased laser printer supplies in 2011 were lower margin products which
resulted in the higher gross profit percentage in 2011.</FONT></P>

<P><FONT SIZE=2><I><B>Operating Expenses</B></I></FONT></P>

<P><FONT SIZE=2><I><B>Selling.</B></I>
Selling expenses for the three months ended March 31, 2011 decreased 5.0% to
$1,555,000 compared to $1,636,000 for the three months ended March 31, 2010,
primarily due to decreased sales commissions in 2011 due to decreased sales.
Selling expenses as a percentage of total net sales increased to 31.4% in 2011
compared to 27.8% in 2010, primarily due to the effect of decreased sales. </FONT></P>

<P><FONT SIZE=2><I><B>Marketing.</B></I>
Marketing expenses for the three months ended March 31, 2011 increased 4.8% to
$414,000 compared to $395,000 for the three months ended March 31, 2010.
Marketing expenses as a percentage of total net sales increased to 8.4% in 2011
compared to 6.7% in 2010, due to the effect of decreased sales. </FONT></P>

<P><FONT SIZE=2><I><B>General and
administrative.</B></I> General and administrative
expenses for the three months ended March 31, 2011 increased 50.4% to
$2,026,000 compared to $1,347,000 for the three months ended March 31, 2010.
General and administrative expenses as a percentage of total net sales
increased to 41.0% in 2011 compared to 22.9% in 2010, due to increased legal
expense in 2011. Legal fees were $989,000 for the three months ended March 31,
2011, compared to $523,000 for the three months ended March 31, 2010. The legal
fees in each quarter were incurred primarily in connection with the News
America lawsuit described in Note 2 to the financial statements. Management
does not expect significant legal fees and expenses in future periods in
connection with post-settlement activities. </FONT></P>

<P><FONT SIZE=2><I><B>Gain from litigation
settlement.</B></I> On February 9, 2011, the Company
entered into a Settlement Agreement in its lawsuit against News America. As
part of the Settlement Agreement, News America paid the Company $125,000,000.
Netted against this payment was a contingent fee payment of $31,250,000 to the
Company&#146;s lead trial counsel as well as performance bonus payments of
$3,988,000 to certain employees in connection with the settlement, resulting in
a net pre-tax gain of $89,762,000. </FONT></P>

<P><FONT SIZE=2><I><B>Other Income.</B></I>
Other income for the three months ended March 31, 2011 was $21,000 compared to
$13,000 for the three months ended March 31, 2010. The difference was due to
increased interest income in the 2011 period due to higher cash, cash
equivalents and short-term investment balances, partially offset by lower
interest rates, and a decrease in interest expense in 2011. </FONT></P>

<P><FONT SIZE=2><I><B>Income Taxes.</B></I>
As a result of the taxable income generated by the settlement proceeds,
$5,385,000 of the Company&#146;s deferred tax assets were utilized during the first
three months of 2011. For the three months ended March 31, 2011, the provision
for income taxes was $33,951,000, or 38.7% of income before income taxes. The
provision for income taxes during the three months ended March 31, 2011, is
comprised of federal and state taxes. The primary difference between the
Company&#146;s March 31, 2011, effective tax rate and the statutory federal rate is
state income taxes. The lack of profitability in the first quarter of 2010, and
the full valuation allowance against the Company&#146;s deferred tax assets,
resulted in no provision for taxes or tax benefit for the 2010 period.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>13</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P><FONT SIZE=2><I><B>Net Income (Loss).</B></I>
Our net income for the three months ended March 31, 2011 was $53,873,000
compared to a net loss of $(435,000) for the three months ended March 31, 2010.
</FONT></P>

<P><FONT SIZE=2><B>Non-GAAP Financial Measures </B></FONT></P>

<P><FONT SIZE=2>To supplement
the Company&#146;s financial statements presented in accordance with GAAP, the
Company has provided certain non-GAAP financial measures of financial
performance in prior public announcements. These non-GAAP measures include: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>net income
 (loss) before gain from litigation settlement (net of tax), and </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>net income
 before News America related legal fee expense. </FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>The Company&#146;s
reference to these non-GAAP measures should be considered in addition to
results prepared under current accounting standards, but are not a substitute
for, or superior to, GAAP results. </FONT></P>

<P><FONT SIZE=2>These non-GAAP
measures are provided to enhance investors&#146; overall understanding of the
Company&#146;s current financial performance and ability to generate cash flows. In
many cases non-GAAP financial measures are used by analysts and investors to
evaluate the Company&#146;s performance. Reconciliation to the nearest GAAP measure
can be found in the financial table included below. </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="70%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="3%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="10%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1><B>Three
 Months Ended March 31</B></FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2011</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>2010</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Net income (loss)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>53,873,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>(435,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Adjustment:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gain from litigation settlement (net of tax) (<I>see below)</I></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(55,062,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Non-GAAP net loss before gain from litigation settlement (net of tax)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(1,189,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(435,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Adjustment:</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>News America related legal expense</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>826,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>404,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Non-GAAP net loss before gain from litigation settlement (net of tax)
 and News America related legal expense</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(363,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(31,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gain from litigation settlement (net of tax)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Settlement proceeds</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=2>125,000,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Less contingent attorney&#146;s fees</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>(31,250,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>)</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Less bonuses paid to employees</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(3,988,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P STYLE='MARGIN-LEFT:8.65PT;TEXT-INDENT:-8.65PT'><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>89,762,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Less settlement related income taxes</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=RIGHT><FONT SIZE=2>(34,700,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8" STYLE="PADDING-BOTTOM:1PX">
 <P><FONT SIZE=2>)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM BGCOLOR="#D6F3E8">
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P STYLE='MARGIN-RIGHT:0IN;MARGIN-LEFT:17.3PT;TEXT-INDENT:-8.65PT'><FONT  SIZE=2>Gain from litigation settlement (net of tax)</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P><FONT SIZE=2>$</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="BORDER-BOTTOM:DOUBLE BLACK 3PX">
 <P ALIGN=RIGHT><FONT SIZE=2>55,062,000</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM STYLE="PADDING-BOTTOM:3PX">
 <P><FONT SIZE=1>&nbsp;</FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><B>Liquidity and Capital Resources </B></FONT></P>

<P><FONT SIZE=2>The Company
has financed its operations with proceeds from public and private stock sales
and sales of its services and products. At March 31, 2011, working capital was
$32,792,000 compared to $12,505,000 at December 31, 2010. During the three
months ended March 31, 2011, cash, cash equivalents and short-term investments
increased $76,544,000 from $13,696,000 at December 31, 2010 to $90,240,000 at
March 31, 2011.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>14</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P><FONT SIZE=2>On February 9,
2011, the Company entered into a settlement agreement in its lawsuit against
News America. As part of the settlement agreement, News America paid the
Company $125,000,000 less $4,000,000 related to a 10-year business arrangement.
Litigation counsel for the Company received a contingent fee payment of
$31,250,000 which resulted in net cash to the Company of $89,750,000 after the
contingent fee. </FONT></P>

