As filed with the Securities and Exchange Commission on January 5, 2007

Registration No. 333-                    

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

INNERWORKINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	2790	20-5997364
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

600 West Chicago Avenue

Suite 850

Chicago, Illinois 60610

Phone: (312) 642-3700

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Steven E. Zuccarini

Chief Executive Officer

InnerWorkings, Inc.

600 West Chicago Avenue, Suite 850

Chicago, Illinois 60610

Phone: (312) 642-3700

Fax: (312) 642-3704

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Steven J. Gavin, Esq. Richard E. Ginsberg, Esq. Matthew F. Bergmann, Esq. Winston & Strawn LLP 35 West Wacker Drive Chicago, Illinois 60601 Phone: (312) 558-5600 Fax: (312) 558-5700 John J. Sabl, Esq. Sidley Austin LLP One South Dearborn Chicago, Illinois 60603 Phone: (312) 853-7437 Fax: (312) 853-7036

Approximate date of commencement of proposed sale to the public:    As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

If this Form is to be a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement of the earlier effective registration statement for the same offering:  ¨

If this Form is a post-effective amendment pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  ¨

CALCULATION OF REGISTRATION FEE

Title of each class of Securities to be registered	Amount to be registered(1)	Proposed maximum offering price per share(2)	Proposed maximum aggregate offering price(2)	Amount of registration fee
Common Stock, $.0001 par value per share	9,200,000	$15.98	$147,016,000	$15,730.71

(1) Includes 1,200,000 shares of common stock that may be sold if the over-allotment option granted to the underwriters is exercised in full.

(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and based on the average high and low prices of the common stock as reported on the Nasdaq Global Market on January 3, 2007.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date, until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)

Issued January 5, 2007

8,000,000 Shares

COMMON STOCK

InnerWorkings, Inc. is offering 3,000,000 shares of its common stock and the selling stockholders are offering 5,000,000 shares of common stock. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

Our common stock is listed on the Nasdaq Global Market under the symbol “INWK.” On January 4, 2007, the closing sale price of our common stock as reported on the Nasdaq Global Market was $16.42 per share.

Investing in our common stock involves risks. See “Risk Factors” beginning on page 9.

PRICE $         A SHARE

	Price to Public	Underwriting Discounts and Commissions	Proceeds to InnerWorkings	Proceeds to Selling Stockholders
Per Share	$	$	$	$
Total	$	$	$	$

The selling stockholders have granted the underwriters the right to purchase up to an additional 1,200,000 shares to cover over-allotments.

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Morgan Stanley & Co. Incorporated expects to deliver the shares to purchasers on                         , 2007.

MORGAN STANLEY JPMORGAN

JEFFERIES & COMPANY

PIPER JAFFRAY

WILLIAM BLAIR & COMPANY

                    , 2007

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	9
Forward-Looking Statements	18
Use Of Proceeds	19
Market Price of Common Stock	19
Dividend Policy	19
Capitalization	20
Selected Consolidated Financial And Other Data	21
Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Business	41
Management	51
Compensation Discussion and Analysis	55

	Page
Certain Relationships And Related Party Transactions	72
Principal And Selling Stockholders	76
Description Of Capital Stock	82
Shares Eligible For Future Sale	85
Certain Material U.S. Federal Income Tax Consequences To Non-U.S. Holders	87
Underwriting	90
Legal Matters	94
Experts	94
Where You Can Find Additional Information	94
Index To Historical Consolidated Financial Statements	F-1

You should rely only on the information contained in this prospectus. We have not, and the selling stockholders and the underwriters have not, authorized anyone to provide you with additional information or information different from that contained in this prospectus. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where those offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

We operate in an industry in which it is difficult to obtain precise industry and market information. Although we have obtained some industry data from third party sources that we believe to be reliable, in certain cases we have based certain statements contained in this prospectus regarding our industry and our position in the industry on our estimates concerning our customers and competitors. These estimates are based on our experience in the industry, conversations with our principal suppliers and our own investigation of market conditions. Unless otherwise noted, the statistical data contained in this prospectus regarding the print industry is based on data we obtained from the Print Industries of America/Graphic Arts Technical Foundation, or PIA/GATF, a graphic arts trade association, Datamonitor, a business information company specializing in industry analysis, or International Data Corporation, or IDC, a provider of market intelligence for the information technology, telecommunications and consumer technology markets.

i

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in the prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk Factors” beginning on page 9, and the consolidated financial statements and notes to those consolidated financial statements before making an investment decision.

INNERWORKINGS, INC.

Our Company

We are a leading provider of print procurement solutions to corporate clients in the United States. Utilizing our proprietary technology and database, as well as our extensive domain expertise, we create a competitive bid process to procure, purchase and deliver printed products as part of a comprehensive outsourced enterprise solution and in individual transactions. Our technology is designed to capitalize on excess manufacturing capacity and other inefficiencies in the traditional print supply chain to obtain favorable pricing and to deliver high-quality products and services for our clients.

Our proprietary software applications and database, PPM4™, create a fully-integrated solution that stores, analyzes and tracks the production capabilities of our supplier network, as well as quote and price data for each bid we receive and print job we execute. As a result, we believe PPM4™ contains one of the largest independent repositories of equipment profiles and price data for print suppliers in the United States. We leverage our technology to match each print job with the supplier that is optimally suited to meet the client’s needs at a highly competitive price. Our procurement managers use PPM4™ to manage the print procurement process from end-to-end.

Through our network of over 4,500 suppliers, we offer a full range of print, fulfillment and logistics services that allows us to procure printed products on virtually any substrate. The breadth of our product offerings and services and the depth of our supplier network enable us to fulfill up to 100% of the print procurement needs of our clients. By leveraging our technology platform, our clients are able to reduce overhead costs, redeploy internal resources and obtain favorable pricing and service terms. In addition, our ability to track individual transactions and provide customized reports detailing print procurement activity on an enterprise-wide basis provides our clients with greater visibility and control of their print expenditures.

We generate revenue by procuring and purchasing printed products from our suppliers and selling those products to our clients. We procure printed products for clients across a wide range of industries, such as advertising, consumer products, publishing and retail. Our clients fall into two categories, enterprise and transactional. We enter into arrangements with our enterprise clients to provide some, or substantially all, of their printed products, typically on a recurring basis. We provide printed products to our transactional clients on an order-by-order basis. For the year ended December 31, 2005, enterprise and transactional clients accounted for 69% and 31% of our revenue, respectively. For the nine months ended September 30, 2006, enterprise and transactional clients accounted for 77% and 23% of our revenue, respectively.

We were formed in 2001 and commenced operations in 2002. From our inception through December 31, 2005, we served over 1,100 clients, received approximately 96,000 bids and executed approximately 26,000 print jobs through over 1,100 suppliers, and through September 30, 2006, we served over 1,600 clients, received approximately 120,000 bids and executed approximately 37,000 print jobs through over 1,600 suppliers. We have increased our revenue from $5.0 million in 2002 to $76.9 million in 2005, representing a compound annual growth rate of 148%. In 2005, our revenue was $76.9 million, compared to $38.9 million in 2004. For the nine months ended September 30, 2006, our revenue was $99.4 million, compared to $54.6 million for the nine months ended September 30, 2005.

1

Our Industry

Our business of providing print procurement solutions intersects two large and growing industries, commercial printing and business process outsourcing, or BPO. Total shipments in the worldwide commercial print industry were approximately $373 billion in 2005 and are expected to increase by an average of $9 billion per year through 2010, according to a 2006 Datamonitor global commercial printing industry profile. To become more competitive, many businesses seek to focus on core competencies and outsource non-core business functions, such as print procurement. According to a 2006 IDC global BPO forecast, the worldwide market for BPO is estimated to grow from $384 billion in 2005 to $618 billion in 2010, representing a compound annual growth rate of 10%.

In addition, the U.S. print industry is highly fragmented, with an estimated 39,300 printing plants. In 2005, the ten largest commercial print companies accounted for only approximately 16% of the total domestic print market. The traditional process of designing, procuring and producing a print order requires extensive collaboration by printers, designers, brokers and other middlemen and is often highly inefficient for the customer, who typically pays a mark-up at each intermediate stage of the supply chain. Print procurement is often dispersed across several areas of a business enterprise, including sales, marketing, communications and finance. Consolidating all print activities across the organization represents an opportunity to reduce total print expenditure and decrease the number of vendors in the print supply chain. Applying software and database technology to manage the print procurement process also provides for enhanced tracking and auditing capabilities.

In recent years, the print industry has been impacted by developments in technology, including enhanced output capacity of printing presses and increased utilization of Internet-based communications and digital printing. These developments have lowered barriers to entry, increased the number of print suppliers available to our clients and reduced the utilization of printing presses. As a result, the print industry has experienced, and is continuing to experience, significant excess manufacturing capacity and the market for printed products has become increasingly commoditized.

Our Competitive Strengths

We believe a number of important competitive strengths will continue to drive our success in the future, including:

Disruptive business solution.    Our fully-integrated print procurement solution disrupts the traditional print supply chain by aggregating the collective print demand of our clients and greatly increasing the number of suppliers that can efficiently bid for our clients’ print jobs. Our print procurement costs are often 30 to 50% less than the print expenditures historically incurred by our clients, and we believe that we offer a compelling value proposition to our clients by passing on to them a considerable portion of such cost savings. In addition, our solution reduces the amount of internal resources our clients must dedicate to print procurement, accelerates the print procurement process and consistently delivers a high-quality product. We believe that our business model, which is unencumbered by commercial print production assets, offers the first enterprise solution capable of meeting the entire print procurement needs of corporate clients.

Proprietary software and database.    PPM4™ is a fully-integrated proprietary software solution that allows us to match each print job with the supplier in our network that is optimally suited to produce the job at a highly competitive price. Our technology also enables us to efficiently manage critical aspects of the print procurement process, including gathering job specifications, identifying suppliers, establishing pricing, managing print production and purchasing and coordinating delivery of the finished product.

We believe our proprietary database contains one of the largest independent repositories of equipment profiles and price data for print suppliers in the United States. This data provides us with valuable insight into how excess manufacturing capacity and other industry factors impact the pricing of printed products, and enhances our ability to capitalize on those trends to our clients’ advantage. Our database expands with each job we quote and becomes more difficult to replicate, which we believe increases our competitive advantage.

2

Extensive and diverse supplier network.    The more than 4,500 suppliers in our network, which produced more than $50 billion of printed products in 2005, have been selected from among thousands of potential suppliers worldwide based on their ability to effectively serve our clients on the basis of price and service. Through these suppliers, we offer a full range of print, fulfillment and logistics services that allows us to procure printed products on virtually any substrate, including books, magazines, catalogues, direct mail, point-of-purchase displays, commercial print, packaging, labels and promotional products. By leveraging our access to a full range of print and print-related services, we are able to provide a complete and cost-effective outsourced solution for our clients.

Deep domain knowledge and procurement management expertise.    Effective management of the outsourced printing procurement process requires highly experienced and dedicated personnel to work closely with both clients and print suppliers. Our teams of account executives and procurement managers ensure high levels of execution and the on-time delivery of a quality product, while delivering domain expertise that spans advertising, consumer products, manufacturing, publishing, retail and other print-related industries. As of September 30, 2006, we had over 110 account executives, who average 17 years of experience in the printing industry, and over 75 procurement managers, who average 13 years of experience in the printing industry.

Scalable business model with significant operating leverage.    Our technology solution can support a significant increase in the number of clients we serve and jobs we process without significant capital investment. In addition, our extensive supplier network provides access to a vast supply of manufacturing capacity without requiring any capital expense. Because we do not own commercial print production assets, the primary incremental operating cost of growing our business is hiring additional account executives who market and sell our services, and procurement managers who manage the print procurement process. As a result, our revenue growth has significantly outpaced the increase in our operating expenses. Our revenue increased from $5.0 million in 2002 to $76.9 million in 2005, while our operating expenses as a percentage of revenue, which exclude cost of goods sold, decreased from 23.2% in 2002 to 14.3% in 2005. Our revenue increased from $54.6 million during the nine months ended September 30, 2005 to $99.4 million during the nine months ended September 30, 2006, while our operating expenses as a percentage of revenue, which exclude cost of goods sold, decreased from 14.6% during the nine months ended September 30, 2005 to 13.4% during the nine months ended September 30, 2006.

Experienced management team.    We have a highly experienced management team with extensive industry knowledge. Our Chief Executive Officer, Steven Zuccarini, is the former president of the Catalog & Retail and the Global Solutions business units of North America’s largest print company, R.R. Donnelley & Sons Company, where he was responsible for providing enterprise solutions to its largest clients. Our non-executive Chairman, John Walter, is the former Chairman and Chief Executive Officer of R.R. Donnelley.

Our Growth Strategy

We intend to become the preeminent provider of print procurement solutions on a global basis. The key elements of our growth strategy include:

Expand our base of enterprise clients.    We are focused on continuing to increase our business with clients using our technology enabled enterprise solution. During 2005, we entered into contracts with 23 enterprise clients, including 17 new clients and six clients that we initially serviced on a transactional basis. During the nine months ended September 30, 2006, we entered into contracts with 17 enterprise clients, including 12 new clients and five clients that we initially serviced on a transactional basis. We seek to attract new enterprise clients by targeting companies which have substantial and recurring print requirements. We also seek to transition transactional clients to our enterprise solution in order to capture a greater portion of their recurring print expenditures and become more fully integrated into their business infrastructure. This strategy has been highly successful as 28 of our 86 enterprise clients as of September 30, 2006 began as transactional accounts.

3

Expand our base of transactional clients.    As a significant portion of our new transactional business results from our recruitment of sales executives, we intend to continue to hire account executives, or acquire groups of them, with established client relationships. We believe our business model is extremely attractive to these executives, as it enables sales professionals to leverage our technology and supplier network to market a broader range of products and services to their clients than were available with their previous employers. As these executives are hired, we expect to expand our base of transactional clients, thereby expanding our pipeline of clients to which we can market our enterprise solution.

Further penetrate our established customer base.    We believe our established customer base presents a substantial opportunity for growth. Our ability to deliver a full range of printed products at competitive prices and procure up to 100% of the print requirements of our clients allows us to capitalize on our established client relationships to increase our sales. As we further develop our relationships with clients, we seek to manage more of their total print expenditures over time. For example, we estimate that during 2005 sales to our ten largest enterprise clients accounted for less than 25% of their total print expenditures.

Broaden geographic presence.    We believe the opportunity exists to expand our business into new geographic markets. Our headquarters are located in Chicago, and as of September 30, 2006 approximately 51% of our clients were located in Illinois. We also maintain offices in New York, California, Hawaii, Michigan and Missouri. Our objective is to increase our sales in other major print markets in the United States, such as Atlanta, Boston, Dallas, Los Angeles and Minneapolis. We intend to hire or acquire more account executives within close proximity to these large markets, which accounted for, in aggregate, $17.3 billion of print expenditures in 2005, according to PIA/GATF. In addition, given that the print industry is a global business, over time we intend to evaluate opportunities to access attractive markets outside the United States. For example, in March 2006 we entered into a strategic agreement to grant SNP Corporation Ltd. a non-exclusive, non-transferable license to use certain non-core applications of our software in China, Singapore and Hong Kong.

Recent Developments

Initial Public Offering.    In August 2006, we completed an initial public offering of shares of our common stock. We offered and sold 7,060,000 shares of our common stock and certain selling stockholders offered and sold an additional 5,118,500 shares of our common stock at a price of $9.00 per share. Our net proceeds from the initial public offering were approximately $56.3 million.

Applied Graphics Acquisition.    In October 2006, we acquired Applied Graphics, Inc., a provider of print management and print-on-demand services headquartered in San Rafael, California. As a result of the acquisition, we believe we established a significant presence in the West Coast market with sales executives in California, Hawaii and Nevada. We added 35 sales executives, approximately 1,000 transactional clients and approximately 500 new suppliers. This significantly expanded our pipeline of clients to which we can market our enterprise solution. The acquisition consideration consisted of approximately $7.0 million in cash paid in October 2006 and up to an additional $4.9 million contingent upon the attainment of certain performance measures by Applied Graphics on or prior to September 30, 2008.

CoreVision Acquisition.    In September 2006, we acquired CoreVision Group, Inc., a provider of end-to-end marketing solutions, including design, print, promotional products and fulfillment services, located in Carol Stream, Illinois. As a result of the acquisition, we added 15 sales executives, including our first sales executives in the states of Michigan and Missouri. The acquisition consideration for CoreVision consisted of approximately $1.1 million, $10,000 paid in September 2006 and the remaining $1.1 million to be paid in monthly installments through August 2007. The former owner of CoreVision is also eligible to receive up to an additional $2.5 million in acquisition consideration based on gross profit generated by CoreVision on or prior to December 31, 2009.

4

Risk Factors

Investing in our common stock involves risks. You should carefully read the section entitled “Risk Factors” beginning on page 9 for an explanation of these risks before investing in our common stock. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our growth strategy, which could cause a decrease in the price of our common stock and result in a loss of all or a portion of your investment:

• Competition could substantially impair our business and our operating results.

• If our services do not achieve widespread commercial acceptance, our business will suffer.

• If our suppliers do not meet our needs or expectations, or those of our clients, our business will suffer.

• A decrease in the number of our suppliers could adversely affect our business.

• If we are unable to expand the number of account executives, or if a significant number of our account executives leave us, our ability to increase our revenues could be negatively impacted.

• If we are unable to retain and expand our enterprise client base, our revenue growth may be negatively impacted.

Our principal executive offices are located at 600 West Chicago Avenue, Suite 850, Chicago, IL 60610, and our telephone number at this address is (312) 642-3700. Our website is www.iwprint.com. Information contained on our website is not a part of this prospectus.

5

THE OFFERING

Common stock offered by InnerWorkings	3,000,000 shares
Common stock offered by the selling stockholders	5,000,000 shares
Total	8,000,000 shares
Common stock to be outstanding after this offering	47,472,961 shares
Over-allotment option offered by the selling stockholders	1,200,000 shares
Use of proceeds	We expect our net proceeds from this offering will be approximately $       million. We intend to use our net proceeds from this offering to expand our sales force, to acquire or make strategic investments in complementary businesses and for working capital and other general corporate purposes.
Risk factors	See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in shares of our common stock.
Nasdaq Global Market symbol	“INWK”

Unless otherwise indicated, the number of shares of common stock to be outstanding after this offering excludes:

• 5,024,075 shares of common stock issuable (after giving effect to the exercise of options to purchase 458,642 shares of common stock, which shares are being sold by certain selling stockholders) in this offering upon the exercise of outstanding stock options at a weighted average exercise price of $1.99 per share; and

• 843,450 shares of common stock available for additional grants under our stock incentive plan.

Unless otherwise indicated, all information in this prospectus assumes the underwriters’ over-allotment option is not exercised.

6

SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

The following table presents summary consolidated financial and other data as of and for the periods indicated. You should read the following information together with the more detailed information contained in “Selected Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the accompanying notes. The pro forma consolidated statements of operations data for the year ended December 31, 2005 and for the nine months ended September 30, 2006 give effect to the May 31, 2006 acquisition of Graphography Limited LLC and the October 11, 2006 acquisition of Applied Graphics, Inc. as if these acquisitions had occurred on January 1, 2005 and reflect the elimination of preferred dividends accrued during the periods presented as a result of the recapitalization of all outstanding shares of our Series B preferred stock, Series D preferred stock and Series E preferred stock into shares of our common stock as if the recapitalization had occurred on January 1, 2005 and the elimination of interest expense incurred during the periods presented as a result of the repayment of all outstanding indebtedness under our line of credit as if the repayment had occurred on January 1, 2005. In addition, the pro forma consolidated statements of operations data reflect income tax expense as if our January 3, 2006 conversion from a limited liability company to a C corporation had occurred at the beginning of the period presented, as well as the consummation of this offering. The pro forma consolidated statements of operations data do not necessarily indicate the results that would have actually occurred if the acquisitions of Graphography Limited LLC and Applied Graphics, Inc. had occurred on January 1, 2005 or that may occur in the future. You should read the pro forma consolidated statements of operations data together with the more detailed information contained in Unaudited Pro Forma Condensed Consolidated Financial Statements and the accompanying notes.

	Years ended December 31,									Pro forma year ended December 31, 2005			Nine months ended September 30,						Pro forma nine months ended September 30, 2006
	2003			2004			2005						2005			2006
										(unaudited)			(unaudited)			(unaudited)			(unaudited)
	(in thousands, except per share amounts)
Consolidated statements of operations data:
Revenue	$	16,229		$	38,884		$	76,870		$	130,737		$	54,626		$	99,362		$	134,394
Cost of goods sold		12,487			30,483			61,272			101,640			43,359			78,228			103,025
Gross profit		3,742			8,401			15,598			29,097			11,267			21,134			31,369
Selling, general and administrative expenses:
Commission expenses		577			1,788			3,492			7,904			3,040			4,651			6,079
General and administrative expenses		2,382			4,317			7,114			15,239			4,671			8,119			15,961
Total selling, general and administrative expenses		2,959			6,105			10,606			23,143			7,711			12,770			22,040
Depreciation and amortization		18			223			388			881			256			574			846
Income from operations		765			2,073			4,604			5,073			3,300			7,790			8,483
Other income (expense)		(86	)		(124	)		(29	)		(154	)		(25	)		339			101
Minority interest income (expense)		(8	)		(192	)		58			58			58			—			—
Total other income (expense)		(94	)		(316	)		29			(96	)		33			339			101
Income before income taxes		671			1,757			4,633			4,977			3,333			8,129			8,584
Income tax expense		—			—			—			(1,962	)		—			3,215			(3,395	)
Net income		671			1,757			4,633			3,015			3,333			4,914			5,189
Dividends on preferred shares		(176	)		(462	)		(762	)		—			(584	)		(1,409	)
Net income applicable to common stockholders	$	495		$	1,295		$	3,871		$	3,015		$	2,749		$	3,505		$	5,189
Net income per share of common stock:
Basic	$	0.02		$	0.04		$	0.12					$	0.09		$	0.13
Diluted	$	0.02		$	0.04		$	0.12					$	0.09		$	0.13
Shares used in per share calculations:
Basic		26,139			29,449			31,010						30,701			27,518
Diluted		26,139			29,449			32,707						31,890			36,804
Unaudited pro forma income tax provision(1)	$	262		$	685		$	1,807					$	1,300
Unaudited pro forma net income(1)	$	409		$	1,072		$	2,826					$	2,033
Unaudited pro forma net income per share of common stock(2):
Basic										$	0.07								$	0.11
Diluted										$	0.07								$	0.10
Shares used in unaudited pro forma per share calculations(2):
Basic											43,607									46,989
Diluted											44,367									49,516
Other data (unaudited):
Enterprise clients(3)		14			46			69			71			64			86			86
Transactional clients(4)		294			593			667			3,229			574			701			3,401
Total clients(5)		308			639			736			3,300			638			787			3,487
Total print jobs(6)		2,002			6,972			10,736			—			8,111			11,160			—
Employees and independent contractors(7)		43			85			154			233			136			240			320

7

(1) The unaudited pro forma data presented gives effect to our conversion on January 3, 2006 into a Delaware corporation as if it occurred at the beginning of the period presented. The unaudited pro forma income tax provision represents a combined federal and state effective tax rate of 39.0% and does not consider potential tax loss carrybacks, carryforwards or realizability of deferred tax assets. The unaudited pro forma net income represents our net income for the periods presented as adjusted to give effect to the pro forma income tax provision.

(2) Unaudited pro forma net income per share of common stock (i) reflects the recapitalization of all outstanding shares of our Class A common stock, Class B common stock, Series B preferred stock, Series D preferred stock and Series E preferred stock into shares of our common stock on a one-for-one basis, which we effectuated in connection with our initial public offering, (ii) includes 3,000,000 shares of common offered by us in this offering and (iii) gives effect to the elimination of interest expense on the outstanding indebtedness under our line of credit that we repaid with a portion of the proceeds from our initial public offering, less the related income tax effect.

(3) Reflects number of enterprise clients as of the last day of the applicable period.

(4) Reflects number of transactional clients served in the applicable period. The increase in the number of transactional clients is primarily due to the acquisition of Applied Graphics, which has historically had significantly lower average revenue per client than our historical business.

(5) Reflects total number of enterprise clients as of the last day of the applicable period and number of transactional clients served in the applicable period.

(6) Reflects total number of print jobs executed in the applicable period.

(7) Reflects number of employees and independent contractors as of the last day of the applicable period.

The pro forma balance sheet data in the table below gives effect to the October 11, 2006 acquisition of Applied Graphics, Inc. as if the acquisition had occurred on September 30, 2006.

The pro forma as adjusted balance sheet data in the table below reflects the sale of 3,000,000 shares of our common stock offered by us in this offering assuming a public offering price of $16.42 per share, the closing sale price per share of our common stock as reported on the Nasdaq Global Market on January 4, 2007, after deducting estimated underwriting discounts and commissions and offering expenses payable by us.

	As of September 30, 2006
	Actual		Pro forma before Offering		Pro forma as adjusted
	(unaudited)
	(in thousands)
Consolidated balance sheet data:
Cash and cash equivalents	$	34,284	$	27,328	$	73,545
Working capital		61,862		55,712		101,929
Total assets		104,116		109,326		155,543
Line of credit		—		2,444		2,444
Capital leases		313		330		330
Total stockholders’ equity		78,533		78,533		124,750

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risks and other information in this prospectus before you decide to buy our common stock. Our business, financial condition or operating results may suffer if any of the following risks is realized. If any of these risks or uncertainties occurs, the trading price of our common stock could decline and you might lose all or part of your investment.

Risks Related to Our Business

Our limited operating history makes it difficult to evaluate our business, prospects and future financial performance.

We formed our business in September 2001 and have a limited operating history, which makes evaluating our current business and prospects difficult. The revenue and income potential of our business is uncertain, which makes it difficult to predict accurately our future financial performance. We may face periods where our financial performance falls below investor expectations. As a result, the price of our common stock may decline.

Competition could substantially impair our business and our operating results.

We operate in the print industry and several print-related industries, including paper and pulp, graphics art and pre-press and fulfillment and logistics. Competition in these industries is intense. Our primary competitors are printers that employ traditional methods of marketing and selling their printed materials. Many of these printers, such as Quad/Graphics, Quebecor and R.R. Donnelley have larger client bases and significantly more resources than we do. Print buyers may prefer to utilize the traditional services offered by the printers with whom we compete. Alternatively, some of these printers may elect to offer outsourced print procurement services or enterprise software applications, and their well-established client relationships, industry knowledge, brand recognition, financial and marketing capabilities, technical resources and pricing flexibility may provide them with a competitive advantage over us.

We also compete with a number of print suppliers, distributors and brokers. Several of these competitors, such as Cirqit, Workflow/Relizon and Newline/Noosh offer outsourced print procurement services or enterprise software applications for the print industry. These competitors, or new competitors that enter the market, may also offer print procurement services similar to and competitive with or superior to our current or proposed offerings and achieve greater market acceptance. In addition, a software solution and database similar to PPM4^TM could be created over time by a competitor with sufficient financial resources and comparable experience in the print industry. If our competitors are able to offer comparable services, we could lose clients, and our market share could decline.

Our competitors may also establish cooperative relationships to increase their ability to address client needs. Increased competition may lead to revenue reductions, reduced gross margins or a loss of market share, any one of which could harm our business.

If our services do not achieve widespread commercial acceptance, our business will suffer.

