##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2007Oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934   Commission file number: 1-31949
 INX Inc.
 (Exact name of Registrant as
    specified in its charter)
  Delaware

76-0515249(State of
    Incorporation)

(I.R.S. Employer
    Identification No.)6401 Southwest Freeway
    Houston, TX(Address of principal
    executive offices)

77074(Zip
    code)   Registrants telephone number:
    (713) 795-2000
  Securities registered pursuant to section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, par value $0.01
    Warrants to purchase common stock

Nasdaq Global Market
    Nasdaq Global Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large Accelerated
    Filer o

Accelerated
    Filer o

Non-accelerated
    Filer þ
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




---



##### 





INX Inc.
    and Subsidiaries
  FORM 10-K
    For the Year Ended December 31, 2007
    TABLE OF CONTENTS
   
 PagePART IItem 1


Business


3Item 1A


Risk Factors


14Item 2


Properties


20Item 3


Legal Proceedings


20Item 4


Submission of Matters to a Vote of Security
    Holders


20PART IIItem 5


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


21Item 6


Selected Financial Data


25Item 7


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


26Item 7A


Quantitative and Qualitative Disclosures About
    Market Risk


44Item 8


Financial Statements and Supplementary Data


45Item 9


Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure


76Item 9A(T)


Controls and Procedures


76Item 9B


Other Information


77PART IIIItem 10


Directors, Executive Officers, and Corporate
    Governance


77Item 11


Executive Compensation


77Item 12


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


77Item 13


Certain Relationships and Related Transactions,
    and Director Independence


77Item 14


Principal Accountant Fees and Services


77PART IVItem 15


Exhibits and Financial Statement Schedules


78SIGNATURES


79INDEX TO EXHIBITSAmendment Ten to Systems Integrator AgreementAmendment Eleven to Systems Integrator AgreementAmendment Twelve to Systems Integrator AgreementAmendment to Systems Integrator AgreementList of SubsidiariesConsent of Grant Thornton LLPCertification of Chairman and CEO Pursuant to Rule 13a-14(a)Certification of CFO Pursuant to Rule 13a-14(a)Certification of CEO Pursuant to Section 1350Certification of CFO Pursuant to Section 1350Report of Independent Registered Public Accounting Firm    Form 10-K
 2




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##### Table of Contents



PART I  Item 1.
    Business  Special
    Notice Regarding Forward-Looking Statements
    General
    set-up
   3




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##### Table of Contents



IP-connected
             4




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##### Table of Contents



Industry
  IP
    Telephony, Voice over IP, Convergence and Unified
    Communications
  set-up e-mail,
     
    data communication between computers and servers was performed
    using LAN/WAN IP network infrastructure, including the Internet;
    telephone/voice communication was conducted using traditional
    circuit-switched PBX systems and the PSTN; and
    video communications have often been accomplished using
    stand-alone video conferencing systems using either multiple
    circuit-switched telephone lines over the PSTN or using data
    network communications.      
    elimination of redundant traditional telephone line circuits and
    cabling systems as internal voice communications move to the
    enterprises
    IP-based
    network cabling system;
    reduced cost resulting from consolidation of PSTN circuits to a
    central location so that all external communications to and from
    the enterprise occur through fewer or only one point of
    interface to the PSTN, commonly referred to as circuit
    consolidation;
    more efficient support of telephone and data functions by a
    single support organization rather than multiple service
    providers and in-house support departments;
    simplified administration and lower costs for moves, adds and
    changes of the telephone system because an IP telephony handset
    can be moved or changed within an enterprise without rewiring
    the PBX or re-programming the telephone number as is required in
    a conventional PBX system; and
    elimination or reduction of long distance toll charges as
    enterprises operating a converged solution move their internal
    voice communications to the fixed-cost data network that often
    already exists between the enterprises remote facilities.   5




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##### Table of Contents



e-mail,
          Network
    Storage and the Virtualization of the Data Center
     6




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##### Table of Contents



Wireless
    Network Access and Mobility
        Security
    
    The trend towards virtualization of the data center is creating
    new security complexities. While virtualization actually
    improves security in some respects, it also introduces new
    security risks and the complexity of security solutions.
    The ease with which attacks can be initiated through freely
    available tools. These attacks are as likely to come from inside
    the network as they are from the Internet.
    The increased number of users utilizing laptops and other mobile
    devices that may become infected while outside the controls of
    the network further complicates security issues once mobile
    users reconnect within the network, behind the firewall.
    In order to support mobile users, organizations are deploying
    more and more wireless solutions that create another network
    access point easily compromised by malicious users if not
    secured properly. 7




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##### Table of Contents




    While more difficult to exploit than wireless networks, unused
    network ports that are not properly secured are another
    potential network access point available to zealous hackers that
    are able to physically connect to such ports.
    Many organizations want to grant limited access to guests,
    consultants, and others while protecting their critical
    infrastructure from these less trusted users.
    There is an increasing trend towards criminal activity via
    network attacks; it is no longer an issue of only
    industrial espionage or vandalism.
    As security needs increase, the complexity of security solutions
    increases, requiring well designed solutions.
    Many organizations have policies driven by regulatory and
    compliance requirements (such as HIPPA and Sarbanes-Oxley) that
    dictate enhanced security stances.    Ramifications
    of Industry Trends
      IP-based
       8




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##### Table of Contents



Our
    Business
        best-in-class
  Products
      Services
   9




---



##### Table of Contents



Professional
    Services
      Managed
    Services
    IP-based ®
      Competition
   10




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##### Table of Contents



The
    Geographic Markets We Currently Serve
    
    Los Angeles, California
    Boise, Idaho
    Boston, Massachusetts
    Albuquerque, New Mexico
    Oklahoma City, Oklahoma
    Eugene, Oregon
    Portland Oregon
    Austin, Texas
    Dallas, Texas
    El Paso, Texas
    Houston, Texas
    San Antonio, Texas
    Seattle, Washington
    Washington, DC    Our Plans
    for Geographic Expansion
   11




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##### Table of Contents



start-up
      Customers
  and/or
  E-Rate
  E-Rate
  Sales and
    Marketing
   12




---



##### Table of Contents



Supply
    and Distribution
  and/or
  Management
    Information Systems
    Employees
    Seasonality
    Certain
    Milestones in Our Corporate Development
       13




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##### Table of Contents



I-Sector
  General
    Information
  (713) 795-2000. Form 10-K, Form 10-Q, Form 8-K http://www.INXI.com, 1-800-SEC-0330.
  Item 1A.
    Risk
    Factors  We have a
    history of losses and may continue to incur losses.
    Our
    success is dependent upon maintaining our relationship with
    Cisco.
   14




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##### Table of Contents



Our
    success depends upon broad market acceptance of IP
    telephony.
    
    quality of infrastructure;
    security concerns;
    equipment, software or other technology failures;
    government regulation;
    inconsistent quality of service;
    poor voice quality over IP networks; and
    lack of availability of cost-effective, high-speed network
    capacity.    Although
    our success is generally dependent upon the market acceptance of
    IP telephony, our success also depends upon a broad market
    acceptance of Cisco-centric IP telephony.
  Cisco-centric Cisco-centric
  Our
    business depends on the level of capital spending by enterprises
    for the advanced technology products and services we
    offer.
    Our
    profitability depends on Cisco product pricing and incentive
    programs.
   15




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##### Table of Contents



A
    substantial portion of our customers are based in
    Texas.
    Our
    strategy contemplates rapid geographic expansion, which we may
    be unable to achieve, and which is subject to numerous
    uncertainties.
    We may
    require additional financing to achieve expansion of our
    business operations, and failure to obtain financing may prevent
    us from carrying out our business plan.
    We
    require access to significant working capital and vendor credit
    to fund our day-to-day operations. Our failure to comply with
    the financial and other covenants under our working capital
    facility could lead to a termination of the agreement and an
    acceleration of our outstanding debt.
  and/or
 16




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##### Table of Contents



We may be
    unable to manage our growth effectively, which may harm our
    business.
    Our
    operating results have historically been volatile, and may
    continue to be volatile, particularly from quarter to
    quarter.
    
