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ER

| Part                  I.  | Financial                  Information |                                                                                                                                                                    |   |
|---------------------------|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  1.               | Financial                  Statements:                                                                                                                                  | Page   |
|                      |                                   |                                                                                                                                                                    |   |
|                      |                                   | Consolidated                  Balance Sheets as of  October                  5,  2007 and January 5, 2007                                           | 1      |
|                      |                                   | Consolidated                  Statements of Operations for the Three Months                  Ended  October 5, 2007 and  2006                       | 3      |
|                      |                                   | Consolidated                  Statements of Comprehensive Income (Loss) for the                  Three Months Ended  October 5, 2007 and 2006                 | 4      |
|                      |                                   | Consolidated                  Statements of Operations for the Nine Months                  Ended October 5, 2007 and  2006                                   | 5      |
|                      |                                   | Consolidated                  Statements of Comprehensive Income (Loss) for                  the Nine Months Ended  October 5, 2007 and                  2006 | 6      |
|                      |                                   | Consolidated                  Statements of Cash Flows for the Nine Months                  Ended October 5, 2007 and  2006                                   | 7      |
|                      |                                   | Notes                  to Consolidated Financial                  Statements                                                                                            | 8      |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  2.               | Management's                  Discussion and Analysis of Financial Condition and                  Results of Operations                                                 | 14     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  3.               | Quantitative                  and Qualitative Disclosure about Market                  Risk                                                                             | 21     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  4.               | Controls                  and Procedures                                                                                                                                | 21     |
| Part                  II. |                                   |                                                                                                                                                                    |   |
|                      | Other                  Information     |                                                                                                                                                                    |   |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  1.               | Legal                  Proceedings                                                                                                                                      | 22     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  1A.              | Risk                  Factors                                                                                                                                           | 22     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  2.               | Unregistered                  Sales of Equity Securities and Use of                  Proceeds                                                                           | 23     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  3.               | Defaults                  Upon Senior Securities                                                                                                                        | 23     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  4.               | Submission                  of Matters to a Vote of Security                  Holders                                                                                   | 23     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  5.               | Other                  Information                                                                                                                                      | 24     |
|                      |                                   |                                                                                                                                                                    |   |
|                      | Item                  6.               | Exhibits                                                                                                                                                                | 24     |
|                      |                                   |                                                                                                                                                                    |   |
| SIGNATURE       | 26                                     |

----

*Table            of Contents*

**POMEROY        IT SOLUTIONS, INC**

**CONSOLIDATED        BALANCE SHEETS**

**UNAUDITED)**

| (in                  thousands)                                                                       |   | October                  5, |    |   | January                  5, |   |
|-------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|-----------------------------|--------|
|                                                                                                  |   | 2007                        |    |   | 2007                        |   |
| **ASSETS**                                                                                            |   |                        |    |   |                        |   |
|                                                                                                  |   |                        |    |   |                        |   |
| Current                  Assets:                                                                      |   |                        |    |   |                        |   |
| Cash                  and cash equivalents                                                            |   | $                           | 5,728   |   |                        | $      | 13,562 |   |
| Certificates                  of deposit                                                              |   |                        | 1,103   |   |                        |   | 1,076 |   |
|                                                                                                  |   |                        |    |   |                        |   |   |   |
| Accounts                  receivable:                                                                 |   |                        |    |   |                        |   |   |   |
| Trade,                  less allowance of  $3,447 and $4,390,                  respectively |   |                        | 130,608 |   |                        |   | 139,225 |   |
| Vendor,                  less allowance of $355 and $155, respectively                                |   |                        | 9,534   |   |                        |   | 8,095 |   |
| Net                  investment in leases                                                             |   |                        | 841     |   |                        |   | 1,587 |   |
| Other                                                                                                 |   |                        | 762     |   |                        |   | 1,367 |   |
| Total                  receivables                                                                    |   |                        | 141,745 |   |                        |   | 150,274 |   |
|                                                                                                  |   |                        |    |   |                        |   |   |   |
| Inventories                                                                                           |   |                        | 19,709  |   |                        |   | 16,274 |   |
| Other                                                                                                 |   |                        | 11,927  |   |                        |   | 10,791 |   |
| Total                  current assets                                                                 |   |                        | 180,212 |   |                        |   | 191,977 |   |
|                                                                                                  |   |                        |    |   |                        |   |   |   |
| Equipment                  and leasehold improvements:                                                |   |                        |    |   |                        |   |   |   |
| Furniture,                  fixtures and equipment                                                    |   |                        | 19,660  |   |                        |   | 22,540 |   |
| Leasehold                  improvements                                                               |   |                        | 8,583   |   |                        |   | 8,459 |   |
| Total                                                                                                 |   |                        | 28,243  |   |                        |   | 30,999 |   |
|                                                                                                  |   |                        |    |   |                        |   |   |   |
| Less                  accumulated depreciation                                                        |   |                        | 19,037  |   |                        |   | 18,406 |   |
| Net                  equipment and leasehold improvements                                             |   |                        | 9,206   |   |                        |   | 12,593 |   |
|                                                                                                  |   |                        |    |   |                        |   |   |   |
| Net                  investment in leases, net of current portion                                     |   |                        | 11      |   |                        |   | 42 |   |
| Goodwill                                                                                              |   |                        | -       |   |                        |   | 98,314 |   |
| Intangible                  assets, net                                                               |   |                        | 2,160   |   |                        |   | 2,634 |   |
| Other                  assets                                                                         |   |                        | 11,875  |   |                        |   | 3,403 |   |
| Total                  assets                                                                         |   | $                           | 203,464 |   |                        | $      | 308,963 |   |

