UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 FORM
10-K/A
 (Amendment
No. 2)
 
 T
              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 Number     0-28488
 
 ZONES,
INC
 (Exact
name of registrant as specified in its charter)
 
 Washington
              
              91-1431894(State
      of Incorporation)
              
              (I.R.S.
      Employer Identification Number)1102
      15th
      Street SW, Suite 102Auburn,
      Washington
              
              98001-6509(Address
      of Principal Executive Offices)
              
              (Zip
      Code)
 (253)
205-3000
 (Registrant's
Telephone
 Number,
Including Area Code)
 
 Securities
registered pursuant to Section 12(b) of the Act: Common Stock
 Securities
registered pursuant to Section 12(g) of the Act: None
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes £No T
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.   Yes £No T
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes TNo £
 Indicate
by check mark if disclosure of delinquent filers pursuant to item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. T
 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 £
                Smaller
      reporting company T
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes £No T
 
 The
aggregate market value of the Common Stock held by non-affiliates as of the
registrant’s most recently completed second fiscal quarter, June 30, 2007, was
approximately $55,246,950, based upon the last sales price per share of $9.00 as
reported by the NASDAQ Global Market.
 
 The
number of shares of the registrant's Common Stock outstanding as of February 27,
2008 was 13,158,595.
  
 
  EXPLANATORY NOTE
 
 Zones,
Inc (the “Company,”) is filing this Amendment No. 2 on Form 10-K/A (this
“Amendment”) to its Annual Report on Form 10-K for the fiscal year ended
December 31, 2007, which was originally filed on March 3, 2008 (the “Original
Filing”), and was amended by Amendment No. 1 to Form 10-K filed on August
12, 2008.  The purpose of the Amendment is to amend and restate Item
9A in its entirety. As disclosed below, Item 9A revises management’s conclusions
regarding the effectiveness of the Company's disclosure controls and procedures
as of December 31, 2007 solely as a result of its failure to file management’s
annual report on internal control over financial reporting in the Original
Filing.
  Except
for the matters disclosed in Item 9A and Exhibits 31.1 and 31.2, this amendment
does not modify, amend or update in any way any other item or disclosure in the
Original Filing. The Original Filing continues to speak as of its date, and we
have not updated the disclosures therein to reflect any events that occurred at
a date subsequent to the filing of the Original Filing.
  2
  Part II.
 
 Item 9A(T).
Controls and Procedures
 
 Disclosure
Controls and Procedures
 
 Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”).   Based on this
evaluation, our principal executive officer and principal financial officer
concluded that, as of December 31, 2007, our disclosure controls and procedures
were not effective based solely on the inadvertent omission of the required
management’s report on internal control over financial reporting in our Original
Filing.
 
 Management’s
Report on Internal Control over Financial Reporting
 
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act
13a-15(f)   Under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in
Internal Control —
Integrated Framework. Based on this evaluation under the framework in
Internal Control – Integrated
Framework, our management concluded that our internal control over
financial reporting was effective as of December 31, 2007.
 
 Management’s
internal control report was not subject to attestation by our independent
registered public accounting firm pursuant to the temporary rules of the
Securities and Exchange Commission that permit us to provide only management’s
report in this assessment.
 
 Inherent
Limitations Over Internal Controls
 
 Our
internal control over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of consolidated financial statements for external purposes in accordance with
generally accepted accounting principles. Our internal control over financial
reporting includes those policies and procedures that:
 
 i.           pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets;
 
 ii.          provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of consolidated financial statements in accordance with generally
accepted accounting principles, and that our receipts and expenditures are being
made only in accordance with authorizations of our management and directors;
and
 
 iii.         provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on the consolidated financial statements.
 
 Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations, including
the possibility of human error and circumvention by collusion or overriding of
controls. Accordingly, even an effective internal control system may not prevent
or detect material misstatements on a timely basis. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions or that the
degree of compliance with the policies or procedures may
deteriorate.
 
 Changes in Internal Control over
Financial Reporting
 
 There
have been no changes in our internal control over financial reporting during the
fourth fiscal quarter of 2007 that materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.
  3
  Part IV
 
 Item
15.                      Exhibits and Financial
Statement Schedules
 (b)  Exhibits:
 
 Exhibit
                                                    No.
                                                  Description
                                                  Filed
                                                    Herewith
                                                  Incorporated
      by ReferenceForm
                                                  Exhibit
      No.
                                                  File
      No.
                                                  Filing
      Date31.1
                                                  Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 and the regulations promulgated thereunder
                                                  X31.2
                                                  Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 and the regulations promulgated thereunder
                                                  X
  4
  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.
 
 ZONES,
INC.
 
 Date:  October
15, 2008
 By:
                  /S/     FIROZ
      H. LALJIFiroz
      H. Lalji, Chairman and Chief Executive Officer/S/     RONALD
      P. MCFADDENRonald
      P. McFadden, Chief Financial
Officer
 
 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 date indicated.
 
 Signature
                
                Title
                
                Date/S/     JOHN
      H. BAUER*
                
                Director
                
                October
      15, 2008John
      H. Bauer/S/     CATHI
      HATCH*
                
                Director
                
                October
      15, 2008Cathi
      Hatch/S/     WILLIAM
      C. KEIPER*
                
                Director
                
                October
      15, 2008William
      C. Keiper/S/     KENNETH
      M. KIRKPATRICK*
                
                Director
                
                October
      15, 2008Kenneth
      M. Kirkpatrick/S/     FIROZ
      H. LALJI
                
                Director
                
                October
      15, 2008Firoz
      H. Lalji
 
 *
Ronald P. McFadden, as attorney in fact






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