<P><FONT SIZE=2>On February
22, 2011, the Board of Directors approved a series of actions. First, the Board
of Directors authorized a special $2.00 per common share dividend which
resulted in in a payment to shareholders of $31,335,000 on May 2, 2011. Second,
the Board approved a Performance Bonus Plan, providing for the payment of
$3,988,000 to certain employees of the Company. Third, the Board authorized the
repurchase of up to $15,000,000 of the Company&#146;s common stock on or before
January 31, 2012. The plan does not obligate the Company to repurchase any
particular number of shares, and may be suspended at any time at the Company&#146;s
discretion. On May 25, 2011, the Board amended the plan to increase the maximum
share purchase amount from $15,000,000 to $20,000,000. </FONT></P>

<P><FONT SIZE=2>Net cash
provided by operating activities during the three months ended March 31, 2011,
was $85,966,000. Net income of $53,873,000, plus non-cash adjustments of
$5,618,000 and changes in operating assets and liabilities of $26,475,000
resulted in the $85,966,000 of cash provided by operating activities. The net
non-cash adjustments of $5,618,000 consisted of depreciation and amortization
expense, deferred income tax expense, and stock-based compensation expense. The
most significant component of the $26,475,000 change in operating assets and
liabilities was income taxes. Income tax payable increased by $28,145,000,
before the excess tax benefit of $2,222,000, primarily due to taxable income
related to the litigation settlement. Accrued retailer payments decreased
$1,082,000 primarily related to the payment to one of our retailers, and
accrued compensation increased $1,398,000 primarily due to the terms of the
performance bonus plan related to the News America settlement. The Company
expects accounts receivable, accounts payable, accrued liabilities and deferred
revenue to fluctuate during future periods depending on the level of POPSign
revenues and related business activity as well as billing arrangements with
customers and payment terms with retailers. </FONT></P>

<P><FONT SIZE=2>Net cash of
$3,541,000 was used in investing activities during the three months ended March
31, 2011. Proceeds from the sale of investments were more than offset by the
purchase of property and equipment and the payment of $4,000,000 in exchange
for a 10-year business arrangement. Proceeds of $500,000 during the first
quarter consisted entirely of redemptions of twenty-six week certificates of
deposit. Capital expenditures of $41,000 during the quarter consisted primarily
of information technology equipment and software. The Company expects to make
capital expenditures of approximately $2,000,000 for the remainder of 2011. </FONT></P>

<P><FONT SIZE=2>Net cash of
$5,381,000, which includes the excess tax benefit of $2,222,000, was used in
financing activities during the three months ended March 31, 2011. The
repurchase of common stock of $10,672,000, pursuant to a plan adopted on
February 22, 2011 and amended on May 25, 2011, was partially offset by
$3,069,000 of proceeds from the issuance of common stock from the exercise of
employee stock options and the employee stock purchase plan. </FONT></P>

<P><FONT SIZE=2>The Company
believes that based upon current business conditions, its existing cash balance
and future cash from operations will be sufficient for its cash requirements
for the remainder of 2011 and for the next twelve months thereafter. However,
there can be no assurances that this will occur or that the Company will be
able to secure additional financing from public or private stock sales or from
other financing agreements if needed. </FONT></P>

<P><FONT SIZE=2><B>Critical Accounting Policies </B></FONT></P>

<P><FONT SIZE=2>The discussion
and analysis of our financial condition and results of operations are based
upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of America. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets and liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities at
the date of our financial statements. Actual results may differ from these estimates
under different assumptions or conditions. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>15</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P><FONT SIZE=2>Our
significant accounting policies are described in Note 1 to the annual financial
statements as of and for the year ended December 31, 2010, included in our Form
10-K/A filed with the Securities and Exchange Commission on September 9, 2011.
We believe our most critical accounting policies and estimates include the
following: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> revenue recognition; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> allowance for doubtful accounts; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2> accounting for deferred income taxes; and</FONT></P>
 </TD>
 </TR>
<TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>&#149;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>stock-based compensation. </FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><B>Cautionary Statement Regarding Forward
Looking Information </B></FONT></P>

<P><FONT SIZE=2>Statements
made in this quarterly report on Form 10-Q/A, in the Company&#146;s other SEC
filings, in press releases and in oral statements to shareholders and
securities analysts, which are not statements of historical or current facts,
are &#147;forward looking statements.&#148; Such forward looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results or performance of the Company to be materially different from the
results or performance expressed or implied by such forward looking statements.
The words &#147;believes,&#148; &#147;expects,&#148; &#147;anticipates,&#148; &#147;seeks&#148; and similar expressions
identify forward looking statements. Readers are cautioned not to place undue
reliance on these forward looking statements, which speak only as of the date
the statement was made. These statements are subject to the risks and
uncertainties that could cause actual results to differ materially and
adversely from the forward looking statements. These risks and uncertainties
include, but are not limited to, the risks presented in our Annual Report on
Form 10-K/A for the year ended December 31, 2010, and updated in Part II, Item
1A of this Quarterly Report on Form 10-Q/A. </FONT></P>

<P><FONT SIZE=3><B>Ite<A NAME="A114213A008_V1"></A>m 3. Quantitative and Qualitative Disclosures About
Market Risk </B></FONT></P>

<P><FONT SIZE=2>Not
applicable.</FONT></P>

<P><FONT SIZE=3><B>It<A NAME="A114213A009_V1"></A>em 4. Controls and Procedures </B></FONT></P>

<P><FONT SIZE=2>(a) Evaluation
of Disclosure Controls and Procedures </FONT></P>

<P><FONT SIZE=2>The Company&#146;s
management carried out an evaluation, under the supervision and with the
participation of the Company&#146;s Chief Executive Officer and the Company&#146;s Chief
Financial Officer, of the effectiveness of the design and operation of the
Company&#146;s disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended)
as of the end of the period covered by this report, pursuant to Exchange Act
Rule 13a-15. Based upon that evaluation, including the circumstances
surrounding the recently announced amendment of the 2010 Form 10-K, the
Company&#146;s Chief Executive Officer and the Company&#146;s Chief Financial Officer
concluded that the Company&#146;s disclosure controls and procedures were effective
as of the end of the period covered by this report. Disclosure controls and procedures
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commission rules and forms, and are designed to ensure that information
required to be disclosed by us in these reports is accumulated and communicated
to the Company&#146;s management, including its Chief Executive Office and Chief
Financial Officer, as appropriate to allow timely decisions regarding
disclosures. </FONT></P>

<P><FONT SIZE=2>(b) Changes in
Internal Controls Over Financial Reporting </FONT></P>

<P><FONT SIZE=2>There was no
change in our internal controls over financial reporting that occurred during
the last fiscal quarter that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting, other than
the Company&#146;s hiring of a new chief financial officer effective June 13, 2011. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>16</FONT></P>

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<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P ALIGN=CENTER><FONT SIZE=3><B>P<A NAME="A114213A010_V1"></A>ART II. OTHER INFORMATION</B></FONT></P>

<P><FONT SIZE=3><B>I<A NAME="A114213A011_V1"></A>tem 1. Legal Proceedings </B></FONT></P>