----

*Table            of Contents*

**POMEROY        IT SOLUTIONS, INC.**

**CONSOLIDATED        BALANCE SHEETS**

**UNAUDITED)**

| (in                  thousands)                                                                                                                                                                                              |   |                            |    |   |                            |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|---------|--------|---------------------------------|--------|
|                                                                                                                                                                                                                         |   | October                  5,2007 |    |   | January                  5,2007 |   |
| **LIABILITIES                  AND EQUITY**                                                                                                                                                                                  |   |                            |    |   |                            |   |
|                                                                                                                                                                                                                         |   |                            |    |   |                            |   |
| Current                  Liabilities:                                                                                                                                                                                        |   |                            |    |   |                            |   |
| Accounts                  payable                                                                                                                                                                                            |   | $                               | 67,946  |   |                            | $      | 74,726 |   |
| Deferred                  revenue                                                                                                                                                                                            |   |                            | 2,307   |   |                            |   | 2,604 |   |
| Employee                  compensation and benefits                                                                                                                                                                          |   |                            | 6,836   |   |                            |   | 8,642 |   |
| Accrued                  facility closing cost and other liability                                                                                                                                                           |   |                            | 1,295   |   |                            |   | 1,286 |   |
| Other                  current liabilities                                                                                                                                                                                   |   |                            | 9,141   |   |                            |   | 14,412 |   |
| Total                  current liabilities                                                                                                                                                                                   |   |                            | 87,525  |   |                            |   | 101,670 |   |
|                                                                                                                                                                                                                         |   |                            |    |   |                            |   |   |   |
| Accrued                  facility closing cost and other liability                                                                                                                                                           |   |                            | 1,383   |   |                            |   | 2,313 |   |
|                                                                                                                                                                                                                         |   |                            |    |   |                            |   |   |   |
| Equity:                                                                                                                                                                                                                      |   |                            |    |   |                            |   |   |   |
| Preferred                  stock, $.01 par value; authorized 2,000 shares (no shares issued or                  outstanding)                                                                                            |   |                            | -       |   |                            |   | -  |   |
| Common                  stock, $.01 par value; authorized 20,000 shares (13,513 and 13,476                  shares                  issued at October 5, 2007  and January 5, 2007,                  respectively) |   |                            | 138     |   |                            |   | 137 |   |
| Paid-in                  capital                                                                                                                                                                                             |   |                            | 90,868  |   |                            |   | 89,992 |   |
| Accumulated                  other comprehensive income (loss)                                                                                                                                                               |   |                            | (60     | )      |                            |   | 15 |   |
| Retained                  earnings                                                                                                                                                                                           |   |                            | 35,612  |   |                            |   | 126,433 |   |
|                                                                                                                                                                                                                         |   |                            | 126,558 |   |                            |   | 216,577 |   |
| Less                  treasury stock, at cost (1,177 and 1,130 shares at October 5, 2007                  and                  January 5, 2007)                                                                              |   |                            | 12,002  |   |                            |   | 11,597 |   |
| Total                  equity                                                                                                                                                                                                |   |                            | 114,556 |   |                            |   | 204,980 |   |
| Total                  liabilities and equity                                                                                                                                                                                |   | $                               | 203,464 |   |                            | $      | 308,963 |   |

