SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-K/A


(Amendment
No. 1)





R           ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE


SECURITIES
EXCHANGE ACT OF 1934


For the
fiscal year ended December 31, 2007





OR





£           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE


SECURITIES
EXCHANGE ACT OF 1934


For the
transition period from _____ to
_____







Commission
File No. 000-29235





TEJAS
INCORPORATED





(Exact
Name of Registrant as Specified in its Charter)





DELAWARE
            13-3577716(State
      or other jurisdiction of incorporation)
            (IRS
      Employer Identification No.)





8226 Bee
Caves Road, Austin, Texas 78746





(Address
of Principal Executive Offices)   (Zip Code)





Registrant’s
telephone number, including area code (512) 306-8222


Securities
registered pursuant to Section 12(b) of the Act: None


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


Common
Stock, par value $0.001 per share


(Title of
Class)


Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes £
No R
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act. Yes £
No R


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 and (2) has been subject to such filing
requirements for the past 90 days. Yes R
No £


Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405) is not contained herein, and will not be contained,
to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K £


Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (check one):


Large
      accelerated filer £
            Accelerated
      filer £
            Non-accelerated
      filer R
            Smaller
      reporting company £


Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes £
No R


The
aggregate market value of common stock held by non-affiliates as of June 30,
2007 was $9,343,907 using a market price of $3.30 as quoted on the
over-the-counter bulletin board as of the close of business on that
date.  As of February 29, 2008 there were 4,494,115 shares of the
Registrant’s common stock, $0.001 par value, outstanding.





TABLE
OF CONTENTS




PagePART
      IIIItem
      10.
            Directors and Executive Officers of the
      Registrant
            4Item
      11.
            Executive Compensation
            6Item
      12.
            Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
            19Item
      13.
            Certain Relationships and Related
    Transactions
            21Item
      14.
            Principal Accountant Fees and Services
            23PART
      IVItem
      15.
            Exhibits and Financial Statement Schedules
            24


2
 Table of Contents




Explanatory
Note





This
Amendment No. 1 on Form 10-K/A (this “Amendment”) amends our Annual Report on
Form 10-K for the year ended December 31, 2007 that was filed with the
Securities and Exchange Commission (the “SEC”) on March 28, 2008 (the “Original
Filing”).  This Amendment is being filed to include the information
required by Part III and not included in the Original Filing, as we will not
file our definitive proxy statement within 120 days after December 31,
2007.





Except as
set forth in Part III below, no other changes have been made to the Original
Filing.  Unless expressly stated herein, this Amendment does not
reflect events occurring after the filing of the Original Filing, nor does it
modify or update in any way the disclosures contained in the Original
Filing.  References to the “Company”, “we”, “our”, or “us” in this
Amendment refer to Tejas Incorporated and its consolidated subsidiaries, unless
the context otherwise indicates.


3
 Table of Contents




PART
III





ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE





This
section gives biographical information about our directors and describes their
membership on board committees, their attendance at meetings and their
compensation.





General





The
number of directors constituting the current board of directors is
six.  The term of office for each person elected as a director will
continue until the next annual meeting or until his successor has been duly
elected and qualified, or his earlier death, resignation or
removal.





Directors





The name
and certain information related to each director are set forth
below:





Name of
      Director
            Age
            TitleJohn
      J. Gorman
            47
            Director
      and Chairman of the BoardMichael
      F. Dura
            54
            Director
      and Vice Chairman of the BoardBarry
      A. Williamson
            50
            DirectorWilliam
      A. Inglehart
            76
            DirectorCharles
      H. Mayer
            60
            DirectorDennis
      G. Punches
            72
            DirectorClark
      N. Wilson
            51
            Director
      (Resigned as of March 31, 2008)





The
information includes the age of each director as of the date
hereof.





John J.
Gorman.  Mr. Gorman became our Chairman of the board of
directors in August 1999.  He was our Chief Executive Officer from
August 1999 through June 2004.  He was the Chairman of Tejas
Securities Group, Inc., one of our wholly-owned operating subsidiaries, which we
will refer to herein as Tejas Securities, from July 1997 through August 2005.
Mr. Gorman has over 21 years of experience in the brokerage
industry.  Mr. Gorman became a principal of Tejas Securities on April
18, 1995.  From 1988 until joining Tejas Securities, Mr. Gorman worked
at APS Financial Inc., a broker-dealer in Austin, Texas, as a Senior Vice
President.  Mr. Gorman served primarily in a broker capacity at APS
Financial Inc.  Mr. Gorman has held positions at APS Financial Inc.,
Landmark Group, Shearson Lehman and Dean Witter.  Mr. Gorman is the
nephew of Charles H. Mayer and is the son-in-law of William A.
Inglehart.  Mr. Gorman received his B.B.A. from Southern Methodist
University in 1983.





Michael F.
Dura.  Mr. Dura joined our board of directors and became our
Vice Chairman of the board of directors on November 8, 2005.  Mr. Dura
also serves as a director of UNX Inc., a broker-dealer he joined in August
2005.  Mr. Dura is also a founder of and has been a Managing Member of
Prex Capital Partners LLC, a private money management firm, since February
2004.  Mr. Dura served in executive management level positions with
National Financial Services, UBS PaineWebber, Broadway Trading LLC and Schroder
& Co., Inc. from 1988 through December 2003.  Mr. Dura received
his A.B. degree in Political Science from Columbia University in
1975.





Barry A.
Williamson.Mr. Williamson returned as a Director in November
2006.  Mr. Williamson previously served as a Director from October
1999 through January 2006.  Mr. Williamson recently accepted the
position of Chief Executive Officer for Opal Energy, Inc.  Mr.
Williamson was elected in 1992 as the 38th Texas Railroad Commissioner and
served from January 1993 to January 1999.  He served as the Railroad
Commission’s Chairman in 1995.  During the late 1980’s and early
1990’s, Mr. Williamson served under the Bush administration at the U.S.
Department of Interior as the Director of Minerals Management
Service.  During the 1980’s, Mr. Williamson served under the Reagan
administration as a principal advisor to the U.S. Secretary of Energy in the
creation and formation of a national energy policy.  Mr. Williamson
began his career with the firm of Turpin, Smith, Dyer & Saxe, and in 1985
established the Law Offices of Barry Williamson and founded an independent oil
and gas company.  Mr. Williamson graduated from the University of
Arkansas with a B.A. in Political Science in 1979, and received his J.D. degree
from the University of Arkansas Law School in 1982.  Mr. Williamson
also serves on the board of directors of Green Builders, Inc., a public
homebuilding company.





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 Table of Contents




William A.
Inglehart.  Mr. Inglehart became a Director in June
2003.  Mr. Inglehart served as President and Chief Executive Officer
of Payco American Corporation, a publicly-held financial services organization
with offices throughout the United States, from September 1989 until his
retirement in November 1991.  While in the United States military, Mr.
Inglehart served as a special agent with the counter-intelligence
corps.  Mr. Inglehart earned a B.A. from the University of Arizona in
1958.  Mr. Inglehart is Mr. Gorman’s father-in-law.





Charles H.
Mayer.  Mr. Mayer became a Director in September
1999.  Mr. Mayer retired as our President and Chief Operating Officer
in June 2004.  Mr. Mayer previously served in those capacities from
December 2000 and September 1999, respectively.  In June 2004, Mr.
Mayer formed Seton Securities Group, Inc., a privately held
broker-dealer.  From 1995 until he joined Tejas Securities, Mr. Mayer
was self-employed and managed personal investments in a number of companies
unrelated to the securities industry.  From 1990 to 1995, Mr. Mayer
was the Managing Director and Chief Information Officer with Credit Suisse First
Boston.  Mr. Mayer’s other experience includes 21 years in senior
positions with Morgan Stanley, Tech Partners, Salomon Brothers, Lehman Brothers
and the Federal Reserve Bank of New York.  Mr. Mayer is the uncle of
John J. Gorman. Mr. Mayer earned a B.B.A. and M.B.A. from Seton Hall
University.





Dennis G.
Punches.Mr. Punches became a Director in December
2004.  Mr. Punches has served as the President of Payback, LP, a real
estate management company, from 1996 to present.  Mr. Punches
previously served as Chairman of Payco American Corporation, a publicly-held
financial services organization with offices throughout the United States, from
1956 through 1996.  Mr. Punches currently serves as the Chairman of
Collection House Ltd, PTY, a receivables management company based in Brisbane,
Australia.  Mr. Punches also serves as a director for Novo I, a
Waukesha, Wisconsin based marketing company.  Mr. Punches received his
B.S. from Carroll College.





Clark N.
Wilson.Mr. Wilson became a Director in October
1999.  Mr. Wilson resigned from the board of directors effective March
31, 2008.  Mr. Wilson became the Chairman, President and Chief
Executive Officer of Green Builders, Inc. (formerly Wilson Holdings, Inc.), a
Delaware corporation on October 11, 2005, and Wilson Family Communities, Inc., a
Delaware corporation, in May 2005.  Green Builders, Inc. became the
parent-company for Wilson Family Communities, Inc. on October 11, 2005, and is a
publicly-reporting company.  Wilson Family Communities, Inc. merged
with Athena Equity Partner-Hayes LP, a Texas limited partnership that
specializes in commercial real estate investments, in May 2005.  Mr.
Wilson previously served as a principal in Athena Equity Partner-Hayes LP since
2002.  Mr. Wilson served as the President and Chief Executive Officer
of Clark Wilson Homes, Inc., a subsidiary of Capital Pacific Holdings, from 1992
to 2003.  Previously, Mr. Wilson was the President of Doyle Wilson
Homebuilder, Inc., serving in that position in 1992.  Mr. Wilson
served as Vice President of Doyle Wilson Homebuilder, Inc. from 1986 to
1992.  Mr. Wilson attended Amarillo College and the University of
Texas at Austin, and has nearly 26 years of experience in the homebuilding
industry.