<P><FONT SIZE=2>On September
23, 2004, the Company brought suit against News America and Albertson&#146;s Inc.
(Albertson&#146;s) in Federal District Court in Minneapolis, Minnesota, for
violations of federal and state antitrust and false advertising laws, alleging
that News America has acquired and maintained monopoly power through various
wrongful acts designed to harm the Company in the in-store advertising and
promotion products and services market. The suit sought injunctive relief
sufficient to prevent further antitrust injury and an award of treble damages
for the harm caused to the Company. On September 20, 2006, the State of
Minnesota through its Attorney General intervened as a co-plaintiff in the
business disparagement portion of the case. In December 2006, News America
filed counterclaims in the case that included claims of alleged interference
with contracts and alleged libel and slander against Insignia and one of its
officers. On February 4, 2008, the Court approved a consent decree entered into
by News America and the State of Minnesota under which News America agreed to
not violate Minnesota&#146;s statutes prohibiting commercial disparagement. On July
29, 2008, the Company and Albertson&#146;s entered into a settlement agreement and
mutual release, in which they each agreed to release all claims against the
other, and the Company agreed to dismiss its lawsuit against Albertson&#146;s. </FONT></P>

<P><FONT SIZE=2>On February 7,
2011, trial in the Company&#146;s lawsuit against News America commenced in U.S.
District Court for the District of Minnesota. On February 9, 2011, the Company
and News America entered into a Settlement Agreement to settle the lawsuit.
Pursuant to the Settlement Agreement, News America paid the Company
$125,000,000, and the Company paid News America $4,000,000 in exchange for a
10-year arrangement to sell signs with price into News America&#146;s network of
retailers as News America&#146;s exclusive agent. The Settlement Agreement included
the dismissal with prejudice of the Company&#146;s lawsuit against News America. The
definitive agreement for the 10-year arrangement was approved by the U.S.
District Court on June 6, 2011, and signed by both parties. Certain issues have
arisen since then in connection with the implementation of the definitive
agreement. On August 25, 2011, the Magistrate Judge issued a supplemental Order
defining and clarifying the business operations between the Company and News
America relative to the definitive agreement. The Company expects that the
definitive agreement and the supplemental Order will aid the Company in
increasing its sale of signs-with-price to consumer packaged goods customers,
but there is no guarantee that the definitive agreement will result in
increased sales.</FONT></P>

<P><FONT SIZE=2>Legal fees of
$826,000 were incurred in connection with the News America lawsuit as the
Company prepared for trial, worked through settlement discussions, and post
settlement activities. Additionally, during the quarter ended March 31, 2011,
the Company made a contingent fee payment of $31,250,000 to the lead trial
counsel out of the News America lawsuit settlement proceeds. Management does not
expect significant legal fees and expenses in future periods after
post-settlement activities are concluded. Legal fees and expenses are expensed
as incurred and are included in general and administrative expenses in the
statements of operations, except for the contingent fee which was included as a
reduction of the gain from the litigation settlement. </FONT></P>

<P><FONT SIZE=2>The Company is
subject to various other legal proceedings in the normal course of business.
Management believes the outcome of these proceedings will not have a material
adverse effect on the Company&#146;s financial position or results of operations. </FONT></P>

<P><FONT SIZE=3><B>I<A NAME="A114213A012_V1"></A>tem 1A. Risk Factors </B></FONT></P>

<P><FONT SIZE=2>We described
the most significant risk factors applicable to the Company in Part I, Item 1A
&#147;Risk Factors&#148; of our Annual Report on Form 10-K/A for the year ended December
31, 2010. We believe there have been no material changes from the risk factors
disclosed on Form 10-K/A. </FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>17</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P><FONT SIZE=3><B>It<A NAME="A114213A013_V1"></A>em 2. Unregistered Sales of Equity Securities and Use
of Proceeds </B></FONT></P>

<P><FONT SIZE=2>On February
23, 2010, the Board of Directors authorized the repurchase of up to $2,000,000
of the Company&#146;s common stock on or before January 31, 2011. The plan has now
expired with no shares repurchased in 2011. </FONT></P>

<P><FONT SIZE=2>On February
22, 2011, the Board of Directors authorized the repurchase of up to $15,000,000
of the Company&#146;s common stock on or before January 31, 2012, under a new plan.
The plan does not obligate the Company to repurchase any particular number of
shares, and may be suspended at any time at the Company&#146;s discretion. On May
25, 2011, the Board amended the plan to increase the maximum share purchase
amount from $15,000,000 to $20,000,000. </FONT></P>

<P><FONT SIZE=2>Our share
repurchase program activity for the three months ended March 31, 2011, under
the new plan was: </FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="29%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="12%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="9%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="14%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="2%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="16%" VALIGN=BOTTOM>
 <P ALIGN=RIGHT>&nbsp;</P>
 </TD>
 <TD WIDTH="1%" VALIGN=BOTTOM>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Total Number<BR>
 Of Shares<BR>
 Repurchased</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Average<BR>
 Price Paid<BR>
 Per Share</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Total Number Of<BR>
 Shares Purchased As<BR>
 Part Of Publicly<BR>
 Announced Plans<BR>
 Or Programs</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=BOTTOM STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=1><B>Approximate Dollar<BR>
 Value of Shares That<BR>
 May Yet Be Purchased<BR>
 Under The Plans<BR>
 Or Programs</B></FONT></P>


 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=CENTER><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
<tr>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>February
 22-28, 2011</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>&#151;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>$</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>20,000,000</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=2>March 1-31,
 2011</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,583,700</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>6.69</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>1,583,700</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P ALIGN=RIGHT><FONT SIZE=2>9,407,700</FONT></P>
 </TD>
 <TD VALIGN=BOTTOM>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=3><B>Ite<A NAME="A114213A014_V1"></A>m 3. Defaults upon Senior Securities</B></FONT></P>

<P><FONT SIZE=2>None.</FONT></P>

<P><FONT SIZE=3><B>It<A NAME="A114213A015_V1"></A>em 4. Removed and Reserved</B></FONT></P>

<P><FONT SIZE=3><B>It<A NAME="A114213A016_V1"></A>em 5. Other Information</B></FONT></P>

<P><FONT SIZE=2>None.</FONT></P>

<P><FONT SIZE=3><B>It<A NAME="A114213A017_V1"></A>em 6. Exhibits</B></FONT></P>

<P><FONT SIZE=2>The following
exhibits are included herewith<B>:</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Settlement
 Agreement and Release with News America Marketing In-Store, LLC, dated
 February 9, 2011, including exhibits (confidential treatment requested)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Executive Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.2</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Financial Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>32</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Section 1350
 Certification</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>18</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P ALIGN=CENTER><FONT SIZE=3><B>SIGNATURES</B></FONT></P>

<P><FONT SIZE=2>Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.</FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="65%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="35%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Dated:&nbsp;&nbsp;&nbsp;September
 9, 2011</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2>Insignia Systems, Inc.</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>(Registrant)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Scott F.
 Drill</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Scott F.
 Drill</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>President
 and Chief Executive Officer (principal executive officer)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ John C.
 Gonsior</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>John C.
 Gonsior</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Vice
 President, Finance and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Chief
 Financial Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 financial officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>19</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<P STYLE="font-SIZE: 10pt;"><A HREF="#toc">Table of Contents</A></P>
<P ALIGN=CENTER><FONT SIZE=3><B>EXHIBIT
INDEX</B></FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
<TD WIDTH="3%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="90%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD> </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>10.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Settlement
 Agreement and Release with News America Marketing In-Store, LLC, dated
 February 9, 2011, including exhibits (confidential treatment requested) </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD> </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.1</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Executive Officer </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD> </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>31.2</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Certification
 of Principal Financial Officer </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD> </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>32</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Section 1350
 Certification </FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>20</FONT></P>