Most companies currently coordinate the procurement and management of their print orders with their own employees using a combination of telephone, facsimile, e-mail and the Internet. Growth in the demand for our services depends on the adoption of our outsourcing model for print procurement services. We may not be able to persuade prospective clients to change their traditional print management processes. Our business could suffer if our services are not accepted or are not perceived by the marketplace to be effective or valuable.

If our suppliers do not meet our needs or expectations, or those of our clients, our business would suffer.

The success of our business depends to a large extent on our relationships with our clients and our reputation for high quality printed products and print procurement services. We do not own printing presses or

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other printing equipment. Instead, we rely on third-party suppliers to deliver the printed products and services that we provide to our clients. As a result, we do not directly control the manufacturing of the products or the services provided by our suppliers. If our suppliers do not meet our needs or expectations, or those of our clients, our professional reputation may be damaged, our business would be harmed and we could be subject to legal liability.

A decrease in the number of our suppliers could adversely affect our business.

In 2005, our top 10 suppliers accounted for approximately 40% of the products we sold, and our top three suppliers accounted for approximately 21% of the products we sold. We expect to continue to rely on these suppliers to fulfill a substantial portion of our print orders in the future. These suppliers are not contractually required to continue to accept orders from us. If production capacity at a significant number of these suppliers becomes unavailable, we will be required to use fewer suppliers, which could significantly limit our ability to serve our clients on competitive terms. In addition, we rely on price bids provided by our suppliers to populate our database. If the number of our suppliers decreases significantly, we will not be able to obtain sufficient pricing information for PPM4 ^TM, which could affect our ability to obtain favorable pricing for our clients.

If we are unable to expand the number of our account executives, or if a significant number of our account executives leave InnerWorkings, our ability to increase our revenues could be negatively impacted.

Our ability to expand our business will depend largely on our ability to attract additional account executives with established client relationships. Competition for qualified account executives can be intense and we may be unable to hire such persons. Any difficulties we experience in expanding the number of our account executives could have a negative impact on our ability to expand our client base, increase our revenue and continue our growth.

In addition, we must retain our current account executives and properly incentivize them to obtain new clients and maintain existing client relationships. If a significant number of our account executives leave InnerWorkings and take their clients with them, our revenue could be negatively impacted. We have entered into non-compete agreements with our account executives to mitigate this risk, but we may need to litigate to enforce our rights under these agreements, which could be time-consuming, expensive and ineffective. A significant increase in the turnover rate among our current account executives could also increase our recruiting costs and decrease our operating efficiency and productivity, which could lead to a decline in the demand for our services.

If we are unable to expand our enterprise client base, our revenue growth rate may be negatively impacted.

As part of our growth strategy, we seek to attract new enterprise clients and migrate our transactional client relationships into enterprise engagements under long-term contracts. If we are unable to attract new enterprise clients or expand our relationships with our existing transactional clients, our ability to expand our business will be hindered.

Many of our clients may terminate their relationship with us on short notice and with no penalties or limited penalties.

Our transactional clients, which accounted for approximately 50%, 31% and 23% of our revenue in 2004, 2005 and the nine months ended September 30, 2006, respectively, typically use our services on an order-by-order basis rather than under long-term contracts. These clients have no obligation to continue using our services and may stop purchasing from us at any time. We have entered into contracts with our enterprise clients, which accounted for approximately 50%, 69% and 77% of our revenue in 2004, 2005 and the nine months ended September 30, 2006, respectively, that generally have an open-ended duration. Most of these contracts, however, do not impose minimum purchase or volume requirements, and typically permit the clients to terminate our engagements on prior notice ranging from 90 days to 12 months with limited or no penalties.

The volume and type of services we provide our clients may vary from year to year and could be reduced if the client were to change its outsourcing or print procurement strategy. If a significant number of our

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transactional or enterprise clients elect to terminate or not to renew their engagements with us, or if the volume of their print orders decreases, our business, operating results and financial condition could suffer.

A significant portion of our revenue is derived from a relatively limited number of large clients and any loss of, or decrease in sales to, these clients could harm our results of operations.

A significant portion of our revenue is derived from a relatively limited number of large clients. Revenue from our top ten clients accounted for 43%, 46% and 51% of our revenue during the years ended December 31, 2004 and December 31, 2005 and the nine months ended September 30, 2006, respectively. In 2005, our largest client accounted for 16% of our revenue. During the nine months ended September 30, 2006, our largest client accounted for 18% of our revenue. We are likely to continue to experience ongoing client concentration, particularly if we are successful in attracting large enterprise clients. Moreover, there may be a loss or reduction in business from one or more of our large clients. It is also possible that revenue from these clients, either individually or as a group, may not reach or exceed historical levels in any future period. The loss or significant reduction of business from our major clients would adversely affect our results of operations.

There are risks that our acquisitions could disrupt our business and harm our financial condition. These risks include:

Ÿ problems with integrating the operations and technologies of our acquired companies with our business;

Ÿ distraction and diversion of management time and attention from our existing core business;

Ÿ inability to retain business relationships with the customers of our acquired companies; and

Ÿ inability to retain key employees of our acquired companies.

In addition, a large percentage of Graphography’s revenues have historically come from only two customers. Revenues from these customers would have accounted for approximately 9% of our pro forma revenue for the nine months ended September 30, 2006. The loss of either of these customers or a reduction in the business they send us could cause our business and financial results to deteriorate, leading to possible lower earnings, future impairment of goodwill and other intangible assets and a loss in the market value of our shares of common stock.

We may not be able to develop or implement new systems, procedures and controls that are required to support the anticipated growth in our operations.

Our revenues increased from $5.0 million in 2002 to $76.9 million in 2005, representing a compound annual growth rate of 148%. Between January 1, 2002 and September 30, 2006, the number of our employees and independent contractors increased from 21 to 240. Continued growth could place a significant strain on our ability to:

Ÿ recruit, motivate and retain qualified account executives, procurement managers and management personnel;

Ÿ preserve our culture, values and entrepreneurial environment;

Ÿ develop and improve our internal administrative infrastructure and execution standards; and

Ÿ maintain high levels of client satisfaction.

To manage our growth, we must implement and maintain proper operational and financial controls and systems. Further, we will need to manage our relationships with various clients and suppliers. We cannot give any assurance that we will be able to develop and implement, on a timely basis, the systems, procedures and

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controls required to support the growth in our operations or effectively manage our relationships with various clients and suppliers. If we are unable to manage our growth, our business, operating results and financial condition could be adversely affected.

A decrease in levels of excess capacity in the U.S. commercial print industry could have an adverse impact on our business.

We believe that for the past several years, the U.S. commercial print industry has experienced significant levels of excess capacity. Our business seeks to capitalize on imbalances between supply and demand in the print industry by obtaining favorable pricing terms from suppliers in our network through a competitive bid process. Reduced excess capacity in the print industry generally and in our supplier network specifically could have an adverse impact on our ability to execute our business strategy and on our business results and growth prospects.

Our inability to protect our intellectual property rights may impair our competitive position.

If we fail to protect our intellectual property rights adequately, our competitors could replicate our proprietary technology in order to offer similar services and harm our competitive position. We rely on a combination of trademark and trade secret laws and confidentiality and nondisclosure agreements to protect our proprietary technology. We cannot be certain that the steps we have taken to protect our intellectual property rights will be adequate or that third parties will not infringe or misappropriate our rights or imitate or duplicate our services or methodologies, including PPM4™. We may need to litigate to enforce our intellectual property rights or determine the validity and scope of the rights of others. Any such litigation could be time-consuming and costly.

If we are unable to maintain PPM4™, demand for our services and our revenues could decrease.

We rely heavily on PPM4™ to procure printed products for our clients. To keep pace with changing technologies and client demands, we must correctly interpret and address market trends and enhance the features and functionality of our technology in response to these trends, which may lead to significant research and development costs. We may be unable to accurately determine the needs of print buyers, the trends in the print industry or to design and implement the appropriate features and functionality of our technology in a timely and cost-effective manner, which could result in decreased demand for our services and a corresponding decrease in our revenue.

In addition, we must protect our systems against physical damage from fire, earthquakes, power loss, telecommunications failures, computer viruses, hacker attacks, physical break-ins and similar events. Any software or hardware damage or failure that causes interruption or an increase in response time of PPM4™ could reduce client satisfaction and decrease usage of our services.

If the key members of our management team do not remain with us in the future, our business, operating results and financial condition could be adversely affected.

Our future success will depend to a significant extent on the continued services of Steven Zuccarini, our Chief Executive Officer, Nicholas Galassi, our Chief Financial Officer, Scott Frisoni, our Executive Vice President of Sales, Eric Belcher, our Chief Operating Officer, and Neil Graver, our Chief Technology Officer. The loss of the services of any of these or other individuals could adversely affect our business, operating results and financial condition and could divert other senior management time in searching for their replacements.

Our management team has limited experience managing a public company, and regulatory compliance may divert its attention from the day-to-day management of our business.

The individuals who now constitute our management team have limited experience managing a publicly-traded company and limited experience complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition into a public

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company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. In particular, these new obligations will require substantial attention from our senior management and divert its attention away from the day-to-day management of our business, which could materially and adversely impact our business operations.

Because many of the members of our management team have been employed with us for a short period of time, we cannot be certain that they will be able to manage our business successfully.

We are dependent on our management team for our business to be successful. Because of our limited operating history, many of our key management personnel have been employed by us for less than two years. Therefore, we cannot be certain that we will be able to allocate responsibilities appropriately and that the new members of our management team will succeed in their roles. Our inability to integrate members of our current management team with our business model would make it difficult for us to manage our business successfully and to pursue our growth strategy.

Our business is subject to seasonal sales fluctuations, which could result in volatility or have an adverse effect on the market price of our common stock.

Our business is subject to some degree of sales seasonality. Historically, the percentage of our annual revenue earned during the third and fourth fiscal quarters has been higher due, in part, to a greater number of print orders in anticipation of the year-end holiday season. If our business continues to experience seasonality, we may incur significant additional expenses during our third and fourth quarters, including additional staffing expenses. Consequently, if we were to experience lower than expected revenue during any future third or fourth quarter, whether from a general decline in economic conditions or other factors beyond our control, our expenses may not be offset, which would have a disproportionate impact on our operating results and financial condition for that year.

Price fluctuations in raw materials costs could adversely affect the margins on our print orders.

The print industry relies on a constant supply of various raw materials, including paper and ink. Prices within the print industry are directly affected by the cost of paper, which is purchased in a price sensitive market that has historically exhibited price and demand cyclicality. Prices are also affected by the cost of ink. Our profit margin and profitability is largely a function of the rates that our suppliers charge us compared to the rates that we charge our clients. If our suppliers increase the price of our print orders, and we are not able to find suitable or alternative suppliers, our profit margin may decline.

If any of our products cause damages or injuries, we may experience product liability claims.

Clients and third parties who claim to suffer damages or an injury caused by our products may bring lawsuits against us. Defending lawsuits arising out of any of the products we provide to our clients could be costly and absorb substantial amounts of management attention, which could adversely affect our financial performance. A significant product liability judgment against us could harm our reputation and business.

If any of our key clients fail to pay for our services, our profitability would be negatively impacted.

We take full title and risk of loss for the printed products we procure from our suppliers. Our obligation to pay our suppliers is not contingent upon receipt of payment from our clients. In 2004, 2005 and the nine months ended September 30, 2006, our revenue was $38.9 million, $76.9 million and $99.4 million, respectively, and our top 10 clients accounted for 43%, 46% and 51%, respectively, of such revenue. If any of our key clients fails to pay for our services, our profitability would be negatively impacted.

We may not be able to identify suitable acquisition candidates, effectively integrate newly acquired businesses or achieve expected profitability from acquisitions.

Part of our growth strategy is to increase our revenue and the markets that we serve through the acquisition of additional businesses. We are actively considering certain acquisitions and will likely consider others. There

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can be no assurance that suitable candidates for acquisitions can be identified or, if suitable candidates are identified, that acquisitions can be completed on acceptable terms, if at all. Even if suitable candidates are identified, any future acquisitions may entail a number of risks that could adversely affect our business and the market price of our common stock, including the integration of the acquired operations, diversion of management’s attention, risks of entering markets in which we have limited experience, adverse short-term effects on our reported operating results, the potential loss of key employees of acquired businesses and risks associated with unanticipated liabilities.

We may use common stock to pay for acquisitions. If the owners of potential acquisition candidates are not willing to receive common stock in exchange for their businesses, our acquisition prospects could be limited. Future acquisitions could also result in accounting charges, potentially dilutive issuances of equity securities and increased debt and contingent liabilities, including liabilities related to unknown or undisclosed circumstances, any of which could have a material adverse effect on our business and the market price of our common stock.

We incur increased costs as a result of being a public company.

We face increased legal, accounting, administrative and other costs and expenses as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, including the requirements of Section 404, as well as new rules and regulations subsequently implemented by the Securities and Exchange Commission (the SEC), the Public Company Accounting Oversight Board and the Nasdaq Global Market, impose additional reporting and other obligations on public companies. We expect that continuing compliance with these public company requirements will increase our costs and make some activities more time-consuming. A number of those requirements will require us to carry out activities we have not done previously. For example, under Section 404 of the Sarbanes-Oxley Act, for our annual report on Form 10-K for our fiscal year ending December 31, 2007 we will need to document and test our internal control procedures, our management will need to assess and report on our internal control over financial reporting and our independent accountants will need to issue an opinion on that assessment and the effectiveness of those controls. Furthermore, if we identify any issues in complying with those requirements (for example, if we or our accountants identified a material weakness or significant deficiency in our internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect us, our reputation or investor perceptions of us. We also expect that it will be difficult and expensive to maintain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. Advocacy efforts by stockholders and third parties may also prompt even more changes in governance and reporting requirements. We expect that the additional reporting and other obligations imposed on us by these rules and regulations will increase our legal and financial compliance costs and the costs of our related legal, accounting and administrative activities by approximately $1.3 million per year. These increased costs will require us to divert a significant amount of money that we could otherwise use to expand our business and achieve our strategic objectives.

Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.

We may in the future be required to raise capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity financing may be dilutive to the holders of our common stock, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures.

A significant or prolonged economic downturn, or a dramatic decline in the demand for printed products, could adversely affect our revenues and results of operations.

Our results of operations are affected directly by the level of business activity of our clients, which in turn is affected by the level of economic activity and cyclicality in the industries and markets that they serve. Certain of

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our products are sold to industries, including the advertising industry, that experience significant fluctuations in demand based on general economic conditions, cyclicality and other factors beyond our control. An economic stagnation or downturn could result in a reduction of the marketing budgets of our clients or a decrease in the number of print jobs that our clients order from us. Reduced demand from one of these industries or markets could adversely affect our revenues, operating income and profitability.

Risks Related to this Offering and Ownership of Our Common Stock

The trading price of our common stock may be volatile, and you might not be able to sell your shares at or above the offering price.

The trading prices of many newly publicly-traded companies are highly volatile. Since our initial public offering in August 2006, the closing sale price of our common stock as reported by the Nasdaq Global Market has ranged from a low of $10.10 on August 23, 2006 to a high of $17.80 on November 24, 2006.

Certain factors may continue to cause the market price of our common stock to fluctuate, including:

Ÿ fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

Ÿ changes in market valuations of similar companies;

Ÿ success of competitive products or services;

Ÿ changes in our capital structure, such as future issuances of debt or equity securities;

Ÿ announcements by us, our competitors, our clients or our suppliers of significant products or services, contracts, acquisitions or strategic alliances;

Ÿ regulatory developments in the United States or foreign countries;

Ÿ litigation involving our company, our general industry or both;

Ÿ additions or departures of key personnel;

Ÿ investors’ general perception of us; and

Ÿ changes in general economic, industry and market conditions.

In addition, if the stock market in general experiences a loss of investor confidence, the trading price of our common stock could decline for reasons unrelated to our business, financial condition or results of operations. If any of the foregoing occurs, it could cause our stock price to fall and may expose us to class action lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management. As a result, you could lose all or part of your investment.

If equity research analysts do not publish research or reports about our business or if they issue unfavorable commentary or downgrade our common stock, the price of our common stock could decline.

The trading market for our common stock relies in part on the research and reports that equity research analysts publish about us and our business. We do not control these analysts. The price of our stock could decline if one or more equity analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

Our quarterly results are difficult to predict and may vary from quarter to quarter, which may result in our failure to meet the expectations of investors and increased volatility of our stock price.

The continued use of our services by our clients depends, in part, on the business activity of our clients and our ability to meet their cost saving needs, as well as their own changing business conditions. The time between

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our payment to the supplier of a print job and our receipt of payment from our clients varies with each print job and client. In addition, a significant percentage of our revenue is subject to the discretion of our enterprise and transactional clients, who may stop using our services at any time, subject, in the case of most of our enterprise clients, to advance notice requirements. Therefore, the number, size and profitability of print jobs may vary significantly from quarter to quarter. As a result, our quarterly operating results are difficult to predict and may fall below the expectations of current or potential investors in some future quarters, which could lead to a significant decline in the market price of our stock. This may lead to volatility in our stock price. The factors that are likely to cause these variations include:

Ÿ the demand for our print procurement solution;

Ÿ the use of outsourced enterprise solutions;

Ÿ clients’ business decisions regarding the quantities of printed products they purchase;

Ÿ the number, timing and profitability of our print jobs, unanticipated contract terminations or print job postponements;

Ÿ new product introductions and enhancements by our competitors;

Ÿ changes in our pricing policies;

Ÿ our ability to manage costs, including personnel costs; and

Ÿ costs related to possible acquisitions of other businesses.

Because a limited number of stockholders will control the majority of the voting power of our common stock, investors in this offering will not be able to determine the outcome of stockholder votes.

Upon completion of this offering, Orange Media, LLC, an entity controlled by Elizabeth Kramer Lefkofsky, who is the wife of Eric P. Lefkofsky, Richard A. Heise, Jr. and Incorp, LLC, an entity controlled by Orange Media and Mr. Heise, will beneficially own and have the ability to exercise voting control over, in the aggregate, 33.9% of our outstanding common stock. In addition, New Enterprise Associates 11, Limited Partnership and NEA Ventures 2005, Limited Partnership will beneficially own, and have the ability to exercise voting control over, in the aggregate, 17.3% of our outstanding common stock. As a result, these stockholders will be able to exercise significant control over all matters requiring stockholder approval, including the election of directors, any amendments to our certificate of incorporation and significant corporate transactions. These stockholders may exercise this control even if they are opposed by our other stockholders. Without the consent of these stockholders, we could be delayed or prevented from entering into transactions (including the acquisition of our company by third parties) that may be viewed as beneficial to us or our other stockholders. In addition, this significant concentration of stock ownership may adversely affect the trading price of our common stock if investors perceive disadvantages in owning stock in a company with controlling stockholders.

The future sale of our common stock could negatively affect our stock price after this offering.

After this offering, we will have 47,472,961 shares of common stock outstanding, 15,637,142 of which will be available for immediate public sale. 31,835,819 shares of common stock outstanding after this offering, including an aggregate of 26,023,849 shares beneficially owned by Orange Media, LLC, Richard A. Heise, Jr., Incorp, LLC, New Enterprise Associates 11, Limited Partnership, NEA Ventures 2005, Limited Partnership and Printworks Series E, LLC, will be available for public sale under Rule 144 from time to time, subject to volume, manner of sale and other restrictions under Rule 144. Additional sales of our common stock in the public market after this offering, or the perception that these sales could occur, could cause the market price of our common stock to decline.

Our directors, officers and certain stockholders have agreed to enter into “lock up” agreements with the underwriters, in which they will agree to refrain from selling their shares for a period of 90 days after this

16

offering. 31,583,742 of these shares, or 66.5% of our common stock outstanding upon the completion of this offering, will become available for public sale 90 days (45 days in the case of 850,000 shares) after this offering upon the expiration of these agreements. Increased sales of our common stock in the market could exert significant downward pressure on our stock price. These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and price we deem appropriate.

In addition, 10,066,104 of our shares of common stock, including shares beneficially owned by New Enterprise Associates 11, Limited Partnership, NEA Ventures 2005, Limited Partnership and Printworks Series E, LLC, will be entitled to registration rights with respect to these shares after this offering. Such holders may require us to register the resale of all or substantially all of these shares upon demand. These holders include certain individuals and entities that will be selling shares of our common stock in this offering.

We do not currently intend to pay dividends, which may limit the return on your investment in us.

We have not declared or paid any cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

If our board of directors authorizes the issuance of preferred stock, holders of our common stock could be diluted and harmed.

Our board of directors has the authority to issue up to 5,000,000 shares of preferred stock in one or more series and to establish the preferred stock’s voting powers, preferences and other rights and qualifications without any further vote or action by the stockholders. The issuance of preferred stock could adversely affect the voting power and dividend liquidation rights of the holders of common stock. In addition, the issuance of preferred stock could have the effect of making it more difficult for a third party to acquire, or discouraging a third party from acquiring, a majority of our outstanding voting stock or otherwise adversely affect the market price of our common stock. It is possible that we may need to raise capital through the sale of preferred stock in the future.

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FORWARD-LOOKING STATEMENTS

Many of the statements included in this prospectus contain forward-looking statements and information relating to our company. We generally identify forward-looking statements by the use of terminology such as “may,” “will,” “could,” “should,” “potential,” “continue,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or similar phrases or the negatives of such terms. We base these statements on our beliefs as well as assumptions we made using information currently available to us. Such statements are subject to risks, uncertainties and assumptions, including those identified in “Risk Factors,” as well as other matters not yet known to us or not currently considered material by us. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this prospectus. Forward-looking statements do not guarantee future performance and should not be considered as statements of fact.

Factors that may cause actual results to differ from expected results include, among others:

Ÿ general economic conditions and a downturn in the printing and business process outsourcing industry;

Ÿ competition in our industry and innovation by our competitors;

Ÿ our failure to anticipate and adapt to future changes in our industry;

Ÿ uncertainty regarding our product and service innovations;

Ÿ our inability to successfully identify and manage our acquisitions or hire qualified account executives;

Ÿ adverse developments concerning our relationships with certain key clients or suppliers;

Ÿ our inability to adequately protect our intellectual property and litigation regarding intellectual property;

Ÿ the increased expenses and administrative workload associated with being a public company; and

Ÿ failure to maintain an effective system of internal controls necessary to accurately report our financial results and prevent fraud.

All future written and verbal forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We undertake no obligation, and specifically decline any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur.

See the section entitled “Risk Factors” for a more complete discussion of these risks and uncertainties and for other risks and uncertainties. These factors and the other risk factors described in this prospectus are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. Consequently, there can be no assurance that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, us.

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USE OF PROCEEDS

We estimate that the net proceeds to us from the sale of the 3,000,000 shares of our common stock we are offering at an assumed public offering price of $16.42 per share (the closing price for our common stock as reported on the Nasdaq Global Market on January 4, 2007) will be approximately $46.2 million after deducting the estimated underwriting discounts and expenses payable by us. We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

We intend to use our net proceeds from this offering to expand our sales force, to acquire or make strategic investments in complementary businesses and for working capital and other general corporate purposes. As of the date of this prospectus, we have no binding commitment or agreement relating to any acquisition or investment. We have not yet determined the amount of our net proceeds to be used specifically for any of the foregoing purposes. Accordingly, management will have significant flexibility in applying our net proceeds of this offering. Pending their use, we intend to invest our net proceeds from this offering in short-term, investment grade interest-bearing instruments.

MARKET PRICE OF COMMON STOCK

Our common stock has been listed on the Nasdaq Global Market under the symbol “INWK” since August 16, 2006. Prior to that time, there was no public market for our common stock. The following table sets forth, for the periods indicated in the fiscal year ending December 31, 2006, the high and low closing sale prices per share for our common stock as reported on the Nasdaq Global Market.

	Common stock price
2006	High		Low
Third quarter (from August 16, 2006)	$	12.58	$	10.10
Fourth quarter	$	17.80	$	11.68
2007
First quarter (through January 4, 2007)	$	16.42	$	15.75

On January 4, 2007, the closing sale price per share for our common stock as reported on the Nasdaq Global Market was $16.42 per share. As of January 3, 2007, there were approximately 35 holders of record of our common stock.

DIVIDEND POLICY

We currently do not intend to pay any dividends on our common stock after the completion of this offering. We intend to retain all available funds and any future earnings for use in the operation and expansion of our business. Any determination in the future to pay dividends will depend upon our financial condition, capital requirements, operating results and other factors deemed relevant by our board of directors, including any contractual or statutory restrictions on our ability to pay dividends.

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2006:

• on an actual basis;

• on a pro forma basis to give effect to the October 11, 2006 acquisition of Applied Graphics, Inc. as if the acquisition had occurred as of September 30, 2006; and

• on a pro forma as adjusted basis to give effect to the sale of 3,000,000 shares of our common stock offered by us in this offering at an assumed public offering price of $16.42 per share, the closing sale price per share of our common stock as reported on the Nasdaq Global Market on January 4, 2007, after deducting estimated underwriting discounts and offering expenses payable by us.

You should read this table together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Description of Capital Stock,” and our consolidated financial statements and related notes which are included elsewhere in this prospectus.

	As of September 30, 2006
	Actual			Pro forma before Offering			Pro forma as adjusted
	(in thousands)
				(unaudited)
Cash and cash equivalents	$	34,284		$	27,328		$	73,545
Line of credit	$	—		$	2,444		$	2,444
Long-term debt, including current portion and capital leases(1)		313			330			330
Stockholders’ equity:
Common Stock, par value $0.0001 per share, 200,000,000 shares authorized, 44,014,319 shares issued and outstanding, actual; 200,000,000 shares authorized, 44,014,319 shares issued and outstanding, pro forma; 200,000,000 shares authorized, 47,472,961 shares issued and outstanding, pro forma as adjusted		115,344			115,344			115,344
Preferred Stock, par value $0.0001 per share, 5,000,000 shares authorized, no shares issued and outstanding, actual; 5,000,000 shares authorized, no shares issued and outstanding, pro forma; 5,000,000 shares authorized, no shares issued and outstanding, pro forma as adjusted		—			—			—
Additional paid-in capital		5,323			5,323			51,540
Treasury stock at cost		(40,000	)		(40,000	)		(40,000	)
Unrealized loss on marketable securities		(31	)		(31	)		(31	)
Accumulated deficit		(2,103	)		(2,103	)		(2,103	)
Total stockholders’ equity		78,533			78,533			124,750
Total capitalization	$	78,846		$	81,307		$	127,524

(1) Reflects the amount outstanding as of September 30, 2006 pursuant to a loan relating to the purchase of certain computer equipment, furniture and commercial software licenses.

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

The following table presents selected consolidated financial and other data as of and for the periods indicated. You should read the following information together with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the accompanying notes.