    volume and timing of orders received during the quarter;
    amount and timing of supplier incentives received in any
    particular quarter, which can vary substantially;
    gross margin fluctuations associated with the mix of products
    sold;
    general economic conditions;
    patterns of capital spending by enterprises for communications
    products;
    the timing of new product announcements and releases;
    pricing pressures;
    the cost and effect of acquisitions;
    the amount and timing of sales incentives we may receive from
    our suppliers, particularly Cisco; and
    the availability and cost of products and components from our
    suppliers.    We have
    many competitors and expect new competitors to enter our market,
    which could increase price competition and may affect the amount
    of business available to us and the prices that we can charge
    for our products and services.
      
    develop and expand their products and services more quickly; 17




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##### Table of Contents




    adapt faster to new or emerging technologies and changing
    customer needs;
    take advantage of acquisitions and other opportunities more
    readily;
    negotiate more favorable agreements with vendors;
    devote greater resources to marketing and selling their
    products; and
    address customer service issues more effectively.  and/or
  Business
    acquisitions, dispositions or joint ventures entail numerous
    risks and may disrupt our business, dilute stockholder value or
    distract management attention.
  and/or
  
    unanticipated costs and liabilities;
    difficulty of integrating the operations, products and personnel
    of the acquired business;
    difficulty retaining key personnel of the acquired business;
    difficulty retaining customers of the acquired businesses;
    difficulties in managing the financial and strategic position of
    acquired or developed products, services and technologies;
    difficulties in maintaining customer relationships, in
    particular where a substantial portion of the targets
    sales were derived from products that compete with products that
    we currently offer;
    the diversion of managements attention from the core
    business;
    inability to maintain uniform standards, controls, policies and
    procedures; and
    damage to relationships with acquired employees and customers as
    a result of integration of the acquired business.    Our
    international operations, which we plan to expand, will subject
    us to additional risks that may adversely affect our operating
    results due to increased costs.
    
    unexpected changes in regulatory requirements and
    telecommunication standards; 18




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##### Table of Contents




    tariffs and other trade barriers;
    risk of loss in currency exchange transactions;
    exchange controls or other currency restrictions;
    difficulty in collecting receivables;
    difficulty in staffing and managing foreign operations;
    the need to customize marketing and products;
    inadequate protection of intellectual property in countries
    outside the United States;
    adverse tax consequences; and
    political and economic instability.    If we
    lose key personnel we may not be able to achieve our
    objectives.
    We may
    not be able to hire and retain highly skilled technical
    employees, which could affect our ability to compete effectively
    and could adversely affect our operating results.
    
    hire more employees with experience developing and providing
    advanced technology products and services;
    retrain our current personnel to sell and support the advanced
    technology solutions that we intend to market in the
    future; and
    retain personnel to service our products.    If we are
    unable to protect our intellectual property rights, our business
    may be harmed.
   19




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##### Table of Contents



We may be
    found to infringe on third-party intellectual property
    rights.
  and/or
  Costs of
    compliance with the Sarbanes-Oxley Act of 2002 and the related
    SEC regulations may harm our results of operations.
    Item 2.
    Properties    
    Los Angeles, California
    Boise, Idaho
    Boston, Massachusetts
    Albuquerque, New Mexico
    Oklahoma City, Oklahoma
    Eugene, Oregon
    Portland Oregon
    Austin, Texas
    Dallas, Texas
    El Paso, Texas
    Houston, Texas
    San Antonio, Texas
    Seattle, Washington
    Washington, DC    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   20




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##### Table of Contents



Family
    Relationships
   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
    Common
    Stock
    High


Low2006First Quarter

$
7.48


$
5.55Second Quarter

$
7.15


$
5.40Third Quarter

$
6.89


$
5.77Fourth Quarter

$
7.99


$
6.402007First Quarter

$
10.30


$
7.55Second Quarter

$
12.39


$
8.97Third Quarter

$
14.44


$
8.81Fourth Quarter

$
15.28


$
9.75   Warrants
    High


Low2006First Quarter

$
1.50


$
0.55Second Quarter

$
1.30


$
0.50Third Quarter

$
1.06


$
0.72Fourth Quarter

$
1.55


$
1.052007First Quarter

$
2.74


$
1.41Second Quarter

$
3.40


$
2.37Third Quarter

$
3.23


$
1.90Fourth Quarter

$
3.99


$
0.95    21




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##### Table of Contents



Dividend
    Policy
    Equity
    Compensation Plan Information
    
    the number of shares of our common stock issuable upon exercise
    of outstanding options, warrants and rights, separately
    identified by those granted under equity incentive plans
    approved by our shareholders and those granted under plans,
    including individual compensation contracts, not approved by our
    shareholders (column A),
    the weighted average exercise price of such options, warrants
    and rights, also as separately identified (column B), and the
    number of shares remaining available for future issuance under
    such plans, other than those shares issuable upon exercise of
    outstanding options, warrants and rights (column C).  Column A


Column B


Column CNumber of SharesNumber of Shares





Remaining Availableto be Issued


Weighted Average


for Future IssuanceUpon Exercise of


Exercise Price of


Under Equity CompensationOutstanding Options,


Outstanding Options


Plans (Excluding SharesWarrants and Rights


Warrants and Rights


Reflected in Column A)Equity incentive plans approved by shareholders


1,676,245


$
4.83



43,372Equity incentive plans not approved by shareholders










Totals


1,676,245


$
4.83



43,372    22




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##### Table of Contents



Stock
    Performance Graph
    COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    AMONG INX INC.,
    THE NASDAQ COMPOSITE INDEX AND THE RUSSELL 2000 INDEX
  
  *
    
    $100 invested on 12/31/02 in stock or index-including
    reinvestment of dividends.      12/02


3/03


6/03


9/03


12/03


3/04


6/04INX INC.



100.00




97.50




119.50




220.00




784.00




432.50




407.50NASDAQ STOCK MARKET (U.S.)



100.00




99.35




120.21




133.69




149.75




150.16




154.24RUSSELL 2000



100.00




95.51




117.88




128.58




147.25




156.47




157.21   9/04


12/04


3/05


6/05


9/05


12/05


3/06INX INC.



350.00




382.50




262.00




400.00




240.00




277.50




310.00NASDAQ STOCK MARKET (U.S.)



144.26




164.64




151.53




155.46




164.16




168.60




179.97RUSSELL 2000



152.72




174.24




164.94




172.06




180.14




182.18




207.57   6/06


9/06


12/06


3/07


6/07


9/07


12/07INX INC.



300.00




327.50




393.00




509.50




451.00




722.00




522.50NASDAQ STOCK MARKET (U.S.)



167.47




174.65




187.83




188.40




201.89




210.35




205.22RUSSELL 2000



197.14




198.01




215.64




219.84




229.54




222.44




212.26  23




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##### Table of Contents



Form 10-K
  Issuer
    Purchases of Equity Securities
    Total Number of


Approximate DollarShares Purchased


Amount of SharesTotal Number


Average


as Part of Publicly


That May yet beof Shares


Price Paid


Announced Plans


Purchased Under thePeriod

Purchased


per Share


or Programs


Plans or Programs(In Thousands)October 1 to October 31, 2007


None



N/A



None



NoneNovember 1 to November 30, 2007


None



N/A



None



NoneDecember 1 to December 31, 2007


5,600


$
10.06



5,600


$
1,944Total


5,600


$
10.06



5,600   Rule 10b-18
 24




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##### Table of Contents



Item 6.
    Selected
    Financial Data    Year Ended December 31,2007(1)


2006(1)


2005(1)


2004


2003(1)Operating Data:Revenue:Products

$
180,311


$
135,317


$
94,570


$
65,207


$
39,369Services


27,656



20,696



12,749



6,280



4,226Total

$
207,967


$
156,013


$
107,319


$
71,487


$
43,595Net income (loss) from continuing operations

$
3,652


$
1,511


$
(4,917
)

$
1,110


$
(147
)Net income (loss) per share from continuing operations:Basic

$
0.52


$
0.24


$
(0.86
)

$
0.24


$
(0.04
)Diluted

$
0.45


$
0.21


$
(0.86
)

$
0.23


$
(0.04
)Income (loss) from discontinued operations, net of tax(2)

$
83


$
(316
)

$
(2,967
)

$
420


$
(1,689
)Net income (loss)

$
3,735


$
1,195


$
(7,884
)