<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>insignia114213_ex10-1.htm
<DESCRIPTION>SETTLEMENT AGREEMENT AND RELEASE
<TEXT>
 <HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=3><B>EXHIBIT
10.1</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><U><B>SETTLEMENT AGREEMENT AND RELEASE</B></U></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Settlement Agreement and Mutual Release (&#147;Agreement&#148;) is dated as of February
9, 2011 between Plaintiff Insignia Systems, Inc. (&#147;Plaintiff&#148;), Scott Drill
(&#147;Drill&#148;) and Defendant News America Marketing In-Store L.L.C. (sued in the
Action (as defined below) as News America Marketing In-Store, Inc.)
(&#147;Defendant&#148;). Plaintiff, Drill and Defendant are collectively referred to
herein as &#147;the Parties.&#148;</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>RECITALS</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
Plaintiff filed a lawsuit against Defendant captioned<I> Insignia Systems, Inc. v. News America
Marketing In-Store, Inc.</I>, United States District Court for
Minnesota, Civil No. 04-4213, to collect damages and seek injunctive relief
for,<I>
inter alia</I>, alleged violations of federal and state antitrust laws,
unfair competition, and federal and state disparagement laws. Defendant filed a
counter-claim against Plaintiff and Drill. Collectively, the complaint,
included as amended, and the counterclaim are referred to herein as the
&#147;Action&#148;;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
all claims by Plaintiff against Defendant, and by Defendant against Plaintiff
and Drill, have been vigorously contested, with all Parties denying any and all
liability to each other;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS,</B>
the Parties hereto desire to forever put to rest all disputes and claims
through the date of this Agreement;</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW,
THEREFORE, </B>in consideration of the foregoing and of the mutual
promises hereinafter set forth, the receipt and adequacy of which are hereby
acknowledged, the Parties agree as follows: </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Defendant
shall pay Plaintiff the sum of One Hundred Twenty Five Million Dollars
($125,000,000) (&#147;Settlement Amount&#148;), less the Four Million Dollar ($4,000,000)
payment owed by Plaintiff to Defendant under the Exclusive Selling Agreement
(as defined below) for a net payment to Plaintiff of One Hundred Twenty Million
Dollars ($121,000,000) (the &#147;Net Amount&#148;). The Net Amount is payable by the
Defendants as follows: the Net Amount shall be paid on February 10, 2011, by
wire transfer to <B>[ * ]</B>. </FONT></P>