	Years ended December 31,												Nine months ended September 30,
	2002			2003			2004			2005			2005			2006
													(unaudited)
	(in thousands, except per share amounts)
Consolidated statements of operations data:
Revenue	$	4,970		$	16,229		$	38,884		$	76,870		$	54,626		$	99,362
Cost of goods sold		3,737			12,487			30,483			61,272			43,359			78,228
Gross profit		1,233			3,742			8,401			15,598			11,267			21,134
Selling, general and administrative expenses:
Commission expenses		285			577			1,788			3,492			3,040			4,651
General and administrative expenses		864			2,382			4,317			7,114			4,671			8,119
Total selling, general and administrative expenses		1,149			2,959			6,105			10,606			7,711			12,770
Depreciation and amortization		5			18			223			388			256			574
Income from operations		79			765			2,073			4,604			3,300			7,790
Other income (expense)		(148	)		(86	)		(124	)		(29	)		(25	)		339
Minority interest income (expense)		—			(8	)		(192	)		58			58			—
Total other income (expense)		(148	)		(94	)		(316	)		29			33			339
Income before income taxes		(69	)		671			1,757			4,633			3,333			8,129
Income tax expense		—			—			—			—			—			3,215
Net income (loss)		(69	)		671			1,757			4,633			3,333			4,914
Dividends on preferred shares		(60	)		(176	)		(462	)		(762	)		(584	)		(1,409	)
Net income (loss) applicable to common stockholders	$	(129	)	$	495		$	1,295		$	3,871		$	2,749		$	3,505
Net income (loss) per share of common stock:
Basic	$	(0.01	)	$	0.02		$	0.04		$	0.12		$	0.09		$	0.13
Diluted	$	(0.01	)	$	0.02		$	0.04		$	0.12		$	0.09		$	0.13
Shares used in per share calculations:
Basic		15,314			26,139			29,449			31,010			30,701			27,518
Diluted		15,314			26,139			29,449			32,707			31,890			36,804
Unaudited pro forma income tax provision (benefit)(1)	$	—		$	262		$	685		$	1,807		$	1,300
Unaudited pro forma net income (loss)(1)	$	(69	)	$	409		$	1,072		$	2,826		$	2,033
Other data (unaudited):
Enterprise clients(2)		5			14			46			69			64			86
Transactional clients(3)		69			294			593			667			574			701
Total clients(4)		74			308			639			736			638			787
Total print jobs(5)		723			2,002			6,972			10,736			8,111			11,160
Employees and independent contractors(6)		21			43			85			154			136			240

(1) The unaudited pro forma data presented gives effect to our conversion on January 3, 2006 into a Delaware corporation as if it occurred at the beginning of the period presented. The unaudited pro forma income tax provision represents a combined federal and state effective tax rate of 39.0% and does not consider potential tax loss carrybacks, carryforwards or realizability of deferred tax assets. The unaudited pro forma net income

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represents our net income for the periods presented as adjusted to give effect to the pro forma income tax provision (benefit).

(2) Reflects number of enterprise clients determined as of the last day of the applicable period.

(3) Reflects number of transactional clients served in the applicable period.

(4) Reflects total number of enterprise clients as of the last day of the applicable period and number of transactional clients served in the applicable period.

(5) Reflects total number of print jobs executed in the applicable period.

(6) Reflects number of employees and independent contractors as of the last day of the applicable period.

	As of December 31,								As of September 30,
	2002		2003		2004		2005		2006
									(unaudited)
	(in thousands)
Consolidated balance sheet data:
Cash and cash equivalents	$	252	$	966	$	1,476	$	2,963	$	34,284
Working capital		536		2,688		3,467		3,540		61,862
Total assets		1,680		6,385		14,713		26,685		104,116
Line of credit		84		—		678		2,924		—
Long-term debt		—		—		2,022		—		—
Capital leases		—		—		128		393		313
Convertible redeemable preferred shares		—		2,511		2,863		5,008		—
Total members’ equity/stockholders’ equity		566		320		91		1,252		78,533

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and accompanying notes, which appear elsewhere in this prospectus. It contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this prospectus, particularly under the heading “Risk Factors.”

Overview

We are a leading provider of print procurement solutions to corporate clients in the United States. Utilizing our proprietary technology and database, as well as our extensive domain expertise, we create a competitive bid process to procure, purchase and deliver printed products as part of a comprehensive outsourced enterprise solution and in individual transactions. Our technology is designed to capitalize on excess manufacturing capacity and other inefficiencies in the traditional print supply chain to obtain favorable pricing and to deliver high-quality products and services for our clients.

Our proprietary software applications and database, PPM4™, create a fully-integrated solution that stores, analyzes and tracks the production capabilities of our supplier network, as well as quote and price data for each bid we receive and print job we execute. As a result, we believe PPM4™ contains one of the largest independent repositories of equipment profiles and price data for print suppliers in the United States. We leverage our technology to match each print job with the supplier that is optimally suited to meet the client’s needs at a highly competitive price. Our procurement managers use PPM4™ to manage the print procurement process from end-to-end.

Through our network of over 4,500 suppliers, we offer a full range of print, fulfillment and logistics services that allows us to procure printed products on virtually any substrate. The breadth of our product offerings and services and the depth of our supplier network enable us to fulfill up to 100% of the print procurement needs of our clients. By leveraging our technology platform, our clients are able to reduce overhead costs, redeploy internal resources and obtain favorable pricing and service terms. In addition, our ability to track individual transactions and provide customized reports detailing print procurement activity on an enterprise-wide basis provides our clients with greater visibility and control of their print expenditures.

We believe the opportunity exists to expand our business into new geographic markets. Our headquarters are located in Chicago, and approximately 51% of our clients as of September 30, 2006 were located in Illinois. We also maintain offices in New York, California, Hawaii, Michigan and Missouri. Our objective is to increase our sales in other major print markets in the United States, such as Atlanta, Boston, Dallas, Los Angeles and Minneapolis. We intend to hire or acquire more account executives within close proximity to these large markets, which accounted for, in aggregate, $17.3 billion of print expenditures in 2005, according to PIA/GATF. In addition, given that the print industry is a global business, over time we intend to evaluate opportunities to access attractive markets outside the United States. For example, in March 2006 we entered into a strategic agreement to grant SNP Corporation Ltd. a non-exclusive, non-transferable license to use certain non-core applications of our software in China, Singapore and Hong Kong.

We acquired Graphography Limited LLC on May 31, 2006, CoreVision Group, Inc. on September 12, 2006 and Applied Graphics, Inc. on October 11, 2006. Our results of operations during the nine months ended September 30, 2006 include the results of operations from Graphography from June 1, 2006 and CoreVision from September 1, 2006. Our results of operations in future periods will include the results of operations from Applied Graphics from October 1, 2006.

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Recent Developments

Initial Public Offering.    In August 2006, we completed an initial public offering of shares of our common stock. We offered and sold 7,060,000 shares of our common stock and certain

selling stockholders offered and sold an additional 5,118,500 shares at a price of $9.00 per share. Our net proceeds from the initial public offering were approximately $56.3 million.

Applied Graphics Acquisition.    In October 2006, we acquired Applied Graphics, Inc., a provider of print management and print-on-demand services headquartered in San Rafael, California. As a result of the acquisition, we believe we established a significant presence in the West Coast market with sales executives in California, Hawaii and Nevada. In total, we added 35 sales executives, approximately 1,000 transactional clients and approximately 500 new suppliers. This significantly expanded our pipeline of clients to which we can market our enterprise solution.

The acquisition consideration for Applied Graphics consisted of approximately $7.0 million in cash paid on October 11, 2006. In addition, the former owners of Applied Graphics will receive:

• $1.9 million if gross profit generated by Applied Graphics equals or exceeds $9.7 million from October 1, 2006 to September 30, 2007,

• $1.9 million if gross profit generated by Applied Graphics equals or exceeds $19.3 million from October 1, 2006 to September 30, 2008,

• $500,000 if earnings before interest, taxes, depreciation and amortization (EBITDA) generated by Applied Graphics equals or exceeds $2.5 million from October 1, 2006 to September 30, 2007, or a portion thereof if EBITDA is between $2.3 million and $2.5 million during that period, and

• $500,000 if EBITDA generated by Applied Graphics equals or exceeds $2.8 million from October 1, 2007 to September 30, 2008, or a portion thereof if EBITDA is between $2.6 million and $2.8 million during that period.

CoreVision Acquisition.    In September 2006, we acquired CoreVision Group, Inc., a provider of end-to-end marketing solutions, including design, print, promotional products and fulfillment services, located in Carol Stream, Illinois. As a result of the acquisition, we added 15 sales executives, including our first sales executives in the states of Michigan and Missouri. The acquisition consideration for CoreVision consisted of approximately $1.1 million, $10,000 paid in September 2006 and the remaining $1.1 million to be paid in monthly installments through August 2007. In addition, the former owner of CoreVision is eligible to receive up to:

• $666,666 if gross profit generated by CoreVision equals or exceeds $1.7 million from September 1, 2006 to December 31, 2006, or a portion thereof if gross profit is less than $1.7 million,

• $667,000 if gross profit generated by CoreVision equals or exceeds $5.1 million from January 1, 2007 to December 31, 2007, or a portion thereof if gross profit is less than $5.1 million,

• $667,000 if gross profit generated by CoreVision equals or exceeds $5.1 million from January 1, 2008 to December 31, 2008, or a portion thereof if gross profit is less than $5.1 million, and

• $500,000 if gross profit generated by CoreVision equals or exceeds $6.5 million from January 1, 2009 to December 31, 2009.

Revenue

We generate revenue through the sale of printed products to our clients. Our revenue was $5.0 million, $16.3 million, $38.9 million and $76.9 million in 2002, 2003, 2004 and 2005, respectively, reflecting growth rates of 226.5%, 139.6% and 97.7% in 2003, 2004 and 2005, respectively, as compared to the corresponding prior year. Our revenue was $54.6 million and $99.4 million during the nine months ended September 30, 2005 and 2006, respectively, reflecting a growth rate of 81.9%. As our revenue has grown, our growth rates have decreased. We expect this trend to continue as our revenue increases. Our revenue is generated from two

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different types of clients: enterprise and transactional. Enterprise jobs usually involve higher dollar amounts

and volume than our transactional jobs. We categorize a client as an enterprise client if we have a contract with the client for the provision of printing services on a recurring basis; if the client has signed an open-ended purchase order, or a series of related purchase orders; or if the client has enrolled in our e-stores program, which enables the client to make online purchases of printing services on a recurring basis. We categorize all other clients as transactional. We enter into contracts with our enterprise clients to provide some or a substantial portion of their printed products on a recurring basis. Our contracts with enterprise clients generally have an open-ended term subject to termination by either party upon prior notice ranging from 90 days to twelve months. Several of our larger enterprise clients have outsourced substantially all of their recurring print needs to us. We provide printed products to our transactional clients on an order-by-order basis. As of December 31, 2005, we had 69 enterprise clients, and as of September 30, 2006 we had 86 enterprise clients. From our inception through September 30, 2006, we have served over 1,800 transactional clients. During 2005 and the nine months ended September 30, 2006, enterprise clients accounted for 69% and 77% of our revenue, respectively, while transactional clients accounted for 31% and 23% of our revenue, respectively.

Our revenue consists of the prices paid by our clients for printed products. These prices, in turn, reflect the amounts charged to us by our suppliers plus our gross profit. Our gross profit margin, in the case of some of our enterprise clients, is fixed by contract or, in the case of transactional clients, is negotiated on a job-by-job basis. Once either type of client accepts our pricing terms, the selling price is established and we procure the product for our own account in order to re-sell it to the client. We take full title and risk of loss for the product upon shipment. The finished product is typically shipped directly from our supplier to a destination specified by our client. Upon shipment, our supplier invoices us for its production costs and we invoice our client.

Our revenue from enterprise clients tends to generate lower gross profit margins than our revenue from transactional clients because the gross profit margins established in our contracts with large enterprise clients are generally lower than the gross profit margins we typically realize in our transactional business. Although our enterprise revenue generates lower gross profit margins, our enterprise business tends to be more profitable than our transactional business on an operating profit basis because the commission expense associated with enterprise jobs is generally lower.

The print industry has historically been subject to seasonal sales fluctuations because a substantial number of print orders are placed for the year-end holiday season. We have historically experienced seasonal client buying patterns with a higher percentage of our revenue being earned in our third and fourth quarters. We expect these seasonal revenue patterns to continue.

Cost of Goods Sold and Gross Profit

Our cost of goods sold consists primarily of the price at which we purchase products from our suppliers. Our selling price, including our gross profit, in the case of some of our enterprise jobs, is based on a fixed gross margin established by contract or, in the case of transactional jobs, is determined at the discretion of the account executive or procurement manager within predetermined parameters. Our gross margins on our enterprise jobs are typically lower than our gross margins on our transactional jobs. As a result, our cost of goods sold as a percentage of revenue for our enterprise jobs is typically higher than those for our transactional jobs. Our gross profit for 2003, 2004 and 2005 was $3.7 million, $8.4 million and $15.6 million, respectively. Our gross profit for the nine months ended September 30, 2005 and 2006 was $11.3 million and $21.1 million, respectively. We have early payment discount terms with several of our key suppliers. We have taken advantage of early payment terms on a more frequent basis in recent periods, thereby reducing our overall cost of goods sold as a percentage of revenue.

Operating Expenses and Income from Operations

Commissions paid to our account executives are a significant component of our operating expenses. The commissions we pay to our account executives are based on the gross profit we collect from the clients for which they have responsibility. As a percentage of our gross profit, commissions were 15.4%, 21.3% and 22.4% in

25

2003, 2004 and 2005, respectively. The increase in commissions as a percentage of our gross profit was a result

of the relatively high volume of business in 2003 initiated by our senior management, to whom we do not pay sales commissions. This business as a percentage of our total revenue decreased in 2004 and 2005, resulting in relatively higher commissions as a percentage of our total revenue in those years.

As a percentage of our gross profit, commissions were 27.0% and 22.0% during the nine months ended September 30, 2005 and 2006, respectively. The decrease in commissions as a percentage of gross profit resulted from a higher concentration of revenue from enterprise clients. For the nine months ended September 30, 2006, 77% of our revenue was generated from enterprise clients compared to 66% for the nine months ended September 30, 2005. Commission rates as a percentage of gross profit are generally lower for enterprise accounts.

We accrue for commissions when we recognize the related revenue. Some of our account executives receive a monthly draw to provide them with a more consistent income stream. The cash paid to our account executives in advance of commissions earned is reflected as a prepaid expense on our balance sheet. As our account executives earn commissions, a portion of their commission payment is withheld and offset against their prepaid commission balance, if any. Our prepaid commission balance was $565,000 as of December 31, 2003, $470,000 as of December 31, 2004, $1.6 million as of December 31, 2005 and $1.6 million as of September 30, 2006.

Our general and administrative expenses consist mainly of compensation costs for our management team and procurement managers. Our general and administrative expenses also include compensation costs for our finance and support employees, corporate systems, and accounting, legal, facilities and travel and entertainment expenses. We have been able to manage our business with relatively low general and administrative expenses. General and administrative expenses as a percentage of revenue were 14.7%, 11.1% and 9.3% in 2003, 2004 and 2005, respectively, and 8.6% and 8.2% for the nine months ended September 30, 2005 and 2006, respectively. The decrease in general and administrative expenses as a percentage of revenue reflects our ability to add clients and account executives without incurring a corresponding increase in our general and administrative expenses.

We agree to provide our clients with printed products that conform to the industry standard of a “commercially reasonable quality,” and our suppliers in turn agree to provide us with products of the same quality. In addition, the quotes we execute with our clients include customary industry terms and conditions that limit the amount of our liability for product defects. Product defects have not had a material adverse effect on our results of operations.

We are required to make payment to our suppliers for completed print jobs regardless of whether our clients make payment to us. To date, the failure of our clients to make required payments has not had a material adverse effect on our results of operations. Our bad debt expense was approximately $125,000, $149,000, and $176,000 in 2003, 2004 and 2005, respectively, and $28,000 and $111,000 for the nine months ended September 30, 2005 and 2006, respectively.

Our income from operations for 2003, 2004 and 2005 was $765,000, $2.1 million and $4.6 million, respectively, and $3.3 million and $7.8 million for the nine months ended September 30, 2005 and 2006, respectively.

Recapitalization

On August 15, 2006, we recapitalized all outstanding shares of our Class A common stock, Class B common stock, Series B preferred stock, Series D preferred stock and Series E preferred stock into shares of our common stock on a one-for-one basis. For a discussion of the recapitalization, see “Certain Relationships and Related Party Transactions—Recapitalization.”

Income Taxes

On January 3, 2006, our company completed a conversion pursuant to which InnerWorkings, LLC, a limited liability company, converted to InnerWorkings, Inc., a corporation. As a limited liability company, we were

26

treated as a partnership for federal, state and local income tax purposes. As a result, all items of income, expense, gain and loss of InnerWorkings were generally reportable on the tax returns of members of InnerWorkings, LLC. Accordingly, we made no provisions for income taxes at the company level through December 31, 2005. Our earnings are now subject to federal, state and local taxes at a combined rate of approximately 39.0%.

Critical Accounting Policies

Revenue Recognition

Revenue is recognized when the product is shipped from a third party to the customer, which is when title transfers. In accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, we recognize revenue on a gross basis, as opposed to a net basis similar to a commission arrangement, because we bear the risks and benefits associated with revenue-generated activities by: (1) acting as a principal in the transaction; (2) establishing prices; (3) being responsible for fulfillment of the order; (4) taking the risk of loss for collection, delivery and returns; and (5) marketing our products, among other things.

Goodwill and Other Intangibles

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identified assets of businesses acquired. Under SFAS No. 142, Goodwill and other Intangible Assets, goodwill and other intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or if certain circumstances indicate a possible impairment may exist, in accordance with the provisions of SFAS No. 142. We evaluate recoverability of goodwill using a two-step impairment test approach at the reporting unit level. In the first step, the fair value for the reporting unit is compared to its book value, including goodwill. If the fair value of the reporting unit is less than the book value, a second step is performed, which compares the implied fair value of the reporting unit’s goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values of the reporting units and the net fair values of the identifiable assets and liabilities of such reporting units. If the fair value of the goodwill is less than the book value, the difference is recognized as an impairment. As of December 31, 2005, our net goodwill balance was $353,000.

SFAS No. 142 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives to the estimated residual values, and reviewed for the impairment in accordance with SFAS No. 144, Accounting for Impairment or Disposal of Long-Lived Assets. Our intangible assets consist of customer lists and non-compete agreements with account executives and are amortized on the straight-line basis. We believe the customer lists have ten-year useful lives, and we are amortizing the non-compete agreements over the terms of the agreements. As of December 31, 2005, the net balance of our intangible assets was $931,000.

Stock-Based Compensation

Prior to January 1, 2006, we accounted for stock-based employee compensation arrangements in accordance with provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and complied with the disclosure requirements of Financial Accounting Standards Board (FASB) No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure—An Amendment of FASB Statement No. 123. Effective January 1, 2006, we adopted the fair value recognition provisions of FAS 123 (R), Share-Based Payments, using the prospective transition method and Black-Scholes as the option valuation model. Under the transition method, we will continue to account for nonvested equity awards outstanding at the date of adopting Statement 123 (R) in the same manner as they had been accounted for prior to adoption. As a result, under APB No. 25, compensation expense is based on the difference, if any, on the grant date between the estimated fair value of our stock and the exercise price of options to purchase that stock. The compensation expense is then amortized over the vesting period of the stock options.

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Between June 30, 2005 and June 30, 2006, we granted options to purchase 2,192,000 shares of our common stock. The estimated per share fair value of the shares underlying these option grants ranged from $0.65 to $5.35.

Between June 30, 2005 and December 31, 2005, we granted options to purchase 997,000 shares of our common stock. In August 2005, we engaged an independent valuation specialist to perform a retrospective valuation of our common stock as of November 30, 2004. On September 16, 2005, the valuation specialist delivered a report stating that the fair value of our common stock as of November 30, 2004 was $0.43 per share. Shortly after our receipt of the report, we used the valuation specialist’s methodology to determine that the fair value of our common stock as of June 30, 2005 was $0.65 per share. In October 2005, we used the valuation specialist’s methodology to determine that the fair value of our common stock as of September 30, 2005 was $0.65 per share. Based on these determinations, we established an exercise price of no less than $0.65 per share for the options granted between June 30, 2005 and December 31, 2005. Using the valuation specialist’s methodology, we valued our business as of June 30, 2005 and September 30, 2005 by calculating the present value of our future available cash flows at an appropriate rate. For purposes of estimating our future available cash flows, we made significant assumptions with respect to revenue growth rates, forecasted net income and debt-free future cash flow. We applied a 40% rate to calculate the present value of our future available cash flows based on the independent valuation specialist’s determination that we were in our second stage, or “expansion” stage, of development. We also applied a 5% lack of marketability discount to our enterprise value, which took into account the fact that minority investments in private companies are less liquid than similar investments in publicly-traded companies. There is inherent uncertainty in these estimates.

We believe that the per share fair value of our common stock increased from $0.43 as of November 30, 2004 to $0.65 as of September 30, 2005 as a result of the following developments, among others:

During the nine months ended September 30, 2005, two Fortune 500 companies became enterprise clients. We hired 51 employees and independent contractors during this period, increasing the total to 136. Revenue during this period increased more than 130% from revenue during the prior comparable period.

We accounted for options granted prior to December 31, 2005 in accordance with APB Opinion No. 25. The exercise price of all of the options that we granted during this period was at or above fair market value. As a result, there was no intrinsic value associated with these option grants. Pursuant to APB Opinion No. 25, we were not required to record any compensation expense in connection with these option grants.

On March 1, 2006, we granted options to purchase 30,000 shares of our common stock. The estimated per share fair value of this option grant was $4.92. The basis for determining the estimated per share fair value of this option grant was the contemporaneous arm’s length negotiation of a transaction involving the sale of certain shares of our common stock to SNP. Effective January 1, 2006, we calculate compensation expense under SFAS No. 123 (R) based on the Black-Scholes value of options at the time of grant and record compensation expense in equal amounts as the options vest. We estimated the Black-Scholes value of these options using the following assumptions: expected volatility: 33.5%; risk-free interest rate: 4.63%; expected life: 10 years; exercise price: $4.92 per share; and fair market value: $4.92 per share. We recorded compensation expense of $112,628 in the six months ended June 30, 2006.

On May 8 and June 5, 2006, we granted options to purchase a total of 1,165,000 shares of our common stock. The exercise price of the options to purchase 1,150,000 shares of our common stock that we granted on May 8, 2006 was $4.92 per share, which was the price per share paid by SNP in April 2006. On June 1, 2006, the same valuation specialist that we engaged in August 2005 delivered a report stating that the fair value of our common stock as of May 8, 2006 was $5.35 per share. We used this as the exercise price of the options to purchase 15,000 shares of our common stock that we granted on June 5, 2006. We also used this as the estimated per share fair value of this option grant and the May 8, 2006 option grant. We estimated the Black-Scholes value of these options using the following assumptions: expected volatility: 33.5%; risk-free interest rate: 5.01%; expected life: 10 years; exercise price: $4.92 per share or $5.35 per share, as applicable; and fair market value: $5.35 per share. We expect that our expense for our 2006 option grants will be approximately $430,000 in 2006 and $640,000 in 2007.

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We believe that the per share fair value of our common stock increased from $0.65 as of September 30, 2005 to $5.35 as of May 8, 2006 as a result of the following developments, among others:

From January 1, 2006 to April 30, 2006, six Fortune 500 companies became enterprise clients. The addition of enterprise agreements and the prospect of additional capital from this offering increased our revenue projections. From January 1, 2006 to April 30, 2006, our revenue increased more than 80% from the prior comparable period. In January 2006, we completed a Series E preferred round of financing at a purchase price of $4.92 per share, which provided $9.3 million of working capital. In April 2006, we entered into a strategic alliance with SNP to license a portion of our technology. This alliance included the sale of our common stock to SNP at a purchase price of $4.92 per share.

As of June 30, 2006, there were 5,315,667 options to purchase shares of our common stock outstanding. Of these outstanding options, 1,905,667 were vested and 3,410,000 were unvested. At our initial public offering price of $9.00 per share, the intrinsic value of these outstanding options as of June 30, 2006 was $39.7 million, of which $16.1 million related to vested options and $23.6 million related to unvested options.

On August 15, 2006, we granted options to purchase 56,050 shares of our common stock under our Stock Incentive Plan to certain employees at an exercise price equal to the initial public offering price of $9.00 per share. The options will vest in equal annual installments over the three-year period following the completion of this offering. At the initial public offering price of $9.00 per share, the value of the option grants, as calculated in accordance with FAS No. 123 (R), Share-Based Payments, will be approximately $141,000, which will be expensed in equal installments over three years.

We believe that the per share fair value of our common stock increased from $5.35 as of May 8, 2006 to the initial public offering price of $9.00 as a result of the following developments, among others:

• On May 31, 2006, we acquired Graphography Limited LLC, a provider of production management services, including print procurement and promotional services. In 2005, Graphography generated revenue of $23.8 million, representing 18.2% of our 2005 pro forma revenue. As a result of the acquisition, we established a significant presence in the New York market, which is the third largest print market in the United States. Graphography adds two new significant enterprise clients, a Fortune 500 manufacturing and marketing company and a multi-billion dollar international beverage distributor, each of which would have been in our top five accounts based on revenue generated in 2005 on a pro forma basis. It also adds more than 100 transactional clients, which expands our pipeline of clients to which we can market our enterprise solution. In addition, we gained approximately 400 new suppliers that can provide printing and promotional services to our existing clients. We also acquired three additional sales executives as well as two additional lead production managers, and their corresponding production teams, with significant expertise in the areas of direct mail and promotional products. The acquisition enabled us to populate our proprietary database with over 10,000 historical Graphography print jobs and quotes, increasing the size of our PPM4^™ database by over 15% and enhancing our ability to identify optional pricing for our clients.

• From May 8, 2006 to August 15, 2006, we gained three new enterprise clients, including two Fortune 500 companies, we executed jobs for 50 new transactional clients, including several Fortune 500 companies, and we hired five additional sales executives who brought significant customer relationships to us.

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Results of Operations

The following table sets forth our consolidated statements of income data for the periods presented as a percentage of our revenue:

	Years ended December 31,						Nine months ended September 30,
	2003		2004		2005		2005		2006
							(unaudited)
Consolidated statements of income data:
Revenue	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	76.9		78.4		79.7		79.4		78.7
Gross profit	23.1		21.6		20.3		20.6		21.3
Selling, general and administrative expenses:
Commission expenses	3.6		4.6		4.5		5.6		4.7
General and administrative expenses	14.6		11.1		9.3		8.6		8.2
Total selling, general and administrative expenses	18.2		15.7		13.8		14.2		12.9
Depreciation and amortization	0.1		0.6		0.5		0.5		0.6
Income from operations	4.7		5.3		6.0		5.9		7.8
Other income (expense)	(0.5	)	(0.3	)	—		0.0		0.3
Minority interest income (expense)	—		(0.5	)	0.1		0.1		—
Total other income (expense)	(0.6	)	(0.8	)	0.0		6.0		8.1
Income tax expense	—		—		—		—		(3.2	)
Net income	4.1	%	4.5	%	6.0	%	6.0	%	4.9	%

Comparison of three months ended September 30, 2006 and 2005

Revenue

Our revenue increased by $18.3 million, or 78.1%, from $23.5 million during the three months ended September 30, 2005 to $41.8 million during the three months ended September 30, 2006. The revenue growth reflects an increase in both enterprise and transactional clients. Our revenue from enterprise clients increased by $11.9 million, or 61.8%, from $19.3 million during the three months ended September 30, 2005 to $31.2 million during the three months ended September 30, 2006. As of September 30, 2006, we had 86 enterprise clients under contract compared to 64 enterprise clients under contract as of September 30, 2005. Additionally, revenue from transactional clients increased by $6.4 million, or 152.9%, from $4.2 million during the three months ended September 30, 2005 to $10.6 million during the three months ended September 30, 2006. The incremental transactional revenue is largely a result of increasing the number of experienced sales executives. We increased our number of sales executives by 60, or 111.1%, from 54 as of September 30, 2005 to 114 as of September 30, 2006.