Meetings
of the Board of Directors





The board
of directors met five times in 2007.  All members of the board were in
attendance at each of the meetings.





We do not
have a formal policy regarding directors’ attendance at annual stockholders
meetings, although we encourage directors to attend such
meetings.  Six of our board members attended our 2007 annual
stockholders meeting.  Our common stock is traded on the OTC Bulletin
Board (OTCBB) but is not listed on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq Stock Market, Inc. (which we refer to as the
NASDAQ).





Communication
with the Board of Directors





Stockholders
are permitted to communicate with our board of directors by forwarding written
communications to our corporate offices at 8226 Bee Caves Road, Austin, Texas
78746, Attention: Chairman of the Board.  We will present all
communications, as received and without screening, to the board of directors at
its next regularly scheduled meeting.  If a stockholder wishes to
communicate with a specific director, he or she may do so by forwarding written
communications to the above address to the attention of such
director.





5
 Table of Contents








Audit
Committee





The Audit
Committee of the board of directors was formed in May 2000. The Audit Committee
members are Michael F. Dura, Dennis G. Punches, Barry A. Williamson and William
A. Inglehart.  The Audit Committee met four times in
2007.  All members of the committee attended each of those
meetings.  On March 29, 2004, the board of directors adopted an
Amended and Restated Charter for the Audit Committee.  A copy of this
charter is available on our website at www.tejs.com.  The
Audit Committee’s responsibilities include:




·
              assisting
      the board in its oversight responsibilities
  regarding:
 (1)
              the
      integrity of our financial
statements,
 (2)
              our
      compliance with legal and regulatory requirements,
  and
 (3)
              the
      Independent Registered Public Accounting Firm’s qualifications and
      independence;
 ·
              preparing
      the report required by the SEC for inclusion in our annual proxy
      statement;
 ·
              appointing,
      retaining, compensating, evaluating and terminating our Independent
      Registered Public Accounting Firm;
 ·
              approving
      audit and non-audit services to be performed by the Independent Registered
      Public Accounting Firm;
 ·
              overseeing
      our accounting and financial reporting processes and the audits of our
      financial statements; and
 ·
              otherwise
      performing such other functions as the board may from time to time assign
      to the Audit Committee.




Nominating
Committee





We do not
have a nominating committee (or a nominating committee charter) because our
entire board of directors participates in our director nomination
process.  The only members of our board of directors that meet the
definition of “independence” set forth in Rule 4200(a)(15) of the NASDAQ listing
standards are Messrs. Punches, Williamson and Dura.





Code
of Business Conduct and Ethics





The
Company has adopted a code of business conduct and ethics that applies to all of
its directors, officers and employees, a current copy of which is available on
our website at www.tejs.com.





SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE





Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors
and executive officers, and persons who own more than 10% of a registered class
of our equity securities, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission, or the
SEC.  Such persons are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file.





Based on
a review of reports filed by our directors, executive officers and beneficial
holders of 10% or more of our shares, and upon representations from those
persons, we believe that all SEC stock ownership reports required to be filed by
those reporting persons during 2007 were timely made.





ITEM 11. EXECUTIVE COMPENSATION





Compensation
Discussion and Analysis





Objectives





We
compensate our executive officers primarily through a combination of base
salary, bonuses, commissions (if applicable), and equity awards.  Our
compensation program is designed to meet the following goals:





·
            attracting,
      retaining and motivating highly qualified and committed executive
      officers;


·
            compensating
      competitively;





6
 Table of Contents




·
            aligning
      incentives with stockholder value
creation;


·
            exercising
      appropriate discretion and judgment in making individual compensation
      determinations based on the performance and particular employment position
      of the executive officers, our current economic and business
      circumstances, and prevailing conditions in the marketplace;
      and


·
            encouraging
      executive officers to obtain and retain an equity stake in
    us.





To meet
these objectives, the Compensation Committee has implemented the executive
compensation program discussed below.





Elements
of Executive Compensation





Our
executive compensation program is designed to reflect the philosophy and
objectives described above.  The amount and manner of compensation for
an executive depends on many factors, including individual performance and
responsibilities, our overall performance and the performance of such
executive’s business group, our strategic goals, and how the executive might
contribute to our future success.  We also consider the compensation
levels at other companies in the Austin market and in our industry.





Executive
compensation is comprised of four primary components: (1) base salary; (2)
bonuses; (3) commissions; and (4) equity awards in our common
stock.  We believe that a combination of these elements is the primary
compensation-related motivator in attracting and retaining
executives.  We view these components of compensation as related but
distinct.  The Compensation Committee reviews total compensation, and
in certain circumstances, the amount of compensation may take into account the
broker commissions earned by the executive.  We determine the
appropriate level for each compensation component based in part, but not
exclusively, on individual performance, business group performance, company
performance, and other considerations we deem relevant.  Our
Compensation Committee has not adopted any formal or informal policies or
guidelines for allocating compensation between long-term and currently paid out
compensation, between cash and non-cash compensation, or among different forms
of non-cash compensation.  However, our Compensation Committee’s
philosophy is to strike a balance among guaranteed compensation (base salary and
guaranteed bonuses), discretionary compensation (additional bonuses and warrant
transfers), compensation tied closely to specific individual performance
(commissions), and long-term equity compensation (stock options).





Our
Compensation Committee, in consultation with executive management and our
chairman (except in the case of their own compensation), performs at least
annually a review of our executive officers’ compensation to determine whether
the compensation provides adequate incentives and motivation to our executive
officers and whether they adequately compensate our executive officers relative
to comparable officers in other companies with which we compete for
executives.  In addition, on an annual basis, our Compensation
Committee, in consultation with executive management and our chairman, reviews
and considers the individual performance of executives, the financial and
operating performance of the groups or departments managed by the executives,
and our overall performance.  Historically, our Compensation Committee
has performed this annual review in the first half of the year following the
year under review.  During the year, our Compensation Committee may
consider additional compensation awards to executives based on
performance.





Base
Salary.Annual base salaries for executive officers are
determined by evaluating the scope of responsibilities and related experience
and knowledge of the individual officer. Consideration is also given for
competitiveness in the regional market for comparable executive
talent.  For each individual executive, we also consider our needs for
that officer’s skill set, the contribution that the officer has made or we
believe will make, whether the executive officer’s skill set is easily
transferable to other potential employers as well as other
factors.  We fix executive base salaries at a level we believe enables
us to hire and retain individuals in a competitive environment and to reward
satisfactory individual performance and a satisfactory level of contribution to
our overall business goals.





Base salaries are reviewed annually,
and adjusted from time to time based on individual responsibilities, performance
and experience.  In 2007, this review occurred in May.  In
2007, Mr. Morales assumed the additional role of Chief Financial Officer of our
broker-dealer subsidiary, Tejas Securities Group, Inc.  Mr. Morales
received an increase of $4,167 to his monthly salary for assuming the additional
duties related to that position.




7
 Table of Contents




The base
salaries paid to our named executive officers in 2007 are set forth below in the
Summary Compensation Table.




Bonuses.We
structure bonuses to executive officers to encourage individual performance and
contributions and the achievement of our goals both company-wide and for the
individual executive officers. Generally, bonuses are based upon our revenues
and profitability and the individual’s performance.  In 2004, we
instituted guaranteed quarterly bonus payments to our chief executive officer
and president.





Bonuses
are determined by our Compensation Committee, in consultation with executive
management and our chairman (except in the case of their own bonuses) in its
discretion.  We believe this discretion is important to give our
Compensation Committee flexibility to award more significant bonuses for greater
individual performance and contributions to company-wide performance, thereby
motivating executives towards greater performance and stockholder value
creation.  Our Compensation Committee will generally establish a cash
bonus pool for the management and administration group and allocate a portion of
such bonus pool to executives based on the performance of such group and the
executive’s individual performance and contributions to such
group.  For 2007, the Compensation Committee approved a bonus pool for
management and administrative employees.  The annual amount of the
pool was a minimum of $500,000 with a maximum of approximately 10% of our
pre-tax net income.  Generally, approximately 25% of the minimal tier
of the bonus pool is paid out in mid-year as determined in the discretion of
executive management in consultation with our chairman, with the remaining
amount of the actual annual pool determined and paid out subsequent to year end,
usually within the first quarter, as determined by our Compensation Committee,
in consultation with executive management and our chairman.  In
addition, from time to time during the year, in the discretion of our
Compensation Committee, we may pay discretionary bonuses to executive officers
based on the operation and/or performance of the business units they oversee and
their individual performance and contributions.





Warrants.  In
addition to the cash bonuses described above, our Compensation Committee may
award to executives warrants to acquire shares of capital stock of companies
that we received as a portion of compensation for investment banking services
that we provided to such companies.  Our Compensation Committee, in
consultation with executive management and our chairman (except in the case of
their own awards), awards these warrants in its discretion based on individual
performance.





Commissions.Several
of our executive officers are also stockbrokers who actively trade securities
for Tejas Securities, one of our operating subsidiaries.  As a result,
these officers are paid commissions based upon the various revenue transactions
in which they are engaged.  The executive officers, like the rest of
Tejas Securities’ brokers, are paid commissions on a monthly basis and at the
standard rate for the Company, unless otherwise negotiated.