<P><FONT SIZE=2>*Indicates
confidential information which has been omitted and filed separately with the
Commission under Rule 24b-2.</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>21</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insignia
and News America shall enter into an exclusive selling arrangement consistent
with the terms attached hereto as Joint Exhibit A (the &#147;Exclusive Selling
Agreement&#148;). The Settlement Amount is not part of the consideration for the
Exclusive Selling Agreement. This Agreement, and any and all releases and
covenants not to sue, shall survive and remain in full force and effect and be
considered final and binding even if a dispute arises regarding the Exclusive
Selling Agreement, including but not limited to a dispute in which there are
claims that the Exclusive Selling Agreement has been breached, claims that the
Exclusive Selling Agreement should be declared void or claims that the
Exclusive Selling Agreement lacks consideration.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Defendant
shall not seek to enforce any right of first refusal and/or right of last
refusal provision contained in any of its current agreements with retailers and
shall not include right of first refusal and/or right of last refusal
provisions in any agreement it reaches with any retailer in the future.
Similarly, Plaintiff shall not include right of first refusal and/or right of
last refusal provisions in any agreement it reaches with retailers in the
future. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Parties mutually agree that they shall not do or say anything at any time which
is falsely disparaging to the other Parties.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
or before February 9, 2011, Plaintiff shall provide Defendant with a stipulated
order in the form of Exhibit B, dismissing the action with prejudice and
without costs. The Parties shall take all reasonable steps to have the order on
the stipulation entered.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Party shall bear its own expenses and attorneys&#146; fees in connection with the
Action. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Parties agree that the United States District Court for Minnesota shall retain
jurisdiction over the Action to enforce this Agreement. Pursuant to 28 U.S.C. &sect;
636, Fed.R.Civ.P. 53 and Local Rule 72.1, the Parties further agree and consent
to the appointment of the Honorable Arthur Boylan as the master to resolve all
disputes in accordance with procedures established by him. Accordingly,
concurrent with the execution of this Agreement, the Parties will exchange
executed copies of the stipulation substantially in the form attached hereto as
Exhibit C and Defendant will promptly file it with the Court. The Parties shall
take all reasonable steps to have the order on the stipulation entered.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
terms of the Protective Order as originally entered in the Action on or about
December 28, 2006 (&#147;the Protective Order&#148;) shall survive dismissal of the
Action and are hereby reaffirmed, including the provision that all Confidential
Material (as that term is defined in the Protective Order) shall be destroyed.
For the avoidance of doubt, the Parties agree that all Confidential Material
(including but not limited to discovery responses, documents and things
produced, depositions, summaries of the foregoing, and motion papers filed with
the Court consisting of, incorporating or attaching Confidential Material) that
are in the possession, custody or control of the Parties, their attorneys
and/or their experts and consultants shall be destroyed on or before March 30,
2011, except that outside counsel for the respective parties shall retain for a
period of six (6) years a copy of documents which formed a part of the court
record in the Action. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>22</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
for the Parties&#146; obligations under this Agreement and the Exclusive Selling
Agreement, each of Plaintiff and the Plaintiff Released Parties (as defined
below) hereby releases, remises, acquits, and forever discharges Defendant or
any of its past or present members, related or affiliated companies and any or
all of its respective officers, directors, shareholders, partners, servants,
employees, members, attorneys, accountants, agents, representatives,
affiliates, subsidiaries, parents, successors and assigns, whether in their
individual capacity or as principal or agent (collectively, the &#147;Defendant
Released Parties&#148;), from any and all manner of actions and causes of action,
suits, debts, obligations, contracts, torts, covenants, claims, rights of
contribution and/or indemnification, rights of subrogation, sums of money,
judgments, executions, liabilities, damages, interest, costs, expenses,
attorneys&#146; fees and legal costs, demands and rights whatsoever, contingent or
noncontingent, in law or in equity, known or unknown, of any kind or character,
from the beginning of time up to the date of this Agreement (collectively, the
&#147;Released Matters&#148;). Each of Plaintiff and the Plaintiff Released Parties
further promises, covenants and agrees not to sue, attempt to introduce as
evidence, or otherwise assert any of the Released Matters and/or the underlying
facts or conduct supporting the Released Matters against the Defendant or the
Defendant Released Parties in any court, governmental or regulatory body or
other proceedings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
for the Parties&#146; obligations under this Agreement and the Exclusive Selling
Agreement, each of Defendant and the Defendant Released Parties hereby
releases, remises, acquits and forever discharges Plaintiff or any of its past
or present members, related or affiliated companies and any or all of its
respective officers, directors, shareholders, partners, servants, employees,
members, attorneys, accountants, agents, representatives, affiliates,
subsidiaries, parents, successors and assigns, whether in their individual
capacity or as principal or agent (collectively, the &#147;Plaintiff Released
Parties&#148;), from any and all manner of actions and causes of action, suits,
debts, obligations, contracts, torts, covenants, claims, rights of contribution
and/or indemnification, rights of subrogation, sums of money, judgments,
executions, liabilities, damages, interest, costs, expenses, attorneys&#146; fees
and legal costs, demands and rights whatsoever, contingent or noncontingent, in
law or in equity, known or unknown, of any kind or character, from the
beginning of time up to the date of this Agreement (collectively, &#147;Released
Matters&#148;). Each of Defendant and the Defendant Released Parties further
promises, covenants and agrees not to sue, attempt to introduce as evidence, or
otherwise assert any of the Released Matters and/or the underlying facts or
conduct supporting the Released Matters against Plaintiff or Plaintiff Released
Parties in any court, governmental or regulatory body or other proceedings.</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>23</FONT></P>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
for the Parties&#146; obligations under this Agreement, Drill hereby releases,
remises, acquits, and forever discharges Defendant and the Defendant Released
Parties from any and all manner of actions and causes of action, suits, debts,
obligations, contracts, torts, covenants, claims, rights of contribution and/or
indemnification, rights of subrogation, sums of money, judgments, executions,
liabilities, damages, interest, costs, expenses, attorneys&#146; fees and legal
costs, demands and rights whatsoever, contingent or noncontingent, in law or in
equity, known or unknown, of any kind or character, from the beginning of time
up to the date of this Agreement (collectively, &#147;Released Matters&#148;). Drill
further promises, covenants and agrees not to sue, attempt to introduce as
evidence, or otherwise assert any of the Released Matters and/or the underlying
facts or conduct supporting the Released Matters against Defendant or any
Defendant Released Parties in any court, governmental or regulatory body or
other proceedings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
for the Parties&#146; obligations under this Agreement, each of Defendant and
Defendant Released Parties hereby releases, remises, acquits and forever
discharges Drill from any and all manner of actions and causes of action,
suits, debts, obligations, contracts, torts, covenants, claims, rights of
contribution and/or indemnification, rights of subrogation, sums of money,
judgments, executions, liabilities, damages, interest, costs, expenses,
attorneys&#146; fees and legal costs, demands and rights whatsoever, contingent or
noncontingent, in law or in equity, known or unknown, of any kind or character,
from the beginning of time up to the date of this Agreement (collectively,
&#147;Released Matters&#148;). Each of Defendant and Defendant Released Parties further
promises, covenants and agrees not to sue, attempt to introduce as evidence, or
otherwise assert any of the Released Matters and/or the underlying facts or
conduct supporting the Released Matters against Drill in any court,
governmental or regulatory body or other proceedings. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plaintiff
and Defendant hereby warrant and represent to the other that they have not
assigned or transferred, or purported to assign or transfer, to any person or
entity, any rights, claims, counterclaims, obligations, demands, damages,
actions or causes of action that they may have against the other, including but
not limited to rights, claims or damages arising out of or related in any way
to the Action. Plaintiff and Defendant hereby represent and warrant that there
are no other pending actions or claims by Plaintiff against Defendant, or by
Defendant against Plaintiff. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Drill
and Defendant hereby warrant and represent to the other that they have not
assigned or transferred, or purported to assign or transfer, to any person or
entity, any rights, claims, counterclaims, obligations, demands, damages,
actions or causes of action that they may have against the other, including but
not limited to rights, claims or damages arising out of or related in any way
to the Action. Drill and Defendant hereby represent and warrant that there are
no other pending actions or claims by Drill against Defendant, or by Defendant
against Drill.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>24</FONT></P>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Parties understand and agree that this Agreement, and the Parties&#146; obligations
and payments made hereunder, are entered into and done solely to compromise
disputed claims, and shall not constitute an admission of liability on the part
of any Party. Further, this Agreement, the Parties&#146; obligations hereunder, and
payments made hereunder, shall not be offered into evidence in any proceedings
by any Party hereto, except as necessary in an action to enforce the terms
hereof.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement, including the exhibits hereto, is the entire, integrated agreement
between the Parties, and any and all discussions, understandings, and
agreements heretofore had by the Parties with respect to the subject matter
hereof are merged into this Agreement, which alone fully and completely
expresses the Parties&#146; agreement, except as set forth in the other documents
executed by the Parties. No amendments, waivers, or termination can be made
except in a writing signed by each of the Parties.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement shall be governed by and construed in accordance with the laws of the
State of Minnesota, without regard to the conflicts of law provisions thereof.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
than to announce that the parties have amicably settled the Action, neither
party hereto nor its attorneys shall disclose to any third party any
information with respect to the terms and provisions of this Agreement except:
(i) to the extent necessary to comply with the law or a valid order of a court
of competent jurisdiction, in which event(s) the party making such disclosure
shall so notify the other as promptly as practicable (if possible, prior to
making such disclosure), and shall seek confidential treatment of such
information and/or in camera review, (ii) to the extent necessary to comply
with the S.E.C. or other regulatory authorities or similar disclosure
requirements under any applicable laws, (iii) as part of its normal business
activities or reporting or review procedures to its parent and affiliated
companies (other than Valassis), banks, auditors, attorneys, accountants,
insurers and similar professionals, provided, however, that such companies,
banks, auditors, attorneys, accountants, insurers and similar professionals
agree to be bound by the provisions of this paragraph, (iv) as required by the
Internal Revenue Service or by any state tax authority, and (v) in any
proceeding to enforce this Agreement. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
confidential information that the parties disclose to each other pursuant to
the Settlement Agreement or Exclusive Selling Agreement, including but not limited
to the terms of their respective agreements with retailers, shall be kept
confidential by the receiving party and not shared with any competitors,
including Valassis. The receiving party shall treat the other party&#146;s
confidential information with the same care and take the same precautions that
the receiving party uses to maintain the confidentiality of their own
confidential and competitively sensitive documents and information.</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=2>25</FONT></P>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
provision of this Agreement may be waived, amended, supplemented, terminated or
repealed in whole or in part, except only by the written consent of all
Parties. Any waiver, amendment or supplement agreed to by the Parties will
apply only to the instance or circumstance expressly provided therein, and not
to any other instance or circumstance, whether similar or dissimilar.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Parties each represent and warrant to the other that the persons executing this
Agreement on their respective behalves are authorized to do so. All terms and
conditions of this Agreement are binding upon and will inure to the benefit of
the Parties and their respective members, transferees, successors and assigns.
Plaintiff acknowledges that it sought and obtained approval to enter into this
settlement from its board of directors. Defendants acknowledge that they sought
and obtained approval to enter into this settlement from the board of directors
of News Corp. No provision of this Agreement gives any third persons any right
of subrogation or action against any party hereto. All representations,
warranties, indemnities, covenants and agreements in this Agreement shall
survive execution and delivery of this Agreement and continue to be binding.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;22.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is agreed that this Agreement was prepared by counsel for each of the Parties
hereto. Each of the Parties acknowledges that each signed this document
voluntarily, without duress, undue influence or oppression and each represents
to the other that it acts voluntarily and with full advice of counsel. Each
Party recognizes and acknowledges that its knowledge may not be full and
complete. Each Party elects to assume the risk of partial knowledge and elects
to settle on the terms stated herein. Each Party further acknowledges to the
other that it does not rely upon any representations of any kind or character
made by or on behalf of the other, including by way of illustration and not of
limitation, any representation about the nature or extent of any claims,
demands, damages, rights or defenses which one Party may have against the other
Parties, and that no Party relies upon any representations of the other
Parties, its officers, agents, directors, employees or attorneys in entering
into this Agreement, except as set forth in this Agreement. Each Party
acknowledges that the consideration received has been actual and adequate. This
Agreement may be executed in counterparts and facsimile copies of signatures
shall be treated as originals for all purposes.</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>26</FONT></P>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS
WHEREOF, this Agreement was executed the 9th day of February, 2011. </FONT></P>