Cost of goods sold

Our cost of goods sold increased by $13.6 million, or 72.7%, from $18.7 million during the three months ended September 30, 2005 to $32.2 million during the three months ended September 30, 2006. The increase reflects the revenue growth during the three months ended September 30, 2006. Our cost of goods sold as a percentage of revenue decreased from 79.6% during the three months ended September 30, 2005 to 77.2% during the three months ended September 30, 2006. The decrease is a result of a lower concentration of our business coming from enterprise accounts. During the three months ended September 30, 2005, 82% of our revenue was generated from enterprise accounts compared to 75% during the three months ended September 30, 2006. Additionally, we have early payment terms with many of our suppliers, which we aggressively utilized, thereby reducing our cost of goods sold.

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Gross Profit

Our gross profit as a percentage of revenue, which we refer to as gross margin, increased from 20.4% during the three months ended September 30, 2005 to 22.8% during the three months ended September 30, 2006. The increase is the result of a higher concentration of business from transaction accounts as well as early pay discounts with many of our suppliers.

Selling, general and administrative expenses

Commission expense increased by $1.0 million, or 75.4%, from $1.3 million during the three months ended September 30, 2005 to $2.3 million during the three months ended September 30, 2006. As a percentage of gross profit, commission expense decreased from 27.3% during the three months ended September 30, 2005 to 24.1% during the three months ended September 30, 2006. The decrease is a result of a higher concentration of business from clients with lower commission rates.

General and administrative expense increased by $1.6 million, or 88.4%, from $1.8 million during the three months ended September 30, 2005 to $3.4 million during the three months ended September 30, 2006. General and administrative expense increased as a percentage of revenue from 7.6% during the three months ended September 30, 2005 to 8.1% during the three months ended September 30, 2006. The increase is due to the non-cash compensation expense of $198,000 resulting from the adoption of SFAS 123 (R), which was 0.5% of revenue during the three months ended September 30, 2006. Without this compensation expense, general and administrative expense as a percentage of revenue would have been 7.6%.

Depreciation and amortization

Depreciation and amortization expense increased by $135,000, or 128.3%, from $105,000 during the three months ended September 30, 2005 to $240,000 during the three months ended September 30, 2006. The increase in depreciation expense is primarily attributable to purchases of computer hardware and software, equipment and furniture and fixtures as well as capitalization of costs of computer software for internal use in accordance with Statement of Position 98-1 during 2005. The increase in amortization expense is a result of the amortization of the intangible assets acquired in connection with our purchase of Graphography LLC in May 2006.

Income from operations

Income from operations increased by $2.0 million, or 128.2%, from $1.6 million during the three months ended September 30, 2005 to $3.6 million during the three months ended September 30, 2006. As a percentage of revenue, income from operations increased from 6.8% during the three months ended September 30, 2005 to 8.7% during the three months ended September 30, 2006. The increase in income from operations as a percentage of revenue is a result of an increase in our gross profit margin and an increase in our selling, general and administrative expenses as a percentage of revenue.

Other income and expense

Other income and expense increased $240,000 from $9,000 during the three months ended September 30, 2005 to $249,000 during the three months ended September 30, 2006. The significant increase is due to an increase in interest income from $19,000 during the three months ended September 30, 2005 to $315,000 during the three months ended September 30, 2006. The increase in interest income is largely a result of the capital raised in connection with our initial public offering in which we sold 7,060,000 shares of our common stock with net proceeds to us, after preference payments, dividend payments and repayment of outstanding indebtedness under our line of credit, of approximately $46.8 million. These proceeds were invested in money market funds from the receipt date through September 30, 2006.

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Provision for income taxes

Provision for income taxes increased by $1.5 million from zero during the three months ended September 30, 2005 to $1.5 million during the three months ended September 30, 2006. The provision for income taxes was zero during the three months ended September 30, 2005 because we were a limited liability company (LLC) and, as a result, did not pay income taxes. The income of our Company flowed through to the members of the LLC. We converted from an LLC to a corporation on January 3, 2006. As a result, we have a provision for federal and state income taxes for the three months ended September 30, 2006.

We used $40 million of the $50 million we received in exchange for the issuance of our Series E preferred stock to redeem Class A common shares held by our existing stockholders in connection with our conversion from a limited liability company to a corporation. The cash distribution was taxable to our stockholders and resulted in a $34.0 million step-up in the basis of our assets for tax purposes. As a result of the $34.0 million step-up, we recognized a deferred tax asset of $13.2 million, for which we recorded a valuation allowance of $6.6 million and a corresponding net increase to additional paid in capital of $6.6 million. For the three months ended September 30, 2006, the provision for federal and state income taxes was $1.5 million, resulting in an effective tax rate of 39%.

Net income

Net income increased by $763,000, or 47.6%, from $1.6 million during the three months ended September 30, 2005 to $2.4 million during the three months ended September 30, 2006. Net income as a percentage of revenue decreased from 6.8% during the three months ended September 30, 2005 to 5.7% during the three months ended September 30, 2006. This is the result of recording no tax provision during the three months ended September 30, 2005 as we were an LLC. Pretax income as a percentage of revenue increased to 9.3% during the three months ended September 30, 2006 compared to 6.8% during the three months ended September 30, 2005. The increase in pretax income as a percentage of revenue is largely a result of improved gross profit margin from 20.4% during the three months ended September 30, 2005 to 22.8% during the three months ended September 30, 2006.

Comparison of nine months ended September 30, 2006 and 2005

Revenue

Our revenue increased by $44.7 million, or 81.9%, from $54.6 million during the nine months ended September 30, 2005 to $99.4 million during the nine months ended September 30, 2006. Our revenue growth primarily reflects an increase in our enterprise business. We increased our business from enterprise clients to 77% of our revenue during the nine months ended September 30, 2006, up from 66% of our revenue during the nine months ended September 30, 2005. Our revenue from enterprise clients increased by $40.1 million, or 111.2%, from $36.1 million during the nine months ended September 30, 2005 to $76.2 million during the nine months ended September 30, 2006. As of September 30, 2006, we had 86 enterprise clients under contract compared to 64 enterprise clients under contract as of September 30, 2005. In addition, we continued to hire or acquire experienced sales executives with existing books of business. We increased our number of sales executives by 60, or 111.1%, from 54 as of September 30, 2005 to 114 as of September 30, 2006.

Cost of goods sold

Our cost of goods sold increased by $34.9 million, or 80.4%, from $43.4 million during the nine months ended September 30, 2005 to $78.2 million during the nine months ended September 30, 2006. The increase reflects the revenue growth during the nine months ended September 30, 2006. Our cost of goods sold as a percentage of revenue decreased from 79.4% during the nine months ended September 30, 2005 to 78.7% during the nine months ended September 30, 2006. The decrease is a result of a greater concentration of higher gross profit margin enterprise business. Additionally, we have early payment terms with many of our suppliers, which we aggressively utilized, thereby reducing our cost of goods sold.

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Gross Profit

Our gross profit as a percentage of revenue, which we refer to as gross margin, increased from 20.6% during the nine months ended September 30, 2005 to 21.3% during the nine months ended September 30, 2006. The increase is the result of a greater concentration of higher margin transactional clients as well as early pay discounts with many of our key suppliers.

Selling, general and administrative expenses

Commission expense increased by $1.7 million, or 53.0%, from $3.0 million during the nine months ended September 30, 2005 to $4.7 million during the nine months ended September 30, 2006. As a percentage of revenue, commission expense decreased from 5.6% during the nine months ended September 30, 2005 to 4.7% during the nine months ended September 30, 2006. The decrease is a result of a higher concentration of business with enterprise clients. Historically, lower commission rates have been paid on our enterprise business.

General and administrative expense increased by $3.4 million, or 73.9%, from $4.7 million during the nine months ended September 30, 2005 to $8.1 million during the nine months ended September 30, 2006. General and administrative expense decreased as a percentage of revenue from 8.6% during the nine months ended September 30, 2005 to 8.2% during the nine months ended September 30, 2006. The decrease is primarily due to a decrease in salaries and benefits as a percentage of revenue. Salaries and benefits decreased as a percentage of revenue from 5.4% during the nine months ended September 30, 2005 to 5.0% during the nine months ended September 30, 2006. The decrease reflects our ability to add clients and account executives to increase our revenue without incurring a corresponding increase in our general and administrative expense.

Depreciation and amortization

Depreciation and amortization expense increased by $318,000, or 124.6%, from $256,000 during the nine months ended September 30, 2005 to $574,000 during the nine months ended September 30, 2006. The increase in depreciation expense is primarily attributable to purchases of computer hardware and software, equipment and furniture and fixtures as well as capitalization of costs of computer software for internal use in accordance with Statement of Position 98-1 during 2005. The increase in amortization expense is a result of the amortization of the intangible assets acquired in connection with our purchase of the remaining 49% ownership interest in Insight, LLC in March 2005 and our purchase of Graphography LLC in May 2006.

Income from operations

Income from operations increased by $4.5 million, or 136.0%, from $3.3 million during the nine months ended September 30, 2005 to $7.8 million during the nine months ended September 30, 2006. As a percentage of revenue, income from operations increased from 6.0% during the nine months ended September 30, 2005 to 7.8% during the nine months ended September 30, 2006. The increase in income from operations as a percentage of revenue is a result of an increase in our gross profit margin and a decrease in our selling, general and administrative expenses as a percentage of revenue.

Other income and expense

Other income and expense increased $306,000 from $33,000 during the nine months ended September 30, 2005 to $339,000 during the nine months ended September 30, 2006. The significant increase is due to an increase in interest income from $54,000 during the nine months ended September 30, 2005 to $492,000 during the nine months ended September 30, 2006. The increase in interest income is largely a result of the capital raised in connection with our initial public offering in which we sold 7,060,000 shares of our common stock with net proceeds to us after preference payments, dividend payments and repayment of outstanding indebtedness under our line of credit, of approximately $46.9 million. These proceeds were invested in money market funds from the receipt date through September 30, 2006.

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Provision for income taxes

Provision for income taxes increased by $3.2 million from zero during the nine months ended September 30, 2005 to $3.2 million during the nine months ended September 30, 2006. The provision for income taxes was zero during the nine months ended September 30, 2005 because we were a limited liability company (LLC) and, as a result, did not pay income taxes. The income of the company flowed through to the members of the LLC. We converted from an LLC to a corporation on January 3, 2006. As a result, we have a provision for federal and state income taxes for the nine months ended September 30, 2006.

We used $40 million of the $50 million we received in exchange for the issuance of our Series E preferred stock to redeem Class A common shares held by our existing stockholders in connection with our conversion from a limited liability company to a corporation. The cash distribution was taxable to our stockholders and resulted in a $34.0 million step-up in the basis of our assets for tax purposes. As a result of the $34.0 million step-up, we recognized a deferred tax asset of $13.2 million, for which we recorded a valuation allowance of $6.6 million and a corresponding net increase to additional paid in capital of $6.6 million. For the nine months ended September 30, 2006, the provision for federal and state income taxes was $3.2 million, resulting in an effective tax rate of 39.6%.

Net income

Net income increased by $1.6 million, or 47.4%, from $3.3 million during the nine months ended September 30, 2005 to $4.9 million during the nine months ended September 30, 2006. Net income as a percentage of revenue decreased from 6.1% during the nine months ended September 30, 2005 to 4.9% during the nine months ended September 30, 2006. This is a result of no tax provision during the nine months ended September 30, 2005 as we were an LLC. Pretax income as a percentage of revenue increased to 8.2% during the nine months ended September 30, 2006 compared to 6.1% during the nine months ended September 30, 2005. The increase in pretax income as a percentage of revenue is largely a result of improved operating profit. Selling, general and administrative expenses as a percentage of revenue decreased from 14.1% during the nine months ended September 30, 2005 to 12.9% during the nine months ended September 30, 2006.

Comparison of years ended December 31, 2005 and 2004

Revenue

Our revenue increased by $38.0 million, or 97.7%, from $38.9 million in 2004 to $76.9 million in 2005. The revenue growth reflects an increase in transactional and enterprise business in 2005. We increased our business from enterprise clients to 69% of our revenue in 2005, up from 50% of our revenue in 2004. Our revenue from enterprise clients increased by $33.3 million, or 172.5%, from $19.5 million in 2004 to $52.8 million in 2005. As of December 31, 2005, we had 69 enterprise clients under contract, which was an increase of 23, compared to 46 enterprise clients under contract as of December 31, 2004. In addition, we performed 10,736 print jobs in 2005, compared to 6,972 print jobs in 2004.

Cost of goods sold

Our cost of goods sold increased by $30.8 million, or 101.0%, from $30.5 million in 2004 to $61.3 million in 2005. The increase reflects the growth in revenue in 2005. Our cost of goods sold as a percentage of revenue increased from 78.4% in 2004 to 79.7% in 2005. The increase is primarily due to a higher concentration of business with enterprise clients which typically have lower commission rates.

Gross profit

Our gross profit as a percentage of revenue, which we refer to as gross margin, decreased from 21.6% in 2004 to 20.3% in 2005. The decrease primarily resulted from an increase in our enterprise business, which has historically had lower gross profit margins than our transactional business.

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Selling, general and administrative expenses

Commission expense increased by $1.7 million, or 95.3%, from $1.8 million in 2004 to $3.5 million in 2005. As a percentage of revenue, commission expense decreased from 4.6% in 2004 to 4.5% in 2005. The decrease resulted from increased enterprise business, which typically have lower commission rates.

General and administrative expenses increased by $2.8 million, or 64.8%, from $4.3 million in 2004 to $7.1 million in 2005. As a percentage of revenue, general and administrative expenses decreased from 11.1% in 2004 to 9.3% in 2005. The decrease is due in part to a decrease in salaries and benefits as a percentage of revenue. Salaries and benefits decreased as a percentage of revenue from 6.0% in 2004 to 5.5% in 2005. The decrease reflects our ability to add clients and account executives to increase our revenue without incurring a corresponding increase in our general and administrative expenses.

Depreciation and amortization

Depreciation and amortization expense increased by $165,000, or 74.0%, from $223,000 in 2004 to $388,000 in 2005. The increase in depreciation expense is primarily attributable to purchases of computer hardware and software, equipment and furniture and fixtures during 2005. The increase in amortization expense is due to the acquisition of intangible assets of Ocular Group, LLC (Ocular), a print broker, in April 2004. The Ocular acquisition included the purchase of intangible assets, including customer lists and sales executives non-compete agreements with values of $889,000 that are being amortized on a straight-line basis over a useful life of five and ten years.

Income from operations

Income from operations increased by $2.5 million, or 122.1%, from $2.1 million in 2004 to $4.6 million in 2005. As a percentage of revenue, income from operations increased from 5.3% in 2004 to 6.0% in 2005. The increase in income from operations as a percentage of revenue reflects a reduction in selling, general and administrative expenses as a percentage of revenue.

Minority interest expense

Minority interest expense decreased by $250,000 from expense of $192,000 in 2004 to income of $58,000 in 2005. For the first two months of 2005, Insight had an operating loss. As a result, we recorded minority interest income for that period. Upon our acquisition of the 49% ownership interest in Insight that we did not already own in March 2005, we ceased recording minority interest expense.

Other income and expense

Interest expense decreased by $34,000, or 25.4%, from $132,000 in 2004 to $98,000 in 2005. The decrease is the result of maintaining a lower average daily balance under our bank line of credit.

Net Income

Net income increased by $2.8 million, or 163.7%, from $1.8 in 2004 to $4.6 million in 2005. As a percentage of revenue, net income increased from 4.5% in 2004 to 6.0% in 2005. The increase in net income as a percentage of revenue is largely a result of improved operating profit. Selling, general and administrative expenses as a percentage of revenue decreased from 15.7% in 2004 to 13.8% in 2005.

Comparison of years ended December 31, 2004 and 2003

Revenue

Our revenue increased by $22.7 million, or 139.6%, from $16.2 million in 2003 to $38.9 million in 2004. The revenue growth reflects an increase in transactional and enterprise business in 2004. We increased our

35

business from enterprise clients to 50% of our revenue in 2004, up from 37% of our revenue in 2003. Our revenue from enterprise clients increased by $13.5 million, or 225.0%, from $6.0 million in 2003 to $19.5 million in 2004. As of December 31, 2004, we had 46 enterprise clients under contract, which was an increase of 32, compared to 14 enterprise clients under contract as of December 31, 2003. In addition, we performed 6,972 print jobs in 2004, compared to 2,002 print jobs in 2003.

Cost of goods sold

Our cost of goods sold increased by $18.0 million, or 144.1%, from $12.5 million in 2003 to $30.5 million in 2004. The increase reflects the growth in revenue in 2004. Revenue from enterprise clients and Insight accounted for a higher percentage of our revenue. Our gross margins on our enterprise jobs and Insight’s gross margins are typically lower than those on our transactional jobs. As a result, cost of goods sold as a percentage of revenue increased from 76.9% in 2003 to 78.4% in 2004.

Gross profit

Our gross margin decreased from 23.1% in 2003 to 21.6% in 2004. The decrease primarily resulted from an increase in business with enterprise clients and Insight’s lower gross margin. Insight’s gross margin decreased from 17.8% in 2003 to 16.3% in 2004.

Selling, general and administrative expenses

Commission expenses increased by $1.2 million, or 209.9%, from $577,000 in 2003 to $1.8 million in 2004. As a percentage of revenue, commission expense increased from 3.6% in 2003 to 4.6 % in 2004. The increase is due to a higher percentage of revenue being generated from commissioned accounts.

General and administrative expenses increased by $1.9 million, or 81.2%, from $2.4 million in 2003 to $4.3 million in 2004. As a percentage of revenue, general and administrative expenses decreased from 14.6% in 2003 to 11.1% in 2004. The decrease is due in part to a decrease in salaries and benefits as a percentage of revenue. Salaries and benefits decreased as a percentage of revenue from 8.9% in 2003 to 6.0% in 2004. The decrease reflects our ability to add clients and account executives to increase our revenue without incurring a corresponding increase in our general and administrative expenses.

Depreciation and amortization

Depreciation and amortization expense increased by $205,000 from $18,000 in 2003 to $223,000 in 2004. The increase in depreciation expense is primarily attributable to purchases of computer hardware and software, equipment and furniture and fixtures in 2004. The increase in amortization expense is due to the acquisition of Ocular in April 2004. The acquisition of Ocular included the purchase of intangible assets with values of $889,000 that are being amortized on a straight-line basis over a useful life of five and ten years.

Income from operations

Income from operations increased by $1.3 million, or 171.0%, from $765,000 in 2003 to $2.1 million in 2004. As a percentage of revenue, income from operations increased from 4.7% in 2003 to 5.3% in 2004. The increase in income from operations as a percentage of revenue reflects a reduction in general and administrative expenses as a percentage of revenue as a result of our improved operating leverage.

Minority interest expense

Minority interest expense increased by $184,000 from $8,000 in 2003 to $192,000 in 2004. The increase is due to our sale of a 49% ownership interest in Insight in October 2003.

Other income and expense

Interest expense increased by $43,000, or 48.6%, from $89,000 in 2003 to $132,000 in 2004. The increase is due to the interest payments to the former holders of our Series D preferred stock made in 2004.

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Net Income

Net income increased by $1.1 million, or 161.9%, from $671,000 in 2003 to $1.8 million in 2004. As a percentage of revenue, net income increased from 4.1% in 2003 to 4.5% in 2004.

Quarterly Results of Operations

The following table represents unaudited statement of operations data for our most recent ten fiscal quarters. You should read the following table in conjunction with our consolidated financial statements and related notes appearing elsewhere in this prospectus. The results of operations of any quarter are not necessarily indicative of the results that may be expected for any future period.

	Three months ended
	June 30, 2004		Sept. 30, 2004		Dec. 31, 2004		Mar. 31, 2005		June 30, 2005		Sept. 30, 2005		Dec. 31, 2005		Mar. 31, 2006		June 30, 2006		Sept. 30, 2006
	(unaudited) (in thousands, except per share amounts)
Revenue	$	8,551	$	9,795	$	15,219	$	12,420	$	18,739	$	23,476	$	22,244	$	22,435	$	35,142	$	41,785
Gross profit		1,966		2,221		2,930		2,520		3,950		4,797		4,331		4,512		7,076		9,545
Net income		263		464		1,014		575		1,159		1,604		1,301		826		1,719		2,367
Net income per share of common stock:
Basic	$	0.01	$	0.01	$	0.03	$	0.01	$	0.03	$	0.04	$	0.04	$	0.01	$	0.05	$	0.06
Diluted	$	0.01	$	0.01	$	0.03	$	0.01	$	0.03	$	0.04	$	0.03	$	0.01	$	0.04	$	0.05

Impact of Inflation

We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation and changing prices did not have a material impact on our operations in 2003, 2004, 2005 or the nine months ended September 30, 2006.

Liquidity and Capital Resources

In connection with our initial public offering, we raised approximately $46.9 million net of underwriting discounts, professional fees, preference payments, dividend payments and repayment of outstanding indebtedness under our line of credit. At September 30, 2006, we had $44.3 million of cash, cash equivalents and marketable securities. Cash equivalents and marketable securities are comprised of asset- and mortgage-backed securities, U.S. government and agency securities and domestic and foreign corporate bonds. Historically, we have financed our operations through private sales of common and preferred equity, bank loans and internally generated positive cash flow. We believe that our available cash and cash flows generated from operations will be sufficient to satisfy our working capital requirements for the foreseeable future.

Operating Activities. Cash provided by (used in) operating activities primarily consists of net income adjusted for certain non-cash items including depreciation and amortization and the effect of changes in working capital and other activities. Cash used in operating activities for the nine months ended September 30, 2006 was $7.9 million and primarily reflected net income of $4.9 million and $1.2 million of non-cash items, offset by $14.0 million used to fund working capital and other activities. The most significant impact on working capital and other activities consisted of an increase in accounts receivable of $10.7 million due to revenue growth with an increase in accounts payable of only $600,000 due to early payments to many of our suppliers to take advantage of discount opportunities.

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For the nine months ended September 30, 2005, cash provided by operating activities was $3.2 million and principally consisted of net income of $3.3 million. The most significant impact on working capital and other activities consisted of an increase in accounts payable of $4.9 million offset by an increase in prepaid expenses of $3.5 million, an increase in accounts receivable of $1.2 million and an increase in unbilled revenue of $1.3 million.

In 2005, cash provided by operating activities increased by $112,000 to $967,000 from $855,000 in 2004. Cash provided by operating activities increased by only $112,000 compared to an increase in net income of $2.9 million due to the significant increase in prepaid expenses and other. Prepaid expenses increased by over $1.0 million due to professional fees incurred in 2005 in connection with our initial public offering. In addition, other prepaid expenses increased by over $1.0 million due to prepaid paper and other supplier costs for jobs that were not ready to ship to clients. The increase in this current asset reduced the overall net cash provided by operations.

In 2004, cash provided by operating activities increased $1.6 million to $855,000 compared with cash used in operating activities of $697,000 in 2003. The increase in cash provided by operating activities reflects an improvement in our net income and that growth in our accounts receivable outpaced increases in our accounts payable and other short-term liabilities.

Investing Activities. Cash used in investing activities in the nine months ended September 30, 2006 of $14 million was attributable to purchases of marketable securities of $10 million with a portion of the net proceeds received from our initial public offering, cash paid for acquisitions of $3 million and capital expenditures of $1 million.

Cash used in investing activities for the nine months ended September 30, 2005 of $1.6 million was primarily attributable to purchases of marketable securities of $760,000, using a portion of the net proceeds received from our Series D round of financing in February 2005, and capital expenditures of $707,000.

In 2005, cash used in investing activities increased $209,000 to $1.2 million from $991,000 in 2004. In 2004, $681,000 was used to purchase the Ocular Group, LLC, while $309,000 was used for the purchase of property and equipment. In 2005, the purchase of property and equipment increased to $1.0 million related to the purchase of new hardware and software and the capitalization of internal software costs.

Cash used in investing activities increased $921,000 to $991,000 in 2004 from $70,000 in 2003. The increase reflects the purchase of Ocular and purchases of property and equipment.

Financing Activities. Cash provided by financing activities in the nine months ended September 30, 2006 of $53.2 million was primarily attributable to the net proceeds received from our initial public offering, after preference payments, dividend payments and repayment of outstanding indebtedness under the line of credit, of approximately $46.9 million and the proceeds received from our Series E round of financing, net of the subsequent $40 million share repurchase, of approximately $10.0 million.

Cash used in financing activities in the nine months ended September 30, 2005 of $968,000 was primarily attributable to payment of distributions of $1.4 million and payment of dividends on preferred shares of $821,000. This was offset by the net proceeds received from our Series D round of financing of approximately $2.2 million.

In 2005, cash provided by financing activities increased by $1.1 million to $1.7 million from $646,000 in 2004. The increase in cash provided by financing activities is a result of usage of our line of credit in 2005. In addition, we raised capital through the sale of $2.0 million of Series D preferred stock in February 2005.

In 2004, cash provided by financing activities decreased by $854,000 to $646,000 from $1.5 million in 2003. The decrease in cash provided by financing activities primarily reflects proceeds from private sales of common and preferred equity.

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Capital expenditures were $70,000 in 2003, $310,000 in 2004, $1.0 million in 2005 and $980,000 for the nine months ended September 30, 2006. We anticipate spending between $1.2 million and $1.6 million for the full year 2006 on capital expenditures, including new hardware and software and the capitalization of internal software costs. Our capital expenditures historically consisted of purchases of resources to manage our operations, including computer hardware and software, office furniture and equipment and leasehold improvements. We expect that our capital expenditures will continue to increase in the future. Since our inception, we have generally funded capital expenditures either through the use of working capital or with capital leases.

We have a $20.0 million line of credit with JPMorgan Chase Bank, N.A. The line of credit was unused as of September 30, 2006. The maximum amount outstanding under our line of credit cannot exceed 80% of the book value of our eligible accounts receivable. Our line of credit contains limitations on our ability to incur indebtedness, create liens and make certain investments. Advances made under our line of credit accrue interest at a per annum rate equal to the prime rate.

We anticipate that our operating expenses and planned capital expenditures will constitute a material use of cash. In addition, we may continue to utilize cash to fund acquisitions of or strategic investments in complementary businesses and to expand our sales force. Although we can provide no assurances, we believe that the net proceeds from this offering, together with our available cash and cash equivalents and amounts available under our line of credit, should be sufficient to meet our working capital and operating expenditure requirements for the foreseeable future. Thereafter, we may find it necessary to obtain additional equity or debt financing. In the event additional financing is required, we may not be able to raise it on acceptable terms or at all.

Contractual Obligations

As of September 30, 2006, we had the following contractual obligations:

	Payments due by period
	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
	(in thousands)
Capital lease obligations		366		100		170		96		—
Operating lease obligations		10,475		1,580		3,329		2,368		3,198
Total	$	10,841	$	1,680	$	3,499	$	2,464	$	3,198

This table does not include contingent obligations related to any acquisitions. See “Management Discussion and Analysis—Recent Developments.”

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Quantitative and Qualitative Disclosure about Market Risk

Commodity Risk

We are dependent upon the availability of paper and paper prices represent a substantial portion of the cost of our products. The supply and price of paper depends on a variety of factors over which we have no control, including environmental and conservation regulations, natural disasters and weather.