$
1,530


$
(1,836
)Balance Sheet Data:Total assets

$
84,582


$
62,520


$
41,645


$
41,139


$
19,207Interest bearing borrowings under Credit Facility


6,000



4,350



2,464



8,122



1,688Long-term debt (including current portion) from continuing
    operations


200



259



243



36



72No cash dividends were declared or paid during the five years
    ended December 31, 2007.     (1)
    
    The Select, Inc. acquisition was completed and initially
    reported in 2007, the Datatran Network Systems acquisition was
    initially reported in 2006, the Network Architects and InfoGroup
    Northwest acquisitions were initially reported in 2005, and the
    Digital Precision acquisition was initially reported in 2003.
    The 2005, 2006 and 2007 acquisitions are discussed further in
    Note 3 to consolidated financial statements in
    Part II, Item 8.(2)
    
    The Stratasoft and Valerent subsidiaries were discontinued in
    2005 as discussed further in Note 4 to consolidated
    financial statements in Part II, Item 8. 25




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Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Please read the following discussion of our financial
    condition and results of operations together with
    Item 6. Selected Financial Data and our
    consolidated financial statements and the notes to those
    statements included elsewhere in this report. The following
    discussion and analysis contains forward-looking statements that
    involve risks and uncertainties. Our actual results may differ
    materially from those anticipated in these forward-looking
    statements as a result of certain factors, including, but not
    limited to, those set forth under Item 1A. Risk
    Factors and elsewhere in this report.
  General
          
    the mix of large, competitively bid sales transactions as
    compared to smaller, less competitive transactions;
    the mix of new customer transactions, which tend to be more
    competitively bid by us, as compared to transactions with
    existing customers, which tend to be somewhat less
    competitive; and
    the mix of products sold, with certain newer, advanced product
    categories generating higher gross margin than other, more
    traditional products.    
    the utilization of our technical engineering resources used to
    perform our professional services;
    the amount of
    NetSurant®
    recurring, post-sale managed support services as compared to the
    cost of operating our managed services support center, which
    costs are somewhat fixed;
    the mix between the different types of service.   26




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case-by-case
    Strategy
      
    Aligning ourselves with the leading manufacturers of advanced
    technology products for IP communications and IP network-based
    systems. To this end, Cisco has always been our primary supplier
    for network routing 27




---



##### Table of Contents



and switching and IP telephony products that we offer, and we
    align ourselves with what we believe to be the best of
    breed manufacturer in each area of technology or specific
    product in order to provide our customers with the best
    technology available.  
    Promoting our
    NetSurant®
    brand of post-sale managed support services to generate
    increased recurring services revenues and improve gross margin
    on service revenue.
    Increasing the gross revenues from our higher gross margin
    services offerings, as compared to product sales that typically
    produce relatively lower gross margins.
    Opening new branch offices in new markets.
    Expanding geographically by acquiring complementary businesses
    and by opening new offices.
    Marketing to larger customers as we become more of a
    national level provider of IP communications
    solutions.
    Developing and marketing our own custom products for certain
    specialized IP communications solutions.  work-in-progress
  ®
     28




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Results
    of Operations
  Overview
  Sources of Revenue.
  E-Rate
  ®
  Gross Profit and Gross Profit Margin.
   29




---



##### Table of Contents



Selling, General and Administrative
    Expenses.
    Acquisitions.
 30




---



##### Table of Contents



31




---



##### Table of Contents



Tax Loss Carryforward.
  Deferred Tax Assets.
 32




---



##### Table of Contents



Period Comparisons.
  Year Ended December 31,2007


2006


2005Amount


%


Amount


%


Amount


%(Dollars in thousands)Revenue:Products

$
180,311



86.7


$
135,317



86.7


$
94,570



88.1Services


27,656



13.3



20,696



13.3



12,749



11.9Total revenue


207,967



100.0



156,013



100.0



107,319



100.0Gross profit:Products


31,747



17.6



25,132



18.6



14,855



15.7Services


7,900



28.6



5,365



25.9



3,721



29.2Total gross profit


39,647



19.1



30,497



19.5



18,576



17.3Selling, general and administrative expenses


36,152



17.4



28,710



18.4



22,759



21.2Operating income (loss)


3,495



1.7



1,787



1.1



(4,183
)


(3.9
)Interest and other (income) expense, net


79



0.0



232



0.1



236



0.2Income tax expense (benefit)


(236
)


(0.1
)


44



0.0



475



.4Minority interest






0.0







0.0



23



0.0Net income (loss) from continuing operations


3,652



1.8



1,511



1.0



(4,917
)


(4.5
)Income (loss) from discontinued operations, net of taxes


83



0.0



(316
)


(0.2
)


(2,967
)


(2.8
)Net income (loss)

$
3,735



1.8


$
1,195



0.8


$
(7,884
)


(7.3
)   Year
    Ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Total Revenue. ®
  Gross Profit. ®
  Selling, General and Administrative
    Expenses.
 33




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##### Table of Contents



Operating Income.
  Interest and Other Income (Expense),
    net.
  Income Tax Expense (Benefit).
  Income (Loss) from Discontinued Operations, net of
    tax.
  Net Income.
  Year
    Ended December 31, 2006 Compared to Year Ended
    December 31, 2005
  Total Revenue. ®
  Gross Profit. ®
 34




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Selling, General and Administrative
    Expenses.
  Operating Income (Loss).
  Interest and Other Income (Expense),
    net.
  Loss from Discontinued Operations, net of
    tax.
  Net Income (Loss).
 35




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##### Table of Contents



Quarterly
    Results
    2007


2006Fourth


Third


Second


First


Fourth


Third


Second


FirstQuarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter


Quarter(Dollars in thousands, except share and per share amounts)Revenue:Products

$
48,621


$
45,222


$
46,918


$
39,550


$
39,837


$
39,847


$
33,322


$
22,311Services


7,978



6,776



6,809



6,093



5,978



5,397



5,356



3,965Total revenue

$
56,599


$
51,998


$
53,727


$
45,643


$
45,815


$
45,244


$
38,678


$
26,276Gross profit:Products

$
8,753


$
7,887


$
7,889


$
7,218


$
7,722


$
6,632


$
6,360


$
4,418Services


2,789



1,666



2,156



1,289



1,587



1,517



1,272



989Total gross profit


11,542



9,553



10,045



8,507



9,309



8,149



7,632



5,407Selling, general and administrative expenses


10,395



8,543



9,042



8,172



8,432



7,432



7,001



5,845Operating income (loss)


1,147



1,010



1,003



335



877



717



631



(438
)Interest and other (income) expense, net


79



17



(41
)


24



18



111



18



85Income tax expense (benefit)


(257
)


7



7



7



(1
)


44







1Net income (loss) from continuing operations


1,325



986



1,037



304



860



562



613



(524
)Income (loss) from discontinued operations, net of taxes


(14
)


38



(3
)


62



(164
)


(291
)


143



(4
)Net income (loss)

$
1,311


$
1,024


$
1,034


$
366


$
696


$
271


$
756


$
(528
)Income (loss) from continuing operations per share:Basic

$
0.18


$
0.14


$
0.15


$
0.04


$
0.13


$
0.10


$
0.10


$
(0.09
)Diluted

$
0.16


$
0.12


$
0.13


$
0.04


$
0.11


$
0.09


$
0.08


$
(0.09
)Net income (loss) per share:Basic

$
0.17


$
0.14


$
0.15


$
0.05


$
0.11


$
0.08


$
0.12


$
(0.09
)Diluted

$
0.16


$
0.13


$
0.13


$
0.05


$
0.09


$
0.07


$
0.10


$
(0.09
)Shares used in computing net income (loss) per share:Basic


7,499,620



7,081,511



6,862,538



6,662,839



6,571,826



6,419,501



6,223,118



6,047,840Diluted


8,408,437



8,037,221



7,817,371



7,729,681



7,500,976



7,284,261



7,324,469



6,047,840    36




---



##### Table of Contents



Critical
    Accounting Policies
  Revenue
    Recognition
    Products revenue
  No. 99-19, EITF 99-19,
    Software No. 97-2,
  Technical support services revenue
 37




---



##### Table of Contents



Revenue for fixed and flat fee services contracts
  Other service revenue
  Arrangements with multiple deliverables No. 00-21, (EITF 00-21),
    
    The customer is required to pay the product billing in its
    entirety independent of any services performed.
    The product has value to the customer on a stand alone basis and
    pricing is comparable whether sold with or without services.
    The product is standard equipment not significantly altered by
    installation.
    Installation of the product can be performed by many other
    companies.
    Although there is a general right of return relative to
    delivered product, delivery of the undelivered items is
    considered probable and is substantially in our control.  EITF 00-21.
   38




---



##### Table of Contents



Vendor
    Incentive Recognition
    Share-Based
    Compensation Expense
     39




---



##### Table of Contents



2007


2006


2005Expected volatility


60.3
%


63.1
%


63.9
%Expected term (in years)


6.5



6.3



8.0Risk-free interest rate


4.4
%


4.7
%


4.4
%Expected dividend yield


0
%


0
%


0
%       Liquidity
    and Capital Resources
  Sources
    of Liquidity
    Form S-3 and/or
  Accounts Receivable.
 40




---



##### Table of Contents



Inventory.
  Accounts Payable.
  Contractual
    Obligations
    Payments Due by PeriodLess Than








AfterContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 Years(Dollars in thousands)Lease obligations

$
4,941


$
1,282


$
2,143


$
965


$
551Other obligations


382



219



163







Total contractual obligations

$
5,323


$
1,501


$
2,306


$
965


$
551       Credit Facility.
  