Under the
terms of his employment arrangement, Mr. Gorman receives as commissions a
percentage of our gross revenues, less related expenses, attributed to his
efforts, which such percentage is determined by the Committee.  The
Committee determines the percentage based on Mr. Gorman’s individual
performance and contributions.  The Committee previously determined
that Mr. Gorman would receive a tiered-percentage payout of our monthly
revenue production attributed to his efforts.  Specifically, Mr.
Gorman’s commissions are based on (1) sales activities on behalf of his
clients, (2) trading profitability (including unrealized gains and losses)
related to our proprietary investments in securities if within Mr. Gorman’s
designated trading account, and (3) revenues from investment banking
clients and/or transactions that were sourced or placed primarily as a result of
Mr. Gorman’s efforts.  Mr. Gorman receives 100% of the first $100,000
of revenue production attributable to his efforts in such month (notwithstanding
any trading losses within his designated trading account).  If Mr.
Gorman’s net production (including trading losses within his designated trading
account) for such month does not equal or exceed $100,000, the deficit is
carried forward and applied to subsequent months.  Mr. Gorman is paid
at a rate of 30% of monthly revenue production attributable to his efforts in
excess of $100,000 plus any deficits carried forward from prior
months.  To the extent the annual revenue production attributable to
his efforts exceeds $6,500,000, Mr. Gorman is paid at a rate of 45% of such
excess.  Mr. Gorman’s rate is re-adjusted downward to the minimum tier
on a calendar year basis, however, any remaining deficit is carried forward to
all subsequent periods.





Mr.
Salter also receives commissions on all sales activities on behalf of his
clients equal to 45% to 50% of broker commissions on such sales activities
collected by us that are directly attributable to his efforts.  His
agreement also entitles him to monthly payments on revenues attributable to
government debt, mortgage-backed products, asset-backed securities and high
grade corporate debt equal to 10% of commission production and 25% of trading
profitability related to such securities if within Mr. Salter’s designated
trading account.





8
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Equity Awards.We
believe stock options foster an ownership culture which encourages individual
performance and contributions as well as the achievement of our
goals.  Additionally, as all our option grants traditionally have
vesting periods, we believe the options also serve as a means of
retention.  All option grants are approved by the Compensation
Committee and the board of directors, in consultation with executive management
and our chairman (except in the case of their own option grants).  Our
Compensation Committee and board of directors review and approve stock option
awards to executive officers based upon the assessment of individual
performance, a review of each executive’s long-term incentives, and retention
considerations.  Stock option awards may be granted at any time of the
year based on individual performance.





Stock
options are generally granted at a price equal to the closing price per share of
our common stock, as reported on the Over-The-Counter Bulletin Board, on the
date of grant.  Options grants generally have a term of five years and
vest one-third on the date of grant and one-third on each of the first two
anniversaries of the date of grant.  Our board of directors has not
established stock ownership guidelines.





We do not
time stock option grants in coordination with the release of material non-public
information.





Other
Executive Benefits and Perquisites




Executive
officers receive $1,000 for each meeting of our board of directors they attend,
unless the officer also serves as a member of our board of directors and
receives board compensation for attending such meeting.  See “Election
of Directors – Board Compensation” for a description of board
compensation.





Executive
officers are eligible to participate in all of our employee benefit plans, such
as medical, dental, vision, group life, disability, and accidental death and
dismemberment insurance and our 401(k) plan, in each case on the same basis as
other employees.





We
provide certain named executive officers with perquisites and other personal
benefits that we believe are reasonable and consistent with our overall
compensation program to better enable us to attract and retain employees for key
positions.  The Compensation Committee periodically reviews the level
of perquisites and other personal benefits provided to named executive
officers.  For a description of perquisites, see “Summary Compensation
Table”.





Employment
Agreements




We have
entered into written employment agreements with Messrs. Salter, Rechner, and
Morales, and the employment agreements for Messrs. Salter and Rechner contain
severance provisions.  We believe these provisions help us to attract
and retain qualified executives. The employment agreements and the severance
provisions for the executive officers are summarized under “Employment
Agreements” and “Severance and Change of Control Benefits” below, along with a
quantification of the severance and change of control benefits.





Impact
of Accounting and Regulatory Requirements on Compensation




We
account for equity compensation paid to our employees under the rules of SFAS
No. 123R, which require us to estimate and record an expense over the service
period of the award.  Any gain recognized by optionees from
nonqualified stock options should be deductible by us, while any gain recognized
by optionees from incentive stock options will not be deductible by us if there
is no disqualifying disposition by the optionee.  We account for cash
compensation as an expense at the time the obligation is
accrued.  This expense will also be tax deductible by us.





Section
162(m) of the Internal Revenue Code limits the tax deductibility by a
publicly-held corporation of compensation in excess of $1,000,000 paid to the
chief executive officer or any other of its four most highly compensated
executive officers, unless that compensation is “performance-based compensation”
as defined by the Internal Revenue Code.  The Compensation Committee
considers deductibility under Section 162(m) with respect to compensation
arrangements with executive officers.  However, our Compensation
Committee and board of directors believe that it is in our best interest that
the Compensation Committee retain its flexibility and discretion to make
compensation awards, whether or not deductible, in order to foster achievement
of performance goals established by the Compensation Committee as well as other
corporate goals that the Compensation Committee deems important to our success,
such as encouraging employee retention and rewarding achievement.





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On
October 22, 2004, the American Jobs Creation Act of 2004 was signed into law,
creating Section 409A of the Internal Revenue Code and changing the tax rules
applicable to nonqualified deferred compensation arrangements.  While
the final regulations have not become effective yet, we believe we are operating
in good faith compliance with the statutory provisions which were effective
January 1, 2005.





Compensation
Committee Report





The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management of the
Company and, based on such review and discussions, the Compensation Committee
recommended to the board of directors of the Company that the Compensation
Discussion and Analysis be included in this Proxy Statement.





Members
of the Compensation Committee:





Michael
F. Dura


Dennis G.
Punches


Barry A.
Williamson – Committee Chairman





Summary
Compensation Table





The
following table sets forth information concerning compensation of our Chief
Executive Officer, Chief Financial Officer, and our remaining two executive
officers for the years ended December 31, 2007 and 2006.  Compensation
figures are based on amounts paid in the year.


Name
      and
                Principal Position
              
              Year
              
              Salary
              
              
              Bonus
              
              
              Stock
      Awards
              
              
              Option
                Awards (1)
              
              
              Non-Equity
      Incentive PlanCompensation
              
              
              Change in Pension Value and Nonqualified
      Compensation Earnings
              
              
              All
      OtherCompensation
              
              
              Total2007
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              2,810,002
              (2)
              
              $
              2,810,002John
      J. GormanChairman
      of the Board
              
              2006
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              27,867
              
              
              $
              —
              
              
              $
              —
              
              
              $
              4,040,039
              (2)
              
              $
              4,067,9062007
              
              $
              180,000
              
              
              $
              135,500
              (3)
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              445,164
              (4)
              
              $
              760,664Mark
      M. SalterChief
      Executive Officer
              
              2006
              
              $
              180,000
              
              
              $
              106,000
              (3)
              
              $
              —
              
              
              $
              64,597
              
              
              $
              —
              
              
              $
              —
              
              
              $
              1,051,049
              (4)
              
              $
              1,401,646Kurt
      J. RechnerPresident,
      Chief
              
              2007
              
              $
              255,000
              
              
              $
              275,000
              (5)
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              51,828
              (6)
              
              $
              581,828Operating
      Officer andChief
      Financial Officer
              
              2006
              
              $
              205,000
              
              
              $
              153,500
              (5)
              
              $
              —
              
              
              $
              64,597
              
              
              $
              —
              
              
              $
              —
              
              
              $
              518,902
              (6)
              
              $
              941,9992007
              
              $
              139,167
              
              
              $
              50,000
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              8,293
              (7)
              
              $
              197,460Kurt
      E. MoralesDirector
      of Accounting
              
              2006
              
              $
              64,167
              
              
              $
              10,000
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              2,000
              (7)
              
              $
              76,167




(1)
            The
      amounts in the “Option Awards” column reflect the dollar amount recognized
      for financial statement reporting purposes for the year ended December 31,
      2007 in accordance with FAS 123R of stock options granted pursuant to our
      1999 stock option plan and thus include amounts from options granted prior
      to 2007.  No stock options were granted to our executive
      officers in 2007.  Assumptions used in the calculation of the
      amount for 2007 are included in footnote 14 to our audited financial
      statements for the year ended December 31, 2007 included in our Annual
      Report on Form 10-K filed with the Securities and Exchange Commission on
      March 28, 2008.





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(2)
            For
      2007, includes (a) $2,418,538 in commissions, (b) $291,340 in net proceeds
      (net of payment of exercise price) realized from the exercise of warrants
      to acquire shares of capital stock of companies we provided investment
      banking services to, which warrants we received as partial consideration
      for our providing such services and which we transferred to Mr. Gorman
      prior to 2007, (c) $32,625 of capital stock of companies we provided
      investment banking services to, which stock we received as partial
      consideration for our providing such services and which we transferred to
      Mr. Gorman during 2007, (d) $36,000 of reimbursed professional fees
      related to the provision of tax services for Mr. Gorman, (e) approximately
      $17,000 as a car allowance, (f) approximately $5,700 in country club
      membership fees paid by us for the benefit of Mr. Gorman, (g)
      approximately $4,000 in health insurance premiums paid by us for the
      benefit of Mr. Gorman and his family and (h) $5,000 in fees for attending
      meetings of our board of directors.





For 2006,
includes (a) $1,548,935 in commissions, (b) $2,453,500 in net proceeds (net of
payment of exercise price) realized from the exercise of warrants to acquire
shares of capital stock of companies we provided investment banking services to,
which warrants we received as partial consideration for our providing such
services and which we transferred to Mr. Gorman prior to 2006, (c) approximately
$18,000 as a car allowance, (d) approximately $5,500 in country club membership
fees paid by us for the benefit of Mr. Gorman, (e) approximately $3,400 in
health insurance premiums paid by us for the benefit of Mr. Gorman and his
family and (f) $10,000 in fees for attending meetings of our board of
directors.





See
“-Employment Arrangements-John J. Gorman” for a description of the terms of Mr.
Gorman’s employment arrangement.





(3)
            Includes
      Mr. Salter’s guaranteed bonus of $70,000 ($17,500 per
      quarter).  See “-Employment Arrangements–Mark M. Salter” for a
      description of the terms of Mr. Salter’s employment
    agreement.