<P><FONT SIZE=2>INSIGNIA
SYSTEMS, INC.</FONT></P>

<P><FONT SIZE=2>By: <U>/s/
Scott Drill</U></FONT></P>

<P><FONT SIZE=2>Its: <U>CEO</U></FONT></P>

<P><FONT SIZE=2>SCOTT DRILL</FONT></P>

<P><FONT SIZE=2><U>/s/ Scott Drill</U></FONT></P>

<P><FONT SIZE=2>NEWS AMERICA
MARKETING IN-STORE SERVICES L.L.C. </FONT></P>

<P><FONT SIZE=2>By: <U>/s/
Eugenie Gavencek</U></FONT></P>

<P><FONT SIZE=2>Its: <U>Senior
Vice President</U></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>27</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>

<BR>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="40%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="20%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="40%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><U><B>FOR SETTLEMENT PURPOSES ONLY</B></U></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>EXHIBIT A</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2><U>CONFIDENTIAL &#150; TO BE DISTRIBUTED ON AN AS NEEDED BASIS ONLY</U></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>INSIGNIA &#150;NEWS AMERICA MARKETING</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>TERM SHEET</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>February 9, 2011</FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="95%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><U>Exclusive
 Selling Agent</U>. Insignia will purchase the exclusive
 selling rights for <U>placement of a sign with price (including </U>NAM&#146;s
 Price Pop Guaranteed product<U>)</U> for the Term (defined below)<U> in NAM&#146;s
 network of retailers</U> for a purchase price equal to $4,000,000. The amount
 of $4,000,000 may be subtracted from the settlement payment. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>[ * ]</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><U>Term</U>.
 The initial term (&#147;Term&#148;) of the agreement shall be for a period of ten (10)
 years. The term may be extended upon mutual agreement of the parties. </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=2 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>[ * ]</FONT></P>
 </TD>
 </TR>
</TABLE>

<P><FONT SIZE=2>*Indicates
confidential information which has been omitted and filed separately with the
Commission under Rule 24b-2.</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>28</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><I><U><B>EXHIBIT B</B></U></I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>UNITED STATES DISTRICT COURT<BR>
DISTRICT OF MINNESOTA</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="35%" VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="58%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>INSIGNIA SYSTEMS, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Civil No. 04 4213 (JRT/AJB)</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Plaintiff,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>STIPULATED ORDER DISMISSING CASE WITH PREJUDICE</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.4IN'><FONT SIZE=2><B>v.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Judge: Hon.
 John R. Tunheim</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>NEWS AMERICA MARKETING</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>IN-STORE, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
<P><FONT SIZE=2>Complaint
 Filed: Sept. 23, 2004</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Trial Date:
 February 7, 2011</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Defendant.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
  <P><FONT SIZE=1><B>&nbsp;</B></FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2><U><B>STIPULATION TO DISMISS CASE WITH PREJUDICE</B></U></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plaintiff
Insignia Systems, Inc., on the one hand, and Defendant News America Marketing
In-Store L.L.C. (sued in the Action as News America Marketing In-Store, Inc.),
on the other hand, by and through their attorneys of record (collectively, &#147;the
Parties&#148;), hereby AGREE AND STIPULATE that the above-captioned case, together
with all of Plaintiff&#146;s claims against Defendant which are contained therein or
which could have been contained therein as of the date of this Stipulation, is
hereby DISMISSED WITH PREJUDICE, with each party to bear its own costs.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Parties further AGREE AND STIPULATE that the Protective Order filed in the
above-captioned case shall remain in effect and govern the conduct of the
Parties, including the provision that all Confidential Material (as that term
is defined in the Protective Order) shall be destroyed. For the avoidance of
doubt, the Parties STIPULATE AND AGREE that all Confidential Material
(including but not limited to discovery responses, documents and things
produced, depositions, summaries of the foregoing, and motion papers filed with
the Court incorporating or attaching Confidential Material) that are in the
possession, custody or control of the Parties, their attorneys and/or their
experts and consultants shall be destroyed on or before March 30, 2011.</FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>29</FONT></P>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2><B>I STIPULATE TO ENTRY OF THE ABOVE ORDER:</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="80%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="38%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="38%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Dated: <U>February
 9, 2011<BR>
 <BR>
 </U>By: /s/ Stephen A. Wood<BR>
 <BR>
 Stephen A. Wood<BR>
 KELLEY DRYE &amp; WARREN LLP<BR>
 333 West Wacker Drive<BR>
 Suite 2600<BR>
 Chicago, IL 60606<BR>
 Phone: (312) 857-2311 <BR>
 Fax: (312) 857-7095<BR>
 <U>swood@kelleydrye.com</U><BR>
 <BR>
 Attorneys for Plaintiff<BR>
 Insignia Systems, Inc.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Dated: <U>February
 9, 2011</U><BR>
 <BR>
 By: /s/ Richard L. Stone<BR>
 <BR>
 Richard L. Stone (pro hac vice)<BR>
 HOGAN LOVELLS US LLP<BR>
 1999 Avenue of the Stars<BR>
 Suite 1400<BR>
 Los Angeles, CA 90067<BR>
 (310) 785-4600 (phone)<BR>
 (310) 785-4601 (facsimile)<BR>
 <U>richard.stone@hoganlovells.com</U><BR>
 <BR>
 Attorneys for Defendant <BR>
 News America Marketing In-Store, Inc</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN="CENTER"><FONT SIZE=2>30</FONT></P>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>UNITED STATES DISTRICT COURT<BR>
DISTRICT OF MINNESOTA</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="35%" VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="58%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>INSIGNIA SYSTEMS, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Civil No. 04 4213 (JRT/AJB)</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Plaintiff,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>STIPULATED ORDER DISMISSING CASE WITH PREJUDICE</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.4IN'><FONT SIZE=2><B>v.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Judge: Hon.
 John R. Tunheim</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>NEWS AMERICA MARKETING</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>IN-STORE, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Complaint
 Filed: Sept. 23, 2004</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Defendant.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Trial Date:
 February 7, 2011</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2><U><B>ORDER DISMISSING CASE WITH PREJUDICE</B></U></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT
IS HEREBY ORDERED that that the above-captioned case, together with all of
Plaintiff&#146;s claims against Defendant which are contained therein or which could
have been contained therein as of the date of this Stipulation, is hereby
DISMISSED WITH PREJUDICE, with each party to bear its own costs.</FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT
IS FURTHER ORDERED that the Protective Order filed in the above-captioned case
shall remain in effect and govern the conduct of the Parties. Confidential
Material (including but not limited to discovery responses, documents and
things produced, depositions, summaries of the foregoing, and motion papers
filed with the Court incorporating or attaching Confidential Material) that are
in the possession, custody or control of the Parties, their attorneys and/or their
experts and consultants shall be destroyed on or before March 30, 2011.</FONT></P>