    The Agreement provides a discretionary line of credit up to a
    maximum aggregate amount of $50,000 to purchase inventory from
    CPC approved vendors.
    The Agreement provides a working capital revolving line of
    credit under the above line of credit with an aggregate
    outstanding sublimit of $10 million.
    The working capital revolving line of credit incurs interest
    payable monthly at the rate of prime plus 0.5%.
    The Agreement contains customary covenants regarding maintenance
    of insurance coverage, maintenance of and reporting collateral,
    and submission of financial statements. The Agreement also
    contains covenants measured as of the end of each calendar
    quarter covering required maintenance of minimum current ratio,
    tangible net worth, working capital, and total liabilities to
    tangible net worth ratio (all as defined in the Agreement, as
    amended).
    The credit facility is collateralized by substantially all of
    our assets. 41




---



##### Table of Contents




    The term of the Agreement is for one year, with automatic
    renewals for one year periods, except as otherwise provided
    under the Agreement.    
    $10,000 maximum aggregate commitment for acquisitions.
    Advances under the Acquisition Facility are not to exceed 80% of
    purchase price or six times adjusted EBITDA, as defined in the
    Amendment, for the twelve months immediately preceding the
    acquisition closing date.
    Interest is payable at the rate of prime plus 2%.
    An acquisition commitment fee of 1% of the advance amount is
    payable with one-eighth paid at closing and seven-eighths paid
    with each loan funding.
    Repayment of each advance under the Acquisition Facility is
    interest only for first year then amortizing for 36 to
    48 months, to be determined for each advance, with no
    penalty to prepay any principal balance. The loan will also be
    reduced annually by an amount equal to 25% of excess cash flow,
    as defined in the Amendment, beginning December 31, 2008.
    CPC may negotiate with us to revise existing financial covenants
    in conjunction with each advance as required.
    Termination date of the senior credit facility was extended to
    August 1, 2009, subject to automatic renewal as defined in
    the Amendment.      Total Credit Facility

$
50,000Borrowing base limitation


(14,476
)Total borrowing capacity


35,524Less interest-bearing borrowings


Less non-interest bearing advances


(32,519
)Total unused availability

$
3,005     60-day 30-day 60-day 30-day
   42




---



##### Table of Contents




    maintain Minimum Tangible Net Worth of $8.0 million;
    maintain a maximum Debt to Tangible Net Worth ratio of 6.0 to 1;
    maintain Minimum Working Capital of not less than
    $6.5 million; and
    maintain a Current Ratio of not less than 1.10 to 1.0.    Cash Flows.
  Operating Activities.
  Investing Activities.
  Financing Activities.
  Recent
    Accounting Pronouncements
   43




---



##### Table of Contents



FAS 157-b FAS 157-b.
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Risk
   44




---



##### Table of Contents



Item 8.
    Financial
    Statements and Supplementary Data  INX INC.
    AND SUBSIDIARIES
  INDEX TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 AND
    FINANCIAL STATEMENT SCHEDULE
  PageReport of Independent Registered Public
    Accounting Firm


46Consolidated Balance Sheets at December 31,
    2007 and 2006


47Consolidated Statements of Operations for the
    years ended December 31, 2007, 2006 and 2005


48Consolidated Statements of Stockholders
    Equity for the years ended December 31, 2007, 2006 and
    2005


49Consolidated Statements of Cash Flows for the
    years ended December 31, 2007, 2006 and 2005


50Notes to Consolidated Financial Statements


52Schedule II Valuation and Qualifying
    Accounts


75  45




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    I-Sector
      Share-Based Payment
  
    46




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2007


2006(In thousands, exceptshare and par value amounts)ASSETSCurrent Assets:Cash and cash equivalents

$
9,340


$
1,795Accounts receivable  trade, net of allowance of $470
    and $299


45,128



42,424Inventory, net


1,439



1,157Deferred income taxes


2,100



Other current assets


2,062



2,086Total current assets


60,069



47,462Property and equipment, net of accumulated depreciation of
    $3,728 and $2,414


4,421



3,854Goodwill


16,603



10,891Intangible assets, net of accumulated amortization of $1,592 and
    $1,264


3,148



283Other assets






30Total assets

$
84,241


$
62,520LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Notes payable

$
6,200


$
4,609Accounts payable


37,233



28,798Accrued payroll and related costs


3,788



3,362Accrued expenses


1,825



1,676Other current liabilities


1,440



1,385Total current liabilities


50,486



39,830Long-term liabilities:Deferred income taxes


1,565



Other long-term liabilities


163



306Total long-term liabilities


1,728



306Commitments and ContingenciesStockholders Equity:Preferred stock, $.01 par value, 5,000,000 shares
    authorized, no shares issued






Common stock, $.01 par value, 15,000,000 shares
    authorized, 7,548,892 and 6,603,070 issued


75



66Additional paid-in capital


36,497



30,598Accumulated deficit


(4,545
)


(8,280
)Total stockholders equity


32,027



22,384Total liabilities and stockholders equity

$
84,241


$
62,520    47




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS
  Year Ended December 31,2007


2006


2005(In thousands, except share and per share amounts)Revenue:Products

$
180,311


$
135,317


$
94,570Services


27,656



20,696



12,749Total revenue


207,967



156,013



107,319Cost of goods and services:Products


148,564



110,185



79,715Services


19,756



15,331



9,028Total cost of goods and services


168,320



125,516



88,743Gross profit


39,647



30,497



18,576Selling, general and administrative expenses


36,152



28,710



22,759Operating income (loss)


3,495



1,787



(4,183
)Interest (expense)


(354
)


(273
)


(297
)Interest income


286



42



59Other income (expense), net


(11
)


(1
)


2Income (loss) from continuing operations before income taxes and
    minority interest


3,416



1,555



(4,419
)Income tax expense (benefit)


(236
)


44



475Income (loss) from continuing operations before minority interest


3,652



1,511



(4,894
)Minority interest










23Net income (loss) from continuing operations


3,652



1,511



(4,917
)Income (loss) from discontinued operations, net of taxes


83



(316
)


(2,967
)Net income (loss)

$
3,735


$
1,195


$
(7,884
)Net income (loss) per share:Basic:Net income (loss) from continuing operations before minority
    interest

$
0.52


$
0.24


$
(0.86
)Income (loss) from discontinued operations, net of taxes


0.01



(0.05
)


(0.52
)Net income (loss) per share

$
0.53


$
0.19


$
(1.38
)Diluted:Net income (loss) from continuing operations before minority
    interest

$
0.45


$
0.21


$
(0.86
)Income (loss) from discontinued operations, net of taxes


0.02



(0.05
)


(0.52
)Net income (loss) per share

$
0.47


$
0.16


$
(1.38
)Shares used in computing net income (loss) per share:Basic


7,026,623



6,318,674



5,706,323Diluted


8,027,286



7,293,737



5,706,323    48




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
  $.01 Par Value


AdditionalCommon Stock


Paid-In


AccumulatedShares


Amount


Capital


Deficit


TotalBalance at January 1, 2005


5,201,354


$
52


$
17,513


$
(1,716
)