(4)
            For
      2007, includes (a) $413,096 in commissions, (b) approximately $18,000
      as a car allowance, (c) approximately $5,100 in country club membership
      fees paid by us for the benefit of Mr. Salter, (d) approximately $4,000 in
      health insurance premiums paid by us for health insurance for Mr. Salter
      and his family and (e) $5,000 in fees for attending meetings of our board
      of directors.





For 2006,
includes (a) $538,905 in commissions, (b) $476,650 in net proceeds (net of
payment of exercise price) realized from the exercise of warrants to acquire
shares of capital stock of companies we provided investment banking services to,
which warrants we received as partial consideration for our providing such
services and which we transferred to Mr. Salter prior to 2006,
(c) approximately $18,000 as a car allowance, (d) approximately $5,500 in
country club membership fees paid by us for the benefit of Mr. Salter, (e)
approximately $3,400 in health insurance premiums paid by us for health
insurance for Mr. Salter and his family and (f) $9,000 in fees for attending
meetings of our board of directors.





See
“-Employment Arrangements-Mark M. Salter” for a description of the terms of Mr.
Salter’s employment agreement.





(5)
            Includes
      Mr. Rechner’s guaranteed bonus of $70,000 ($17,500 per
      quarter).  See “-Employment Arrangements-Kurt J. Rechner” for a
      description of the terms of Mr. Rechner’s employment
      agreement.





(6)
            For
      2007, includes (a) $1,635 in commissions, (b) $18,125 of capital stock of
      companies we provided investment banking services to, which stock we
      received as partial consideration for our providing such services and
      which we transferred to Mr. Rechner during 2007, (c) approximately $18,000
      as a car allowance, (d) approximately $5,100 in country club membership
      fees paid by us for the benefit of Mr. Rechner, (e) approximately
      $4,000 in health insurance premiums paid by us for health insurance for
      Mr. Rechner and his family and (f) $5,000 in fees for attending meetings
      of our board of directors.





11
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For 2006,
includes (a) $5,758 in commissions, (b) $476,650 in net proceeds (net of payment
of exercise price) realized from the exercise of warrants to acquire shares of
capital stock of companies we provided investment banking services to, which
warrants we received as partial consideration for our providing such services
and which we transferred to Mr. Rechner prior to 2006, (c) approximately $18,000
as a car allowance, (d) approximately $5,500 in country club membership fees
paid by us for the benefit of Mr. Rechner, (e) approximately $3,400 in
health insurance premiums paid by us for health insurance for Mr. Rechner and
his family and (f) $10,000 in fees for attending meetings of our board of
directors.





See
“-Employment Arrangements-Kurt J. Rechner” for a description of the terms of Mr.
Rechner’s employment agreement.





(7)
            For
      2007, includes (a) approximately $3,300 in health insurance premiums
      paid by us for health insurance for Mr. Morales and his family and (b)
      $5,000 in fees for attending meetings of our board of
      directors.





For 2006,
represents fees for attending meetings of our board of directors.





See
“-Employment Arrangements-Kurt E. Morales” for a description of the terms of Mr.
Morales’ employment agreement.





Employment
Arrangements





John
J. Gorman





On
February 25, 2005, we agreed to an employment arrangement with Mr.
Gorman.  Mr. Gorman is not paid a base salary.  Mr. Gorman
is paid commissions as a percentage of gross revenues, less related expenses,
attributed to his efforts, which such percentage is determined by the
Compensation Committee.  Specifically, Mr. Gorman’s commissions are
based on (1) sales activities on behalf of his clients, (2) trading
profitability (including unrealized gains and losses) related to our proprietary
investments in securities if within Mr. Gorman’s designated trading account, and
(3) revenues from investment banking clients and/or transactions that were
sourced or placed primarily as a result of Mr. Gorman’s
efforts.  Mr. Gorman currently receives a tiered percentage
commission based upon the amount of our monthly revenue production attributed to
his efforts.  Mr. Gorman receives 100% of the first $100,000 of
revenue production attributable to his efforts in such month (notwithstanding
any trading losses within his designated trading account).  If Mr.
Gorman’s net production (including trading losses within his designated trading
account) for such month does not equal or exceed $100,000, the deficit is
carried forward and applied to subsequent months.  Mr. Gorman is paid
at a rate of 30% of monthly revenue production attributable to his efforts in
excess of $100,000 to the extent the excess monthly revenue production exceeds
any cumulative deficit carried forward from prior months.  To the
extent the annual revenue production attributable to his efforts exceeds
$6,500,000, Mr. Gorman is paid at a rate of 45% of such
excess.  Mr.  Gorman’s rate is re-adjusted downward to the
minimum tier on a calendar year basis, however, any remaining deficit is carried
forward to all subsequent periods.  Additionally, Mr. Gorman is
entitled to participate in the management and administrative bonus pool on an
annual basis.  The Compensation Committee determines the bonus amount
to be paid to Mr. Gorman based on the performance of such group and
Mr. Gorman’s individual performance and contributions to such
group.  In addition, from time to time during the year, our
Compensation Committee may approve the payment of discretionary bonuses to
Mr. Gorman based on our operational and/or financial performance and
Mr. Gorman’s individual performance and contributions to
Tejas.  Mr. Gorman’s compensation arrangement also provides for a
monthly car allowance, country club dues, and health insurance
reimbursement.





On July
1, 2005, we and Mr. Gorman entered into a non-compete agreement pursuant to
which, if we terminate Mr. Gorman’s employment for “Cause” (as defined below) or
Mr. Gorman voluntarily terminates his employment without “Good Reason” (as
defined below), he will be subject to noncompetition and nonsolicitation
obligations for two years following such termination.  “Cause” is
defined as (1) Mr. Gorman’s dishonesty, fraud, theft, embezzlement, or breach of
fiduciary duties related to company matters, (2) his material violation of the
non-compete agreement, (3) his engagement in gross misconduct which is injurious
to our finances, business, or reputation, or (4) his conviction of, or plea of
nolo contendere to, a felony or other crime involving moral
turpitude.  “Good Reason” is defined as any action taken by us and not
consented to by Mr. Gorman that has the following effect: (1) any material
breach of the terms of the employment arrangement between Mr. Gorman and us, (2)
any change in the formula or means by which his annual compensation is to be
determined, or any failure to pay such compensation when due, (3) any material
diminution in his duties and responsibilities, any change in his title as
chairman of the board, or any change in the reporting structure pursuant to
which he reports directly to our board of directors, or (4) any failure by Mr.
Gorman to be re-elected as a member of our board of directors.





12
 Table of Contents




Mark
M. Salter





On June
1, 2004 we entered into an employment and confidentiality agreement with Mr.
Salter.  Mr. Salter’s agreement provides for a monthly salary of
$15,000, which is subject to adjustment at the discretion of the Compensation
Committee.  Either party may terminate the employment agreement at any
time.  The agreement also entitles him to receive a severance payment
equal to three months salary if we terminate his employment for any reason other
than cause.  For a discussion of severance benefits, see “-Severance
and Change of Control Benefits”. Additionally, Mr. Salter’s agreement provides
for payment of quarterly guaranteed bonuses in the amount of
$17,500.  Mr. Salter also receives commissions on all sales activities
on behalf of his clients equal to 45% to 50% of broker commissions on such sales
activities collected by us that are directly attributable to his
efforts.  Mr. Salter’s agreement also entitles him to monthly payments
on revenues attributable to government debt, mortgage-backed products,
asset-backed securities and high grade corporate debt equal to 10% of commission
production and 25% of trading profitability related to such securities if within
Mr. Salter’s designated trading account.  The Compensation
Committee has approved the following perquisites for Mr. Salter: a monthly car
allowance, country club dues, and health insurance reimbursement.





In
addition, from time to time during the year, our Compensation Committee may
approve the payment of discretionary bonuses to Mr. Salter based on the
operational and/or financial performance of our subsidiary Tejas Securities
Group, Inc. and Mr. Salters’ individual performance and contributions to
Tejas.  Our Compensation Committee has the discretion to determine
whether to pay and, if so, the amount of any such discretionary
bonuses.





Kurt
J. Rechner





On June
1, 2004 we entered into an employment and confidentiality agreement with Mr.
Rechner.  Mr. Rechner’s agreement provides for a monthly salary of
$15,000, which is subject to adjustment at the discretion of the Compensation
Committee.  In 2006, Mr. Rechner assumed the additional role of Chief
Financial Officer on an interim basis until a replacement could be
found.  Mr. Rechner received an increase of $6,250 to his monthly
salary for assuming the additional duties related to that
position.  Either party may terminate the employment agreement at any
time.  The agreement also entitles him to receive a severance payment
equal to six months salary if we terminate his employment for any reason other
than for Cause.  For a discussion of severance benefits, see
“-Severance and Change of Control Benefits”.  Additionally, Mr.
Rechner’s agreement provides for payment of quarterly guaranteed bonuses in the
amount of $17,500 and provides he is eligible for an annual bonus based on his
performance and our profitability.  The Compensation Committee has
approved the following perquisites for Mr. Rechner: a monthly car allowance,
country club dues, and health insurance reimbursement.





In
addition, from time to time during the year, our Compensation Committee may
approve the payment of discretionary bonuses to Mr. Rechner based on the
operation and/or financial performance of our investment banking business and
Mr. Rechner’s individual performance and contributions to
Tejas.  Our Compensation Committee has the discretion to determine
whether to pay and, if so, the amount of any such discretionary
bonuses.