----

*Table            of Contents*

**POMEROY        IT SOLUTIONS, INC.**

**CONSOLIDATED        STATEMENTS OF OPERATIONS**

**UNAUDITED)**

| (in                  thousands, except per share data)                                                                                                                                                                                                                                                                                           |   | Three                  Months Ended |     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|
|                                                                                                                                                                                                                                                                                                                                             |   | October                  5,         |     |   | October                  5, |   |
|                                                                                                                                                                                                                                                                                                                                             |   | 2007                                |     |   | 2006 |   |
| Product                  and service revenues:                                                                                                                                                                                                                                                                                                   |   |                                |     |   |   |   |
| Product                                                                                                                                                                                                                                                                                                                                          |   | $                                   | 96,495   |   |   | $ | 93,678 |   |
| Service                                                                                                                                                                                                                                                                                                                                          |   |                                | 56,219   |   |   |   | 61,255 |   |
| Total                  revenues                                                                                                                                                                                                                                                                                                                  |   |                                | 152,714  |   |   |   | 154,933 |   |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| Cost                  of product and service revenues:                                                                                                                                                                                                                                                                                           |   |                                |     |   |   |   |   |   |
| Product                                                                                                                                                                                                                                                                                                                                          |   |                                | 87,282   |   |   |   | 86,307 |   |
| Service                                                                                                                                                                                                                                                                                                                                          |   |                                | 44,702   |   |   |   | 45,966 |   |
| Total                  cost of revenues                                                                                                                                                                                                                                                                                                          |   |                                | 131,984  |   |   |   | 132,273 |   |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| Gross                  profit                                                                                                                                                                                                                                                                                                                    |   |                                | 20,730   |   |   |   | 22,660 |   |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| Operating                  expenses:                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| Selling,                  general and administrative                                                                                                                                                                                                                                                                                             |   |                                | 20,344   |   |   |   | 19,                  482 |   |
| Depreciation                  and amortization                                                                                                                                                                                                                                                                                                   |   |                                | 1,367    |   |   |   | 1,250 |   |
| Goodwill                  impairment                                                                                                                                                                                                                                                                                                             |   |                                | 98,314   |   |   |   | 3,472 |   |
| Bad                  debt                                                                                                                                                                                                                                                                                                                        |   |                                | 2,413    |   |   |   | - |   |
| Loss                  on asset disposal                                                                                                                                                                                                                                                                                                          |   |                                | 1,828    |   |   |   | 22 |   |
| Other                                                                                                                                                                                                                                                                                                                                            |   |                                | -        |   |   |   | 89 |   |
| Total                  operating expense                                                                                                                                                                                                                                                                                                         |   |                                | 124,266  |   |   |   | 24,315 |   |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| (Loss)                  from operations                                                                                                                                                                                                                                                                                                          |   |                                | (103,536 | ) |   |   | (1,655 | ) |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| Interest                  Income                                                                                                                                                                                                                                                                                                                 |   |                                | 169      |   |   |   | 124 |   |
| Interest                  Expense                                                                                                                                                                                                                                                                                                                |   |                                | (98      | ) |   |   | (128 | ) |
| Interest                  income (expense), net                                                                                                                                                                                                                                                                                                  |   |                                | 71       |   |   |   | (4 | ) |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| (Loss)                  before income tax (benefit)                                                                                                                                                                                                                                                                                              |   |                                | (103,465 | ) |   |   | (1,659 | ) |
| Income                  tax (benefit)                                                                                                                                                                                                                                                                                                            |   |                                | (11,671  | ) |   |   | (647 | ) |
| Net                  (loss)                                                                                                                                                                                                                                                                                                                      |   | $                                   | (91,794  | ) |   | $ | (1,012 | ) |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| Weighted                  average shares outstanding:                                                                                                                                                                                                                                                                                            |   |                                |     |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                            |   |                                | 12,335   |   |   |   | 12,591 |   |
| Diluted                                                                                                                                                                                                                                                                                                                                          |   |                                | 12,335   | * |   |   | 12,591 |   |
|                                                                                                                                                                                                                                                                                                                                             |   |                                |     |   |   |   |   |   |
| Earnings                  (loss) per common share:                                                                                                                                                                                                                                                                                               |   |                                |     |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                            |   | $                                   | (7.44    | ) |   | $ | (0.08 | ) |
| Diluted                                                                                                                                                                                                                                                                                                                                          |   | $                                   | (7.44    | )* |   | $ | (0.08 | ) |
|  *Dilutive                  loss per common share for the three months ended October 5, 2007 and                  2006 would have been anti-dilutive if the number                  of weighted average shares outstanding was adjusted to reflect                  the                  dilutive effect of outstanding stock options. |   |

----

*Table            of Contents*

**POMEROY        IT SOLUTIONS, INC.**

**CONSOLIDATED        STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**

**UNAUDITED)**

| (in                  thousands)                          |   | Three                  Months Ended |                         |
|----------------------------------------------------------|--------|-------------------------------------|------------------------------|
|                                                     |   | October                  5,         |                         |   | October                  5, |   |
|                                                     |   | 2007                                |                         |   | 2006 |   |
| Net                  (loss)                              |   | $                                   | (91,794                      | ) |   | $ | (1,012 | ) |
| Other                  comprehensive income (loss):      |   |                                |                         |   |   |   |   |   |
| Foreign                  currency translation adjustment |   |                                | 3                            |   |   |   | (1 | ) |
|                                                     |   |                                |                    |   |   |   |                     |   |
| Comprehensive                  (loss)                    |   | $                                   | (91,791                      | ) |   | $ | (1,013 | ) |