$
15,849Exercise of common stock options


157,414



2



207







209Exchange of INX and
    I-Sector
    options










5,729







5,729Exchange of INX and
    I-Sector
    common stock


244,890



2



1,528







1,530Issuance of shares for Network Architects acquisition


308,166



3



1,997







2,000Issuance of shares for InfoGroup Northwest acquisition


65,102



1



512







513Issuance of stock options










57







57Vesting of consultant options










9







9Repurchase and retirement of common stock


(1,300
)






(6
)






(6
)Net loss














(7,884
)


(7,884
)Balance at December 31, 2005


5,975,626



60



27,546



(9,600
)


18,006Cumulative effect of correction of accounting for professional
    fees as provided under SAB 108














125



125Balance at January 1, 2006


5,975,626



60



27,546



(9,475
)


18,131Exercise of common stock options and other


332,859



3



610







613Issuance of shares for Datatran acquisition


73,108



1



514







515Issuance of shares as additional purchase price consideration
    for Network Architects acquisition


97,413



1



570







571Issuance of shares as additional purchase price consideration
    for InfoGroup Northwest acquisition


122,544



1



750







751Issuance of warrants










128







128Common stock grant to employee


1,520







10







10Share-based compensation expense related to employee stock
    options










462







462Share-based compensation expense related to employee restricted
    stock grants










8







8Net income














1,195



1,195Balance at December 31, 2006


6,603,070



66



30,598



(8,280
)


22,384Exercise of common stock options


591,011



6



1,443







1,449Issuance of vested restricted common stock


4,928















Issuance of shares as additional purchase price consideration
    for Datatran acquisition


25,253







250







250Issuance of shares as additional purchase price consideration
    for Network Architects, Corp. acquisition


75,000



1



676







677Issuance of shares as purchase price consideration for Select,
    Inc. acquisition


243,556



2



2,580







2,582Share-based compensation expense related to employee stock
    options










557







557Share-based compensation expense related to directors
    stock grants


9,072







90







90Share-based compensation expense related to employee restricted
    stock grants










88







88Excess tax benefit from stock option exercises










160







160Issuance of warrants










86







86Purchase and retirement of treasury stock resulting from grantee
    election to fund payroll taxes out of restricted stock grant


(1,198
)






(13
)






(13
)Repurchase and retirement of common stock


(1,800
)






(18
)






(18
)Net income














3,735



3,735Balance at December 31, 2007


7,548,892


$
75


$
36,497


$
(4,545
)

$
32,027    49




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2007


2006


2005(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)

$
3,735


$
1,195


$
(7,884
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:(Income) loss from discontinued operations


(111
)


316



2,967Depreciation and amortization


1,659



1,178



949Deferred income tax (benefit)


(535
)






Share-based compensation expense for employee stock options and
    restricted stock grant


653



415



Bad debt expense


268



63



9Issuance of warrants


86







Issuance of stock grant


90



10



66Loss on retirement of assets


12



9



26Tax expense (benefit) from discontinued operations


28







(466
)Minority interest










23Exchange of options in merger of subsidiary










5,729Changes in assets and liabilities that provided (used) cash:Accounts receivable, net


2,733



(17,584
)


1,678Inventory


156



(1,053
)


302Other current assets


130



(1,206
)


(579
)Other assets






21



(21
)Accounts payable


1,653



14,981



3,875Accrued expenses


(152
)


837



496Other current and long-term liabilities


(408
)


792



468Net cash provided by (used in) continuing operations


9,997



(26
)


7,638Net operating activities from discontinued operations


28



(684
)


412Net cash provided by (used in) operating activities


10,025



(710
)


8,050CASH FLOWS FROM INVESTING ACTIVITIES:Capital expenditures, net of effect of acquisitions


(1,591
)


(1,921
)


(476
)Acquisition of Select, Inc., net of $2,864 cash acquired


(3,375
)






Acquisition of Datatran Network Systems


(250
)


(1,000
)


Acquisition of InfoGroup Northwest, Inc.






(751
)


(1,900
)Acquisition of Network Architects, Corp.






(394
)


(2,300
)Proceeds of sale of fixed assets


3







31Transaction costs paid for acquisitions


(386
)


(32
)


(362
)Net cash used in investing activities of continuing operations


(5,599
)


(4,098
)


(5,007
)Net investing activities of discontinued operations


15



1,492



(77
)Net cash used in investing activities


(5,584
)


(2,606
)


(5,084
)CASH FLOWS FROM FINANCING ACTIVITIES:Borrowings under acquisition credit facility


6,000







Borrowings (payments) of short-term interest bearing credit
    facility, net


(4,350
)


1,886



(5,658
)Exercise of stock options


1,449



613



209Excess tax benefits from stock option exercises


160







Proceeds from other short-term borrowings


472



407



370Payments of other short-term borrowings


(531
)


(391
)


(163
)Debt issuance costs paid


(65
)






Purchase of treasury stock resulting from grantee election


(13
)






Purchase of common stock


(18
)






(6
)Net cash provided by (used in) financing activities of
    continuing operations


3,104



2,515



(5,248
)Net financing activities of discontinued operations






(1
)


(96
)Net cash provided by (used in) financing activities


3,104



2,514



(5,344
)NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


7,545



(802
)


(2,378
)CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD


1,795



2,597



4,975CASH AND CASH EQUIVALENTS AT END OF PERIOD

$
9,340


$
1,795


$
2,597    50




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Year Ended December 31,2007


2006


2005(In thousands)SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:Cash paid for interest

$
272


$
219


$
426Cash paid for income taxes

$
16


$
14


$
42SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:Acquisition of Select, Inc.:Fair value of assets acquired

$
6,807


$



$
Common stock issued


(2,582
)






Noncompete agreement liability


(450
)






Transaction costs accrued


(50
)






Acquisition of Datatran Network Systems:Fair value of assets acquired


500



1,515



Common stock issued


(250
)


(515
)


Acquisition of Network Architects, Corp.:Fair value of assets acquired


677



965



4,300Common stock issued


(677
)


(571
)


(2,000
)Acquisition of InfoGroup Northwest, Inc.:Fair value of assets acquired






1,502



2,400Common stock issued






(751
)


(500
)Acquisition of INX minority interest:Common stock issued










1,530Minority interest acquired










(302
)Obligation under software license agreement:Fair value of asset acquired






775



Obligation incurred






(775
)


Issuance of warrants in connection with sale of Stratasoft,
    Inc.






(128
)


    51




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS
 For the Years Ended December 31, 2007, 2006 and
    2005
 (In thousands, except share and per share amounts)
  1.
    Description
    of Business  I-Sector I-Sector
  2.
    Summary
    of Significant Accounting Policies  Basis of Presentation
  Principles of Consolidation
  Cash and Cash Equivalents
  Accounts Receivable
  Inventory first-in
  Property and Equipment
  Goodwill
 52




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Intangible Assets
  Impairment of Long-Lived Assets
  Income Taxes
  Use of Estimates
  Revenue Recognition
  Products revenue
  No. 99-19, EITF 99-19,
    Software 97-2,
 53




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Technical support services revenue
  Revenue for fixed and flat fee services contracts
  Other service revenue
  Arrangements with multiple deliverables 00-21, (EITF 00-21),
    
    The customer is required to pay the product billing in its
    entirety independent of any services performed.
    The product has value to the customer on a stand alone basis and
    pricing is comparable whether sold with or without services.   The product is standard equipment not significantly altered by
    installation.
    Installation of the product can be performed by many other
    companies. 54




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Although there is a general right of return relative to
    delivered product, delivery of the undelivered items is
    considered probable and is substantially in the control of the
    Company.  EITF 00-21.
    No. 06-3
  Vendor Incentives
  Advertising Costs
  Research and Development Costs
  Share-Based Compensation
 55




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Earnings Per Share
  Fair Value of Financial Instruments
  Audit and Tax Professional Fees
  Recent Accounting Pronouncements
   56




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      FAS 157-b FAS 157-b.
  3.
    Acquisitions    Select,
    Inc.
     57




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Pro
    Forma Summary (Unaudited)
    Year Ended December 31,2007


2006Revenues

$
236,110


$
189,767Net income from continuing operations

$
3,996


$
1,382Net income per share from continuing operations:Basic

$
0.55


$
0.21Diluted

$
0.48


$
0.18Weighted average shares used in calculation:Basic


7,242,931



6,562,230Diluted


8,243,594



7,537,293   Datatran
    Network Systems
     58




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Network
    Architects, Corp.
        InfoGroup
    Northwest, Inc.
   59




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Datatran


Network


InfoGroupNetwork


Architects,


Northwest,Select, Inc.