Kurt
E. Morales





On June
1, 2006 we entered into an employment agreement with Mr. Morales.  Mr.
Morales’ agreement provides for an annual salary of $110,000.  Under
the terms of the agreement, we paid Mr. Morales a $10,000 bonus upon the
transfer of his NASD license to us.  In 2007, Mr. Morales assumed the
additional role of Chief Financial Officer of our broker-dealer subsidiary,
Tejas Securities Group, Inc. for which he received an increase to his annual
salary by $50,000.  The agreement also entitles him to receive a
severance payment equal to three months salary if we terminate his employment
for any reason other than for Cause.  Either party may terminate the
employment agreement at any time.  In addition, the employment
agreement will automatically terminate if Mr. Morales is disqualified as a
registered broker by the NASD.  The agreement also imposes
noncompetition obligations on Mr. Morales for the term of the agreement and
nonsolicitation obligations for one year following termination of his
employment.  The Compensation Committee has approved health insurance
reimbursement as a perquisite for Mr. Morales.





13
 Table of Contents




In
addition, from time to time during the year, our Compensation Committee may
approve the payment of discretionary bonuses to Mr. Morales based on the
performance of our treasury department and Mr. Morales’ individual
performance and contributions to Tejas.  Our Compensation Committee
has the discretion to determine whether to pay and, if so, the amount of any
such discretionary bonuses.





Grants
of Plan-Based Awards





No
non-equity incentive plan awards, equity incentive plan awards, stock options or
other stock awards were granted to any named executive officer during the year
ended December 31, 2007.





Outstanding
Equity Awards at Fiscal Year End





The
following table provides information concerning unexercised options held as of
December 31, 2007, by the named executive officers.





Option
      AwardsName
            
            Number
              of
              Securities
      Underlying Unexercised Options
              (#)
              Exercisable
            
            
            Number
              of
              Securities
      Underlying Unexercised Options
              (#)
              Unexercisable
            
            
            Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options
              (#)
            
            
            Option
      Exercise Price
              ($)
            
            Option
      Expiration Date(a)
            
            (b)
            
            
            (c)
            
            
            (d)
            
            
            (e)
            
            (f)John
      J. Gorman
            
            
            20,000
            (1)
            
            —
            
            
            —
            
            
            $
            1.25
            
            6/3/0820,000
            (1)
            
            —
            
            
            —
            
            
            $
            9.90
            
            11/8/0920,000
            (1)
            
            —
            
            
            —
            
            
            $
            1.25
            
            6/3/08125,000
            (1)
            
            —
            
            
            —
            
            
            $
            4.50
            
            5/10/09Kurt
      J. Rechner
            
            
            60,000
            (1)
            
            —
            
            
            —
            
            
            $
            9.00
            
            11/8/0920,000
            (1)
            
            —
            
            
            —
            
            
            $
            1.25
            
            6/3/08125,000
            (1)
            
            —
            
            
            —
            
            
            $
            4.50
            
            5/10/09Mark
      M. Salter
            
            
            20,000
            (1)
            
            —
            
            
            —
            
            
            $
            9.00
            
            11/8/09





(1)           This
stock option was fully vested as of December 31, 2007.





Option
Exercises and Stock Vested





No stock
option exercises by any named executive officer occurred during
2007.





Severance
and Change of Control Benefits





The
following sets forth potential payments payable to our named executive officers
upon the termination of employment under their current employment agreements and
a change of control.  The Compensation Committee may in its discretion
revise, amend or add to the benefits if it deems advisable (subject to the
agreement of the applicable named executive officer).





Mr.
Gorman is not entitled to any severance benefits.  Under the terms of
their employment agreements, Mr. Salter and Mr. Morales are entitled to
severance benefits equal to three months of their annual salary if terminated
for any reason other than for Cause.  Under the terms of his
employment agreement, Mr. Rechner is entitled to severance benefits equal to six
months of his annual salary if terminated for any reason other than for
Cause.  “Cause” is not defined in their employment
agreements.





14
 Table of Contents




Under the
terms of our 1999 stock option plan, if a “Change of Control” occurs, each
outstanding stock option under the plan will become exercisable during the
period beginning on the date of such Change of Control and ending on the
sixtieth day following such date.  The plan defines a “Change of
Control” as the occurrence of any of the following:





•
            any
      “person” or “group” (as defined in the Securities Exchange Act of 1934)
      other than (a) an employee benefit plan sponsored by us or (b) Mr. Gorman
      or any of his affiliates, becomes the “beneficial owner” (as defined in
      the Securities Exchange Act of 1934) of 50% or more of the outstanding
      shares of our stock entitled to vote for the election of our
      directors;


•
            any
      shares of our stock are purchased pursuant to a tender or exchange offer
      other than by us; or


•
            a
      dissolution, liquidation, merger or consolidation of us or any disposition
      of all or substantially all of our assets, if our stockholders immediately
      before such transaction own, immediately after consummation of such
      transaction, equity securities possessing less than 50% of the voting
      power of the surviving or acquiring
entity.





The
following table shows the potential payments upon termination or a change of
control as of December 31, 2007 for Mr. Gorman.





Cash
      Severance
            
            
            Value
      of Accelerated Equity  Awards
            
            
            TotalWithout
      cause
            
            
            —
            
            
            
            —
            
            
            
            —With
      cause, resignation, death or disability
            
            
            —
            
            
            
            —
            
            
            
            —Change
      of control
            
            
            —
            
            
            $
            —
            (a)
            
            $
            —
            (a)





(a)           Because
all of Mr. Gorman’s options were fully vested as of December 31, 2007, the value
associated with the acceleration of vesting of options upon a change of control
would be zero.








The
following table shows the potential payments upon termination or a change of
control as of December 31, 2007 for Mr. Salter.





Cash
      Severance
            
            
            Value
      of Accelerated Equity  Awards
            
            
            TotalWithout
      cause
            
            $
            45,000
            
            
            
            —
            
            
            $
            45,000With
      cause, resignation, death or disability
            
            
            —
            
            
            
            —
            
            
            
            —Change
      of control
            
            
            —
            
            
            $
            —
            (a)
            
            $
            —
            (a)





(a)           Because
all of Mr. Salter’s options were fully vested as of December 31, 2007, the value
associated with the acceleration of vesting of options upon a change of control
would be zero.





15
 Table of Contents





The
following table shows the potential payments upon termination or a change in
control as of December 31, 2007 for Mr. Rechner.





Cash
      Severance
            
            
            Value
      of Accelerated Equity Awards
            
            
            TotalWithout
      cause
            
            $
            127,500
            
            
            
            —
            
            
            $
            127,500With
      cause, resignation, death or disability
            
            
            —
            
            
            
            —
            
            
            
            —Change
      of control
            
            
            —
            
            
            $
            —
            (a)
            
            $
            —
            (a)





(a)           Because
all of Mr. Rechner’s options were fully vested as of December 31, 2007, the
value associated with the acceleration of vesting of options upon a change of
control would be zero.








The
following table shows the potential payments upon termination or a change in
control as of December 31, 2007 for Mr. Morales.





Cash
      Severance
            
            
            Value
      of Accelerated Equity  Awards
            
            
            TotalWithout
      cause
            
            $
            40,000
            
            
            
            —
            
            
            $
            40,000With
      cause, resignation, death or disability
            
            
            —
            
            
            
            —
            
            
            
            —Change
      of control
            
            
            —
            
            
            $
            —
            (a)
            
            $
            —
            (a)





(a)           Mr.
Morales held no stock options as of December 31, 2007.





1999
Stock Option Plan





In
October 1999, we adopted a stock option plan to strengthen our ability to
attract, motivate, compensate and retain employees, directors, and consultants
by providing a means for such persons to acquire a proprietary interest in us
and to participate in our growth through ownership of our common
stock.  The Compensation Committee of the board of directors
administers the Stock Option Plan; provided, however, that the board of
directors may also take all actions to administer the Stock Option Plan,
including granting options.





Shares
Subject to the Plan





Under the
Stock Option Plan, we can grant awards consisting of either incentive stock
options or nonqualified stock options for the purchase of shares of our common
stock.  In September 2004, our board of directors approved a
resolution to amend the Stock Option Plan to increase the maximum number of
shares issuable under the Stock Option Plan from 800,000 to
2,000,000.  That number will be adjusted automatically if the
outstanding shares of common stock are increased or decreased or changed into or
exchanged for a different number of shares or kind of shares or other securities
of the company or of another corporation, by reason of reorganization, split,
combination of shares, or a dividend payable in common
stock.  Equitable adjustments to the number of shares subject to each
award and to the payment required to obtain such shares will also be made so
that the same proportion of shares will be subject to the award and the
aggregate consideration to acquire all shares subject to the award will remain
as it was prior to such event as described in the previous
sentence.





During
2007, we granted options under the Plan to acquire 327,500 shares of common
stock, none of which were forfeited during the year.  No options
granted during 2007 were exercised or canceled.  Options to purchase
156,000 shares of common stock, issued prior to 2007, were forfeited during
2007.  No options to purchase shares of common stock, issued prior to
2006, were exercised during 2007.  We had 341,100 shares available for
issuance under the Plan as of December 31, 2007.





16
 Table of Contents




Eligibility





All of
our employees, directors and consultants are eligible to receive awards under
the Stock Option Plan, but only employees are eligible to receive incentive
stock options.  The Compensation Committee, as administrator of the
Stock Option Plan, determines the persons to whom stock option awards are to be
granted; whether an option will be an incentive stock option or nonqualified
stock option or both; the number of shares of our common stock subject to each
grant; and the time or times at which stock option awards will be granted and
the time or times of the exercise period, which shall not exceed the maximum
period described below.





Types
of Awards





Options
granted under the Stock Option Plan may be either options that are intended to
qualify for treatment as “incentive stock options” under Section 422 of the
Internal Revenue Code or options that are not, which are “nonqualified stock
options.”  The exercise price of incentive stock options must be at
least the fair market value of a share of the common stock on the date of grant,
and not less than 110% of the fair market value in the case of an incentive
stock option granted to an optionee owning 10% or more of our outstanding common
stock.  The aggregate fair market value of common stock (calculated on
the date of grant) with respect to which incentive stock options are exercisable
for the first time by an optionee during any calendar year shall not exceed
$100,000.  The term of an option may not exceed ten years (or five
years in the case of an incentive stock option granted to an optionee owning 10%
or more of our outstanding common stock).