----

*Table            of Contents*

**POMEROY        IT SOLUTIONS, INC.**

**CONSOLIDATED        STATEMENTS OF OPERATIONS**

**UNAUDITED)**

| (in                  thousands)                                                                                                                                                                                                                                                                                                                             |   | Nine                  Months Ended |                          |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|-------------------------------|
|                                                                                                                                                                                                                                                                                                                                                        |   | October                  5,        |                          |   | October                  5, |   |
|                                                                                                                                                                                                                                                                                                                                                        |   | 2007                               |                          |   | 2006 |   |
| Product                  and service revenues:                                                                                                                                                                                                                                                                                                              |   |                               |                          |   |   |   |
| Product                                                                                                                                                                                                                                                                                                                                                     |   | $                                  | 280,305                       |   |   | $ | 274,636 |   |
| Service                                                                                                                                                                                                                                                                                                                                                     |   |                               | 171,020                       |   |   |   | 195,107 |   |
| Total                  revenues                                                                                                                                                                                                                                                                                                                             |   |                               | 451,325                       |   |   |   | 469,743 |   |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Cost                  of product and service revenues:                                                                                                                                                                                                                                                                                                      |   |                               |                          |   |   |   |   |   |
| Product                                                                                                                                                                                                                                                                                                                                                     |   |                               | 255,393                       |   |   |   | 252,614 |   |
| Service                                                                                                                                                                                                                                                                                                                                                     |   |                               | 129,476                       |   |   |   | 148,650 |   |
| Total                  cost of revenues                                                                                                                                                                                                                                                                                                                     |   |                               | 384,869                       |   |   |   | 401,264 |   |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Gross                  profit                                                                                                                                                                                                                                                                                                                               |   |                               | 66,456                        |   |   |   | 68,479 |   |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Operating                  expenses:                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Selling,                  general and administrative                                                                                                                                                                                                                                                                                                        |   |                               | 61,720                        |   |   |   | 61,045 |   |
| Depreciation                  and amortization                                                                                                                                                                                                                                                                                                              |   |                               | 3,636                         |   |   |   | 3,819 |   |
| Goodwill                  impairment                                                                                                                                                                                                                                                                                                                        |   |                               | 98,314                        |   |   |   | 3,472 |   |
| Bad                  debt                                                                                                                                                                                                                                                                                                                                   |   |                               | 3,063                         |   |   |   | 190 |   |
| Loss                  on asset disposal                                                                                                                                                                                                                                                                                                                     |   |                               | 1,828                         |   |   |   | 34 |   |
| Other                                                                                                                                                                                                                                                                                                                                                       |   |                               |                   - |   |   |   | 99 |   |
| Total                  operating expenses                                                                                                                                                                                                                                                                                                                   |   |                               | 168,561                       |   |   |   | 68,659 |   |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| (Loss)                  from operations                                                                                                                                                                                                                                                                                                                     |   |                               | (102,105                      | ) |   |   | (180 | ) |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Interest                  Income                                                                                                                                                                                                                                                                                                                            |   |                               | 699                           |   |   |   | 431 |   |
| Interest                  Expense                                                                                                                                                                                                                                                                                                                           |   |                               | (367                          | ) |   |   | (906 | ) |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Interest                  income (expense), net                                                                                                                                                                                                                                                                                                             |   |                               | 332                           |   |   |   | (475 | ) |
| (Loss)                  before income tax (benefit)                                                                                                                                                                                                                                                                                                         |   |                               | (101,773                      | ) |   |   | (655 | ) |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Income                  tax (benefit)                                                                                                                                                                                                                                                                                                                       |   |                               | (10,952                       | ) |   |   | (255 | ) |
|                                                                                                                                                                                                                                                                                                                                                        |   |                               |                          |   |   |   |   |   |
| Net                  (loss)                                                                                                                                                                                                                                                                                                                                 |   | $                                  | (90,821                       | ) |   | $ | (400 | ) |
| Weighted                  average shares outstanding:                                                                                                                                                                                                                                                                                                       |   |                               |                          |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                       |   |                               | 12,338                        |   |   |   | 12,611 |   |
| Diluted                                                                                                                                                                                                                                                                                                                                                     |   |                               | 12,338                        | * |   |   | 12,611 | * |
| (Loss)                  per common share:                                                                                                                                                                                                                                                                                                                   |   |                               |                          |   |   |   |   |   |
| Basic                                                                                                                                                                                                                                                                                                                                                       |   | $                                  | (7.36                         | ) |   | $ | (0.03 | ) |
| Diluted                                                                                                                                                                                                                                                                                                                                                     |   | $                                  | (7.36                         | )* |   | $ | (0.03 | )* |
|  *Dilutive                  loss per common share for the nine months ended October 5, 2007                  and 2006                  would have been anti-dilutive if the number of weighted average                  shares                  outstanding was adjusted to reflect the dilutive effect of outstanding                  stock options. |   |

----

*Table            of Contents*

**POMEROY        IT SOLUTIONS, INC.**

**CONSOLIDATED        STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**

**UNAUDITED)**

| (in                  thousands)                          |   | Nine                  Months Ended |                         |
|----------------------------------------------------------|--------|------------------------------------|------------------------------|
|                                                     |   | October                  5,        |                         |   | October                  5, |   |
|                                                     |   | 2007                               |                         |   | 2006 |   |
|                                                     |   |                               |                         |   |   |   |
| Net                  (loss)                              |   | $                                  | (90,821                      | ) |   | $ | (400 | ) |
| Other                  comprehensive income (loss):      |   |                               |                         |   |   |   |   |   |
| Foreign                  currency translation adjustment |   |                               | (75                          | ) |   |   | (5 | ) |
|                                                     |   |                               |                    |   |   |   |                    |   |
| Comprehensive                  (loss)                    |   | $                                  | (90,896                      | ) |   | $ | (405 | ) |