Systems


Corp.


Inc.Allocated acquisition cost:Intangible assets:Customer relationships, amortized from 2 to 10 years

$
2,489


$
123


$
151


$
50Noncompete agreements, amortized from 3 to 5 years


704



45



90



84Cash


2,864











Accounts receivable


5,705











Inventory


429



25







Property and equipment


331



38



500



297Other assets


31



5



4



15Goodwill


4,500



1,847



5,261



3,580Accounts payable and other liabilities assumed


(7,382
)










Net assets acquired


9,671



2,083



6,006



4,026Less: cash acquired


(2,864
)










Net amount paid for acquisition

$
6,807


$
2,083


$
6,006


$
4,026   4.
    Discontinued
    Operations  Telecom
    and Computer Products Divisions
    Stratasoft
    and Valerent Subsidiaries
   60




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    All outstanding Stratasoft common stock was sold for a purchase
    price of $3,000, which has been or is subject to reduction as
    follows:  
    $800 placed in escrow, which is available to satisfy indemnified
    losses, if any, as defined in the Agreement. Funds placed in
    escrow are excluded from the estimated gain stated above.
    Approximately $604 in indemnified losses, net of interest
    earned, have been paid or presented for payment as of
    December 31, 2007.
    $221 representing a preliminary net working capital adjustment,
    as defined. The final working capital adjustment recorded during
    June 2006 resulted in the further reduction of the sale proceeds
    of $40.
    The Company indemnified the buyer for potential losses as
    defined in the Agreement to a maximum of $1,400, inclusive of
    amounts placed in escrow. Excess funds held in escrow were
    scheduled to be released on January 26, 2008. However,
    certain potential third-party claims remain outstanding,
    including the Schneider Rucinski lawsuit discussed further in
    Note 15. As provided in the Agreement, funds of $196 held
    in escrow at December 31, 2007 will not be released until
    such claims are resolved.  
    The Agreement provided for additional consideration to the
    Company if either of the following conditions were met:
    (1) Stratasoft revenue exceeds $10,000 for any consecutive
    twelve month period within two years of closing or
    (2) Stratasoft is sold by the buyer to another party prior
    to January 26, 2008, for an amount in excess of $15,000.
    Neither condition was met; therefore, no consideration is due
    the Company.    brother-in-law
 61




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2007


2006


2005Revenues:Stratasoft.

$



$
268


$
5,277Valerent






4,330



6,662Total

$



$
4,598


$
11,939Income (loss) from operations of discontinued subsidiaries:Stratasoft.

$
12


$
(288
)

$
(2,734
)Valerent


39



(830
)


(239
)Total


51



(1,118
)


(2,973
)Gain on disposal of discontinued operations:Stratasoft.






302



Valerent


60



31



Telecom and Computer Products Divisions






469



106Cumulative effect of change in accounting method at Stratasoft










(566
)Income tax (expense) benefit


(28
)






466Income (loss) from discontinued operations, net of taxes

$
83


$
(316
)

$
(2,967
)     December 31,2007


2006Other current assets:Notes receivable, current

$
29


$
19Other assets:Notes receivable, noncurrent

$



$
30Other current liabilities:Accrued expenses

$
44


$
61Deferred revenue


29



64Total

$
73


$
125    62




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    5.
    Property
    and Equipment    December 31,2007


2006Equipment

$
348


$
305Computer equipment


3,585



2,904Computer software


2,127



1,338Furniture and fixtures


971



831Leasehold improvements


1,013



785Vehicles


105



1058,149



6,268Accumulated depreciation and amortization


(3,728
)


(2,414
)Total

$
4,421


$
3,854     6.
    Intangible
    Assets  December 31, 2007


December 31, 2006


WeightedGross





Gross





AverageCarrying


Accumulated


Carrying


Accumulated


RemainingAmount


Amortization


Amount


Amortization


LifeAmortized intangible assets:Customer lists

$
3,649


$
1,208


$
1,160


$
997



9.54Other


1,091



384



387



267



4.42Total

$
4,740


$
1,592


$
1,547


$
1,264       2008

$
4622009


4012010


3912011


3902012


343Thereafter


1,161Total

$
3,148  63




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    Earnings
    Per Share    Year Ended December 31,2007


2006


2005Numerator for basic and diluted earnings per share:Net income (loss) from continuing operations before minority
    interest

$
3,652


$
1,511


$
(4,894
)Minority interest










(23
)Net income (loss) from continuing operations used in computing
    income (loss) per share


3,652



1,511



(4,917
)Income (loss) from discontinued operations, net of taxes


83



(316
)


(2,967
)Net income (loss)

$
3,735


$
1,195


$
(7,884
)Denominator for basic earnings per share 
    weighted-average shares outstanding


7,026,623



6,318,674



5,706,323Effect of dilutive securities:Shares issuable from assumed conversion of common stock options
    and restricted stock


1,000,662



975,063



Denominator for diluted earnings per share 
    weighted-average shares outstanding


8,027,286



7,293,737



5,706,323     8.
    Notes
    Payable    December 31,2007


2006Revolving credit facility bearing interest of prime plus .5%

$



$
4,350Revolving acquisition credit facility bearing interest of prime
    plus 2.0%


6,000



Notes payable bearing interest of 6.00% with monthly payments of
    $40 due May 2008


200



Notes payable bearing interest of 6.25% with monthly payments of
    $74 due July 2007






259Total, all due within 12 months

$
6,200


$
4,609  64




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    
    The Agreement provides a discretionary line of credit up to a
    maximum aggregate amount of $50,000 to purchase inventory from
    CPC approved vendors.
    The Agreement provides a working capital revolving line of
    credit under the above line of credit with an aggregate
    outstanding sublimit of $10 million.
    The working capital revolving line of credit incurs interest
    payable monthly at the rate of prime plus 0.5%.
    The Agreement contains customary covenants regarding maintenance
    of insurance coverage, maintenance of and reporting collateral,
    and submission of financial statements. The Agreement also
    contains covenants measured as of the end of each calendar
    quarter covering required maintenance of minimum current ratio,
    tangible net worth, working capital, and total liabilities to
    tangible net worth ratio (all as defined in the Agreement, as
    amended).
    The credit facility is collateralized by substantially all
    assets of the Company.
    The term of the Agreement is for one year, with automatic
    renewals for one year periods, except as otherwise provided
    under the Agreement.    
    $10,000 maximum aggregate commitment for acquisitions.
    Advances under the Acquisition Facility are not to exceed 80% of
    purchase price or six times adjusted EBITDA, as defined in the
    Amendment, for the twelve months immediately preceding the
    acquisition closing date.
    Interest is payable at the rate of prime plus 2%.
    An acquisition commitment fee of 1% of the advance amount is
    payable with one-eighth paid at closing and seven-eighths paid
    with each loan funding.
    Repayment of each advance under the Acquisition Facility is
    interest only for first year then amortizing for 36 to
    48 months, to be determined for each advance, with no
    penalty to prepay any principal balance. The loan will also be
    reduced annually by an amount equal to 25% of excess cash flow,
    as defined in the Amendment, beginning December 31, 2008.
    CPC may negotiate with the Company to revise existing financial
    covenants in conjunction with each advance as required.
    Termination date of the senior credit facility was extended to
    August 1, 2009, subject to automatic renewal as defined in
    the Amendment.   65




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      9.
    Income
    Taxes    Year Ended December 31,2007


2006


2005Current provision:Federal

$



$
16


$
475State


166



28



Total current provision


166



44



475Deferred benefit


(402
)






Total expense (benefit) from continuing operations


(236
)


44



475Total expense (benefit) from discontinued operations


28







(466
)Total expense (benefit)

$
(208
)

$
44


$
9     Year Ended December 31,2007


2006


2005Federal income tax at statutory rate

$
1,162


$
761


$
(1,502
)Minority interest










1,956Meals and entertainment expenses


82



59



29State taxes, net of federal tax benefit


110



19



Other


43



15



(8
)Valuation allowance


(1,633
)


(810
)


Total expense (benefit) from continuing operations

$
(236
)