Termination
of Awards





The Stock
Option Plan limits the time during which a holder of an option can exercise an
option to no more than ten years.  In addition, an optionee who leaves
our employment will generally have no more than three months to exercise an
option, reduced to zero days after employment is terminated for cause, and
additional rules apply to cases of death and permanent
disability.  Upon the occurrence of certain events which constitute a
change of control, all granted options shall become exercisable during the
period beginning on the date of the occurrence of the change of control and
ending 60 days later.  The Compensation Committee may, however,
override the Stock Option Plan’s rules, other than the ten year
limit.  We cannot grant additional options under the Stock Option Plan
after October 15, 2009, the tenth anniversary of its adoption.





Amendments
to Our Stock Option Plan





The board
of directors may amend or terminate the Stock Option Plan, as long as no
amendment or termination affects options previously granted.  However,
the plan requires stockholder approval of any amendment that increases the
number of shares available under the plan which may be issued as incentive stock
options or that modify the requirements as to eligibility to receive incentive
stock options under the plan.





Compensation
Committee





The
Compensation Committee of the board of directors was formed in October
1999.  The Compensation Committee consists of Michael F. Dura, Barry
A. Williamson and Dennis G. Punches.  The Compensation Committee met
seven times in 2007.  Messrs. Dura and Williamson each attended all of
these Compensation Committee meetings.  Mr. Punches attended six of
the meetings during 2007.  On March 29, 2004, the board of directors
adopted the Amended and Restated Charter of the Compensation
Committee.  A copy of this charter is available on our website at
www.tejs.com.





17
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The
Compensation Committee, in consultation with executive management and our
chairman, reviews and approves compensation to executive officers, including the
executive officers named in the summary compensation table.  The
Compensation Committee has the authority under its charter to engage the
services of outside advisors, experts and others to assist it.





In
performing its duties, the Compensation Committee:




·
              reviews
      all areas of executive compensation and recommends and approves
      compensation for all executives;
 ·
              administers
      our stock option plan;
 ·
              reviews
      and approves new employment agreements and amendments of existing
      employment agreements for executive
officers;
 ·
              issues
      an annual report on executive compensation for inclusion in our annual
      proxy statement;
 ·
              makes
      recommendations to the board with respect to incentive-compensation plans
      and equity-based plans; and
 ·
              performs
      such other functions as the board may from time to time assign to the
      Compensation Committee.




Our
chairman, chief executive officer, other members of our management and outside
advisors may be invited to attend all or a portion of a Compensation Committee
meeting depending on the nature of the agenda items.  Generally, our
chairman and executive management team attend Compensation Committee
meetings.  Neither our chief executive officer nor any other member of
management votes on items before the Compensation Committee; however, the
Compensation Committee and Board of Directors solicit the views of executive
management and our chairman on compensation matters as they relate to the
compensation of all executive officers and our chairman.  The
Compensation Committee also works with our executive management to determine the
agenda for each meeting.





Compensation
Committee Interlocks and Insider Participation





No member
of our Compensation Committee is an officer or employee of
ours.  There are no compensation committee interlock relationships
with respect to us.





Board
Compensation





Our board
compensation consists of both cash and common stock options.  Each
non-employee director receives an annual retainer of
$15,000.  Additionally, each director, whether an employee or not,
receives $1,000 per meeting of the board for his or her service on the board of
directors, plus health insurance benefits or a stipend equal to the value of
health insurance benefits provided to the other directors.  Directors
serving on committees of the board of directors receive $250 per committee
meeting, with the committee chair receiving $500 per committee
meeting.  We typically grant directors options to purchase up to
10,000 shares of common stock annually for serving on the board of directors,
with an exercise price equal to the fair market value (as defined in our 1999
stock option plan) on the date of grant and which vest one-third on the date of
grant and one-third on each of the first two anniversaries of the grant
date.  However, these option grants are not guaranteed.  In
March 2007, each non-employee director was granted an option to acquire 10,000
shares of our common stock on such terms.


18
 Table of Contents




The
following table summarizes board compensation for our non-employee directors for
the year ended December 31, 2007.





Name
            
            Fees
      Earned or Paid in Cash (1)
            
            
            Stock
      Awards
            
            
            Option
      Awards (2)(3)
            
            
            Non-Equity
      Incentive Plan Compensation
            
            
            Change
      in Pension Value and Nonqualified Deferred Compensation
      Earnings
            
            
            All
      Other
              Compensation
      (4)
            
            
            TotalMr.
      Dura
            
            $
            67,750
            
            
            
            —
            
            
            $
            41,381
            
            
            
            —
            
            
            
            —
            
            
            $
            12,040
            
            
            $
            121,171Mr.
      Punches
            
            $
            42,500
            
            
            
            —
            
            
            $
            17,608
            
            
            
            —
            
            
            
            —
            
            
            $
            3,900
            
            
            $
            64,008Mr.
      Inglehart
            
            $
            21,000
            
            
            
            —
            
            
            $
            17,608
            
            
            
            —
            
            
            
            —
            
            
            $
            3,900
            
            
            $
            42,508Mr.
      Mayer
            
            $
            20,000
            
            
            
            —
            
            
            $
            17,608
            
            
            
            —
            
            
            
            —
            
            
            $
            3,587
            
            
            $
            41,195Mr.
      Williamson
            
            $
            25,500
            
            
            
            —
            
            
            $
            8,575
            
            
            
            —
            
            
            
            —
            
            
            $
            11,919
            
            
            $
            45,994Mr.
      Wilson (5)
            
            $
            20,000
            
            
            
            —
            
            
            $
            17,608
            
            
            
            —
            
            
            
            —
            
            
            $
            12,040
            
            
            $
            49,648





(1)
            Comprised
      of $15,000 annual retainer for each director and meeting and committee
      fees for attendance throughout 2007.  Also included for Messrs.
      Dura and Punches are Special Committee fees of $45,000 and $20,000,
      respectively.





(2)
            In
      March 2007, each non-employee director was granted an option to purchase
      10,000 shares of our common stock, which vests one-third on the date of
      grant and one-third on each of the first two anniversaries of the date of
      grant.  The grant date fair value of each such option was
      $14,700 as calculated under FAS
123R.





(3)
            The
      amounts in the “Option Awards” column reflect the dollar amount recognized
      for financial statement reporting purposes for the year ended December 31,
      2007 in accordance with FAS 123R of stock options granted pursuant to our
      1999 stock option plan and thus include amounts from stock options granted
      in and prior to 2007.  Assumptions used in the calculation of
      the amount for 2007 are included in footnote 14 to our audited financial
      statements for the year ended December 31, 2007 included in our Annual
      Report on Form 10-K filed with the Securities and Exchange Commission on
      March 28, 2008.





(4)
            Comprised
      solely of payment of health insurance premiums for the benefit of such
      director and his family.





(5)
            Mr.
      Wilson resigned from the board of directors effective March 31,
      2008.








ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS





Security
Ownership of Certain Beneficial Owners and Management





The
following table provides information with respect to ownership of our common
stock at December 31, 2007 for:





·
            each
      beneficial owner of five percent or more of our common
    stock;


·
            each
      director;


·
            each
      of the named executive officers;
and


·
            all
      directors and officers as a group.





Except as
indicated on the footnotes to this table, the persons named in the table have
sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them. Options exercisable within 60 days
following December 31, 2007, and shares of our common stock into which our
series A preferred stock is convertible are included as shares beneficially
owned.  For purposes of calculating percent ownership as of December
31, 2007, 4,494,115 shares of our common stock were issued and outstanding and,
for any individual who beneficially owns shares represented by our series A
preferred stock or options exercisable within 60 days following December 31,
2007, these shares are treated as if outstanding for that person, but not for
any other person.





19
 Table of Contents








Name
      and Address
              of Beneficial Owner
            
            Number
            
            
            Percent
      Beneficially
              OwnedJohn
      J. Gorman(1) (2)
      (3)
            
            
            1,967,766
            
            
            
            43.4
            %Mark
      M. Salter(1)
      (4)
            
            
            366,740
            
            
            
            7.6
            %PAR
      Investment Partners, L.P.(9)
            
            
            252,682
            
            
            
            5.6
            %Kurt
      J. Rechner(1)
      (6)
            
            
            224,220
            
            
            
            4.8
            %Barry
      A. Williamson(1)
      (5)
            
            
            61,066
            
            
            
            1.4
            %Clark
      N. Wilson(1)
      (7)
            
            
            54,333
            
            
            
            1.2
            %William
      A. Inglehart(1)
      (7)
            
            
            53,333
            
            
            
            1.2
            %Charles
      H. Mayer(1)
      (8)
            
            
            33,333
            
            
            
            *Dennis
      G. Punches(1)
      (8)
            
            
            33,333
            
            
            
            *Michael
      F. Dura(1)
      (8)
            
            
            33,333
            
            
            
            *All
      executive officers and directors as a group (9 total)
            
            
            2,827,457
            
            
            
            53.1
            %


____________





*
            Less
      than 1%.





(1)
            The
      address for Messrs. Gorman, Salter, Rechner, Williamson, Wilson,
      Inglehart, Mayer, Punches and Dura is 8226 Bee Caves Road, Austin, Texas
      78746.




(2)
            Includes
      40,000 shares of common stock issuable pursuant to options granted under
      our 1999 Stock Option Plan (which we refer to as the Stock Option
      Plan).




(3)
            Mr.
      Gorman disclaims beneficial ownership of 359,532 shares, 179,766 shares of
      which are held in the name of the John Joseph Gorman V Trust and 179,766
      shares of which are held in the name of the Ryleigh Gorman Trust. Mr.
      Gorman’s wife, Tamra Gorman, serves as the Trustee of each
      trust.