----

*Table            of Contents*

**POMEROY        IT SOLUTIONS, INC.**

**CONSOLIDATED        STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

| (in                  thousands)                                                                                  |   | Nine                  Months Ended |    |
|------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|---------|
|                                                                                                             |   | October                  5,        |    |   | October                  5, |   |
|                                                                                                             |   | 2007                               |    |   | 2006 |   |
| Cash                  flows from operating activities:                                                           |   |                               |    |   |   |   |
| Net                  (Loss)                                                                                      |   | $                                  | (90,821 | ) |   | $ | (400 | ) |
| Adjustments                  to reconcile net income to net cash from                  operating activities:     |   |                               |    |   |   |   |   |   |
| Depreciation                  and amortization                                                                   |   |                               | 4,055   |   |   |   | 3,819 |   |
| Stock                  option, restricted stock compensation and employee purchase plan                  expense |   |                               | 342     |   |   |   | 1,186 |   |
| Restructuring                  and severance charges                                                             |   |                               | (921    | ) |   |   | 133 |   |
| Goodwill                  impairment                                                                             |   |                               | 98,314  |   |   |   | 3,472 |   |
| Bad                  debt expense                                                                                |   |                               | 3,063   |   |   |   | 190 |   |
| Amortization                  of unearned income                                                                 |   |                               | (31     | ) |   |   | - |   |
| Deferred                  income taxes                                                                           |   |                               | (9,609  | ) |   |   | 605 |   |
| Loss                  on disposal of fixed assets                                                                |   |                               | 1,828   |   |   |   | 67 |   |
| Changes                  in working capital accounts                                                             |   |                               |    |   |   |   |   |   |
| Accounts                  receivable                                                                             |   |                               | 4,721   |   |   |   | (10,525 | ) |
| Inventories                                                                                                      |   |                               | (3,436  | ) |   |   | (1,780 | ) |
| Other                  current assets                                                                            |   |                               | (667    | ) |   |   | (62 | ) |
| Net                  investment in leases                                                                        |   |                               | 808     |   |   |   | 862 |   |
| Accounts                  payable                                                                                |   |                               | (6,779  | ) |   |   | 22,850 |   |
| Deferred                  revenue                                                                                |   |                               | (296    | ) |   |   | (488 | ) |
| Income                  tax payable                                                                              |   |                               | -       |   |   |   | (705 | ) |
| Employee                  compensation and benefits                                                              |   |                               | (1,806  | ) |   |   | 3,005 |   |
| Other,                  net                                                                                      |   |                               | (4,603  | ) |   |   | (5,364 | ) |
| Net                  operating activities                                                                        |   |                               | (5,838  | ) |   |   | 16,865 |   |
| Cash                  flows from investing activities:                                                           |   |                               |    |   |   |   |   |   |
| Capital                  expenditures                                                                            |   |                               | (1,898  | ) |   |   | (1,172 | ) |
| Proceeds                  from redemption of certificates of deposit                                             |   |                               | -       |   |   |   | 2,682 |   |
| Purchases                  of certificates of deposit                                                            |   |                               | (27     | ) |   |   | (102 | ) |
| Payment                  for covenant not-to-compete                                                             |   |                               | -       |   |   |   | (285 | ) |
| Acquisition                  of businesses                                                                       |   |                               | -       |   |   |   | (738 | ) |
| Net                  investing activities                                                                        |   |                               | (1,925  | ) |   |   | 385 |   |
| Cash                  flows from financing activities:                                                           |   |                               |    |   |   |   |   |   |
| Net                  payments of  short-term borrowings                                                |   |                               | -       |   |   |   | (15,304 | ) |
| Proceeds                  from exercise of stock options                                                         |   |                               | 96      |   |   |   | 192 |   |
| Purchase                  of treasury stock                                                                      |   |                               | (405    | ) |   |   | (1,350 | ) |
| Proceeds                  from issuance of common shares for employee stock purchase                  plan       |   |                               | 313     |   |   |   | 303 |   |
| Net                  financing activities                                                                        |   |                               | 4       |   |   |   | (16,159 | ) |
|                                                                                                             |   |                               |    |   |   |   |   |   |
| Effect                  of exchange rate changes on cash and cash equivalents                                    |   |                               | (75     | ) |   |   | (5 | ) |
| Change                  in cash and cash equivalents                                                             |   |                               | (7,834  | ) |   |   | 1,086 |   |
| Cash                  and cash equivalents:                                                                      |   |                               |    |   |   |   |   |   |
| Beginning                  of period                                                                             |   |                               | 13,562  |   |   |   | 1,486 |   |
|                                                                                                             |   |                               |    |   |   |   |   |   |
| End                  of period                                                                                   |   | $                                  | 5,728   |   |   | $ | 2,572 |   |

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*Table            of Contents*

MERO

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*Table            of Contents*

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*Table            of Contents*

|                                                                            |   | Shares |     |   | Weighted                  Average Exercise price |   |
|---------------------------------------------------------------------------------|--------|--------|----------|--------|--------------------------------------------------|--------|
| Restricted                  common stock outstanding January 5, 2007            |   |   | 183,519  |   |                                             | $      | 9.46 |   |
| Granted                                                                         |   |   | 144,603  |   |                                             |   | 7.44 |   |
| Vested                                                                          |   |   | -        |   |                                             |   | - |   |
| Forfeitures                                                                     |   |   | (6,795   | )      |                                             |   | - |   |
| Restricted                  common stock outstanding April 5, 2007              |   |   | 321,327  |   |                                             | $      | 8.57 |   |
| Granted                                                                         |   |   | 46,500   |   |                                             |   | 9.62 |   |
| Vested                                                                          |   |   | -        |   |                                             |   | - |   |
| Forfeitures                                                                     |   |   | (100,250 | )      |                                             |   | - |   |
| Restricted                  common stock outstanding July 5, 2007               |   |   | 267,577  |   |                                             | $      | 8.20 |   |
| Granted                                                                         |   |   | 27,150   |   |                                             |   | 10.05 |   |
| Vested                                                                          |   |   | -        |   |                                             |   | - |   |
| Forfeitures                                                                     |   |   | (31,163  | )      |                                             |   | - |   |
| Restricted                  common stock outstanding October  5, 2007 |   |   | 263,564  |   |                                             | $      | 8.44 |   |

