UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 8, 2007

ZONES, INC.

(Exact name of Registrant as Specified in its Charter)

WASHINGTON	0-28488	91-1431894
(State or other jurisdiction incorporation or organization)	(Commission File Number)	(I.R.S. Employer of Identification Number)

1102 15^th Street SW, Suite 102, Auburn, Washington 98001-6509

(Address of Principal Administrative Offices)

Registrant’s Telephone Number, Including Area Code: (253) 205-3000

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Click the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13-e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 1.01. Entry into a Material Definitive Agreement.

On February 8, 2007, the Board of Directors (the “Board”) of Zones, Inc. (the “Company”), amended the compensation policy for non-employee directors to include a quarterly fee for members of the Strategic Matters Committee of $4,000 per quarter.

Also on February 8, 2007, the Board approved the terms of two bonus programs under which certain corporate officers are eligible to receive bonuses. The programs are designed to reward achievement at specified levels of Company and individual performance. A summary of each plan is described below and attached as an exhibit to this Form 8-K.

Executive Vice President Bonus Program

Under the Executive Vice President Bonus Program, P. Sean Hobday, the Executive Vice President Sales, Thomas Ducatelli, the Executive Vice President Business Development, and Christina Corley, President, have assigned target bonus levels expressed as a ratio of fiscal year end annual salary. Messrs. Hobday and Ducatelli, and Ms. Corley may earn a bonus up to two times, six and three quarters times, and eleven and one third times their annual salary, respectively, if they exceed targeted gross profit and operating income, including the accrual for incentive programs. Two components comprise the fundamental design of the bonus program:

· Financial Performance of the Company: Participating executive officers are eligible to receive quarterly bonuses based on their divisional and/or Company quarterly gross profit and operating income metrics.

· Individual Performance: Participating executive officers may receive bonuses at the discretion of the Board based on individual performance.

The Board retained the right to change its bonus programs at any time. The Board’s approval of the terms of the bonus program is not deemed to create an enforceable agreement between the Company and any executive officer. No rights to any awards exist unless and until the Board authorizes payment of such award under the bonus program.

Senior Management Bonus Program

Under the senior management bonus program, Firoz Lalji, the Chief Executive Officer, Ronald McFadden, the Chief Financial Officer, and Anwar Jiwani, the Chief Information Officer, are eligible to receive a bonus if the Company meets the financial performance objective approved by the Board. The financial performance standard is based on income from operations, after accrual of bonuses. The officers are also eligible to receive discretionary bonuses.

The two components of the bonus program are as follows:

· Financial Performance: The participating executives are eligible for an annual bonus of up to 50% of annual base compensation, of which up to half may be paid quarterly. The Company must meet its minimum quarterly financial performance objective for an officer to be paid quarterly (although the Company could not meet a quarterly objective and meet the annual objective and the participating executive could receive the entire annual bonus). At the completion of the fiscal year, the Company’s annual financial performance is measured against the annual financial performance objective set by the Board. Annual bonuses are calculated based on the Company achieving the minimum financial performance objective less all previous payments made during any of the quarters throughout the year.

· Individual Performance: Participating executive officers may receive bonuses at the discretion of the Board based on individual performance.

Officers are also eligible to participate in an additional bonus pool equal to 10% of the Company’s income from operations which exceeds 110% of the income from operations objective set by the Board. This bonus pool which will be shared by participants based on their proportionate share of compensation to a maximum of 100% of base salary.

The Board retains the right to change its bonus programs at any time. The Board’s approval of the terms of the bonus program is not deemed to create an enforceable agreement between the Company and any executive officer. No rights to any awards exist unless and until the Board authorizes payment of such award under any bonus program.

Item 2.02. Results of Operations and Financial Condition.

On February 8, 2007, Zones, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2006. A copy of the press release is furnished as Exhibit 99.3.

The information disclosed under this Item 2.02, including Exhibit 99.4 hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(b) On February 8, 2007, Larry Benaroya informed the Board of his decision not to stand for re-election to the Board of Directors after his current term, which expires at the 2007 Annual Meeting of Shareholders. Mr. Benaroya also serves as a member of the Company's Compensation Committee and Nominating and Corporate Governance Committee. Mr. Benaroya will continue to serve as a director until the 2007 Annual Shareholders Meeting.

Item 8.01. Other Events

Increase in Buyback Authorization

On February 8, 2007, the Board of Directors approved an amendment to the Company’s stock repurchase program. Under the plan as amended, the Company may repurchase an additional $3.0 million in shares of the Company’s common stock, in either open market or private transactions at prevailing market prices, until February 28, 2008. The exact timing and amount of purchases will depend on market prices.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1, Summary of the Zones, Inc. Executive Vice President Bonus Program

Exhibit 99.2, Summary of the Zones, Inc. Senior Management Bonus Program

Exhibit 99.3, Press release dated February 8, 2007, announcing quarter and year ended December 31, 2006 financial results.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ZONES, INC.
Dated: February 12, 2007	/s/ RONALD P. MCFADDEN
	By: Ronald P. McFadden
	Its: Secretary and Chief Financial Officer

EXHIBIT INDEX

EXHIBIT No.	DESCRIPTION
99.1	Summary of the Zones, Inc. Executive Vice President Bonus Program
99.2	Summary of the Zones, Inc. Senior Management Bonus Program
99.3	Press Release, dated February 8, 2007