(4)
            Includes
      165,000 shares of common stock issuable pursuant to options granted under
      the Stock Option Plan and 200,000 shares of common stock issuable upon the
      conversion of our Series A Preferred Stock owned by Salter Family
      Partners, Ltd., a family limited partnership controlled by Mr. Salter, as
      described below under “Certain Relationships and Related
      Transactions.”




(5)
            Includes
      16,666 shares of common stock issuable pursuant to options granted under
      the Stock Option Plan.




(6)
            Includes
      205,000 shares of common stock issuable pursuant to options granted under
      the Stock Option Plan.




(7)
            Includes
      53,333 shares of common stock issuable pursuant to options granted under
      the Stock Option Plan.




(8)
            Represents
      33,333 shares of common stock issuable pursuant to options granted under
      the Stock Option Plan.




(9)
            Based
      on the Schedule 13G filed on October 26, 2007 by PAR Investment Partners,
      L.P., the address for PAR Investment Partners, L.P. is One International
      Place, Suite 2401, Boston, MA
02110.


20
 Table of Contents


Equity
Compensation Plans





The
following table summarizes information about our equity compensation plans as of
December 31, 2007.





(a)
            
            
            (b)
            
            
            (c)Plan Category
            
            Number
      of Shares ofOur
      Common Stockto
      be Issued UponExercise
      ofOutstandingOptions,
      Warrantsand Rights
            
            
            Weighted
      AverageExercise
      Price of
              OutstandingOptions,
      Warrantsand Rights
            
            
            Number
      of Shares ofOur
      Common StockRemaining
      Availablefor
      Future IssuanceUnder
      EquityCompensation
      Plans(exceeding
      securitiesreflected
      in thecolumn (a))Equity
      compensation plans approved by our security holders
            
            
            1,402,335
            
            
            $
            8.23
            
            
            
            341,100Total
            
            
            1,402,335
            
            
            $
            8.23
            
            
            
            341,100








ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE





Independence
of Board Members





Our board
of directors has determined that Messrs. Dura, Williamson and Punches meet the
definition of “independence” set forth in Rule 4200(a)(15) of the NASDAQ listing
standards as well as the independence standards set forth in Rule 10A-3(b)(1) of
the Exchange Act.  In determining Mr. Williamson’s independence, the
board considered the fact that Mr. Williamson serves on the board of directors
of Green Builders, Inc., a company to which we have provided investment banking
services and leased certain office space.  More information regarding
these services is included in “Other Related Transactions” under “Certain
Relationships and Related Transactions.”  In addition, the board has
determined that Mr. Dura is an “audit committee financial expert” as that term
is defined by the rules and regulations of the SEC.  The board of
directors has also determined that Messrs. Inglehart and Mayer are not
“independent” under Rule 4200(a)(15) of the NASDAQ listing standards and under
Rule 10A-3(b)(1) of the Exchange Act, because Messrs. Inglehart and Mayer are
“Family Members” (as defined in Rule 4200(a)(14) of the NASDAQ listing
standards) of Mr. Gorman.  Mr. Gorman is not “independent” because he
is an employee of ours.  During his time on the board, Mr. Wilson was
not independent under Rule 4200(a)(15) of the NASDAQ listing standards and under
Rule 10A-3(b)(1) of the Exchange Act as a result of investment banking
transactions we completed on behalf of his company and a lease of certain office
space by us to his company.  For more information on such transactions
and lease, see “Other Related Transactions” under “Certain Relationships and
Related Transactions.”





Review,
Approval or Ratification of Transactions with Related Persons





Under the
charter of the audit committee, the audit committee is responsible for reviewing
and approving all related party transactions as defined under the American Stock
Exchange rules (which define related party transactions by reference to Item 404
of Regulation S-K).  Our management is responsible for identifying any
related party transactions and submitting them to the audit committee for
review.  The audit committee will review any related party
transactions on a case-by-case basis and determine whether or not to approve
such transactions.  Other than as set forth in the audit committee
charter, we have not adopted a written policy for the review of related party
transactions.





21
 Table of Contents





Notes
Payable and Preferred Stock





On
February 22, 2005, we purchased an office building through our wholly-owned
subsidiary, TI Building Partnership, Ltd.  The office building was
purchased at a price of approximately $3,470,000, with $2,200,000 being financed
through Community Credit Union, or CCU.  Pursuant to the terms of a
promissory note, this loan accrues interest at a rate of 5.75% per annum, with
monthly installments of $13,840 through February 2011, at which time the
outstanding principal and accrued interest on the note shall be due and
payable.  A mortgage on the building and the associated real property
secures the repayment of such borrowing.  In connection with this
acquisition, John J. Gorman, our Chairman, agreed to (1) indemnify CCU against
any losses incurred by CCU as a result of any violations of environmental laws
or certain building laws related to such real property and (2) provide a limited
guarantee of our performance under certain provisions of the deed of trust
entered into in connection with such financing.  The principal balance
of the promissory note was $2,087,961 as of December 31, 2007.





On July
7, 2004, we entered into a subordinated convertible promissory note agreement
with Salter Family Partners, Ltd., a family limited partnership controlled by
Mark M. Salter, our Chief Executive Officer, to borrow $1,000,000 for operating
purposes.  Under the terms of the promissory note, we were required to
make quarterly interest payments at a rate of 10% per annum.  The
promissory note was unsecured. The maturity date of the note was December 1,
2005, at which time all remaining unpaid principal and interest was to become
due.  The promissory note was convertible at any time into a number of
shares of our common stock equal to the unpaid principal divided by a conversion
price of $5.00 or a number of shares of our Series A Convertible Preferred Stock
equal to the unpaid principal divided by a conversion price of
$1,000.  On September 26, 2005, the Salter Partnership converted the
promissory note into 1,000 shares of our Series A convertible preferred
stock.  We have also granted the Salter Partnership certain piggyback
registration rights for the shares of our common stock into which the preferred
stock may be converted.





Under the
terms of our Series A convertible preferred stock (i) Salter Family Partners,
Ltd. is entitled to a 10% cumulative dividend, payable on a quarterly basis,
(ii) we may convert such preferred stock into common stock in the event our
common stock trades above $10.00 for ten consecutive trading days with a trading
volume of at least 50,000 shares for each such trading day, (iii) in the event
of a liquidation or dissolution of us, the preferred stock has a liquidation
preference over our common stock equal to $1,000 per share (or an aggregate
amount of $1,000,000), (iv) the preferred stock is convertible into common
stock, and (v) the preferred stock will vote on an as-converted basis with our
common stock on all matters requiring a stockholder vote except where a separate
class vote is required under the Delaware General Corporation Law.





We
believe that each of these agreements was negotiated on an arm’s-length
basis.





Officer
and Director Receivables





In
October 2001, John J. Gorman acquired the right to receive payment of a
liability of ours in the amount of $121,000 originally payable to a third
party.  The liability originated from the merger between us and Tejas
Securities Group, Inc. and is payable upon our successful listing on the Nasdaq
SmallCap Market.








Other
Related Transactions





Tejas
Securities entered into an engagement letter to place up to $7,000,000 principal
amount of debt securities on behalf of Green Builders, Inc., in which Mr. Wilson
beneficially owned approximately 69% of its outstanding common stock as of March
31, 2007 and is also the Chairman, Chief Executive Officer and
President.  Mr. Gorman beneficially owned approximately 17.2% of the
outstanding common stock of Green Builders, Inc. as of March 31,
2008.  The transaction was consummated on or about September 12,
2006.  Tejas Securities received a cash fee of $70,000 for placement
services, plus reimbursement for legal fees incurred and ancillary out of pocket
expenses.





On May
10, 2007, Green Builders, Inc. filed a registration statement under the
Securities Act of 1933 that registered 5,750,000 shares of common
shares.   Green Builders, Inc. retained the firm of Capital
Growth Financial, LLC to underwrite this registration of common
stock.   Tejas Securities Group, Inc. participated as a member of
the selling group that sold shares under this
registration.   Tejas Securities Group, Inc. was compensated as
part of the selling group.





22
 Table of Contents




As of
March 31, 2008, we held 445,213 shares of Green Builders, Inc. common
stock.





On
September 14, 2006, we leased office space in a building owned by our wholly
owned subsidiary TI Building Partnership, Ltd. to Green Builders,
Inc.  The lease commenced on October 1, 2006 and expires on September
30, 2009.  We sold this building on January 8, 2008 and assigned the
lease to the new owner.  The lease requires Green Builders, Inc. to
pay approximately $6,000 per month over the lease term plus Green Builders,
Inc.’s pro rata share of the building’s operating expenses as adjusted every
calendar year for the building’s actual operating expenses.





Many of
our employees, officers and management maintain personal accounts with
us.  When we execute securities transactions on behalf of our
employees, officers and management, those transactions are executed at current
market prices, plus execution costs.  All of our officers as well as
our Chairman of the Board, John J. Gorman, routinely conduct such transactions
for their own accounts, and we believe that such transactions are on an
arm’s-length basis. Mr. Gorman, who also beneficially owns 43.4% of our common
stock as of March 31, 2008, also makes many of our proprietary trading
decisions.





ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES





Independent
Registered Public Accounting Firm





Effective
October 6, 2004, we dismissed Ernst & Young LLP and engaged PMB Helin
Donovan, LLP as our Independent Registered Public Accounting Firm.  We
have reported the fees for our Independent Registered Public Accounting Firm
below during 2007 and 2006.





Audit Fees.  Fees
for services rendered by PMB Helin Donovan, LLP in connection with their audits
of our consolidated financial statements, quarterly reviews on Form 10-Q, and
reviews of other Securities and Exchange Commission filings for 2007 and 2006
were $88,652 and $88,635, respectively.





Audit Related
Fees.  Audit-related fees include assurance and related
services, such as reports on internal controls, and due diligence and related
services.  Fees for such services rendered by PMB Helin Donovan, LLP
were $38,635 for fiscal year 2007 and $0 for fiscal year 2006.