<P><FONT SIZE=2><B>IT IS SO ORDERED.</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="31%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="34%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="34%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date: February 10, 2011</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2>s/
 John R. Tunheim</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>at Minneapolis, Minnesota.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>JOHN
 R. TUNHEIM</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>United
 States District Judge</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN="CENTER"><FONT SIZE=2>31</FONT></P>
<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><I><U><B>EXHIBIT C</B></U></I></FONT></P>

<P ALIGN=CENTER><FONT SIZE=2><B>UNITED
STATES DISTRICT COURT<BR>
DISTRICT OF MINNESOTA</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="35%" VALIGN=TOP  STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="58%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>INSIGNIA SYSTEMS, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Civil No. 04 4213 (JRT/AJB)</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Plaintiff,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>STIPULATION TO APPOINT MASTER</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.4IN'><FONT SIZE=2><B>v.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Judge: Hon.
 John R. Tunheim</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>NEWS AMERICA MARKETING</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>IN-STORE, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Complaint
 Filed: Sept. 23, 2004</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Defendant.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Trial Date:
 February 7, 2011</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2><U><B>STIPULATION
TO APPOINT MASTER</B></U></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Plaintiff
Insignia Systems, Inc. and former counter-defendant Scott Drill, on the one
hand, and Defendant News America Marketing In-Store, Inc., on the other hand,
by and through their attorneys of record (collectively, &#147;the Parties&#148;), hereby
AGREE AND STIPULATE, subject to the approval of the Court, that the United
States District Court of Minnesota shall retain jurisdiction to enforce the Parties&#146;
settlement agreement and Exclusive Selling Agreement entered on February 9,
2011, and the Honorable Arthur J. Boylan shall serve as a special master
pursuant to 28 U.S.C. &sect; 636, Fed.R.Civ.P. 53 and Local Rule 72.1 to enforce and
interpret the Parties&#146; settlement agreement and Exclusive Selling Agreement
attached as Exhibit A to the parties&#146; settlement agreement.</FONT></P>

<P ALIGN=CENTER><FONT SIZE=2>32</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P><FONT SIZE=2><B>I STIPULATE TO ENTRY
OF THE ABOVE ORDER:</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="80%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="38%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="38%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Dated: <U>February
 9, 2011</U><BR>
 <BR>
 By: /s/ Stephen A. Wood<BR>
 <BR>
 Stephen A. Wood<BR>
 KELLEY DRYE &amp; WARREN LLP<BR>
 333 West Wacker Drive<BR>
 Suite 2600<BR>
 Chicago, IL 60606<BR>
 Phone: (312) 857-2311 <BR>
 Fax: (312) 857-7095<BR>
 <U>swood@kelleydrye.com</U><BR>
 <BR>
 Attorneys for Plaintiff<BR>
 Insignia Systems, Inc.<BR>
 and Scott Drill</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Dated: <U>February
 9, 2011</U><BR>
 <BR>
 By: /s/ Richard L. Stone<BR>
 <BR>
 Richard L. Stone (pro hac vice)<BR>
 HOGAN LOVELLS US LLP<BR>
 1999 Avenue of the Stars<BR>
 Suite 1400<BR>
 Los Angeles, CA 90067<BR>
 (310) 785-4600 (phone)<BR>
 (310) 785-4601 (facsimile)<BR>
 <U>richard.stone@hoganlovells.com</U><BR>
 <BR>
 Attorneys for Defendant <BR>
 News America Marketing In-Store, Inc</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>33</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3><P STYLE='PAGE-BREAK-BEFORE: ALWAYS'></P><PAGE>
<P ALIGN=CENTER><FONT SIZE=2><B>UNITED
STATES DISTRICT COURT<BR>
DISTRICT OF MINNESOTA</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="35%" VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="7%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="58%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>INSIGNIA SYSTEMS, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>Civil No. 04 4213 (JRT/AJB)</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Plaintiff,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>STIPULATED ORDER TO APPOINT SPECIAL MASTER</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.4IN'><FONT SIZE=2><B>v.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Judge: Hon.
 John R. Tunheim</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>NEWS AMERICA MARKETING</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2><B>IN-STORE, INC.,</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Complaint
 Filed: Sept. 23, 2004</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P STYLE='MARGIN-LEFT:.8IN'><FONT SIZE=2><B>Defendant.</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Trial Date:
 February 7, 2011</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=1><B>&nbsp;</B></FONT></P>


 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2><B>:</B></FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2><U><B>ORDER
APPOINTING MASTER</B></U></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IT
IS ORDERED that the United States District Court for Minnesota shall retain
jurisdiction to enforce the Parties&#146; settlement agreement and Exclusive Selling
Agreement entered on February 9, 2011, and pursuant to 28 U.S.C. &sect; 636,
Fed.R.Civ.P. 53 and Local Rule 72.1, the Honorable Arthur J. Boylan is hereby
designated to serve as a special master for any disputes that arises between
the parties regarding enforcement or interpretation of the Parties&#146; settlement
agreement and Exclusive Selling Agreement appended as Exhibit A to the parties&#146;
settlement agreement.</FONT></P>