Interest Rate Risk

We have exposure to changes in interest rates on our line of credit. The interest rate on our line of credit fluctuates based on the prime rate. Assuming the $20.0 million line of credit was fully drawn, a 1.0% increase in the prime rate would increase our annual interest expense by $200,000.

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Our interest income is sensitive to changes in the general level of U.S. interest rates, in particular because all of our investments are in cash equivalents. The average duration of all of our investments as of September 30, 2006 was less than three months. Due to the short-term nature of our investments, we believe that there is no material risk exposure.

We do not use derivative financial instruments for speculative trading purposes.

Recent Accounting Pronouncements

In July 2006, FASB issued Statement of Financial Accounting Standards Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109, “Accounting for Income Taxes.” FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The new FASB standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. We intend to adopt FIN 48 effective January 1, 2007 and we have not yet determined the impact, if any, this adoption will have.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. This Statement is required to be adopted by us in the first quarter of its fiscal year 2008. We are currently evaluating the potential impact of adopting SFAS 157.

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BUSINESS

Our Company

We are a leading provider of print procurement solutions to corporate clients in the United States. Utilizing our proprietary technology and database, as well as our extensive domain expertise, we create a competitive bid process to procure, purchase and deliver printed products as part of a comprehensive outsourced enterprise solution and in individual transactions. Our technology is designed to capitalize on excess manufacturing capacity and other inefficiencies in the traditional print supply chain to obtain favorable pricing and to deliver high-quality products and services for our clients.

Our proprietary software applications and database, PPM4™, create a fully-integrated solution that stores, analyzes and tracks the production capabilities of our supplier network, as well as quote and price data for each bid we receive and print job we execute. As a result, we believe PPM4™ contains one of the largest independent repositories of equipment profiles and price data for print suppliers in the United States. We leverage our technology to match each print job with the supplier that is optimally suited to meet the client’s needs at a highly competitive price. Our procurement managers use PPM4™ to manage the print procurement process from end-to-end.

Through our network of over 4,500 suppliers, we offer a full range of print, fulfillment and logistics services that allows us to procure printed products on virtually any substrate. The breadth of our product offerings and services and the depth of our supplier network enable us to fulfill up to 100% of the print procurement needs of our clients. By leveraging our technology platform, our clients are able to reduce overhead costs, redeploy internal resources and obtain favorable pricing and service terms. In addition, our ability to track individual transactions and provide customized reports detailing print procurement activity on an enterprise-wide-basis provides our clients with greater visibility and control of their print expenditures.

We generate revenue by procuring and purchasing printed products from our suppliers and selling those products to our clients. We procure printed products for clients across a wide range of industries, such as advertising, consumer products, publishing and retail. Our clients fall into two categories, enterprise and transactional. We enter into arrangements with our enterprise clients to provide some, or substantially all, of their printed products, typically on a recurring basis. We provide printed products to our transactional clients on an order-by-order basis. For the year ended December 31, 2005, enterprise and transactional clients accounted for 69% and 31% of our revenue, respectively. For the nine months ended September 30, 2006, enterprise and transactional clients accounted for 77% and 23% of our revenue, respectively.

We were formed in 2001 and commenced operations in 2002. From our inception through December 31, 2005, we served over 1,100 clients, received approximately 96,000 bids and executed approximately 26,000 print jobs through 1,100 suppliers, and through September 30, 2006, we served over 1,600 clients, received approximately 120,000 bids and executed approximately 37,000 print jobs through over 1,600 suppliers. We have increased our revenue from $5.0 million in 2002 to $76.9 million in 2005, representing a compound annual growth rate of 148%. In 2005, our revenue was $76.9 million, compared to $38.9 million in 2004. For the nine months ended September 30, 2006, our revenue was $99.4 million, compared to $54.6 million for the nine months ended September 30, 2005.

In October 2006, we acquired Applied Graphics, a provider of print management and print-on-demand services headquartered in San Rafael, California. As a result of the acquisition, we believe we established a significant presence in the West Coast market with sales executives in California, Hawaii and Nevada. We added 35 sales executives, approximately 1,000 transactional clients and approximately 500 new suppliers. This significantly expanded our pipeline of clients to which we can market our enterprise solution.

The acquisition consideration for Applied Graphics consisted of approximately $7.0 million in cash paid in October 2006. In addition, the former owners of Applied Graphics will receive:

• $1.9 million if gross profit generated by Applied Graphics equals or exceeds $9.7 million from October 1, 2006 to September 30, 2007,

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• $1.9 million if gross profit generated by Applied Graphics equals or exceeds $19.3 million from October 1, 2006 to September 30, 2008,

• $500,000 if earnings before interest, taxes, depreciation and amortization (EBITDA) generated by Applied Graphics equals or exceeds $2.5 million from October 1, 2006 to September 30, 2007, or a portion thereof if EBITDA is between $2.3 million and $2.5 million during that period, and

• $500,000 if EBITDA generated by Applied Graphics equals or exceeds $2.8 million from October 1, 2007 to September 30, 2008, or a portion thereof if EBITDA is between $2.6 million and $2.8 million during that period.

In September 2006, we acquired CoreVision Group, a provider of end-to-end marketing solutions, including design, print, promotional products and fulfillment services, located in Carol Stream, Illinois. As a result of the acquisition, we added 15 sales executives, including our first sales executives in the states of Michigan and Missouri. The acquisition consideration for CoreVision consisted of approximately $1.1 million, $10,000 paid in September 2006 and the remaining $1.1 million to be paid in monthly installments through August 2007. In addition, the former owner of CoreVision is eligible to receive up to:

• $666,666 if gross profit generated by CoreVision equals or exceeds $1.7 million from September 1, 2006 to December 31, 2006, or a portion thereof if gross profit is less than $1.7 million,

• $667,000 if gross profit generated by CoreVision equals or exceeds $5.1 million from January 1, 2007 to December 31, 2007, or a portion thereof if gross profit is less than $5.1 million,

• $667,000 if gross profit generated by CoreVision equals or exceeds $5.1 million from January 1, 2008 to December 31, 2008, or a portion thereof if gross profit is less than $5.1 million, and

• $500,000 if gross profit generated by CoreVision equals or exceeds $6.5 million from January 1, 2009 to December 31, 2009.

Industry Overview

Our business of providing print procurement solutions intersects two large and growing industries, commercial printing and business process outsourcing, or BPO. Total shipments in the worldwide commercial print industry were approximately $373 billion in 2005 and are expected to increase by an average of $9 billion per year through 2010, according to a 2006 Datamonitor global commercial printing industry profile. The print industry includes the following product categories:

• direct mail and other direct marketing materials;

• basic business printing, including business forms, stationery and business cards;

• promotional printing, which includes brochures, direct mail and catalogs;

• publications, including magazines, books and directories;

• bill of material printing, which consists of customized packaging, labels and other shipping materials;

• promotional products, such as t-shirts, calendars and advertisements;

• warehousing, pick and pack distribution and print on demand; and

• multimedia, including CDs and DVDs.

In addition, the U.S. print industry is highly fragmented, with an estimated 39,300 printing plants. In 2005, the ten largest commercial print companies accounted for only approximately 16% of the total domestic print market. The traditional process of designing, procuring and producing a print order requires extensive collaboration by printers, designers, brokers and other middlemen and is often highly inefficient for the customer, who typically pays a mark-up at each intermediate stage of the supply chain. Print procurement is often dispersed across several areas of a business enterprise, including sales, marketing, communications and finance.

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To become more competitive, many businesses seek to focus on core competencies and outsource non-core business functions, such as print procurement. The National Association of Procurement Managers ranked print procurement as the third most significant resource procurement outsourcing opportunity for U.S. businesses, underscoring this trend. According to a 2006 IDC global BPO forecast, the worldwide market for BPO is estimated to grow from $384 billion in 2005 to $618 billion in 2010, representing a compound annual growth rate of 10%. Consolidating all print activities across the organization represents an opportunity to reduce total print expenditure and decrease the number of vendors in the print supply chain. Applying software and database technology to manage the print procurement process also provides for enhanced tracking and auditing capabilities.

In recent years, the print industry has been impacted by developments in technology, including enhanced output capacity of printing presses and increased utilization of Internet-based communications and digital printing. These developments have lowered barriers to entry and reduced the utilization of printing presses. As a result, the print industry has historically experienced significant excess manufacturing capacity and the market for printed products has become increasingly commoditized. As developments in technology enable more print companies to provide a broad range of products and services, there are fewer opportunities for print vendors to charge premium prices based on product and service differentiation.

We seek to capitalize on the trends impacting the commercial print industry and the movement towards increased outsourcing of non-core business functions by leveraging our propriety technology, expansive database, extensive supplier network and purchasing power.

Our Solution

Utilizing our proprietary technology and database, we are able to create a competitive bid process to procure, purchase and deliver printed products to our clients. Our network of over 4,500 suppliers offers a wide variety of printed products and a full range of print, fulfillment and logistics services.

Our print procurement software seeks to capitalize on excess manufacturing capacity and other inefficiencies in the traditional print supply chain. We believe that the most competitive price bids we obtain from our suppliers are submitted by the suppliers with the most unused capacity. We utilize our technology and a competitive bid process to:

• greatly increase the number of suppliers that our clients can efficiently access;

• obtain favorable pricing and deliver high quality products and services for our clients; and

• aggregate our purchasing power.

Our proprietary software applications and database, PPM4^™, streamline the print procurement process for our clients by eliminating inefficiencies within the traditional print supply chain and expediting production. However, our technology cannot manage all of the variables associated with procuring a print job, which often involves extensive collaboration among numerous parties. Effective management of the procurement process requires that dedicated and experienced personnel work closely with both clients and print suppliers. Our account executives and procurement managers perform that critical function.

Account executives act as the primary sales staff to our clients. Procurement managers manage the entire print procurement process for our clients to ensure timely and accurate delivery of the finished product. For each print job we receive, a procurement manager uses our technology to gather print specifications, solicit bids from the optimal suppliers, establish pricing with the client, manage print production and purchase and coordinate the delivery of the finished product.

Each client is assigned an account executive and procurement manager, who develop contacts with client personnel responsible for authorizing and making print purchases. Our largest clients often are assigned multiple procurement managers. In certain cases, our procurement managers function on-site at the client. In other cases, we designate an employee of the client to function as our procurement manager and reimburse the client for the employee’s compensation costs. Whether on-site or off-site, a procurement manager functions as a virtual employee of the client. As of September 30, 2006, we had 75 procurement managers, including 21 procurement managers working on-site at our clients.

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Although our clients fall into two categories, enterprise and transactional, the procurement process for each client category is substantially similar. A typical print job moves through our solution in ten steps.

Step 1—Gather print specifications.    After the account executive or procurement manager identifies a sale opportunity, a procurement manager discusses the details and timeline for the print job with the client. PPM4^TM automatically generates a customized data entry screen based on the type of printed product and guides the procurement manager to enter the required job specifications.

Step 2—Select appropriate suppliers.    Based on the historical transaction data and supplier capability information contained in our database, PPM4^TM generates a list of potential suppliers within our extensive network with the most efficient equipment profiles to produce the job. The procurement manager may select suppliers from this list or select suppliers suggested by the client. Our technology also enables the procurement manager to disaggregate the job into its component parts and put each part out for competitive bid in order to generate additional savings for the client. After selecting the list of optimal suppliers, the procurement manager electronically transfers the job specifications into an e-mail or e-fax in the form of a request for proposal and sends it to those suppliers.

Step 3—Receive bids from suppliers.    The selected suppliers respond to our request for proposal by submitting bids to us. Upon receipt, the procurement manager enters the bid information into our database and generates a report that details and sorts the bids by cost, quality and logistical considerations.

Step 4—Compare bids to proprietary data.    The procurement manager uses PPM4^TM to compare the bids received from the suppliers to similar transactions in our database. If the current bids deviate from the competitive price range suggested by this data in a manner that is unfavorable to our client, the procurement manager uses our data to negotiate more favorable pricing with the selected suppliers or re-submits the specifications to different suppliers.

Step 5—Submit quote to client.    The procurement manager works with the account executive to prepare a price quote for the print job. The account executive submits the quote to the client, specifying the total cost to the client for the printed product and the timing and delivery terms.

Step 6—Execute quote and print order.    The client accepts the quote by executing it and returning a signed copy to us. The procurement manager uses PPM4^TM to automatically convert the quote into a print order. The print order is sent by e-mail or e-fax to the approved supplier or suppliers for execution. We are now contractually obligated to provide the product to our client and the supplier or suppliers are contractually obligated to provide the product to us. The supplier begins the print process.

Step 7—Manage print process.    The completion of the print process is managed by the procurement manager through a checklist of dates, milestones and deliverables that is monitored electronically. PPM4^TM generates automatic reminders to ensure the product is properly produced in accordance with the client’s specifications and timeline.

Step 8—Perform final quality control check.    Prior to production of the entire print quantity, the supplier submits a contract proof of the finished product to the client and procurement manager for approval. Upon written approval of the proof by the client, the supplier prints the finished product.

Step 9—Deliver finished product.    When printing is completed, we purchase the finished product from the supplier and coordinate delivery to the destination specified by the client. We take full title and risk of loss for the product from shipment until it is received and paid for by the client.

Step 10—Generate and reconcile invoices.    Upon shipment of the finished product, the supplier issues an invoice to us for the cost of the job and our technology automatically converts the quote executed by our client into an invoice that we issue to the client. PPM4^TM reconciles the supplier’s invoice to the print order to ensure that the supplier adhered to the pricing and other terms set forth in the print order.

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The duration of this ten-step process varies based on the type of printed product. For example, this process may take less than 24 hours for limited quantities of a four-page brochure, but last over one month for 1,000,000 copies of a hard cover book.

We regularly request that our clients complete a customer scorecard, which allows them to rate us and our suppliers based on product quality, customer service and overall satisfaction. The data contained in these scorecards is stored in our database and used by our procurement managers during the supplier selection process.

Our Proprietary Technology

PPM4^TM is a fully-integrated, proprietary solution that stores equipment profiles for our supplier network and price data for each job we quote and execute, which allows us to match each print job with the supplier in our network that is optimally suited to produce the job at a highly competitive price. Our technology also allows us to efficiently manage the critical aspects of the print procurement process, including gathering job specifications, identifying suppliers, establishing pricing, managing print production and coordinating purchase and delivery of the finished product.

Our database stores the production capabilities of our supplier network, as well as price and quote data for each bid we receive and transaction we execute. As a result, we believe PPM4^TM contains one of the largest independent repositories of equipment profiles and price data for print suppliers in the United States. Our procurement managers use this data to discover excess print manufacturing capacity, select optimal suppliers, negotiate favorable pricing, and efficiently procure high-quality products and services for our clients.

With each new print job process, we collect and store additional data in our proprietary database. As the number of print jobs we complete increases, our database further enhances our competitive position and our ability to obtain favorable pricing for our clients.

We believe PPM4^TM allows us to procure print more efficiently than traditional manual or semi-automated systems used by many printers and print brokers in the marketplace. PPM4^TM includes the following features:

Ÿ “4caster.”    Our proprietary database provides real-time cost estimates for potential print jobs within our major product categories based upon the historical data we have collected from print jobs with similar specifications. These estimates are used by our account executives during the sales process and procurement managers to compare bids and negotiate favorable pricing. Some of our largest suppliers have provided us with pricing tables covering specific product categories, which have also enhanced our ability to discover competitive pricing.

Ÿ Customized order management.    PPM4^TM automatically generates customized data entry screens based on product type and guides the procurement manager to enter the required job specifications. For example, if a procurement manager selects “envelope” in the product field, the screen will automatically prompt the procurement manager to specify the size, paper type, window size and placement and display style.

Ÿ Cost management.    PPM4^TM reconciles supplier invoices to executed print orders to ensure the supplier adhered to the pricing and other terms contained in the print order. In addition, it includes checks and balances that allow us to monitor important financial indicators relating to a print order, such as projected gross margin and significant job alterations.

Ÿ Standardized reporting.    Our solution generates transaction reports that contain quote, supplier capability, price and customer service information regarding the print jobs the client has completed with us. These reports can be customized, sorted and searched based on a specified time period or the type of printed product, price or supplier. In addition, the reports give our clients insight into their print spend for each individual print job and on an enterprise-wide basis, which allows the client to track the amounts it spends on printed products.

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Ÿ Task-tracking.    Our solution creates a work order checklist that sends e-mail reminders to our procurement managers regarding the time elapsed between certain milestones and the completion of specified deliverables. These automated notifications enable our procurement managers to focus on more critical aspects of the print process and eliminate delays.

Ÿ Open architecture.    PPM4^TM allows us to integrate clients and suppliers into our solution. Some of our larger clients have limited, secure access to our database, which they can use to directly access their transaction data.

Ÿ Historical price baseline.    Some of our larger clients have provided us with pricing data for print jobs they completed before they began to use our solution. For these clients, PPM4^TM automatically compares our current price for a print job to the price obtained by the client for a comparable historical job, which allows us to demonstrate on an ongoing basis the cost savings we provide.

We have also created customized Internet-based stores, which we refer to as IW stores, for certain of our clients that allow them to order pre-selected products, such as personalized business stationery, marketing brochures and promotional products, through an automated ordering process.

Our Clients

We procure printed products for corporate clients across a wide range of industries, such as advertising, consumer products, manufacturing, publishing and retail. Our clients also include printers that outsource jobs to us because they do not have the requisite capabilities or capacity to complete an order. From our inception through December 31, 2005, we served over 1,100 clients, received approximately 96,000 bids and executed approximately 26,000 print jobs through over 1,100 suppliers, and through September 30, 2006, we served over 1,600 clients, received approximately 120,000 bids and executed approximately 37,000 print jobs through over 1,600 suppliers. For the year ended December 31, 2005, Alliance Publishing Group accounted for 16% of our revenue. For the nine months ended September 30, 2006, ServiceMaster accounted for 18% of our revenue. Revenue from our top ten clients accounted for 46% and 51% of our revenue during the nine months ended September 30, 2005 and 2006, respectively.

We generate revenue by procuring and purchasing printed products from our suppliers and selling those products to our clients. Our clients fall into two categories, enterprise and transactional. We enter into contracts with our enterprise clients to provide some or substantially all of their printed products typically on a recurring basis. Our contracts with our enterprise clients generally have an open-ended term with a termination right upon advance notice ranging from 90 days to twelve months. For the years ended December 31, 2004 and 2005, enterprise clients accounted for 50% and 69% of our revenue, respectively. We provide printed products to our transactional clients on an order-by-order basis. For the years ended December 31, 2004 and 2005, transactional clients accounted for 50% and 31% of our revenue, respectively.

As part of our growth strategy, we seek to expand our base of transactional clients by hiring account executives, or acquiring groups of them, with established client relationships. We also aim to sell our enterprise solution to our transactional clients to capture a greater portion of their recurring print expenditures. We estimate that the total annual print expenditures for our 667 transactional clients during the year ended December 31, 2005 were in excess of $750 million.

As of September 30, 2006, approximately 51% of our clients were located in Illinois. In order to expand our client base, we intend to recruit more account executives in other major print markets in the United States, such as Atlanta, Boston, Dallas, Los Angeles and Minneapolis. We believe that the breadth of our supplier network will allow us to expand into new geographic markets with little upfront cost.

Of our 50 largest clients from 2004, 49 placed orders with us during 2005. We believe that our high level of client retention demonstrates the compelling value proposition that we provide to our clients.

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Our Products and Services

We offer a full range of print, fulfillment and logistics services that allows us to procure printed products on virtually any substrate. The printed products we procure for our clients may be printed with any of the eight major types of printing, which include offset sheet-fed, web offset, digital offset, letterpress, screen printing, waterless, flexography and gravure, as well as several forms of specialty printing.

Our major products include:

direct mail pieces
books
brochures
catalogues
point-of-purchase
    displays
magazines
packaging CDs/DVDs
promotional
    products
annual reports
envelopes
labels
calendars
folders posters
newsletters
billboards
playing cards
binders
t-shirts
games
stationery postcards
stickers
bags
magnets
warehousing
pick and pack
    distribution
print on demand

We offer a comprehensive range of fulfillment and logistics services, such as kitting and assembly, inventory management and pre-sorting postage. These services are often essential to the completion of the finished product. For example, we assemble multi-level direct mailings, insurance benefits packages and coupons and promotional incentives that are included with credit card and bank statements. We also provide creative services, including copywriting, graphics and website design, identity work and marketing collateral development, and pre-media services, such as image and print-ready page processing and proofing capabilities.

We agree to provide our clients with products that conform with the industry standard of a “commercially reasonable quality” and our suppliers in turn agree to provide us with products of the same quality. The quotes we execute with our clients include customary provisions that limit the amount of our liability for product defects. To date, we have not experienced significant claims or liabilities relating to defective products.

Our Supplier Network

Our network of 4,500 suppliers include printers, graphic designers, paper mills and merchants, digital imaging companies, specialty binders, finishing and engraving firms and fulfillment and distribution centers. These suppliers have been selected from among thousands of potential suppliers worldwide based on their ability to effectively serve our clients on the basis of price, quality and customer service. Our suppliers include 61 of the 100 largest printers in the United States, including eight of the top ten. The suppliers in our network produced more than $50 billion of printed products in 2005. We direct requests for proposal from our clients to potential suppliers based on historical pricing data, quality control rankings, geographic proximity to a client or other criteria specified by our clients.

In 2005, our top 10 suppliers accounted for approximately 40% of the products we sold, and our top three suppliers accounted for approximately 21% of the products we sold. As of December 31, 2005, a majority of our top 100 suppliers had executed supply and service agreements with us. These agreements have an open-ended term with a termination right on 60 days prior written notice and contain non-solicitation provisions that prohibit the supplier from soliciting any client for which the supplier has executed print order for a specified period, generally 24 months, after the expiration of the agreement. Our contractual relationship with the remaining suppliers in our network is governed solely by the print orders we execute with those suppliers on an order-by-order basis.

We have established a quality control program that is designed to ensure that we deliver high quality printed products and services to our clients through the suppliers in our network. As part of this program, we train our procurement managers to accurately gather job specifications and create a checklist to ensure that each item in the print order has been approved by the client. In addition, we regularly request that our clients complete customer scorecards, which are stored in our database and converted into quality control reports. These quality

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control reports are accessible to our procurement managers through PPM4^TM and are used during the supplier selection process. Our quality control standards are designed to ensure that our clients receive high quality printed products regardless of the supplier that prints the product.

Sales and Marketing

Our account executives sell our print procurement services to corporate clients in the United States. As of September 30, 2006, we had 114 account executives, 68 of whom were independent contractors and 48 of whom were employees, located in 28 cities across the U.S. In addition to our account executives, we have two business development employees responsible for generating sales opportunities with large companies. Our agreements with our account executives require them to market and sell print procurement services for us on an exclusive basis and contain non-compete and non-solicitation provisions that apply during and for a specified period after the term of their service.

Our new client acquisition efforts generally are targeted geographically based on the location of our account executives. Our account tracking solution, IW Pipeline™, which assigns account responsibility for both existing and prospective clients, monitors the sales conversion process and tracks sales activity. An important aspect of our sales process is our periodic analysis of a prospective client’s historic print expenditures, including production and payroll expenses, to demonstrate the potential savings that could be achieved by using our solution.

We expect to continue our growth by recruiting and retaining highly qualified account executives and providing them with the tools to be successful in the marketplace. There are a large number of print sales representatives in North America and we believe that we will be able to identify qualified account executives from this pool of individuals. To coordinate this process, we employ a full-time recruiter whose activities are supplemented by several executive search firms. Candidates are recruited through Internet postings, advertisements in industry publications, industry event attendance, Internet research, referrals and word-of-mouth networking. We also expect to augment our sales force through selective acquisitions of print service businesses, including print brokers, that include experienced sales personnel with established client relationships.

We believe that we offer account executives an attractive opportunity in the print industry because they can utilize our vast supplier network, proprietary pricing data and customized order management solution to sell to their clients virtually any printed product at a highly competitive price. In addition, the diverse production and service capabilities of the suppliers in our network provide our account executives the opportunity to deliver a more complete product and service offering to their clients. We believe we can better attract and retain experienced account executives than our competitors because of the breadth of products offered by our supplier network.

To date, we have been successful in attracting and retaining qualified account executives. As of September 30, 2006, our account executives had an average of over 17 years of sales experience in the print industry, which in certain cases included employment as sales representatives for some of the largest printers in the United States. The integration process consists of training with our sales management, as well as access to a variety of sales and educational resources that are available on our Intranet. In addition, we conduct monthly sales meetings that focus on best practices and industry trends. Because the account executives we hire generally have significant sales experience, they can begin marketing our services after limited training on our model and systems.

Competition

We operate in the print industry and several print-related industries, including paper and pulp, graphics art and digital imaging and fulfillment and logistics. As a result, we compete on some level with virtually every company that is involved in printing, from printers to graphic designers, pre-press firms, paper manufacturers and fulfillment companies.

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Our primary competitors are printers that employ traditional methods of marketing and selling their printed materials. The printers with which we compete generally own and operate their own printing equipment and typically serve clients only within the specific product categories and print types that their equipment produces. Some of these printers, such as Quad/Graphics, Quebecor and R.R. Donnelley, have larger client bases and significantly more resources than we do.

We also compete with a number of print distributors and brokers. These competitors generally do not own or operate printing equipment, and typically work with a limited number of suppliers and have minimal financial investment in the quality of the products produced for their clients. Our industry experience indicates that several of these competitors, such as Cirqit, Workflow/Relizon and Newline/Noosh, offer print procurement services or enterprise software applications for the print industry.

The principal elements of competition in print procurement are price, product quality, customer service and reliability. Although we believe our business delivers products and services on competitive terms, our business and the print procurement industry are relatively new and are evolving rapidly. Print buyers may prefer to utilize the traditional services offered by the printers with whom we compete. Alternatively, some of these printers may elect to compete with us directly by offering print procurement services or enterprise software applications, and their well-established client relationships industry knowledge, brand recognition, financial and marketing capabilities, technical resources and pricing flexibility may provide them with a competitive advantage over us.

Intellectual Property

We rely primarily on a combination of copyright, trademark and trade secret laws and restrictions to protect our intellectual property rights. We also protect our proprietary technology through confidentiality and non-disclosure agreements with our employees and independent contractors.

Our IT infrastructure provides a high level of security for our proprietary database. The storage system for our proprietary data is designed to ensure that power and hardware failures do not result in the loss of critical data. The proprietary data is protected from unauthorized access through a combination of physical and logical security measures, including firewalls, antivirus software, anti-spy software, passwords and physical security, with access limited to authorized IT personnel. In addition to our security infrastructure, our system is backed up daily to prevent the loss of our proprietary data due to catastrophic failures or natural disasters. We test our IT recovery ability semi-annually to verify that we can recover our business critical systems in a timely fashion.

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Properties

Our principal executive offices are located in Chicago, Illinois. We also maintain sales offices in New York, California, Hawaii, Michigan and Missouri. We believe that our facilities are generally suitable to meet our needs for the foreseeable future. However, we will continue to seek additional space as needed to satisfy our growth. We conduct our business from the properties listed below, all of which are leased. The terms of the leases vary and have expiration dates ranging from January 31, 2007 to December 1, 2015.