Tax
Fees.  Tax-related fees included tax compliance, tax advice and
tax planning.  Fees for such services rendered by PMB Helin Donovan,
LLP were $21,850 for fiscal year 2007 and $8,000 for fiscal year
2006.





All Other
Fees.  There were no fees for other services by our Independent
Registered Public Accounting Firm for fiscal years 2007 and 2006.





The Audit
Committee pre-approved all of the services described above under Audit Fees,
Audit-Related Fees and Tax Fees.





Pre-Approval
Policies and Procedures





The audit
committee’s policy is to pre-approve all audit and permissible non-audit
services provided by our Independent Registered Public Accounting
Firm.  Pre-approval is generally provided for up to one year and any
pre-approval is detailed as to the particular service or category of services
and is generally subject to a specific budget.  The audit committee
has delegated pre-approval authority to Mr. Dura when expedition of services is
necessary.





23
 Table of Contents





PART
IV





ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





1.
              Financial
      Statements


The
financial statements and financial statement schedules were included in our Form
10-K filed on March 28, 2008.





2.
            Exhibits


Incorporated
by reference to the Exhibit Index at the end of this report.


24
 Table of Contents


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.





TEJAS
      INCORPORATEDBy:
            /s/ Mark M.
      SalterMark
      M. SalterChief
      Executive Officer





Date:
April 28, 2008





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.





Signature
            
            Title
            
            Date/s/ John J.
      GormanJohn
      J. Gorman
            
            Chairman
      of the Board
            
            April
      28, 2008/s/ Mark M.
      SalterMark
      M. Salter
            
            Chief
      Executive Officer
            
            April
      28, 2008(Principal
      Executive Officer)/s/ Kurt J.
      RechnerKurt
      J. Rechner
            
            President,
      Chief Operating Officer,
            
            April
      28, 2008Chief
      Financial Officer (Principal Financial Officer), Treasurer and
      Secretary/s/ Kurt E.
      MoralesKurt
      E. Morales
            
            Director
      of Accounting
            
            April
      28, 2008(Principal
      Accounting Officer)/s/ Michael F.
      DuraMichael
      F. Dura
            
            Vice-Chairman
      of the Board
            
            April
      28, 2008/s/ William A.
      InglehartWilliam
      A. Inglehart
            
            Director
            
            April
      28, 2008/s/ Dennis G.
      PunchesDennis
      G. Punches
            
            Director
            
            April
      28, 2008/s/ Charles H.
      MayerCharles
      H. Mayer
            
            Director
            
            April
      28, 2008/s/ Barry A.
      WilliamsonBarry
      A. Williamson
            
            Director
            
            April
      28, 2008


25
 Table of Contents




(a)
            Exhibits:





Exhibit
              Number
            
            Description of Exhibits3.1
            
            Certificate
      of Incorporation (Incorporated herein by reference to Exhibit 4.1 to the
      registrant’s Current Report on Form 8-K filed on May 2,
      2001).3.2
            
            Bylaws
      (Incorporated herein by reference to Exhibit 4.2 to the registrant’s
      Current Report on Form 8-K filed on May 2, 2001).3.3
            
            Certificate
      of Amendment to Certificate of Incorporation (Incorporated herein by
      reference to Exhibit 3.3 to the registrant’s Current Report on Form 8-K
      filed on June 25, 2001).3.4
            
            Certificate
      of Amendment to Certificate of Incorporation (Incorporated herein by
      reference to Exhibit 3.4 to the registrant’s Current Report on Form 8-K
      filed on June 20, 2002).3.5
            
            Certificate
      of Ownership and Merger Merging Tejas Incorporated into Westech Capital
      Corp. (Incorporated herein by reference to Exhibit 3.5 to the registrant’s
      Registration Statement on Form S-1, filed on December 22,
      2004).3.6
            
            Certificate
      of Amendment to Certificate of Incorporation (Incorporated herein by
      reference to Exhibit 99.1 to the registrant’s Current Report on Form 8-K
      filed on June 30, 2005).3.7
            
            Certificate
      of Designations for Series A Convertible Preferred Stock (Incorporated
      herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2005).10.1†
            
            First
      Amended and Restated Westech Capital Corp. 1999 Stock Option Plan
      (Incorporated herein by reference to Exhibit 10.1 to the registrant’s
      Annual Report on Form 10-K for the year ended December 31,
      2002).10.2†
            
            Form
      of Incentive Stock Option Agreement (Incorporated herein by reference to
      Exhibit 10.3 to the registrant’s Registration Statement on Form 10-12(g))
      (File No. 000-29235).10.3†
            
            Form
      of Nonqualified Stock Option Agreement (Incorporated herein by reference
      to Exhibit 10.4 to the registrant’s Registration Statement on Form
      10-12(g)) (File No. 000-29235).10.4†
            
            Employment
      and Confidentiality Agreement, dated as of June 1, 2004, between Westech
      Capital Corp. and Kurt J. Rechner (Incorporated herein by reference to
      Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the
      quarter ended June 30, 2004).10.5†
            
            Employment
      and Confidentiality Agreement, dated as of June 1, 2004, between Westech
      Capital Corp. and John F. Garber (Incorporated herein by reference to
      Exhibit 10.4 to the registrant’s Quarterly Report on Form 10-Q for the
      quarter ended June 30, 2004).10.6
            
            Agreement,
      dated December 3, 2001, with Correspondent Services Corporation
      (Incorporated herein by reference to Exhibit 10.9 to the registrant’s
      Annual Report on Form 10-K for the year ended December 31,
      2001).10.7†
            
            Employment
      and Confidentiality Agreement, dated as of June 1, 2004, between Westech
      Capital Corp. and Mark M. Salter (Incorporated herein by reference to
      Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the
      quarter ended June 30, 2004).10.8
            
            Agreement,
      dated as of October 15, 2004, between Seton Securities Group, Inc.,
      Charles H. Mayer, Westech Capital Corp., and Tejas Securities Group, Inc.
      (Incorporated herein by reference to Exhibit 10.2 to the registrant’s
      Current Report on Form 8-K filed on November 9,
  2004).




26
 Table of Contents




Exhibit
              Number
            
            Description of Exhibits


10.9
            
            Agreement
      Regarding Contract between Blake Byram and TI Building Partnership, Ltd.
      (Incorporated herein by reference to Exhibit 10.1 to the Registrant’s
      Current Report on Form 8-K filed on February 18, 2005).10.10
            
            Real
      Estate Purchase and Sale Agreement, and the first and second amendments
      thereto, between Blake Byram and 8226 Bee Caves, Ltd. (Incorporated herein
      by reference to Exhibit 10.2 to the Registrant’s Current Report on Form
      8-K filed on February 18, 2005).10.11
            
            Promissory
      Note, dated February 22, 2005, made by TI Building Partnership, Ltd. for
      the benefit of Community Credit Union (Incorporated herein by reference to
      Exhibit 10.16 to the registrant’s Annual Report on Form 10-K for the year
      ended December 31, 2004).10.12†
            
            First
      Amendment to First Amended and Restated Stock Option Plan (Incorporated
      herein by reference to Exhibit 10.1 to the registrant’s Current Report on
      Form 8-K filed on November 9, 2004).10.13
            
            Piggy-back
      Registration Rights Agreement, dated as of July 7, 2004, by and between
      Westech Capital Corp. and Salter Family Partners, Ltd. (Incorporated
      herein by reference to Exhibit 10.1 to the registrant's Quarterly Report
      on Form 10-Q for the quarter ended June 30, 2004).10.14
            
            Assignment
      of Purchase and Sale Agreement between CNW2, Inc. and TI Building
      Partnership, Ltd. (Incorporated herein by reference to Exhibit 10.1
      to the registrant’s Current Report on Form 8-K filed on
      April 25, 2005).10.15
            
            Purchase
      and Sale Agreement, between Catalyst Development II, L.P. and CNW2, Inc.
      (Incorporated herein by reference to Exhibit 10.2 to the registrant’s
      Current Report on Form 8-K filed on April  25,
      2005).10.16
            
            Promissory
      Note, dated May 9, 2005, made by TI Building Partnership, Ltd. for
      the benefit of First United Bank (Incorporated herein by reference to
      Exhibit 10.6 to the registrant’s Quarterly Report on Form 10-Q
      for the quarter ended March 31, 2005).10.17
            
            Non-Compete
      Agreement, dated as of July 1, 2005, by and between Tejas
      Incorporated and John Gorman (Incorporated herein by reference to
      Exhibit 10.8 to the registrant’s Current Report on Form 8-K
      filed on July 8, 2005).10.18
            
            Employment
      Agreement dated June 1, 2006 by and between Tejas Incorporated and Kurt E.
      Morales (Incorporated herein by reference to Exhibit 10.1 to the
      registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
      2006).10.19
            
            Purchase
      Agreement dated October 1, 2006 by and among Tejas Incorporated, Capital
      & Technology Advisors, Inc. and the persons and entities listed on the
      signature page thereto (Incorporated herein by reference to Exhibit 10.1
      to the registrant’s Current Report on Form 8-K filed on October 5,
      2006).21.1**
            
            Subsidiaries
      of the Registrant23.1*
            
            Consent
      of PMB Helin Donovan, LLP, Independent Registered Public Accounting
      Firm31.1*
            
            Certification
      of Chief Executive Officer under Securities Exchange Act Rules 13a-14 or
      15d-1431.2*
            
            Certification
      of Chief Financial Officer under Securities Exchange Act Rules 13a-14 or
      15d-1432.1**
            
            Certifications
      of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 200232.2**
            
            Certifications
      of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002





____________


*
            Filed
      herewith.


**
            Filed
      with the Company’s Annual Report on form 10-K filed with the SEC on
      March 28, 2008.


†
            Management
      contract or compensatory plan or
arrangement.






27