<P><FONT SIZE=2><B>IT IS SO ORDERED.</B></FONT></P>

<TABLE borDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="31%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="34%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="34%" VALIGN=TOP>
 <P ALIGN=CENTER>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date: February 10, 2011</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P ALIGN=CENTER><FONT SIZE=2>s/
 John R. Tunheim</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>at Minneapolis, Minnesota.</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>JOHN
 R. TUNHEIM</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=2>United
 States District Judge</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>34</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>insignia114213_ex31-1.htm
<DESCRIPTION>CERTIFICATION OF CEO PURSUANT TO SECTION 302
<TEXT>
<HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>
<BR>
<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="91%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=3><B>Exhibit 31.1</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION
 OF PRINCIPAL EXECUTIVE OFFICER</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>I, Scott F.
 Drill, certify that:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>I have
 reviewed this quarterly report on Form 10-Q/A of Insignia Systems, Inc.;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, this report does not contain any untrue statement of a material
 fact or omit to state a material fact necessary to make the statements made,
 in light of the circumstances under which such statements were made, not
 misleading with respect to the period covered by this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>3.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, the financial statements, and other financial information included
 in this report, fairly present in all material respects the financial
 condition, results of operations and cash flows of the registrant as of, and
 for, the periods presented in this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>4.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>The
 registrant&#146;s other certifying officer and I are responsible for establishing
 and maintaining disclosure controls and procedures (as defined in Exchange
 Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
 reporting (as defined in Exchange act Rules 13a-15(f) and 15d-15(f)) for the
 registrant and have:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such disclosure controls and procedures, or caused such disclosure controls
 and procedures to be designed under our supervision, to ensure that material
 information relating to the registrant is made known to us by others within
 the Registrant, particularly during the period in which this report is being
 prepared; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such internal control over financial reporting, or caused such internal
 control over financial reporting to be designed under our supervision, to
 provide reasonable assurance regarding the reliability of financial reporting
 and the preparation of financial statements for external purposes in
 accordance with generally accepted accounting principles; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>c)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Evaluated
 the effectiveness of the registrant&#146;s disclosure controls and procedures and
 presented in this report our conclusions about the effectiveness of the
 disclosure controls and procedures, as of the end of the period covered by
 this report based on such evaluation; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>d)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Disclosed in
 this report any change in the registrant&#146;s internal control over financial
 reporting that occurred during the registrant&#146;s most recent fiscal quarter
 that has materially affected, or is reasonably likely to materially affect,
 the registrant&#146;s internal control over financial reporting;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>5.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>The
 registrant&#146;s other certifying officer and I have disclosed, based on our most
 recent evaluation of internal control over financial reporting, to the
 registrant&#146;s auditors and the audit committee of the registrant&#146;s board of
 directors (or persons performing the equivalent functions):</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>All
 significant deficiencies and material weaknesses in the design or operation
 of internal control over financial reporting which are reasonably likely to
 adversely affect the registrant&#146;s ability to record, process, summarize and
 report financial information; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Any fraud,
 whether or not material, that involves management or other employees who have
 a significant role in the registrant&#146;s internal controls over financial
 reporting.</FONT></P>
 </TD>
 </TR>
</TABLE>
<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="58%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="42%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date:
 September 9, 2011</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Scott F.
 Drill</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Scott F.
 Drill</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>President
 and Chief Executive Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 executive officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>35</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>


</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>insignia114213_ex31-2.htm
<DESCRIPTION>CERTIFICATION OF CFO PURSUANT TO SECTION 302
<TEXT>
<HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="4%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="5%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="91%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=RIGHT><FONT SIZE=3><B>Exhibit 31.2</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P ALIGN=CENTER><FONT SIZE=3><B>CERTIFICATION
 OF PRINCIPAL FINANCIAL OFFICER</B></FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>I, John C.
 Gonsior, certify that:</FONT></P>
 </TD>
 </TR>

 <TR>
 <TD COLSPAN=3 VALIGN=TOP>
 <P><FONT SIZE=2>&nbsp;</FONT></P>
 </TD>
 </TR>


 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>1.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>I have
 reviewed this quarterly report on Form 10-Q/A of Insignia Systems, Inc.;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>2.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, this report does not contain any untrue statement of a material
 fact or omit to state a material fact necessary to make the statements made,
 in light of the circumstances under which such statements were made, not
 misleading with respect to the period covered by this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>3.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>Based on my
 knowledge, the financial statements, and other financial information included
 in this report, fairly present in all material respects the financial
 condition, results of operations and cash flows of the registrant as of, and
 for, the periods presented in this report; </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>4.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>The
 registrant&#146;s other certifying officer and I are responsible for establishing
 and maintaining disclosure controls and procedures (as defined in Exchange
 Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
 reporting (as defined in Exchange act Rules 13a-15(f) and 15d-15(f)) for the
 registrant and have:</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such disclosure controls and procedures, or caused such disclosure controls
 and procedures to be designed under our supervision, to ensure that material
 information relating to the registrant is made known to us by others within
 the Registrant, particularly during the period in which this report is being
 prepared; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Designed
 such internal control over financial reporting, or caused such internal
 control over financial reporting to be designed under our supervision, to
 provide reasonable assurance regarding the reliability of financial reporting
 and the preparation of financial statements for external purposes in
 accordance with generally accepted accounting principles; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>c)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Evaluated
 the effectiveness of the registrant&#146;s disclosure controls and procedures and
 presented in this report our conclusions about the effectiveness of the
 disclosure controls and procedures, as of the end of the period covered by
 this report based on such evaluation; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN="TOP" ALIGN="CENTER">
 <P ALIGN="CENTER"><FONT SIZE=2>d)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Disclosed in
 this report any change in the registrant&#146;s internal control over financial
 reporting that occurred during the registrant&#146;s most recent fiscal quarter
 that has materially affected, or is reasonably likely to materially affect,
 the registrant&#146;s internal control over financial reporting;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>5.</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=2>The
 registrant&#146;s other certifying officer and I have disclosed, based on our most
 recent evaluation of internal control over financial reporting, to the
 registrant&#146;s auditors and the audit committee of the registrant&#146;s board of
 directors (or persons performing the equivalent functions):</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD COLSPAN=2 VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>a)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>All
 significant deficiencies and material weaknesses in the design or operation
 of internal control over financial reporting which are reasonably likely to
 adversely affect the registrant&#146;s ability to record, process, summarize and
 report financial information; and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P ALIGN="CENTER"><FONT SIZE=2>b)</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Any fraud,
 whether or not material, that involves management or other employees who have
 a significant role in the registrant&#146;s internal controls over financial
 reporting.</FONT></P>
 </TD>
 </TR>
</TABLE>

<BR>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="58%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="42%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date:
 September 9, 2011</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ John C.
 Gonsior</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>John C.
 Gonsior</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Vice
 President, Finance and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Chief
 Financial Officer </FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 financial officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>36</FONT></P>

<HR NOSHADE ALIGN=CENTER WIDTH="100%" SIZE=3>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>insignia114213_ex32.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 906
<TEXT>
<HTML>
<HEAD><TITLE></TITLE></HEAD>
<BODY>

<P ALIGN=RIGHT><FONT SIZE=3><B>Exhibit 32</B></FONT></P>

<P ALIGN=CENTER><FONT SIZE=3><B>SECTION 1350
CERTIFICATION</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned certify that:</FONT></P>

<P><FONT SIZE=2>(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The accompanying Quarterly Report
on Form 10-Q/A for the period ended March 31, 2011, fully complies with the requirements of Section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and</FONT></P>

<P><FONT SIZE=2>(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in the
accompanying Quarterly Report fairly
presents, in all material respects, the financial condition and results of
operations of the Company.</FONT></P>

<TABLE BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="100%">
 <TR STYLE="FONT-SIZE:1PX">
 <TD WIDTH="58%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 <TD WIDTH="42%" VALIGN=TOP>
 <P>&nbsp;</P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date:
 September 9, 2011</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ Scott F.
 Drill</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Scott F. Drill</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>President
 and Chief Executive Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 executive officer)</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Date:
 September 9, 2011</FONT></P>
 </TD>
 <TD VALIGN=TOP STYLE="BORDER-BOTTOM:SOLID BLACK 1PX">
 <P><FONT SIZE=2>/s/ John C.
 Gonsior</FONT></P>


 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>John C.
 Gonsior</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Vice
 President, Finance and</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>Chief
 Financial Officer</FONT></P>
 </TD>
 </TR>
 <TR>
 <TD VALIGN=TOP>
 <P><FONT SIZE=1>&nbsp;</FONT></P>
 </TD>
 <TD VALIGN=TOP>
 <P><FONT SIZE=2>(principal
 financial officer)</FONT></P>
 </TD>
 </TR>
</TABLE>
<P ALIGN=CENTER><FONT SIZE=2>37</FONT></P>

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