Location	Use
Chicago, Illinois	Corporate Headquarters
Carol Stream, Illinois	Business Development
New York, New York	Business Development and Warehousing
Del Rey Oaks, California	Business Development
El Cajon, California	Business Development
Grover Beach, California	Business Development
Roseville, California	Business Development
Santa Clara, California	Business Development
San Rafael, California	Business Development and Warehousing
Hilo, Hawaii	Business Development and Warehousing
Honolulu, Hawaii	Business Development
Wailuku, Hawaii	Business Development
Grand Rapids, Michigan	Business Development
Kansas City, Missouri	Business Development

Employees

As of September 30, 2006, we had 240 employees and independent contractors, consisting of 50 corporate staff, 76 procurement managers and 114 account executives. We consider our employee relations to be good.

Legal Proceedings

We are not a party to any material pending legal proceedings.

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MANAGEMENT

Executive Officers and Directors

The following table sets forth certain information concerning each of our executive officers and directors:

Name	Age	Position(s)
John R. Walter(1)(2)	59	Chairman of the Board
Steven E. Zuccarini	50	Chief Executive Officer, President and Director
Nicholas J. Galassi	33	Chief Financial Officer and Secretary
Scott A. Frisoni	35	Executive Vice President of Sales
Eric D. Belcher	38	Chief Operating Officer
Neil P. Graver	35	Chief Technology Officer
Peter J. Barris(1)(2)	55	Director
Sharyar Baradaran(1)(2)	39	Director
Jack M. Greenberg(2)	64	Director
Linda S. Wolf	59	Director

(1) Member of our audit committee.

(2) Member of our compensation and nominating and corporate governance committees.

John R. Walter has served as our non-executive Chairman of the Board since May 2004. Since December 1997, Mr. Walter has been the Chairman, President and Chief Executive Officer of Ashlin Management Company, a private investment firm. Mr. Walter served as President and Chief Operating Officer of AT&T Corporation from October 1996 until his retirement in July 1997, and from 1989 to 1996, he served as Chairman, President and Chief Executive Officer of R.R. Donnelley & Sons Company. Mr. Walter serves on the board of directors of Deere & Company, Manpower, Inc., SNP Corporation Ltd. and VascoData Security International. He is also a trustee of Northwestern University and a director of Evanston Northwestern Healthcare and the Steppenwolf Theatre. He holds a bachelor’s degree from Miami University of Ohio.

Steven E. Zuccarini has served as our Chief Executive Officer since November 2004 and has served on our Board since May 2006. From September 2003 to November 2004, he was the President of the Global Solutions business unit at R.R. Donnelley & Sons Company, and from January 2000 to September 2003, he served as President of the Catalog & Retail business unit. Mr. Zuccarini joined R.R. Donnelley in 1979. Mr. Zuccarini serves on the board of directors of the Chicago Youth Centers and the Direct Marketing Education Foundation. Mr. Zuccarini holds a bachelor’s degree from Northwestern University.

Nicholas J. Galassi has served as our Chief Financial Officer since September 2004. From November 2001 to September 2004, Mr. Galassi was Vice President of Finance at Wolverine Trading, a global derivatives trading firm, and from May 2000 to November 2001, he was the Director of Finance at HA-LO Industries, Inc., a promotional products distributor. From September 1995 to July 1999, Mr. Galassi served as an auditor in the commercial business division of Arthur Andersen. Mr. Galassi is a certified public accountant and holds a bachelor’s degree from the University of Notre Dame.

Scott A. Frisoni has served as our Executive Vice President of Sales since March 2002. From March 1999 to March 2002, Mr. Frisoni was Chief Operating Officer of Decision Support at PurchasePro, a business-to-business software company, and from April 1997 to March 1999, he was Vice President of Sales at Magnitude Network. From May 1993 to April 1997, Mr. Frisoni was a sales executive at The Procter & Gamble Company. Mr. Frisoni holds a bachelor’s degree from Indiana University.

Eric D. Belcher has served as our Chief Operating Officer since December 2006. From June 2005 to December 2006, Mr. Belcher served as our Executive Vice President of Operations. Mr. Belcher served as Chief Operating Officer from March 2003 to June 2005 and as Chief Financial Officer from April 2001 to March 2003 of MAN Roland Inc., a printing equipment manufacturer and distributor. Mr. Belcher was also a director of MAN Roland, Inc. From 1995 to 2000, he led project teams at Marakon Associates, an international

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management consulting firm. Mr. Belcher holds a bachelor’s degree from Bucknell University and an MBA from the University of Chicago Graduate School of Business.

Neil P. Graver has served as our Chief Technology Officer since March 2006. From January 2003 to February 2006, Mr. Graver held the title of Director of Information Technology at CAEL, a benefits management company based in Chicago. From January 2002 to January 2003, he managed The Information Management Group’s internal systems. From January 2001 to December 2001, Mr. Graver was Information Systems Manager at Sega North America and from January 1999 to October 2001, he was web site manager at iOwn.com. Mr. Graver received a Bachelor of Science from Southern Illinois University and holds MCSE, MCSA and MCT certificates.

Peter J. Barris has served on our Board since January 2006. Mr. Barris was elected pursuant to voting rights granted to New Enterprise Associates under our voting agreement, which was terminated upon the closing of our initial public offering in August 2006. Since 2000, Mr. Barris has been the Managing General Partner of New Enterprise Associates where he specializes in information technology investing. Mr. Barris also serves on the boards of directors of Vonage Holdings Corp., Boingo Wireless, Inc., eCommerce Industries, Inc., Hillcrest Laboratories, Inc., Mkt10, Inc., Neutral Tandem, Inc. and ProtoStar Ltd. He also serves on the Board of Directors of the National Venture Capital Association. Mr. Barris is a member of the Board of Trustees, Northwestern University; Board of Overseers, Tuck School at Dartmouth College; Board of Advisors, Tuck’s Center for Private Equity and Entrepreneurship at Dartmouth; and Board of Directors, Venture Philanthropy Partners. He received a Masters in Business Administration from Dartmouth College and a Bachelor of Science in Electrical Engineering from Northwestern University.

Sharyar Baradaran has served on our Board since May 2006. Mr. Baradaran was elected pursuant to voting rights granted to the former holders of our Series D preferred stock under our voting agreement, which was terminated upon the closing of our initial public offering in August 2006. Mr. Baradaran has served as Chief Executive Officer and chairman of BaradaranVentures, a privately held investment fund located in Los Angeles, California since April 2001. Mr. Baradaran currently serves on the board of directors of several high growth technology companies, including Rainmakers, Inc. and MOTA Inc. Mr. Baradaran also serves on the advisory boards of Echo Global Logistics Inc., ISENSIX Inc., and KIYON Inc.

Jack M. Greenberg has served on our Board since October 2005. Mr. Greenberg retired as Chairman and Chief Executive Officer of McDonald’s Corporation at the end of 2002. He had served as McDonald’s Chairman since May 1999 and as its Chief Executive Officer since August 1998. Mr. Greenberg served as McDonald’s President from August 1998 to May 1999, and as its Vice-Chairman from December 1991 to 1998. Mr. Greenberg also served as Chairman, from October 1996, and Chief Executive Officer, from July 1997, of McDonald’s USA until August 1998. He is a member of the American Institute of Certified Public Accountants, the Illinois CPA Society and the Chicago Bar Association. Mr. Greenberg serves as the non-executive Chairman of The Western Union Company and is a director of Abbott Laboratories, The Allstate Corporation, Hasbro, Inc. and Manpower Inc. He is also a member of the board of trustees of DePaul University, the Field Museum and the Chicago Community Trust. Mr. Greenberg is a graduate of DePaul University’s School of Commerce and School of Law.

Linda S. Wolf has served on our Board since November 2006. Ms. Wolf retired as Chairman and Chief Executive Officer of Leo Burnett Worldwide in April 2005. She had served as Leo Burnett Worldwide’s Chairman and Chief Executive Officer since January 2001 and as its Chief Executive Officer from July 1996 through December 2000. From March 1992 to June 1996 she was an Executive Vice President responsible for Business Development at Leo Burnett USA. Ms. Wolf is a director of Wal-Mart Stores Inc. and a trustee of Janus Funds. She is also a member of the Board of Trustees of the Field Museum, Children’s Memorial Hospital, Off the Street Club, The Chicago Council on Global Affairs and the Partnership for New Communities. Ms. Wolf holds a bachelor’s degree from Ohio Wesleyan University.

Board of Directors

Our Board of Directors consists of six directors and includes three committees: an audit committee, compensation committee and nominating and corporate governance committee. Each director is subject to election at each annual meeting of stockholders.

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We adhere to the Nasdaq Marketplace Rules in determining whether a director is independent. Our board of directors has determined that five of our six directors, Messrs. Walter, Barris, Baradaran, Greenberg and Ms. Wolf, are “independent directors” as defined in Rule 4200 of the Nasdaq Marketplace Rules.

Audit Committee

Our audit committee consists of John R. Walter, Peter J. Barris and Sharyar Baradaran. John R. Walter serves as the chairman of our audit committee. The audit committee reviews and recommends to the Board internal accounting and financial controls and accounting principles and auditing practices to be employed in the preparation and review of our financial statements. In addition, the audit committee has authority to engage public accountants to audit our annual financial statements and determine the scope of the audit to be undertaken by such accountants. John R. Walter is our audit committee financial expert under the SEC rule implementing Section 407 of the Sarbanes-Oxley Act of 2002.

Compensation Committee

Our compensation committee consists of John R. Walter, Jack M. Greenberg, Peter J. Barris and Sharyar Baradaran. Jack M. Greenberg serves as the chairman of our compensation committee. The compensation committee is responsible for, among other things, reviewing and approving compensation of our Chief Executive Officer and our other executive officers. Additionally, the compensation committee reviews and recommends to our Chief Executive Officer and the Board policies, practices and procedures relating to the compensation of managerial employees and the establishment and administration of certain employee benefit plans for managerial employees. The compensation committee has the authority to administer our Stock Incentive Plan, and advise and consult with our officers regarding managerial personnel policies.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee consists of John R. Walter, Jack M. Greenberg, Peter J. Barris and Sharyar Baradaran. John R. Walter serves as the chairman of our nominating and corporate governance committee. The nominating and corporate governance committee assists the Board with its responsibilities regarding:

Ÿ the identification of individuals qualified to become directors;

Ÿ the selection of the director nominees for the next annual meeting of stockholders; and

Ÿ the selection of director candidates to fill any vacancies on the Board.

Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee serves, or has at any time served, as an officer or employee of us or any of our subsidiaries. None of our executive officers has served as a member of the compensation committee, or other committee serving an equivalent function, of any other entity, one of whose executive officers served as a member of our compensation committee.

Limitation of Liability and Indemnification of Officers and Directors

Our certificate of incorporation provides that our directors and officers will be not personally liable for monetary damages to us for breaches of their fiduciary duty as directors or officers, except for any breach of their duty of loyalty to us or to our stockholders, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, authorization of illegal dividends or redemptions or any transaction from which they derived an improper personal benefit from their actions. We have obtained insurance that insures our directors and officers against specified losses. In addition, our by-laws provide that our directors, officers and employees shall be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or may in the future be amended, against all expense, liability and loss reasonably incurred or suffered by them in connection with their service for or on behalf of us.

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In addition, we have entered into separate indemnification agreements with our directors and executive officers. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers. These indemnification agreements may require us to indemnify our directors and executive officers for related expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement that were actually and reasonably incurred or suffered by a director or executive officer in an action or proceeding arising out of his or her service as one of our directors or executive officers.

Information about Mr. Eric P. Lefkofsky and Mr. Richard A. Heise, Jr.

Mr. Eric P. Lefkofsky and Mr. Richard A. Heise, Jr. were instrumental in the formation and the development of our company and served as directors until May 2006. Mr. Lefkofsky, who also has served our company as a consultant, is the husband of Elizabeth Kramer Lefkofsky, who controls Orange Media, LLC. Orange Media will own 0.5% of our common stock after this offering. Mr. Heise will own 1.4% of our common stock after this offering. Orange Media and Mr. Heise control Incorp, LLC, which will own 23.1% of our common stock after this offering.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview

This compensation discussion describes the material elements of compensation awarded to, earned by, or paid to each of our executive officers who served as named executive officers during the last completed fiscal year. This compensation discussion focuses on the information contained in the following tables and related footnotes and narrative for primarily the last completed fiscal year, but we also describe compensation actions taken before or after the last completed fiscal year to the extent it enhances the understanding of our executive compensation disclosure.

Prior to our initial public offering in August 2006, our Board (and our Board of Managers when we were a limited liability company) oversaw and administered our executive compensation program. The compensation committee currently oversees the design and administration of our executive compensation program.

The principal elements of our executive compensation program are base salary, annual cash incentives, long-term equity incentives in the form of stock options, other benefits and perquisites, post-termination severance and acceleration of stock option vesting for certain named executive officers upon termination and/or a change in control. Our other benefits and perquisites consist of life and health insurance benefits, a qualified 401(k) savings plan and include reimbursement for certain medical insurance and automobile payments. Our philosophy is to position the aggregate of these elements at a level that is commensurate with our size and sustained performance.

Compensation Program Objectives and Philosophy

In General.    The objectives of our compensation programs are to:

• attract, motivate and retain talented and dedicated executive officers,

• provide our executive officers with both cash and equity incentives to further the interests of us and our stockholders, and

• provide employees with long-term incentives so we can retain them and provide stability during our growth stage.

Generally, the compensation of our executive officers is composed of a base salary, an annual incentive compensation award and equity awards in the form of stock options. In setting base salaries, the Board generally reviewed (and going forward the compensation committee will review) the individual contributions of the particular executive. The annual incentive compensation award for 2006 is a discretionary award determined by the compensation committee based on company performance and in 2007 will be based upon our annual incentive plan. In addition, stock options are granted to provide the opportunity for long-term compensation based upon the performance of our common stock over time.

Competitive Market.    We define our competitive market for executive talent and investment capital to be the technology and business services industries. To date, we have not engaged in the benchmarking of executive compensation but we may choose to do so in the future.

Compensation Process.    Prior to our initial public offering, our Board approved the compensation of our named executive officers, including the terms of their employment agreements. Our Board individually negotiated the employment agreements to retain key management and provide stability during our growth stage. Going forward, for each of our named executive officers, the compensation committee will review and approve all elements of compensation taking into consideration recommendations from our principal executive officer (for compensation other than his own), as well as competitive market guidance provided at the request of the compensation committee.

Regulatory Considerations.    We have designed our Annual Incentive Plan so that bonuses paid thereunder (beginning for 2007) will qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code). Given the compensation cost to us of awarding stock options under recent accounting pronouncements, we will consider the size and frequency of any future stock option awards under our long-term equity incentive program.

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Base Salaries

In General.    We provide the opportunity for our named executive officers and other executives to earn a competitive annual base salary. We provide this opportunity to attract and retain an appropriate caliber of talent for the position, and to provide a base wage that is not subject to our performance risk. We review base salaries for our named executive officers annually in January and increases are based on our performance and individual performance. The salary of our principal executive officer will be set by our compensation committee, but in accordance with his employment agreement, will not be less than $450,000 in 2007. Our Board, in negotiating his amended employment agreement in May 2006, determined that this salary increase from $300,000 in 2006 would provide a salary commensurate with Mr. Zuccarini’s experience and would recognize his contributions to our growth during the past three years. Based on the other named executive officers’ contributions to our growth, our Board also approved increases in the annual base salary rate from 2005 to 2006 for: Mr. Galassi, from $175,000 to $200,000; Mr. Belcher, from $175,000 to $225,000; and Mr. Frisoni, from $195,000 to $225,000.

Total Compensation Comparison.    Assuming a payout of 2006 incentive bonuses at target level, for 2006, base salaries accounted for approximately 47% of total compensation for the principal executive officer and 72% on average for our other named executive officers. In 2006, base salaries represented a high percentage of total compensation since three of our named executive officers received significant option awards in 2005 and none in 2006.

Annual Cash Incentives

In General.    We provide the opportunity for our named executive officers and other executives to earn an annual cash incentive award. We provide this opportunity to attract and retain an appropriate caliber of talent for the position and to motivate executives to achieve our annual business goals. We plan to review annual cash incentive awards for our named executive officers and other executives annually in January or February to determine award payments for the last completed fiscal year, as well as to establish award opportunities for the current fiscal year. Annual cash incentive awards for 2007 will be administered under our Annual Incentive Plan. Pursuant to the terms of his employment agreement, in addition to any bonus paid under the our Annual Incentive Plan, Mr. Zuccarini will receive an annual targeted bonus of $150,000 beginning for fiscal 2007 if our net income reaches targeted levels approved by our Board.

Target Award Opportunities.    Our 2006 awards are subject to the compensation committee’s discretion and may take into account corporate performance measures, including, but not limited to, revenues, EBITDA and net income. We establish annual target award opportunities expressed as a percentage of base salary paid during the fiscal year and maximum award payment limits expressed as a percentage of the target award. For the last completed fiscal year, annual cash incentive opportunities for the named executive officers are summarized below. There is no threshold or minimum bonus level for 2006.

		Annual Cash Incentive Award Opportunity
		Target Performance				Maximum Performance
		% Salary		$ Amount		% Target		$ Amount
Steven E. Zuccarini	FY 2006	25	%	$	75,000	200	%	$	150,000
Nicholas J. Galassi	FY 2006	15	%	$	30,000	200	%	$	60,000
Eric D. Belcher	FY 2006	27.5	%	$	61,875	200	%	$	123,750
Scott A. Frisoni	FY 2006	15	%	$	33,750	200	%	$	67,500
Neil P. Graver	FY 2006	10	%	$	11,800	200	%	$	23,600

Individual Performance Goals.    There are no specific individual performance goals for 2006 incentive awards, but the compensation committee or the Board may exercise discretion and take into account individual performance in determining awards. For example, Mr. Belcher earned a special bonus of $26,000 in 2006 due to his role in the successful completion of strategic acquisitions.

Discretionary Adjustments.    For 2006, the incentive awards are subject to the compensation committee’s discretion. Under the Annual Incentive Plan, beginning in 2007, we may make adjustments to our overall corporate performance goals and our actual performance results that may cause differences between the numbers used for our

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performance goals and the numbers reported in our financial statements. These adjustments may exclude all or a portion of both the positive or negative effect of external events that are outside the control of our executives, such as natural disasters, litigation, or regulatory changes in accounting or taxation standards. These adjustments may also exclude all or a portion of both the positive or negative effect of unusual or significant strategic events that are within the control of our executives but that are undertaken with an expectation of improving our long-term financial performance, such as restructurings, acquisitions, or divestitures.

Total Compensation Comparison.     For the last completed fiscal year, target award opportunities accounted for approximately 12% of total compensation for the principal executive officer and 14% on average for our other named executive officers. In setting the target bonus amounts, our Board took into consideration that our named executive officers have significant equity interests in us through direct ownership of shares or prior option grants, which already provide them with performance incentives.

Long-term Equity Incentives

In General.    We provide the opportunity for our named executive officers and other executives to earn a long-term equity incentive award. Long-term incentive awards provide employees with the incentive to stay with us for longer periods of time, which in turn, provides us with greater stability during our period of growth. These awards also are less costly to us in the short term than cash compensation. We review long-term equity incentives for our named executive officers and other executives annually in January. For the last completed fiscal year, our long-term equity incentive program consisted of grants of stock options.

Stock Options.    For our named executive officers, our stock option program is based on grants that are individually negotiated in connection with employment agreements and other grants to our executives. We have traditionally used stock options as its form of equity compensation because stock options provide a relatively straightforward incentive for our executives, result in less immediate dilution of existing shareholders’ interests and, prior to our adoption of FAS 123(R), resulted in less compensation expense for us relative to other types of equity awards. On March 1, 2006 we granted Mr. Graver options to purchase 30,000 shares of common stock in connection with his commencement of employment. On May 8, 2006, at our request and to better align the value of his equity award with the long-term interests of our stockholders, Mr. Zuccarini agreed to amend his employment agreement to, among other things, eliminate his right to receive vested options to purchase 600,000 shares at an exercise price of $0.50 per share, which were subject to achievement of certain business and financial performance targets. As part of this amendment, Mr. Zuccarini received a grant of options to purchase 750,000 shares of common stock at an exercise price of $4.92 per share, which was the price paid by SNP Corporation Ltd. pursuant to it purchase of 254,065 of our shares in April 2006. The fair market value of our shares as of May 8, 2006 was later (in June 2006) determined by an independent valuation specialist to be $5.35 per share. All other grants of stock options to our employees were granted with exercise prices equal to or greater than the fair market value of our common stock on the respective grant dates. For a discussion of the determination of the fair market value of these grants, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Stock-Based Compensation.”

We do not time stock option grants to executives in coordination with the release of material non-public information. Our stock options have a 10-year contractual exercise term. In general, the option grants are also subject to the following post-termination and change in control provisions:

Event	Award Vesting	Exercise Term
Termination by Us for Reason Other than Cause, Disability or Death	Forfeit Unvested	Earlier of: (1) 1 Year or (2) Remaining Option Period
Disability or Death	Forfeit Unvested	Option Period
Termination for Cause	Forfeit Vested and Unvested	Expire
Other Termination	Forfeit Unvested	Earlier of: (1) Remaining Option Period or (2) 30 Days from Date of Termination
Change in Control	Accelerated*	*

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* The compensation committee may provide that, in the event of a change in control, any outstanding awards that are unexercisable or otherwise unvested will become fully vested and immediately exercisable. If there is a termination of employment, the applicable termination provisions regarding exercise term will apply.

The vesting of certain of our named executive officers’ stock options is accelerated pursuant to the terms of their employment agreements in certain termination and/or change in control events. These terms are more fully described in “—Employment Agreements” and “—Potential Payments upon Termination or Change in Control.”

Total Compensation Comparison.    Assuming a payout of 2006 bonuses at target level, for the last completed fiscal year, long-term equity incentives accounted for approximately 39% of total compensation for the principal executive officer and 5% on average for our other named executive officers. Other than (i) the grant of stock options to Mr. Zuccarini in connection with the amendment of his employment agreement and surrender of his right to receive performance-based stock options (see “—Employment Agreements—Employment Agreement with Steven E. Zuccarini”) and (ii) the grant of stock options to Mr. Graver in connection with the commencement of his employment with us, there were no other grants of stock options to our named executive officers in 2006. The Board determined that our named executive officers had a sufficient equity stake in us, consisting of shares of common stock and/or existing options, to align their interests with ours and our stockholders and consequently there were no new grants in 2006 to our named executive officers other than as described in the preceding sentence.

Executive Benefits and Perquisites

In General.    We provide the opportunity for our named executive officers and other executives to receive certain perquisites and general health and welfare benefits. We also offer participation in our defined contribution 401(k) plan. We do not match employee contributions under our 401(k) plan. We provide these benefits to provide an additional incentive for our executives and to remain competitive in the general marketplace for executive talent. For the last completed fiscal year, we provided the following personal benefits and perquisites to our named executives officers:

Executive Benefit	Description
Reimbursed Car Payments	Certain executives are reimbursed for their automobile lease payments.
Reimbursed Medical Insurance Premiums	We reimburse certain executives for their medical insurance premium payments.
Health Club Membership	Mr. Galassi’s membership dues are reimbursed.

Total Compensation Comparison.    Assuming a payout of 2006 bonuses at target level, for the last completed fiscal year, personal benefits and perquisites accounted for approximately 2% of total compensation for the principal executive officer and 7% on average for our other named executives officers.

Change in Control and Severance Benefits

In General.    We provide the opportunity for certain of our named executive officers to be protected under the severance and change in control provisions contained in their employment agreements. We provide this opportunity to attract and retain an appropriate caliber of talent for the position. Our severance and change in control provisions for the named executive officers are summarized in “—Employment Agreements” and “—Potential Payments upon Termination or Change in Control.” Our analysis indicates that our severance and change in control provisions are consistent with the provisions and benefit levels of other companies disclosing such provisions as reported in public SEC filings. We believe our arrangements are reasonable in light of the fact that cash severance is limited to two years for Mr. Zuccarini (at a rate of $50,000 per month) and one year for Messrs. Galassi, Belcher and Frisoni (at a rate equal to their then current base salary), there is no severance increase with a change in control and there are no “single trigger” benefits upon a change in control other than the vesting of Mr. Zuccarini’s option awards.

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EXECUTIVE COMPENSATION

The following table shows information concerning the annual compensation for services provided to us by our Chief Executive Officer, the Chief Financial Officer and our three other most highly compensated executive officers during 2006.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year	Salary ($)	Bonus (1) ($)		Option Awards (2) ($)	All Other Compensation (3) ($)	Total Compensation (1) ($)
(a)	(b)	(c)	(d)		(f)	(i)	(j)
Steven E. Zuccarini	2006	300,000	—		249,194	9,600	558,794
Chief Executive Officer
Nicholas J. Galassi	2006	190,720	—		7,550	22,249	220,518
Chief Financial Officer
Eric D. Belcher	2006	219,097	26,000	(4)	5,202	23,633	273,932
Chief Operating Officer
Scott A. Frisoni	2006	224,375	—		8,750	18,645	251,770
Executive Vice President of Sales
Neil P. Graver	2006	96,695	—		26,700	4,050	127,444
Chief Technology Officer (5)

(1) Amounts of annual incentive awards are not yet available. These amounts will be determined in January or February 2007 and, together with the updated total compensation amount, will be disclosed in a Form 8-K at that time.

(2) Valuation based on the dollar amount of option grants recognized for financial statement reporting purposes pursuant to FAS 123(R) with respect to 2006, except that, with respect to Mr. Galassi and Mr. Frisoni, the amounts reported in this column are $2,750 higher than the amounts reported in our financial statements. This additional expense shown in the summary compensation table results from requirements of the Securities and Exchange Commission to report option grants made prior to 2006 using the modified prospective transition method pursuant to FAS 123(R), whereas we use the prospective transition method pursuant to FAS 123(R). The assumptions used by us with respect to the valuation of option grants are set forth in “InnerWorkings, Inc. Condensed Consolidated Financial Statements—Notes to Financial Statements—Note 1—Summary of Significant Accounting Policies—Stock-Based Compensation.” The individual awards reflected in the summary compensation table are summarized below:

	Grant Date	Number of Shares	Amount Recognized in Financial Statements 2006 ($)
Steven E. Zuccarini	5/8/2006	750,000	249,194
Nicholas J. Galassi	10/1/2005	80,000	4,800
Eric D. Belcher	9/14/2005	120,000	5,202
Scott A. Frisoni	10/1/2005	100,000	6,000
Neil P. Graver	3/1/2006	30,000	26,700

(3) Consists of reimbursed car payments for Mr. Zuccarini, reimbursed car payments and reimbursed medical insurance premiums for Messrs. Belcher and Frisoni, reimbursed car payments, reimbursed medical insurance premiums and health club dues for Mr. Galassi and reimbursed medical insurance premiums for Mr. Graver.

(4) Special discretionary bonus earned in 2006 upon successful completion of strategic acquisitions.

(5) Joined us on March 1, 2006.

For a description of the material terms of employment agreements with our named executive officers, see “—Employment Agreements.”

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GRANTS OF PLAN-BASED AWARDS (1)

The following table summarizes our awards made to our named executive officers under any plan in 2006.