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*Table            of Contents*

| (in                    thousands, except per share data) |   |                                            |   |                      |                         |   |   |                      |   |   |                         |                           |
|----------------------------------------------------------|--------|-------------------------------------------------|--------|---------------------------|------------------------------|--------|--------|---------------------------|--------|--------|------------------------------|--------------------------------|
|                                                     |   |                                            |   |                      |                         |   |   |                      |   |   |                         |                           |
|                                                     |   | Three                    Months Ended October 5 |   |
|                                                     |   | 2007                                            |   |                      | 2006                         |   |
|                                                     |   |                                            |   |                      | Per                    Share |   |   |                      |   |   | Per                    Share |                           |
|                                                     |   | Shares                                          |   |                      | Amount                       |   |   | Shares                    |   |   | Amount                       |                           |
|                                                     |   |                                            |   |                      |                         |   |   |                      |   |   |                         |                           |
| Basic                    EPS                             |   |                                            | 12,335 |                      |                         | $      | (7.44  | )                         |   |   | 12,591                       |                           |   | $ | (0.08 | ) |
| Dilutive                    potential common shares      |   |                                            | -      |                    * |                         |   | -      |                    * |   |   | -                            |                    *      |   |   | - |                    * |
| Diluted                    EPS                           |   |                                            | 12,335 |                      |                         | $      | (7.44  | )                         |   |   | 12,591                       |                      |   | $ | (0.08 | ) |

| (in                  thousands, except per share data) |   |                                              |   |                    |                       |   |   |                    |   |   |                       |                    |
|--------------------------------------------------------|--------|---------------------------------------------------|--------|-------------------------|----------------------------|--------|--------|-------------------------|--------|--------|----------------------------|-------------------------|
|                                                   |   |                                              |   |                    |                       |   |   |                    |   |   |                       |                    |
|                                                   |   | Nine                  Months Ended October 5 |   |
|                                                   |   | 2007                                              |   |                    | 2006                       |   |
|                                                   |   |                                              |   |                    | Per                  Share |   |   |                    |   |   | Per                  Share |                    |
|                                                   |   | Shares                                            |   |                    | Amount                     |   |   | Shares                  |   |   | Amount                     |                    |
| Basic                  EPS                             |   |                                              | 12,338 |                    |                       | $      | (7.36  | )                       |   |   | 12,611                     |                    |   | $ | (0.03 | ) |
| Dilutive                  potential common shares      |   |                                              | -      |                  * |                       |   | -      |                  * |   |   | -                          |                  * |   |   | - |                  * |
| Diluted                  EPS                           |   |                                              | 12,338 |                    |                       | $      | (7.36  | )                       |   |   | 12,611                     |                    |   | $ | (0.03 | ) |

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*Table            of Contents*

| (in                  thousands)    |   |                                              |   |   |   |   |
|------------------------------------|--------|---------------------------------------------------|--------|--------|--------|--------|
|                               |   | Nine                  Months Ended October 5 |   |
|                               |   | 2007                                              |   |   | 2006   |   |
| Interest                  paid     |   | $                                                 | 253    |   |   | $      | 751 |   |
| Income                  taxes paid |   | $                                                 | (560   | )      |   | $      | 91 |   |

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*Table            of Contents*

| (in                thousands)                         |   | FacilityConsolidation  |   |
|-------------------------------------------------------|--------|-----------------------------|--------|
| Liability                  balance at January 5, 2007 |   | $                           | 3,599  |   |
| Cash                  payments                        |   |                        | (341   | ) |
| Liability                  balance at April 5, 2007   |   | $                           | 3,258  |   |
| Cash                  payments                        |   |                        | (283   | ) |
| Liability                  balance at July 5, 2007    |   | $                           | 2,975  |   |
| Cash                  payments                        |   |                        | (297   | ) |
| Liability                  balance at October 5, 2007 |   | $                           | 2,678  |   |

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*Table            of Contents*

**Item        2-Management’s Discussion and Analysis of Financial Condition and        Results of Operations**

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*Table            of Contents*

**Item        2-Management’s Discussion and Analysis of Financial Condition and Results of        Operations (Continued)**