$
44


$
475  66




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2007


2006Net deferred tax assets (liabilities):Accounts and notes receivable

$
619


$
234Closing and severance costs


23



16Deferred service revenue


331



93Amortization of intangibles


(1,444
)


(518
)Share-based compensation


55



1,589Accrued liabilities


1,396



1,472Inventory Reserves


(286
)


Other


17



Depreciation


(176
)


(492
)Net operating loss carryforward






860Total


535



3,254Less: Valuation allowance






(3,254
)Total

$
535


$
        67




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  10.
    Adoption
    of FASB Interpretation No. 48        11.
    Stockholders
    Equity  Equity
    Compensation Plans
    1996 Incentive Stock Plan and the 1996 Non-Employee Director
    Stock Option Plan
  2000 Stock Incentive Plan
 68




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Grant-Date
    Fair Value
    2007


2006


2005Expected volatility


60.3
%


63.1
%


63.9
%Expected term (in years)


6.5



6.3



8.0Risk-free interest rate


4.4
%


4.7
%


4.4
%Expected dividend yield


0
%


0
%


0
%     Share-Based
    Compensation Expense
      Year Ended December 31,2007


2006Cost of products and services  services

$
65


$
57Selling, general and administrative expenses


500



350Share-based compensation from continuing operations before
    income taxes


565



407Income tax benefit






Share-based compensation from continuing operations


565



407Share-based compensation from discontinued operations


(8
)


55Total share-based compensation

$
557


$
462Impact of total share-based compensation on net income per share:Basic

$
(0.08
)

$
(0.07
)Diluted

$
(0.07
)

$
(0.06
)   paid-in-capital,
 69




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##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2005Basic and diluted:Net loss as reported

$
(7,884
)Add: share-based employee compensation recognized, net of
    related income tax effect


5,786Deduct: share-based employee compensation, net of related income
    tax effect


(6,461
)Pro forma net loss

$
(8,559
)Net loss per share:Basic  as reported

$
(1.38
)Basic  pro forma

$
(1.50
)Diluted  as reported

$
(1.38
)Diluted  pro forma

$
(1.50
)   Option
    Activity
    WeightedWeighted


AverageAverage


Remaining


AggregateExercise


Contractual


IntrinsicShares


Price


Term (Years)


ValueOptions outstanding at December 31, 2006


1,870,763


$
3.42Granted


242,000



10.32






$
31Exercised


(591,010
)


2.45






$
5,376Canceled


(41,017
)


6.94






$
125Options outstanding December 31, 2007


1,480,736


$
4.83



6.51


$
8,403Options exercisable at December 31, 2007


970,803


$
2.92



5.27


$
7,309Options vested and options expected to vest at December 31,
    2007


1,380,943


$
4.66



6.77


$
8,071    70




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageGrant DateNonvested Shares

Shares


Fair ValueNonvested at December 31, 2006


37



Granted


194


$
11.46Vested


(14
)

$
9.06Forfeited


(21
)

$
7.63Nonvested at December 31, 2007


196


$
11.30     No. FAS 123R-3 No. FAS 123R-3
    Capital Stock
  Common Stock Repurchase Plan Rule 10b-18
 71




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Warrants
    paid-in-capital.
  12.
    Elimination
    of Minority Interest in InterNetwork Experts, Inc.  paid-in-capital paid-in-capital
  13.
    Major
    Customers and Geographic Concentrations  E-Rate
  14.
    Related
    Party Transactions    
    A lease term of eighty-four months ending January 31, 2014. 72




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   
    Base rent of $20 per month, gross. Under the Old Lease,
    occupancy expenses such as electricity, gas, water, janitorial,
    and security averaging approximately $280 per year are paid by
    the Company. Under the New Lease these services are included in
    the base rent with the costs born by the landlord.
    A buildout allowance of $31 to be used by the Company to
    partially offset the costs of remodeling the leased premises and
    first floor common areas. The buildout allowance was provided by
    reducing the monthly lease payment from $21 to $20.
    A security deposit of $20 is required, which is a reduction from
    the $38 currently held by Allstar.
    The Company has the option to terminate the lease at the end of
    the sixtieth or seventy-second month of the lease term. In order
    to exercise its option, the Company is required to provide
    Allstar with a minimum of 180 days advance written notice
    of its intent to terminate the lease. If 360 days of
    advance written notice is given by the Company, a termination
    fee of one months base rent is immediately payable, and if
    180 days of advance written notice is given by the Company,
    a termination fee of two months base rent is immediately
    payable.
    At any time during the term of the lease, Allstar has the right
    to pay the Company in cash the amount of unamortized buildout
    allowance, after which the monthly basic rent payable under the
    lease increases from $20 to $21 for the remaining term of the
    lease.
    The Company has the option to renew the lease for two additional
    terms of five years each at the lesser of the then prevailing
    fair market rental rate or 105% of the base rent under the New
    Lease.      
    INX has the sole option to terminate its lease with
    120 days notice for reasons specified in the Amendment. INX
    is not required to pay rent during the 120 day notice
    period.
    INX has the right of first refusal on additional space on the
    second floor of the building.      15.
    Commitments
    and Contingencies  Litigation
 73




---



##### Table of Contents



INX INC.
    AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Schneider Rucinski Enterprises v.
    Touch Asia Outsourcing Solutions, Stratasoft, Inc., INX Inc.,
    et al
    Leases
  Obligation under Software License Agreement
  401(k) Plan
 74




---



##### Table of Contents



Schedule II
    Valuation and Qualifying Accounts
    For Each of the Three Years Ended December 31, 2007
    (Amounts in Thousands)  Balance at


Charges to











Balance atBeginning


Costs and








Other


End ofof Year


Expenses


Write-offs


Recoveries


Changes


YearAccumulated provision deducted from related assets on balance
    sheetAllowance for doubtful accounts:2005

$
601


$
9


$
449


$



$



$
1612006


161



63



5



80







2992007


299



268



117







20



470   Note
 75




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A(T).
    Controls
    and Procedures  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
    Changes
    in Internal Control Over Financial Reporting
    Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rule 13a-15(f)
  Form 10-K
   76




---



##### Table of Contents



Item 9B.
    Other
    Information.   PART III  Form 10-K
  Item 10.
    Directors,
    Executive Officers, and Corporate Governance    http://www.inxi.com.
  Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence    Item 14.
    Principal
    Accountant Fees and Services   77




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules             78




---



##### Table of Contents



SIGNATURES    
  By:
    /s/  JAMES
    H. LONG   Chief Executive Officer
    Signature

Capacity

Date/s/  JAMES
    H. LONGJames
    H. Long

Chief Executive Officer and Chairman of the Board of Directors

March 7, 2008/s/  BRIAN
    FONTANABrian
    Fontana

Vice President and Chief Financial Officer

March 7, 2008/s/  LARRY
    LAWHORNLarry
    Lawhorn

Controller and Chief Accounting Officer

March 7, 2008/s/  DONALD
    R. CHADWICKDonald
    R. Chadwick

Director

March 7, 2008/s/  CARY
    GROSSMANCary
    Grossman

Director

March 7, 2008/s/  JOHN
    B. CARTWRIGHTJohn
    B. Cartwright

Director

March 7, 2008  79




---



##### Table of Contents



EXHIBIT INDEX  ExhibitNo.