Name	Grant Date	Approval Date (2)	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)(3)	Grant Date Fair Market Value of a Share ($/Sh)(4)
(a)	(b)		(j)	(k)	(l)
Steven E. Zuccarini	5/8/2006	5/3/2006	750,000	4.92	2,317,500	5.35(4)
Nicholas J. Galassi	—	—	—	—	—	—
Eric D. Belcher	—	—	—	—	—	—
Scott A. Frisoni	—	—	—	—	—	—
Neil P. Graver	3/1/2006	2/8/2006	30,000	4.92	80,100	4.92

(1) Each award was granted under the InnerWorkings, LLC 2004 Unit Option Plan, which was later merged into the InnerWorkings, Inc. 2006 Stock Incentive Plan.

(2) Mr. Zuccarini’s grant was approved by the Compensation Committee on May 3, 2006 and ratified by the Board of Directors on May 9, 2006. Mr. Graver’s grant was approved by an authorized officer of ours on February 8, 2006, to be effective on March 1, 2006, the date Mr. Graver commenced employment.

(3) Valuation assumptions are found under “InnerWorkings, Inc. Condensed Consolidated Financial Statements —Notes to Financial Statements—Note 1—Summary of Significant Accounting Policies—Stock-Based Compensation.”

(4) See discussion regarding May 8, 2006 option grant contained in “Management’s Discussion and Analysis—Critical Accounting Policies—Stock-Based Compensation.”

Employee Benefits Plans

2004 Unit Option Plan

Effective January 1, 2004, we adopted the InnerWorkings, LLC 2004 Unit Option Plan. The principal purpose of the Unit Option Plan has been to attract, retain and reward selected employees, consultants and directors through the granting of non-qualified stock options.

Upon adoption in 2006 of our Stock Incentive Plan, the Unit Option Plan was merged into the Stock Incentive Plan and ceased to separately exist. Except with respect to rights that may be protected under prior award agreements, outstanding awards under the Unit Option Plan are now subject to the Stock Incentive Plan. No additional awards may be made under the Unit Option Plan on or after the effective date of the Stock Incentive Plan.

Stock Incentive Plan

We have adopted the InnerWorkings, Inc. 2006 Stock Incentive Plan, which replaces the Unit Option Plan. The principal purpose of the Stock Incentive Plan is to attract, motivate, reward and retain selected employees, consultants and directors through the granting of stock-based compensation awards. The Stock Incentive Plan provides for a variety of awards, including non-qualified stock options, incentive stock options (within the meaning of Section 422 of the Code), stock appreciation rights, restricted stock awards, performance-based awards and other stock-based awards.

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Administration.    The Stock Incentive Plan is administered by our compensation committee. The compensation committee may in certain circumstances delegate certain of its duties to one or more of our officers. The compensation committee has the power to interpret the Stock Incentive Plan and to adopt rules for the administration, interpretation and application of the plan according to its terms.

Grant of Awards; Shares Available for Awards.     Certain employees, consultants and directors are eligible to be granted awards under the plan. The compensation committee will determine who will receive awards under the plan, as well as the form of the awards, the number of shares underlying the awards, and the terms and conditions of the awards consistent with the terms of the plan.

The total number of shares of our common stock initially available for issuance or delivery under our Stock Incentive Plan is 1,000,000 shares. The number of shares of our common stock issued or reserved pursuant to the Stock Incentive Plan will be adjusted in the discretion of our Board or the compensation committee as a result of stock splits, stock dividends and similar changes in our common stock. In addition, shares subject to grant under our prior unit option plans (including shares under such plans that expire unexercised or are forfeited, terminated, canceled or withheld for income tax withholding) shall be merged and available for issuance under the Stock Incentive Plan, without reducing the aggregate number of shares available for issuance reflected above.

Stock Options.    The Stock Incentive Plan permits the compensation committee to grant participants incentive stock options, which qualify for special tax treatment in the United States, as well as non-qualified stock options. The compensation committee will establish the duration of each option at the time it is granted, with a maximum ten-year duration for incentive stock options, and may also establish vesting and performance requirements that must be met prior to the exercise of options. Stock option grants (other than incentive stock option grants) also may have exercise prices that are less than, equal to or greater than the fair market value of our common stock on the date of grant. Incentive stock options must have an exercise price that is at least equal to the fair market value of our common stock on the date of grant. Stock option grants may include provisions that permit the option holder to exercise all or part of the holder’s vested options, or to satisfy withholding tax liabilities, by tendering shares of our common stock already owned by the option holder for at least six months (or another period consistent with the applicable accounting rules) with a fair market value equal to the exercise price.

Stock Appreciation Rights.    The compensation committee may also grant stock appreciation rights, which will be exercisable upon the occurrence of certain contingent events. Stock appreciation rights entitle the holder upon exercise to receive an amount in any combination of cash, shares of our common stock (as determined by the compensation committee) equal in value to the excess of the fair market value of the shares covered by the stock appreciation right over the exercise price of the right, or other securities or property owned by us.

Other Equity-Based Awards.    In addition to stock options and stock appreciation rights, the compensation committee may also grant certain employees, consultants and directors shares of restricted stock, restricted stock rights, dividend equivalents, performance-based awards or other stock-based awards, with terms and conditions as the compensation committee may, pursuant to the terms of the Stock Incentive Plan, establish. The Stock Incentive Plan also allows awards to be made in conjunction with a participant’s election to defer compensation in accordance with the rules of Section 409A of the Code.

Change-in-Control Provisions.    In connection with the grant of an award, the compensation committee may provide that, in the event of a change in control, any outstanding awards that are unexercisable or otherwise unvested will become fully vested and immediately exercisable.

Amendment and Termination.    The compensation committee may adopt, amend and rescind rules relating to the administration of the Stock Incentive Plan, and amend, suspend or terminate the Stock Incentive Plan, but no amendment will be made that adversely affects in a material manner any rights of the holder of any award without the holder’s consent, other than amendments that are necessary to permit the granting of awards in compliance with applicable laws. We have attempted to structure the Stock Incentive Plan so that remuneration attributable to stock options and other awards will not be subject to a deduction limitation contained in Section 162(m) of the Code.

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Annual Incentive Plan

We have adopted the InnerWorkings Annual Incentive Plan (the Annual Incentive Plan) that rewards employees for meeting and exceeding annual performance goals established by the compensation committee based on one or more criteria set forth in the Annual Incentive Plan. The Annual Incentive Plan will be used to set bonus targets and pay bonuses beginning in 2007.

Eligibility to participate in the Annual Incentive Plan is limited to substantially all regular full-time and part-time employees. Temporary employees, any independent contractors, and certain other specified classifications are not eligible to participate in the Annual Incentive Plan.

Employees are eligible to receive bonuses based on meeting operational and financial goals that may be stated (a) as goals of the company, a subsidiary, or a portion thereof, (b) on an absolute basis and/or relative to other companies, or (c) separately for one or more participants or business units. The objective performance goals for the Annual Incentive Plan are established by our compensation committee at the beginning of the year. Bonus payouts are determined within a reasonable time after the end of the performance period.

Our compensation committee will administer the Annual Incentive Plan and will have the authority to construe, interpret and implement the Annual Incentive Plan and prescribe, amend and rescind rules and regulations relating to the Annual Incentive Plan. The determination of the compensation committee on all matters relating to the Annual Incentive Plan or any award agreement will be final, binding and conclusive. The Annual Incentive Plan may be amended or terminated by the compensation committee or our Board. However, the Annual Incentive Plan may not be amended without the prior approval of our stockholders, if such approval is necessary to qualify bonuses as performance-based compensation under Section 162(m) of the Code.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table summarizes the number of securities underlying outstanding plan awards for each named executive officer as of December 31, 2006.

	Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)	Option Expiration Date
(a)	(b)	(c)		(e)	(f)
Steven E. Zuccarini	1,367,167	—		0.50	11/05/2014
	—	750,000	(1)	4.92	05/08/2016
Nicholas J. Galassi	100,000	—		0.50	09/01/2014
	25,000	—		0.65	07/15/2015
	40,000	40,000	(2)	0.65	10/01/2015
Eric D. Belcher	105,000	—		1.00	07/20/2015
	40,000	80,000	(3)	0.65	09/14/2015
	50,000	50,000	(4)	1.00	10/01/2015
Scott A. Frisoni	25,000	—		0.65	07/15/2015
	50,000	50,000	(2)	0.65	10/01/2015
Neil P. Graver	10,000	20,000	(5)	4.92	03/01/2016

(1) These options vest in six equal annual installments beginning on May 8, 2007.

(2) These options vest on October 1, 2007.

(3) These options vest in two equal annual installments beginning on June 20, 2007.

(4) These options vest on June 20, 2007.

(5) These options vest in two equal annual installments beginning on September 1, 2007.

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OPTION EXERCISES AND STOCK VESTED

The following table summarizes stock option exercises by our named executive officers in 2006.

	Option Awards		Stock Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)	Number of Shares Acquired on Vesting (#)	Value Realized on Vesting ($)
(a)	(b)	(c)	(d)	(e)
Steven E. Zuccarini	132,833	587,122(1)	—	—
Nicholas J. Galassi	—	—	—	—
Eric D. Belcher	—	—	—	—
Scott A. Frisoni	—	—	—	—
Neil P. Graver	—	—	—	—

(1) Value based on aggregate difference between the closing market price on the date of exercise and the exercise price.

Pension Benefits

We do not sponsor any qualified or non-qualified defined benefit plans.

Nonqualified Deferred Compensation

We do not maintain any non-qualified defined contribution or deferred compensation plans. The Compensation Committee, which is comprised solely of “outside directors” as defined for purposes of Section 162(m) of the Code, may elect to provide our officers and other employees with non-qualified defined contribution or deferred compensation benefits if the Compensation Committee determines that doing so is in our best interests. We sponsor a tax qualified defined contribution 401(k) plan in which Messrs. Belcher, Frisoni and Graver participate.

Employment Agreements

Employment Agreement with Steven E. Zuccarini

We entered into an employment agreement with Steven E. Zuccarini, our Chief Executive Officer, in November 2004 and amended the agreement in May 2006. The employment agreement provides that the amount of Mr. Zuccarini’s base salary will be determined annually by our Board, but will not be less than $450,000 commencing in 2007. Also commencing in 2007, Mr. Zuccarini will receive an annual bonus of $150,000 in the event target levels of net income approved by our Board are exceeded. In addition, Mr. Zuccarini will be eligible to receive an annual bonus based on performance targets approved by our Board.

In connection with the execution of his employment agreement in November 2004, Mr. Zuccarini received options to purchase 1,500,000 shares of common stock at an exercise price of $0.50 per share. These options vested upon the completion of our initial public offering. As of December 31, 2006, 1,367,167 of these options remained outstanding.

In connection with his November 2004 employment agreement, Mr. Zuccarini also became entitled to receive fully vested options to purchase 600,000 shares of common stock at an exercise price of $0.50 per share, subject to the achievement of certain business and financial performance targets. In May 2006, at our request and to better align the value of this equity award with the long-term interests of the stockholders, Mr. Zuccarini agreed to amend his employment agreement to eliminate his rights to these options. As part of this amendment, Mr. Zuccarini received a grant of options to purchase 750,000 shares of common stock at an exercise price of $4.92 per share, which was the price per share paid by SNP Corporation Ltd. pursuant to its purchase of 254,065 of our shares in April 2006. These options will vest ratably over six years at a rate of 125,000 per year. Vesting of these options will accelerate in the event of a change of control (as defined in the agreement).

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Mr. Zuccarini’s employment agreement may be terminated, with or without cause, by our Board. If we terminate the employment agreement for cause (as defined in the agreement) or on account of death or disability or if Mr. Zuccarini terminates the agreement for any reason other than a good reason (as defined in the agreement), Mr. Zuccarini is entitled to no further compensation or benefits other than those earned through the date of termination. If we terminate the agreement for any reason other than for cause, death or disability, we will provide the following severance benefits:

• continued payment of cash compensation at a rate of $600,000 per year for two years following termination,

• additional vesting of his options that would have otherwise vested if he had remained employed by us during the two years following the termination of his employment, and

• continued employee benefits for a period of two years following the termination of his employment or until comparable benefits are provided by a new employer.

Mr. Zuccarini’s employment agreement expires in November 2012.

Employment Agreements with Other Executive Officers

In addition to the employment agreement with Mr. Zuccarini, we have entered into employment agreements with Nicholas J. Galassi, Eric D. Belcher and Scott A. Frisoni. The employment agreements generally provide for a base salary and eligibility to receive an annual performance bonus up to a specified percentage of base salary. The actual amount of the annual bonus is discretionary and determined based upon the executive’s performance, our performance and certain performance targets approved by our Board (and by the compensation committee under our Annual Incentive Plan). The agreements also grant options to purchase shares of common stock and contain customary non-competition and non-solicitation provisions.

The agreements may be terminated, with or without cause, by the executive, the Chief Executive Officer or our Board. If the executive’s employment is terminated by us for cause (as defined in the agreements), on account of death or disability or if the executive terminates his own employment for any reason other than for good reason (as defined in the agreements), the executive is entitled to no further compensation or benefits other than those earned through the date of termination. If the executive’s employment is terminated by us for any reason other than for cause, death or disability, or if the executive terminates his own employment for good reason, we will provide the following severance benefits: (i) continued payment of base salary for 12 months following termination and (ii) immediate vesting of any options that would have been exercisable in the next two years, as if the executive’s employment had continued for the two-year period (for Mr. Belcher, this clause (ii) only applies upon termination in connection with a change in control).

If, during the three months prior to the public announcement of a proposed change of control (as defined in the agreements), or 12 months following a change of control, the executive’s employment is terminated by us for any reason other than cause, or terminated by the executive for good reason, the executive is generally entitled to the same benefits described above. The employment agreements with Messrs. Galassi and Frisoni expire in December 2007, and the employment agreement with Mr. Belcher expires in June 2008.

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Assuming the employment of our named executive officers were to be terminated without cause or for good reason, each as of December 31, 2006, the following individuals would be entitled to payments in the amounts set forth opposite to their name in the below table:

	Cash Severance
Steven E. Zuccarini	$50,000 per month for 24 months
Nicholas J. Galassi	$16,667 per month for 12 months
Eric D. Belcher	$18,750 per month for 12 months
Scott A. Frisoni	$18,750 per month for 12 months
Neil P. Graver	None

We are not obligated to make any cash payments to these executives if their employment is terminated by us for cause or by the executive not for good reason. No severance or benefits are provided for any of the executive officers in the event of death or disability. A change in control does not affect the amount or timing of these cash severance payments.

Assuming the employment of our named executive officers were to be terminated without cause or for good reason, each as of December 31, 2006, the following individuals would be entitled to accelerated vesting of their outstanding stock options described in the table below:

	Value of Equity Awards: Termination Without Cause or For Good Reason (1)	Value of Equity Awards: In Connection With a Change in Control (1)
Steven E. Zuccarini	Additional vesting that would have otherwise vested if employed during 24 months after termination. 250,000 options with value of $2,760,000	Fully Vested. 750,000 options with value of $8,280,000
Nicholas J. Galassi	Immediate vesting of next 2 year’s options as if employment continued for 24 months after termination. 40,000 options with value of $612,400	Upon termination, immediate vesting of next 2 year’s options as if employment continued for 24 months after termination. 40,000 options with value of $612,400
Eric D. Belcher	None	Upon termination, immediate vesting of next 2 full year’s options as if employment continued for 2 years after termination. 130,000 options with value of $1,972,800
Scott A. Frisoni	Immediate vesting of next 2 full year’s options as if employment continued for 24 months after termination. 50,000 options with value of $765,500	Upon termination, immediate vesting of next 2 full year’s options as if employment continued for 24 months after termination. 50,000 options with value of $765,500
Neil P. Graver	None	None

(1) Values are based on the aggregate difference between the respective exercise prices and the closing sale price of our common stock on December 29, 2006, which was $15.96 per share.

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In connection with a termination without cause or a termination for good reason, no payments are due unless the executive executes a general release and waiver of claims against us. During the executive’s employment and for a period of two (2) years following a termination for any reason (including a termination without cause or for good reason or a termination in connection with a change in control), the executive cannot, anywhere in the specified geographic region, directly or indirectly:

(i) perform services for, have any ownership interest in, or participate in the financing, operation, management or control of, any firm, partnership, corporation, or business that engages or participates in a competing business purpose;

(ii) induce or attempt to induce any customer, potential customer, supplier, licensee, licensor or business relation of ours to cease doing business with us, or in any way interfere with the such relationships or solicit the business of any customer or potential customer of ours; or

(iii) solicit, encourage, hire, or take any other action which is intended to induce or encourage, or has the effect of inducing or encouraging, any employee or independent contractor of ours to terminate his or her employment or relationship with us.

Additionally, in the event of a termination without cause or for good reason, Steven E. Zuccarini is entitled to receive benefits under any executive and employee benefit plans and/or insurance programs, as may be in effect, for twenty-four months following termination or until he becomes eligible for comparable benefits by virtue of new employment. Based on a December 31, 2006 termination, the benefits would have an estimated aggregate value of $28,066.

The following definitions apply to the termination and change in control provisions in the employment agreements.

A termination for “Cause” occurs if we terminate employment for the any of the following reasons:

(i) the executive’s failure to perform his reasonably assigned duties after written notice of such failure and a reasonable opportunity to remedy such failure;

(ii) theft, dishonesty, or falsification of any employment or our records by the executive;

(iii) the determination that the executive has committed an act or acts constituting a felony or any act involving moral turpitude;

(iv) the determination that the executive has engaged in willful misconduct or gross negligence that has had a material adverse effect on the our reputation or business; or

(v) the material breach by the executive of any provision of the employment agreement after written notice of such breach and a reasonably opportunity to cure such breach.

Per Mr. Zuccarini’s employment agreement, clause (i) above no longer applies to him after the completion of our initial public offering in 2006.

A termination for “Good Reason” occurs if the executive terminates his employment for any of the following reasons:

(i) we materially reduce the executive’s duties or responsibilities below what is customary for that executive’s position without the executive’s consent;

(ii) we require the executive to relocate his office more than 100 miles from our current office without his consent; or

(iii) we have breached the terms of the employment agreement and such breach continues for more than thirty (30) days after notice from the executive to us specifying the action which constitutes the breach and demanding its discontinuance.

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“Change in Control” means:

(i) An effective change of control pursuant to which any person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) beneficial ownership of our stock representing more than thirty-five percent (35%) of the voting power of our then outstanding stock; provided, however, that a Change in Control will not be deemed to occur by virtue of any of the following acquisitions: (A) by us or any Affiliate, (B) by any employee benefit plan (or related trust) sponsored or maintained by us or any Affiliate, or (C) by any underwriter temporarily holding securities pursuant to an offering of such securities;

(ii) Any person or persons acting as a group acquires beneficial ownership of our stock that, together with our common stock already held by such person or group, constitutes more than fifty (50%) of the total fair market value or voting power of our then outstanding stock. The acquisition of our stock by us in exchange for property, which reduces the number of outstanding shares and increases the percentage ownership by any person or group to more than 50% of our then outstanding stock will be treated as a Change in Control;

(iii) Individuals who constitute the Board immediately after the Effective Date (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board during any 12-month period; provided, however, that: (A) any person becoming a director subsequent thereto whose election or nomination for election was approved by a vote of a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of our proxy statement in which such person is named as a nominee for director, without written objection to such nomination) will be an Incumbent Director, provided that no individual initially elected or nominated as director as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board will be deemed to be an Incumbent Director; and (B) a Change in Control will not be deemed to have occurred pursuant to this paragraph (iii) if, after the Board is reconstituted, the Incumbent Stockholders (as defined below) beneficially own our stock representing more than thirty-five percent (35%) voting power of our then outstanding stock; or

(iv) Any person or persons acting as a group acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from us that have a total gross fair market value of at least forty percent (40%) of the total gross fair market value of all of our assets immediately prior to such acquisition. For purposes of this section, gross fair market value means the value of our assets, or the value of the assets being disposed of, without regard to any liabilities associated with such assets. The event described in this paragraph (iv) shall not be deemed to be a Change in Control if the assets are transferred to (A) any owner of our stock in exchange for or with respect to our stock, (B) an entity in which we own, directly or indirectly, at least fifty percent (50%) of the entity’s total value or total voting power, (C) any person that owns, directly or indirectly, at least fifty percent (50%) of our stock, or (D) an entity in which a person described in (iv)(C) above owns at least fifty percent (50%) of the total value or voting power. For purposes of this section, and except as otherwise provided, a person’s status is determined immediately after the transfer of the assets.

Notwithstanding the foregoing, shares of our stock beneficially owned by any of the following (collectively, the “Incumbent Stockholders”) will be excluded for purposes of determining a Change in Control: Incorp., LLC; Richard A. Heise, Jr.; Old Willow Partners, LLC: Heise Family 2005 Grantor Retained Annuity Trust; InnerWorkings Series C Investment Partners, LLC; Orange Media, LLC: Baradaran Revocable Trust; Sam Nazarian; Shula Nasarian Torbati; David and Angella Nazarian Family Trust; Anthony P. Bobulinski; Printworks, LLC; Printworks Series E, LLC; Younes & Soraya Nazarian Revocable Trust; Younes Nazarian 2006 Annuity Trust—Printworks; Soraya T. Nazarian 2006 Annuity Trust—Printworks; New Enterprise Associates 11, Limited Partnership; NEA Ventures 2005, Limited Partnership; or any of their respective affiliates, successors or assigns. In no event will a Change in Control be deemed to have occurred, with respect to

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the executive, if an employee benefit plan maintained by us or an Affiliate or the executive is part of a purchasing group that consummates the transaction that would otherwise result in a Change in Control. The employee benefit plan or the executive will be deemed “part of a purchasing group” for purposes of the preceding sentence if the plan or the executive is an equity participant in the purchasing company or group, except where participation is: (i) passive ownership of less than two percent (2%) of the stock of the purchasing company; or (ii) ownership of equity participation in the purchasing company or group that is otherwise not significant, as determined prior to the Change in Control by a majority of the non-employee continuing directors.

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DIRECTOR COMPENSATION

The following table summarizes compensation that our directors earned during 2006 for services as members of our Board.

Name (1)	Fees Earned or Paid in Cash ($)	Options Awards ($) (2)	All Other Compensation ($)	Total ($)
John R. Walter	—	132,903	—	132,903
Peter J. Barris	—	—	—	—
Sharyar Baradaran	—	—	—	—
Jack M. Greenberg	—	12,000	—	12,000
Linda S. Wolf	—	17,063	—	17,063

(1) Eric P. Lefkofsky and Richard A. Heise, Jr. were our directors until May 2006, but received no compensation for their service as directors in 2006.

(2) Valuation based on the dollar amount of option grants recognized for financial statement reporting purposes pursuant to FAS 123(R) with respect to 2006, except that, with respect to Mr. Greenberg, the amount reported in this column is $12,000 higher than the amount reported in our financial statements. This additional expense shown in the director compensation table attributable to Mr. Greenberg’s option award results from requirements of the Securities and Exchange Commission to report option grants made prior to 2006 using the modified prospective transition method pursuant to FAS 123(R), whereas we use the prospective transition method pursuant to FAS 123(R). The assumptions we used with respect to the valuation of option grants are set forth in “InnerWorkings, Inc. Condensed Consolidated Financial Statements—Notes to Financial Statements—Note 1—Summary of Significant Accounting Policies—Stock-Based Compensation.” The aggregate option awards outstanding for each person in the table set forth above as of December 31, 2006 are as follows:

Name	Vested	Unvested	Exercise Price		Expiration Date
Jack M. Greenberg	50,000	50,000	$	0.65	10/1/2015
John R. Walter	1,200,000	—	$	0.50	6/1/2014
John R. Walter	—	400,000	$	4.92	5/8/2016
Linda S. Wolf	—	50,000	$	16.41	11/15/2016

Mr. Walter’s options to purchase 400,000 shares are exercisable in 16.67% annual installments beginning May 8, 2007. Mr. Greenberg’s options are exercisable in 50% annual installments beginning June 20, 2006. Ms. Wolf’s options are exercisable in 25% annual installments beginning November 15, 2007. Mr. Barris and Mr. Baradaran have not received any stock options.

The grant date fair values of option grants to our directors in 2006 are as follows:

Name	Options	Grant Date	Grant Date Fair Value ($)
John R. Walter	400,000	05/08/2006	1,236,000
Linda S. Wolf	50,000	11/15/2006	546,000

Assumptions for calculating the grant date fair values are found under “InnerWorkings, Inc. Condensed Consolidated Financial Statements—Notes to Financial Statements—Note 1—Summary of Significant Accounting Policies—Stock-Based Compensation.”

Summary of Director Compensation

We do not provide cash compensation to our directors for their services as members of the Board or for attendance at Board or committee meetings. However, our directors will be reimbursed for reasonable travel and other expenses incurred in connection with attending meetings of the Board and its committees. Under our Stock Incentive Plan, directors are eligible to receive stock option grants at the discretion of the compensation committee or other administrator of the plan.

In March 2004, we entered into an agreement with John R. Walter in connection with his election as Chairman of the Board. Under this agreement, Mr. Walter:

• purchased 100,000 shares of common stock at a price of $0.80 per share in March 2004,

• purchased 200,000 shares of common stock at a price of $0.80 per share in May 2005, and

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• received options to purchase an additional 1,200,000 shares of common stock at an exercise price of $0.50 per share in March 2004. All of these options are vested.

In connection with the March 2004 agreement, Mr. Walter also became entitled to receive fully vested options to purchase 300,000 shares of common stock at an exercise price of $0.50 per share, subject to the achievement of certain business and financial performance targets. In May 2006, at our request and to better align the value of this equity award with the long-term interests of the stockholders, Mr. Walter agreed to eliminate his rights to these options in exchange for the grant of options to purchase 400,000 shares of common stock at an exercise price of $4.92 per share, which was the price per share paid by SNP in April 2006. These options will vest ratably over six years at a rate of 66,666 per year. Vesting of these options will accelerate in the event of a change of control (as defined in Mr. Walter’s agreement).

In October 2005, we entered into a compensation agreement with Jack Greenberg in connection with his election to the Board. Pursuant to this agreement, we granted Mr. Greenberg options to purchase 100,000 shares of common stock at an exercise price of $0.65 per share. These options vest in two equal installments on June 30, 2006 and 2007, provided Mr. Greenberg continues to serve on the Board on such dates. Vesting of these options will accelerate in the event of a change of control (as defined in Mr. Greenberg’s agreement).

Upon her appointment to the Board on November 15, 2006, Ms. Wolf was granted options to purchase 50,000 shares of our common stock at an exercise price of $16.41 per share. These options have a term of ten years and vest in four equal annual installments beginning on November 15, 2007.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In the ordinary course of our business and in connection with our financing activities, we have entered into a number of transactions with our directors, officers and 5% or greater stockholders. All of the transactions set forth below were approved by the unanimous vote of our Board of Directors. We believe that we have executed all of the transactions set forth below on terms no less favorable to us than we could have obtained from unaffiliated third parties. Our audit committee is responsible for approving related party transactions, as defined in applicable rules by the Securities and Exchange Commission. Our audit committee operates under a written charter pursuant to which all related party transactions are reviewed for potential conflicts of interest situations. Such transactions must be approved by our audit committee prior to consummation.

Recapitalization

On August 15, 2006, we recapitalized all outstanding shares of our Class A common stock, Class B common stock, Series B preferred stock, Series D preferred stock and Series E preferred stock into shares of our common stock on a one-for-one basis. In connection with the recapitalization, we made approximately $7.0 million of required preference and accrued dividend payments to the former holders of our Series B, D and E preferred shares.