**RESULTS        OF OPERATIONS**

|                                                 |   | Net                  Product and Service Revenues |     |   | Net                  Product and Service Revenues |   |
|------------------------------------------------------|--------|---------------------------------------------------|----------|--------|---------------------------------------------------|--------|
| Financial                  Results                   |   | Three                  Months Ended October 5     |     |   | Nine                  Months Ended October 5 |   |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                 |   | 2007                                              |     |   | %                  of Revenues                    |   |   | 2006 |   |   | %                  of Revenues |   |   | 2007 |   |   | %                  of Revenues |   |   | 2006 |   |   | %                  of Revenues |   |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  product and service revenues:   |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product                                              |   | $                                                 | 96,495   |   |                                              |   | 63.2 | % |   | $ | 93,678 |   |   |   | 60.5 | % |   | $ | 280,305 |   |   |   | 62.1 | % |   | $ | 274,636 |   |   |   | 58.5 | % |
| Service                                              |   |                                              | 56,219   |   |                                              |   | 36.8 | % |   |   | 61,255 |   |   |   | 39.5 | % |   |   | 171,020 |   |   |   | 37.9 | % |   |   | 195,107 |   |   |   | 41.5 | % |
| Total                  revenues                      |   |                                              | 152,714  |   |                                              |   | 100.0 | % |   |   | 154,933 |   |   |   | 100.0 | % |   |   | 451,325 |   |   |   | 100.0 | % |   |   | 469,743 |   |   |   | 100.0 | % |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  profit                        |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product                                              |   |                                              | 9,213    |   |                                              |   | 6.0 | % |   |   | 7,371 |   |   |   | 4.7 | % |   |   | 24,912 |   |   |   | 5.5 | % |   |   | 22,022 |   |   |   | 4.7 | % |
| Service                                              |   |                                              | 11,517   |   |                                              |   | 7.6 | % |   |   | 15,289 |   |   |   | 9.9 | % |   |   | 41,544 |   |   |   | 9.2 | % |   |   | 46,457 |   |   |   | 9.9 | % |
| Total                  gross profit                  |   |                                              | 20,730   |   |                                              |   | 13.6 | % |   |   | 22,660 |   |   |   | 14.6 | % |   |   | 66,456 |   |   |   | 14.7 | % |   |   | 68,479 |   |   |   | 14.6 | % |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  profit %                      |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product                  %                           |   |                                              | 9.5      | %      |                                              |   |   |   |   |   | 7.9 | % |   |   |   |   |   |   | 8.9 | % |   |   |   |   |   |   | 8.0 | % |   |   |   |   |
| Service                  %                           |   |                                              | 20.5     | %      |                                              |   |   |   |   |   | 25.0 | % |   |   |   |   |   |   | 24.3 | % |   |   |   |   |   |   | 23.8 | % |   |   |   |   |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  expenses:                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling,                  general and administrative |   |                                              | 20,344   |   |                                              |   | 13.3 | % |   |   | 19,482 |   |   |   | 12.6 | % |   |   | 61,722 |   |   |   | 13.7 | % |   |   | 61,045 |   |   |   | 13.0 | % |
| Depreciation                  and amortization       |   |                                              | 1,367    |   |                                              |   | 0.9 | % |   |   | 1,250 |   |   |   | 0.8 | % |   |   | 3,636 |   |   |   | 0.8 | % |   |   | 3,819 |   |   |   | 0.8 | % |
| Goodwill                  impairment                 |   |                                              | 98,314   |   |                                              |   | 64.4 | % |   |   | 3,472 |   |   |   | 2.2 | % |   |   | 98,314 |   |   |   | 21.8 | % |   |   | 3,472 |   |   |   | 0.8 | % |
| Bad                  debt                            |   |                                              | 2,413    |   |                                              |   | 1.6 | % |   |   | - |   |   |   | 0.0 | % |   |   | 3,063 |   |   |   | 0.6 | % |   |   | 190 |   |   |   | 0.0 | % |
| Loss                  on asset disposal              |   |                                              | 1,828    |   |                                              |   | 1.2 | % |   |   | 22 |   |   |   | 0.0 | % |   |   | 1,826 |   |   |   | 0.4 | % |   |   | 34 |   |   |   | 0.0 | % |
| Other                                                |   |                                              | -        |   |                                              |   |   |   |   |   | 89 |   |   |   | 0.1 | % |   |   | - |   |   |   |   |   |   |   | 99 |   |   |   | 0.0 | % |
| Total                  operating expenses            |   |                                              | 124,266  |   |                                              |   | 81.4 | % |   |   | 24,315 |   |   |   | 15.7 | % |   |   | 168,561 |   |   |   | 37.3 | % |   |   | 68,659 |   |   |   | 14.6 | % |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  from operations              |   |                                              | (103,536 | )      |                                              |   | -67.8 | % |   |   | (1,655 | ) |   |   | -1.1 | % |   |   | (102,105 | ) |   |   | -22.6 | % |   |   | (180 | ) |   |   | 0.0 | % |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  income                     |   |                                              | 169      |   |                                              |   | 0.1 | % |   |   | 124 |   |   |   | 0.1 | % |   |   | 699 |   |   |   | 0.2 | % |   |   | 431 |   |   |   | 0.1 | % |
| Interest                  expense                    |   |                                              | (98      | )      |                                              |   | -0.1 | % |   |   | (128 | ) |   |   | -0.1 | % |   |   | (367 | ) |   |   | -0.1 | % |   |   | (906 | ) |   |   | -0.2 | % |
| Interest                  income, (expense) net      |   |                                              | 71       |   |                                              |   | 0.0 | % |   |   | (4 | ) |   |   | 0.0 | % |   |   | 332 |   |   |   | 0.1 | % |   |   | (475 | ) |   |   | -0.1 | % |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)                  before income tax (benefit)  |   |                                              | (103,465 | )      |                                              |   | -67.8 | % |   |   | (1,659 | ) |   |   | -1.1 | % |   |   | (101,773 | ) |   |   | -22.5 | % |   |   | (655 | ) |   |   | -0.1 | % |
| Income                  tax (benefit)                |   |                                              | (11,671  | )      |                                              |   | -7.7 | % |   |   | (647 | ) |   |   | -0.4 | % |   |   | (10,952 | ) |   |   | -2.4 | % |   |   | (255 | ) |   |   | -0.0 | % |
|                                                 |   |                                              |     |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  (Loss)                          |   | $                                                 | (91,794  | )      |                                              |   | -60.1 | % |   | $ | (1,012 | ) |   |   | -0.7 | % |   | $ | (90,821 | ) |   |   | -20.1 | % |   | $ | (400 | ) |   |   | -0.1 | % |

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*Table            of Contents*

**Third        Quarter 2007 versus Third Quarter 2006**

*Revenues*

** **

*Gross        Profit*

----

*Table            of Contents*

**Third        Quarter 2007 versus Third Quarter 2006 (Continued)**

*Operating        Expenses*

*Loss        from Operations*

*Net        Interest Income (Expense)*

*Income        Tax Benefit*

*Net        Loss*

----

*Table            of Contents*

**October        5, 2007 YTD versus October 5, 2006 YTD**

*Revenues*

*Gross        Profit *

----

*Table            of Contents*

**October        5, 2007 YTD versus October 5, 2006 YTD (Continued)**

*Operating        Expenses*

*Loss        from Operations*

*Net        Interest Income (Expense)*

*Income        Tax Benefit*

*Net        Loss*

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*Table            of Contents*