Description

Filed Herewith or Incorporated by Reference From:2
.1

Stock Purchase Agreement by and among The Resource Group
    International Limited and INX Inc. dated January 26, 2006

Exhibit 2.1 to
    Form 8-K
    filed January 31, 20063
.1

Amended and Restated Bylaws of the Company

Exhibit 3.1 to Amendment 5 to
    Form S-1,
    Registration
    No. 333-09789,
    filed June 26, 19973
.2

Certificate of Incorporation of the Company

Exhibit 3.2 to Amendment 1 to
    Form S-1,
    Registration
    No. 333-09789,
    filed September 19, 19963
.3

Certificate of Amendment to Certificate of Incorporation of
    Allstar Systems, Inc., dated June 24, 1997

Exhibit 3.4 to Amendment 5 to
    Form S-1,
    Registration
    No. 333-09789,
    filed June 26, 19973
.4

Certificate of Amendment to Certificate of Incorporation of
    Allstar Systems, Inc., dated March 5, 1999

Exhibit 3.3 to
    Form 8-A,
    Registration
    No. 001-31949,
    filed December 29, 20033
.5

Certificate of Amendment to Certificate of Incorporation of
    Allstar Systems, Inc. dated July 10, 2000

Exhibit 3.4 to
    Form 8-A,
    Registration
    No. 001-31949,
    filed December 29, 20033
.6

Certificate of Ownership and Merger

Exhibit 3.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    dated January 6, 20064
.1

Specimen Common Stock Certificate

Exhibit 4.1 to Amendment 2 to
    Form S-1,
    Registration
    No. 333-09789,
    filed October 3, 199610
.1

Form of Employment Agreement by and between the Company and
    certain members of management

Exhibit 10.5 to Amendment 1 to
    Form S-1,
    Registration
    No. 333-09789,
    filed September 19, 199610
.2

Employment Agreement by and between Allstar Systems, Inc. and
    James H. Long, dated August 15, 1996

Exhibit 10.3 to
    Form 10-K
    Registration
    No. 001-31949,
    filed March 12, 200410
.3

Amended & Restated Allstar Systems, Inc. 1996 Incentive
    Stock Plan, dated effective July 1, 1997

Exhibit 10.9 to
    Form 10-K
    Registration
    No. 001-31949,
    filed March 12, 200410
.4

Amended & Restated I-Sector Corp. Stock Incentive Plan,
    dated effective July 28, 2003

Exhibit 10.10 to
    Form 10-K
    Registration
    No. 001-31949,
    filed March 12, 200410
.5

Amended & Restated Internetwork Experts, Inc., Stock
    Incentive Plan dated effective August 1, 2003

Exhibit 10.11 to
    Form 10-K
    Registration
    No. 001-31949,
    filed March 12, 200410
.6

First Amendment to I-Sector Corporation Incentive Plan

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    dated January 4, 200510
.7

Second Amendment to I-Sector Corporation Incentive Plan, as
    amended and restated

Exhibit 10.2 to
    Form 8-K,
    Registration
    No. 001-31949,
    dated March 21, 200510
.8

Third Amendment to I-Sector Corporation Incentive Plan

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    dated May 17, 200510
.9

Fourth Amendment to I-Sector Corporate Incentive Plan

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed June 6, 200610
.10

Fifth Amendment to I-Sector Corporate Incentive Plan

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed May 15, 200710
.11

Lease Agreement by and between Allstar Equities, Inc. and
    I-Sector Corporation, dated February 1, 2002

Exhibit 10.32 to
    Form 10-K,
    Registration
    No. 000-21479,
    filed March 28, 200210
.12

Lease Agreement between INX Inc. and Allstar Equities, Inc.,
    dated October 11, 2006

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed October 12, 2006




---



##### Table of Contents



ExhibitNo.

Description

Filed Herewith or Incorporated by Reference From:10
.13

Employment Agreement by and between
    I-Sector
    Corporation and Brian Fontana, dated December 20, 2004

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed December 20, 200410
.14

Confidentiality Agreement by and between
    I-Sector
    Corporation and Brian Fontana, dated December 20, 2004

Exhibit 10.2 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed December 20, 200410
.15

Plan and Agreement of merger among I-Sector Corporation, INX
    Merger Sub, Inc. and InterNetwork Experts, Inc. dated as of
    February 1, 2005

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    dated February 7, 200510
.16

Employment Agreement by and between I-Sector Corporation and
    Larry Lawhorn dated April 5, 2005

Exhibit 10.1 to
    Form 10-Q,
    Registration
    No. 001-31949,
    dated August 15, 200510
.17

Credit Agreement by and among Castle Pines Capital LLC, I-Sector
    Corporation, Valerent, Inc., InterNetwork Experts, Inc., and
    Stratasoft, Inc. dated December 27, 2005

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    dated May 4, 200710
.18

Credit Agreement by and among Castle Pines Capital LLC, INX,
    Inc., and Valerent, Inc. dated April 30, 2007

Exhibit 10.1 to
    Form 10-Q,
    Registration
    No. 001-31949,
    dated August 15, 200510
.19

Acquisition Facility Amendment to Amended and Restated Credit
    Agreement by and among Castle Pines Capital LLC, and INX, Inc.
    dated August 1, 2007

Exhibit 10.2 to
    Form 10-Q,
    Registration
    No. 001-31949,
    dated August 6, 200710
.20

Stock Purchase Agreement by and among INX Inc., Dana Zahka, and
    All Other Shareholders of Select, Inc. dated August 31, 2007

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed September 4, 200710
.21

Amended and Restated Financial Covenants Amendment to Amended
    and Restated Credit Agreement by and between INX Inc. and Castle
    Pines Capital LLC dated August 31, 2007

Exhibit 10.2 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed September 4, 200710
.22

Amendment and Joinder to Credit Agreement by and among Select,
    Inc. and Castle Pines Capital LLC dated August 31, 2007

Exhibit 10.3 to
    Form 8-K,
    Registration
    No. 001-31949,
    filed September 4, 200710
.23

Asset Purchase Agreement by and among INX Inc., Datatran Network
    Systems and Mel Sarowitz dated February 3, 2006

Exhibit 1.1 to
    Form 8-K
    filed February 6, 200610
.24

Systems Integrator Agreement by and between Cisco Systems, Inc.
    and Internetwork Experts, Inc., dated November 13, 2001

Exhibit 10.4 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 12, 200410
.25

Amendment One, dated January 28, 2002 to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Exhibit 10.5 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 12, 200410
.26

Amendment Two, dated November 21, 2002 to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Exhibit 10.6 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 12, 200410
.27

Amendment Three, dated January 20, 2003 to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Exhibit 10.7 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 12, 2004




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##### Table of Contents



ExhibitNo.

Description

Filed Herewith or Incorporated by Reference From:10
.28

Amendment Four, dated January 16, 2004 to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Exhibit 10.8 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 12, 200410
.29

Amendment Five, dated January 27, 2005 to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Exhibit 10.23 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 27, 200610
.30

Amendment Six, dated April 18, 2005 to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Exhibit 10.24 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 27, 200610
.31

Amendment Seven, dated March 2, 2006, to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Exhibit 10.25 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 27, 200610
.32

Amendment Eight, dated March 20, 2006, to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and INX Inc.
    (formerly Internetwork Experts, Inc.), dated November 13, 2001

Exhibit 10.26 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 27, 200610
.33

Form of Change in Control Retention Agreement

Exhibit 10.1 to
    Form 8-K,
    Registration
    No. 001-31949,
    dated December 8, 200610
.34

Managed Services Provider Agreement by and between INX Inc. and
    CA, Inc. dated March 30, 2006

Exhibit 10.28 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 8, 200710
.35

Amendment No. 1 dated December 15, 2006, to Managed Services
    Provider Agreement by and between INX Inc. and CA, Inc. dated
    March 30, 2006

Exhibit 10.29 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 8, 200710
.36

Amendment Nine, dated November 13, 2006, to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and INX Inc.
    (formerly Internetwork Experts, Inc.), dated November 13, 2001

Exhibit 10.30 to
    Form 10-K,
    Registration
    No. 001-31949,
    dated March 8, 200710
.37

Amendment Ten, dated January 25, 2007 to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Filed herewith10
.38

Amendment Eleven, dated April 10, 2007 to Systems
    Integrator Agreement by and between Cisco Systems, Inc. and
    Internetwork Experts, Inc., dated November 13, 2001

Filed herewith10
.39

Amendment Twelve, dated December 13, 2007 to Systems
    Integrator Agreement by and between Cisco Systems, Inc. and
    Internetwork Experts, Inc., dated November 13, 2001

Filed herewith10
.40

Amendment dated October 1, 2007, to Systems Integrator
    Agreement by and between Cisco Systems, Inc. and Internetwork
    Experts, Inc., dated November 13, 2001

Filed herewith21
.1

List of Subsidiaries of the Company

Filed herewith




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##### Table of Contents



ExhibitNo.

Description

Filed Herewith or Incorporated by Reference From:23
.1

Consent of Grant Thornton LLP

Filed herewith31
.1

Rule 13a-14(a)/15d-14(a) Certification of Chairman and Chief
    Executive Officer

Filed herewith31
.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

Filed herewith32
.1

Section 1350 Certification of Chief Executive Officer

Filed herewith32
.2

Section 1350 Certification of Chief Financial Officer

Filed herewith99
.1

Report of Independent Registered Public Accounting Firm

Filed herewith