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*Table            of Contents*

**Item        3-Quantitative and Qualitative Disclosures about Market        Risk**

**Item        4-Controls and Procedures**

**Management’s        Evaluation of Disclosure Controls and Procedures**

**Changes        in Internal Control Over Financial Reporting**

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*Table            of Contents*

**Item        1-Legal Proceedings**

**Item        1A-Risk Factors**

**Key        Personnel**

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*Table            of Contents*

**Item        2-Unregistered Sales of Equity Securities and Use of        Proceeds**

| Period                           |   | (a)                  Total number of shares purchased |    |   | (b)                  Average price paid per share |   |   | (c)                  Total number of shares purchased as part of publicly announced                  plan |   |   | (d)                  Maximum number of shares that may yet be purchased under the                  plan |   |
|----------------------------------|--------|-------------------------------------------------------|---------|--------|---------------------------------------------------|--------|--------|-----------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------|--------|
| 4/6/06                  - 5/5/06 |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 500,000 |   |
| 5/6/06                  - 6/5/06 |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 500,000 |   |
| 6/6/06                  - 7/5/06 |   |                                                  | 20,000  |   |                                              | $      | 7.17   |                                                                                                      |   |   | 20,000                                                                                                  |   |   |   | 480,000 |   |
| 7/6/06-8/5/06                    |   |                                                  | 11,980  |   |                                              | $      | 7.21   |                                                                                                      |   |   | 11,980                                                                                                  |   |   |   | 468,020 |   |
| 8/6/06-9/5/06                    |   |                                                  | 49,750  |   |                                              | $      | 7.78   |                                                                                                      |   |   | 49,750                                                                                                  |   |   |   | 418,270 |   |
| 9/6/06-10/5/06                   |   |                                                  | 90,908  |   |                                              | $      | 7.97   |                                                                                                      |   |   | 90,908                                                                                                  |   |   |   | 327,362 |   |
| 10/6/06-11/5/06                  |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 327,362 |   |
| 11/6/06-12/5/06                  |   |                                                  | 50,399  |   |                                              | $      | 7.42   |                                                                                                      |   |   | 50,399                                                                                                  |   |   |   | 276,963 |   |
| 12/6/06-1/5/07                   |   |                                                  | 97,378  |   |                                              | $      | 7.63   |                                                                                                      |   |   | 97,378                                                                                                  |   |   |   | 179,585 |   |
| 1/6/07-2/5/07                    |   |                                                  | 14,000  |   |                                              | $      | 8.00   |                                                                                                      |   |   | 14,000                                                                                                  |   |   |   | 165,585 |   |
| 2/6/07-3/5/07                    |   |                                                  | -       |   |                                              |   |   |                                                                                                      |   |   | -                                                                                                       |   |   |   | 165,585 |   |
| 3/6/07-4/5/07                    |   |                                                  | 28,200  |   |                                              | $      | 8.69   |                                                                                                      |   |   | 28,200                                                                                                  |   |   |   | 137,385 |   |
| 4/6/07                  - 5/5/07 |   |                                                  | 5,200   |   |                                              | $      | 9.28   |                                                                                                      |   |   | 5,200                                                                                                   |   |   |   | 132,185 |   |
| 5/6/07                  - 6/5/07 |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 132,185 |   |
| 6/6/07                  - 7/5/07 |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 132,185 |   |
| 7/6/07                  - 8/5/07 |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 132,185 |   |
| 8/6/07                  - 9/5/07 |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 132,185 |   |
| 9/6/07                  -10/5/07 |   |                                                  | -       |   |                                              | $      | -      |                                                                                                      |   |   | -                                                                                                       |   |   |   | 132,185 |   |
| Total                            |   |                                                  | 367,815 |   |                                              |   |   |                                                                                                      |   |   | 367,815                                                                                                 |   |   |   | 132,185 |   |

**Item        3-Defaults Upon Senior Securities**

**Item        4-Submission of Matters to a Vote of Security        Holders**

**Item        5-Other Information**

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*Table            of Contents*

**Item        6-Exhibits**

| 10.1   | Exhibit                  10 Company’s Form 8-K.                                                                                                                                                                                                                                  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                   |
| 10.2   | Form                  8-K                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                   |
| 10.3   | Employment                  Agreement by and between Pomeroy IT Solutions, Inc. and Keith R.                  Coogan,                  effective October 15, 2007 (incorporated by reference to Exhibit                  10.1 of                  the Form 8-K file October 19, 2007). |
|   |                                                                                                                                                                                                                                                                                   |
| 31.1   | Section                  302 CEO Certification                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                   |
| 31.2   | Section                  302 CFO Certification                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                   |
| 32.1   | Section                  906 CEO Certification                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                   |
| 32.2   | Section                  906 CFO Certification                                                                                                                                                                                                                                         |

NA

|                                     | POMEROY                IT SOLUTIONS, INC.                  |
|------------------------------------------|------------------------------------------------------------|
|                                     |  (Registrant)                                         |
|                                     |                                                       |
| Date:                  November 15, 2007 | By:  /s/                  Kevin G. Gregory  |
|                                     |  Kevin                  G. Gregory                    |
|                                     |  Senior                  Vice President and CFO       |

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