Minority Interest in Echo Global Logistics, LLC

As of September 30, 2006, we owned 2,000,000 shares of Class A common stock, or 6.6%, of Echo Global Logistics, LLC, an enterprise transportation management firm, which we acquired in February 2005 for $125,000. Other than Linda S. Wolf, each member of our Board of Directors has a direct and/or an indirect ownership interest in Echo. Certain members of Echo (and their respective ownership interests in Echo) include:

Ÿ John R. Walter (3.1%), who also is a member of Echo’s Board of Directors,

Ÿ Old Willow Partners, LLC (0.14%), which is owned by Richard A. Heise, Jr.,

Ÿ Blue Media, LLC (0.14%), which is owned by Elizabeth Kramer Lefkofsky,

Ÿ Polygal Row, LLC (31.8%), the members of which include Old Willow, Blue Media, Steven E. Zuccarini, Nicholas J. Galassi, Scott A. Frisoni and Eric D. Belcher,

Ÿ Echo Global Logistics Series C Investment Partners, LLC (14.0%), the members of which include Steven E. Zuccarini and John R. Walter,

Ÿ Entities affiliated with New Enterprise Associates (15.6%),

Ÿ Younes & Soraya Nazarian Revocable Trust (9.75%), a beneficiary of which includes Sharon Baradaran, the wife of Sharyar Baradaran, and

Ÿ Frog Ventures, LLC (15.1%), the members of which include John R. Walter and Jack M. Greenberg.

We provide general administrative services to Echo, including financial management, legal, accounting, tax, treasury services, employee benefit plan and marketing services. As consideration for these services, Echo paid us approximately $194,000 and $29,152 during 2005 and the nine months ended September 30, 2006, respectively. In addition, Echo provided transportation services to us during 2005 and during the nine months ended September 30, 2006. As consideration for these services, we paid Echo approximately $209,000 and $519,996 during 2005 and the nine months ended September 30, 2006, respectively. We also sub-lease a portion of our office space to Echo. Effective January 1, 2006, we entered into a sub-lease agreement with Echo pursuant to which Echo leases approximately 20% of our office space for approximately $7,500 per month.

Effective October 1, 2006, we entered into a referral agreement with Echo pursuant to which Echo agreed to pay us a fee equal to 5% of its gross profit on jobs generated through our referral of new customers. Echo had paid us approximately $60,000 for such referrals.

Sales of Our Securities

We sold the following Class A common units, Series B preferred units, Series C preferred units and Series D preferred units of InnerWorkings, LLC and Series E preferred shares of InnerWorkings, Inc. to our

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directors, officers and 5% or greater stockholders and their respective affiliates, in private transactions on the dates set forth below. In June 2005, all of our Series C preferred units were converted on a one-for-one basis into Class A common units in accordance with the terms of the Series C preferred units. In connection with our conversion in January 2006, the outstanding units of InnerWorkings, LLC were converted into shares of InnerWorkings, Inc. on a one-for-one basis.

Name of Unitholder/Stockholder	Class A Common Units	Series B Convertible Preferred Units	Series C Convertible Preferred Units		Series D Convertible Preferred Units	Series E Convertible Preferred Shares	Date of Purchase		Total Purchase Price
Incorp, LLC(1)	9,500,000	—	—		—	—	1/7/03			(2)
Scott A. Frisoni	300,000	—	—		—	—	2/15/03			(3)
InnerWorkings Series C Investment Partners, LLC(4)	387,000	—	2,580,000	(5)	—	—	(6	)	$	2,580,000
Incorp, LLC	3,500,000	—	—		—	—	10/1/03			(2)
Printworks, LLC(5)	100,000	—	—		—	—	11/14/03			(5)
John R. Walter	100,000	—	-		—	—	3/25/04		$	80,000
The Soraya Nazarian Annuity Trust 2003 dated 10/01/03	—	—	—		640,000	—	8/19/04		$	2,000,000
Incorp, LLC	50,000	—	—		—	—	9/20/04			(7)
Incorp, LLC	175,000	—	—		—	—	1/2/05			(8)
Printworks, LLC(5)	300,000	—	—		320,000	—	2/25/05		$	1,000,000
The Soraya Nazarian Annuity Trust 2003 dated 10/01/03	—	—	—		640,000	—	2/25/05		$	2,000,000
John R. Walter	200,000	—	—		—	—	5/18/05		$	160,000
Entities affiliated with New Enterprise Associates	—	—	—		—	8,134,184	1/3/06		$	40,000,000
Printworks Series E, LLC	—	—	—		—	2,033,546	1/3/06		$	10,000,000

(1) Incorp, LLC is owned by the following individuals and entities: (i) Orange Media, LLC (43.49%), which is owned by Elizabeth Kramer Lefkofsky, (ii) Old Willow Partners, LLC (30.53%), which is controlled by Richard A. Heise, Jr., (iii) the Heise Family Grantor Retained Annuity Trust (15.58%), which is controlled by Mr. Heise, (iv) Scott A. Frisoni (1.36%), (v) Nicholas J. Galassi (0.99%) and (vi) non-related parties (8.05%). The Board of Managers of Incorp consists of Orange Media, Old Willow and Barry Friedland, one of our former directors.

(2) These units were issued in connection with the sale of Insight, LLC by Incorp to InnerWorkings, LLC. See “—Acquisition of Insight, LLC.”

(3) These units were issued to Scott A. Frisoni as partial compensation for his continued employment with InnerWorkings, LLC.

(4) Richard A. Heise, Jr. is the managing member of InnerWorkings Series C Investment Partners, LLC. Series C Investment Partners was formed to facilitate our Series C financing and is owned by the following individuals and entities: (i) Mr. Heise (38.0%), (ii) Orange Media, LLC (1.9%) and (iii) non-related parties (60.1%). In June 2005, all of the Series C preferred units held by Series C Investment Partners were converted on a one-for-one basis into Class A common units in accordance with the terms of the Series C preferred units.

(5) In November 2003, InnerWorkings, LLC issued 100,000 Class A common units to Printworks as consideration for the business and investment relationship established as a result of Printworks’ investment in 1,000,000 Series C preferred units and 150,000 Class A common units through Series C Investment Partners. In February 2005, InnerWorkings, LLC redeemed the 1,000,000 Series C preferred units and 150,000 Class A common units that were held by Series C Investment Partners for the benefit of Printworks at a price of $1.00 per unit. Concurrently with this redemption, Printworks purchased 320,000 Series D preferred units and 150,000 Class A non-voting common units and InnerWorkings, LLC issued 150,000

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Class A non-voting common units to Printworks in replacement of the 150,000 Class A common units that it previously held indirectly through Series C Investment Partners.

(6) These units were issued in a series of transactions that began in April 2003 and concluded in January 2004.

(7) These units were issued to Incorp for the benefit of Nicholas J. Galassi as partial consideration for his continued employment with InnerWorkings, LLC.

(8) InnerWorkings, LLC issued 50,000 of these units to Incorp for the benefit of Scott A. Frisoni and 125,000 of these units to Incorp for the benefit of Nicholas J. Galassi, in each case, as partial consideration for his continued employment with InnerWorkings, LLC.

Acquisition of Insight, LLC

In January 2003, we acquired 100% of the equity ownership of Insight, LLC (Insight) from Incorp in exchange for a total of 13,000,000 Class A common units, 9,500,000 of which were issued in January 2003 and 3,500,000 of which were issued in October 2003. Prior to the Insight transaction, Incorp owned 10,000,000 of our Class A common units, which represented 61.5% of the then total outstanding units of InnerWorkings, LLC.

Payments to Holders of Preferred Shares

Upon the completion of our initial public offering in August 2006, we made the following approximate payments:

• a $20,000 dividend payment to the former holders of our Series B preferred shares,

• a $5.135 million dividend and preference payment to the former holders of our Series D preferred shares, and

• a $1.835 million dividend and preference payment to the former holders of our Series E preferred shares.

Agreement with Zion Consulting, Inc.

In November 2003, we entered into a consulting agreement with Zion Consulting, Inc., a business consulting firm. Eric P. Lefkofsky is the president and sole stockholder of Zion Consulting. Through Zion Consulting, Mr. Lefkofsky has provided consulting services to us since our inception and to Incorp, LLC, our largest stockholder. Under the terms of this agreement, we paid approximately $34,000, $87,000, $90,000 and $79,600 to Zion Consulting for services rendered in 2003, 2004, 2005 and the six months ended June 30, 2006, respectively. We terminated this agreement as of June 30, 2006.

Sale of Units to Orange Media, LLC

In February 2002, InnerWorkings, LLC sold 57,812 Class A common units and 231,250 Series B preferred units to Orange Media, LLC. As consideration for the Class A common units and the Series B preferred units, Orange Media, LLC issued a demand note to InnerWorkings, LLC in the principal amount of $188,469. The note accrued interest at a fixed rate equal to 2.78%, which was due and payable on the date on which the principal amount of the note was paid. Orange Media, LLC is owned by Elizabeth Kramer Lefkofsky. The principal and accrued and unpaid interest on this note was paid by Orange Media in May 2006.

Transfer of Units to Incorp, LLC

In February 2004, InnerWorkings, LLC purchased a total of 2,400,000 Class A common units from two of our employee stockholders and re-issued the same number of Class A common units to Incorp. As consideration for these transactions, Incorp made cash payments totaling $100,000 to these stockholders and we agreed to eliminate the outstanding commission balances for each of these stockholders, which totaled $410,000 as of the date of the transfer, and to make monthly cash payments to these stockholders totaling $224,000 over a two-year period ending February 2006. We sub-lease a portion of our office space to Incorp. Effective January 1, 2006, we

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entered into a sub-lease agreement with Incorp pursuant to which Incorp leases approximately 20% of our office space for approximately $7,500 per month.

Series E Investment

In January 2006, we issued 10,167,730 Series E preferred shares, or approximately 25% of our equity interests on a fully-diluted basis, to New Enterprise Associates 11, Limited Partnership, NEA Ventures 2005, Limited Partnership and Printworks Series E, LLC in exchange for $50 million in cash, or $4.92 per share. We retained $10 million of these proceeds for working capital and general corporate purposes. We used the remaining $40 million of these proceeds to redeem Class A common shares held by our existing stockholders on a pro rata basis at a purchase price of $4.92 per share. In connection with this redemption, the following of our directors, officers and 5% or greater stockholders (or their respective affiliates) received the payments listed below:

Director, Officer or 5% Stockholder (or Affiliate)	Shares Redeemed	Redemption Payment Amount
Incorp, LLC	6,597,563 Class A common shares	$	32,443,638
Orange Media, LLC	24,214 Class A common shares		119,073
Old Willow Partners, LLC	125,000 Class A common shares		614,690
InnerWorkings Series C Investment Partners, LLC	402,263 Class A common shares		1,978,136
John R. Walter	132,833 Class A common shares		653,209
Steven E. Zuccarini	132,833 Class A common shares		653,209
Scott A. Frisoni	71,951 Class A common shares		353,820
Mark D. Desky	1,100 Class A common shares		5,409

Registration Rights

We granted piggyback registration rights to the former holders of our Series B, D and E preferred shares pursuant to the terms of an investor rights agreement that we entered into on January 3, 2006. The registration of shares being sold by certain selling stockholders is being made pursuant to these rights. For a more detailed description of these registration rights, see “Description of Capital Stock—Registration Rights.”

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PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial ownership of our common stock prior to and after this offering:

Ÿ each person known to us to own beneficially more than 5% of our outstanding common stock;

Ÿ each of our executive officers named in the summary compensation table;

Ÿ each of our directors;

Ÿ all of our executive officers and directors as a group; and

Ÿ each selling stockholder.

The beneficial ownership of our common stock set forth in the table is determined in accordance with the rules of the Securities and Exchange Commission. We have 44,014,319 shares of common stock outstanding at January 4, 2007. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after the date of this prospectus are considered outstanding, while these shares are not considered outstanding for purposes of computing percentage ownership of any other person. Unless otherwise indicated in the footnotes below, we believe based on information furnished to us, that the persons and entities named in the table have sole voting and investment power as to all shares of common stock beneficially owned.

Unless otherwise initiated, the address of each beneficial owner listed below is c/o InnerWorkings, Inc., 600 West Chicago Avenue, Suite 850, Chicago, Illinois 60610.

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Principal and selling stockholders

Name of beneficial owner	Shares of common stock beneficially owned prior to this offering				Number of shares of common stock to be sold in this offering	Number of shares of common stock to be sold in over- allotment option(1)	Shares of common stock beneficially owned after this offering(1)				Options exercisable within 60 days	Total Remaining Shares and Options
	Shares	Options	Total	%			Shares	Options	Total	%
Selling Stockholders (other than Directors and Executive Officers)
Incorp, LLC (2)	14,755,835	—	14,755,835	33.5%	3,269,721	490,458	10,995,656	—	10,995,656	23.2%	—	10,995,656
Orange Media, LLC (3)	318,617	—	318,617	*	67,441	10,116	241,059	—	241,059	*	—	241,059
Richard A. Heise, Jr. (4)	883,293	—	883,293	2.0%	186,966	28,045	668,282	—	668,282	1.4%	—	668,282
Entities affiliated with New Enterprise Associates (5)	8,134,184	—	8,134,184	18.5%	—	—	8,134,184	—	8,134,184	17.1%	—	8,134,184
c/o   New Enterprise Associates         1119 St. Paul Street         Baltimore, Maryland 21202
Printworks Series E, LLC (6)	1,931,920	—	1,931,920	4.4%	97,770	14,665	1,819,485	—	1,819,485	3.8%	—	1,819,485
Brian Tuffin	7,036	—	7,036	*	1,489	223	5,323	—	5,323	*	—	5,323
The Scion Group	70,363	—	70,363	*	14,894	2,234	53,235	—	53,235	*	—	53,235
Scott P. George Trust	15,980	—	15,980	*	3,382	507	12,090	—	12,090	*	—	12,090
Richard A. Heise, Sr. Living Trust	297,702	—	297,702	*	63,014	9,452	225,236	—	225,236	*	—	225,236
Anne Curley Zagar	7,036	—	7,036	*	1,489	223	5,323	—	5,323	*	—	5,323
Russ Stepke	35,181	—	35,181	*	7,447	1,117	26,617	—	26,617	*	—	26,617
Michael K. Reilly Trust	112,581	—	112,581	*	23,830	3,574	85,177	—	85,177	*	—	85,177
Baradaran Revocable Trust	748,000	—	748,000	1.7%	47,318	7,098	693,584	—	693,584	1.5%	—	693,584
Sam Nazarian	491,500	—	491,500	1.1%	24,874	3,731	462,895	—	462,895	1.0%	—	462,895
Shula Nazarian Torbati	272,000	—	272,000	*	13,765	2,065	256,170	—	256,170	*	—	256,170
David and Angella Nazarian Family Trust	272,000	—	272,000	*	13,765	2,065	256,170	—	256,170	*	—	256,170
Younes & Soraya Nazarian Revocable Trust	171,500	—	171,500	*	8,679	1,302	161,519	—	161,519	*	—	161,519

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Name of beneficial owner	Shares of common stock beneficially owned prior to this offering				Number of shares of common stock to be sold in this offering	Number of shares of common stock to be sold in over- allotment option(1)	Shares of common stock beneficially owned after this offering(1)				Options exercisable within 60 days	Total Remaining Shares and Options
	Shares	Options	Total	%			Shares	Options	Total	%
Brian McCormack (7)	1,529,637	—	1,529,637	3.5%	323,777	48,567	1,157,294	—	1,157,294	2.4%	—	1,157,294
SNP Corporation Ltd.	199,651	—	199,651	*	42,260	6,339	151,052	—	151,052	*	—	151,052
William and Sandra Lefkofsky	125,000	—	125,000	*	26,459	3,969	94,573	—	94,573	*	—	94,573
Mark D. Desky	3,900	70,000	73,900	*	15,642	2,346	—	55,911	55,911	*	15,000	70,911
Joseph Del Preto	—	10,000	10,000	*	2,117	318	—	7,566	7,566	*	—	7,566
George Keenan (8)	122,371	—	122,371	*	25,902	3,885	92,584	—	92,584	*	—	92,584
Orazio Buzza (9)	61,186	125,000	186,186	*	10,741	1,611	48,834	125,000	173,834	*	—	173,834
Robert Jordan	196,457	—	196,457	*	41,584	6,238	148,636	—	148,636	*	—	148,636
Renee Simpson	3,900	—	3,900	*	826	124	2,951	—	2,951	*	—	2,951
Barry Friedland (10)	7,800	—	7,800	*	1,651	248	5,901	—	5,901	*	—	5,901
Robert Maus	—	10,000	10,000	*	2,117	318	—	7,566	7,566	*	—	7,566
Robert Saldeen	3,900	75,000	78,900	*	16,701	2,505	—	59,694	59,694	*	15,000	74,694
Brad Gerard	—	9,500	9,500	*	2,011	302	—	7,188	7,188	*	—	7,188
Brian Gillespie	—	5,000	5,000	*	1,058	159	—	3,783	3,783	*	—	3,783
James Pouba	77,861	45,000	122,861	*	26,006	3,901	47,954	45,000	92,954	*	80,000	172,954
John Calzeretta	—	5,000	5,000	*	1,058	159	—	3,783	3,783	*	—	3,783
JP Thomas	—	5,000	5,000	*	1,058	159	—	3,783	3,783	*	—	3,783
Katherine Verhaalen	—	500	500	*	106	16	—	378	378	*	—	378
Genji Leclair	—	25,000	25,000	*	5,292	794	—	18,915	18,915	*	50,000	68,915
Marc Collins	—	25,000	25,000	*	5,292	794	—	18,915	18,915	*	50,000	68,915
Michael Avery	—	7,500	7,500	*	1,588	238	—	5,674	5,674	*	—	5,674
Michael Dorman	—	11,500	11,500	*	2,434	365	—	8,701	8,701	*	—	8,701
Michael Gellert	—	5,000	5,000	*	1,058	159	—	3,783	3,783	*	—	3,783

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Name of beneficial owner	Shares of common stock beneficially owned prior to this offering				Number of shares of common stock to be sold in this offering	Number of shares of common stock to be sold in over- allotment option(1)	Shares of common stock beneficially owned after this offering(1)				Options exercisable after 60 days	Total Remaining Shares and Options
	Shares	Options	Total	%			Shares	Options	Total	%
Phil Kenny	—	125,000	125,000	*	26,459	3,969	—	94,573	94,573	*	—	94,573
Rick Emanuel	—	3,500	3,500	*	741	111	—	2,648	2,648	*	7,000	9,648
Ron Gabaldon	—	15,000	15,000	*	3,175	476	—	11,349	11,349	*	15,000	26,349
Directors and Executive Officers
John R. Walter (11)	188,460	1,200,000	1,388,460	3.1%	232,510	34,876	—	1,121,074	1,121,074	2.3%	400,000	1,521,074
Steven E. Zuccarini (12)	—	1,367,167	1,367,167	3.0%	276,052	41,408	—	1,049,707	1,049,707	2.2%	750,000	1,799,707
Jack M. Greenberg (13)	21,293	50,000	71,293	*	15,091	2,264	3,939	50,000	53,939	*	50,000	103,939
Peter J. Barris (14)	8,127,067	—	8,127,067	18.5%	—	—	8,127,067	—	8,127,067	17.1%	—	8,127,067
c/o   New Enterprise Associates         1119 St. Paul Street         Baltimore, Maryland 21202
Sharyar Baradaran (15)	748,000	—	748,000	1.7%	47,318	7,098	693,584	—	693,584	1.5%	—	693,584
Linda S. Wolf	—	—	—	*	—	—	—	—	—	*	50,000	50,000
Nicholas J. Galassi (16)	—	165,000	165,000	*	—	—	—	165,000	165,000	*	40,000	205,000
Scott A. Frisoni (17)	253,049	75,000	328,049	*	—	—	253,049	75,000	328,049	*	50,000	378,049
Eric D. Belcher (18)	—	195,000	195,000	*	41,275	6,191	—	147,533	147,533	*	130,000	277,533
Neil P. Graver (19)	—	10,000	10,000	*	2,117	318	—	7,566	7,566	*	20,000	27,566
Executive officers and directors as a group (10 persons)	9,337,869	3,062,167	12,400,036	26.3%	614,363	92,155	9,077,639	2,615,880	11,693,519	23.3%	1,490,000	13,183,519

* Represents beneficial ownership of less than one percent of the outstanding common stock.

(1) Assumes the over-allotment option is exercised in full.

(2) Incorp, LLC is owned by the following individuals and entities: (i) Orange Media, LLC (43.49%), which is controlled by Elizabeth Kramer Lefkofsky, (ii) Old Willow Partners, LLC (30.53%), which is controlled by Richard A. Heise, Jr., (iii) the Heise Family Grantor Retained Annuity Trust (15.58%), which is controlled by Mr. Heise, (iv) Scott A. Frisoni (1.36%), (v) Nicholas J. Galassi (0.99%) and (vi) non-related parties (8.05%). The Board of Managers of Incorp consists of Orange Media, Old Willow and Barry Friedland, one of our former directors.

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(3) Orange Media, LLC is controlled by Elizabeth Kramer Lefkofsky. Does not include 6,417,759 shares of common stock held by Incorp, LLC, which reflect Orange Media’s proportionate economic interest in the shares of common stock held by Incorp. Orange Media is one of our former directors.

(4) Does not include 6,803,245 shares of common stock held by Incorp, LLC, which reflect Old Willow Partners, LLC’s and the Heise Family Grantor Retained Annuity Trust’s proportionate economic interests in the shares of common stock held by Incorp. Mr. Heise is one of our former directors.

(5) Includes 8,127,067 shares of common stock held by New Enterprise Associates 11, Limited Partnership and 7,117 shares of common stock held by NEA Ventures 2005, L.P.

(6) Sharon Baradaran, the wife of Sharyar Baradaran, owns 20% of Printworks Series E, LLC through various entities. Mr. Baradaran does not have voting and investment control with respect to the shares of common stock held by Printworks Series E, LLC and disclaims beneficial ownership of such shares, except to the extent of pecuniary interest therein.

(7) Mr. McCormack is one of our former directors.

(8) Mr. Keenan is one of our former directors.

(9) Mr. Buzza is our former Chief Financial Officer.

(10) Mr. Friedland is one of our former directors.

(11) Includes 21,293 shares of common stock held by Ashlin Management Co. Mr. Walter is the President and Chief Executive Officer/Managing Member of Ashlin Management Co. Mr. Walter has sole voting and investment control with respect to the shares held by Ashlin Management Co. If the over-allotment option is exercised in full, Mr. Walter will sell 267,386 shares in this offering, representing approximately 15% of his aggregate shares of common stock and options to purchase shares of common stock, based on 188,460 shares and options to purchase 1,600,000 shares (400,000 of which are not included in the beneficial ownership table above due to the fact that they are not exercisable within 60 days) held by Mr. Walter immediately prior to this offering. 78,926 shares to be sold by Mr. Walter will be acquired pursuant to the exercise of options.

(12) If the over-allotment option is exercised in full, Mr. Zuccarini will sell 317,460 shares in this offering, representing approximately 15% of his aggregate options to purchase shares of common stock, based on options to purchase 2,117,707 shares (750,000 of which are not included in the beneficial ownership table above due to the fact that they are not exercisable within 60 days) held by Mr. Zuccarini immediately prior to this offering. All the shares to be sold by Mr. Zuccarini will be acquired pursuant to the exercise of options.

(13) Includes options to purchase 50,000 shares of common stock held for the benefit of members of Mr. Greenberg’s family. Mr. Greenberg has voting and investment control with respect to the shares underlying these options.

(14) Includes 8,127,067 shares of common stock held by New Enterprise Associates 11, Limited Partnership. Mr. Barris shares voting and investment control with respect to the shares held by New Enterprise Associates 11, Limited Partnership in his capacity as a manager of NEA 11 GP, LLC, the sole general partner of NEA Partners 11, Limited Partnership, which is the sole general partner of New Enterprise Associates 11, Limited Partnership. Mr. Barris disclaims beneficial ownership of the shares held by New Enterprise Associates 11, Limited Partnership, except to the extent of his pecuniary interest in such shares.

(15) Includes 748,000 shares of common stock held by the Baradaran Revocable Trust. Mr. Baradaran has voting and investment control with respect to these shares of stock. Does not include shares held by Sharon Baradaran, the wife of Sharyar Baradaran, through Printworks Series E, LLC.

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(16) Does not include 145,995 shares of common stock held by Incorp, LLC, which represent Mr. Galassi’s proportionate economic interest in the shares of common stock held by Incorp. Mr. Galassi does not have voting or investment control with respect to these shares. Of these shares, 52,649 will be sold in this offering if the over-allotment option is exercised in full, representing approximately 15% of Mr. Galassi’s aggregate ownership interest, based on his proportionate economic interest in 145,995 shares held by Incorp and options to purchase 205,000 shares (40,000 of which are not included in the beneficial ownership table above due to the fact that they are not exercisable within 60 days) held by Mr. Galassi immediately prior to this offering.

(17) Does not include 200,144 shares of common stock held by Incorp, LLC, which represent Mr. Frisoni’s proportionate economic interest in the shares of common stock held by Incorp. Mr. Frisoni does not have voting or investment control with respect to these shares. Of these shares, 86,728 will be sold in this offering if the over-allotment option is exercised in full, representing approximately 15% of Mr. Frisoni aggregate ownership interest, based on his proportionate economic interest in 200,144 shares held by Incorp, 253,049 shares and options to purchase 125,000 shares (50,000 of which are not included in the beneficial ownership table above due to the fact that they are not exercisable within 60 days) held by Mr. Frisoni immediately prior to this offering.

(18) If the over-allotment option is exercised in full, Mr. Belcher will sell 47,466 shares in this offering, representing approximately 15% of his aggregate options to purchase shares of common stock, based on options to purchase 325,000 shares (130,000 of which are not included in the beneficial ownership table above due to the fact that they are not exercisable within 60 days) held by Mr. Belcher immediately prior to this offering. All the shares to be sold by Mr. Belcher will be acquired pursuant to the exercise of options.

(19) If the over-allotment option is exercised in full, Mr. Graver will sell 2,435 shares in this offering, representing approximately 15% of his aggregate options to purchase shares of common stock, based on options to purchase 30,000 shares (20,000 of which are not included in the beneficial ownership table above due to the fact that they are not exercisable within 60 days) held by Mr. Graver immediately prior to this offering. All the shares to be sold by Mr. Graver will be acquired pursuant to the exercise of options.

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DESCRIPTION OF CAPITAL STOCK

General

The total amount of our authorized capital stock consists of 200,000,000 shares of common stock, $0.0001 par value, and 5,000,000 shares of preferred stock, $0.0001 par value. In July 2006, we adopted, and our stockholders approved, a recapitalization agreement, an amendment to our amended and restated certificate of incorporation, a second amended and restated certificate of incorporation and amended and restated by-laws. The discussion herein describes our capital stock, second amended and restated certificate of incorporation and amended and restated by-laws in effect as of the date of this prospectus. The following summary of certain provisions of our capital stock describes certain material provisions of, but does not purport to be complete and is subject to and qualified in its entirety by, our second amended and restated certificate of incorporation and amended and restated by-laws, which are included as exhibits to the registration statement of which this prospectus forms a part, and by the provisions of applicable law.

Common Stock

As of the date of this prospectus, there are 44,014,319 shares of common stock outstanding held by approximately 35 holders of record. Holders of common stock are entitled to one vote for each share held on all matters subject to a vote of stockholders, subject to the rights of holders of any outstanding preferred stock. Accordingly, holders of a majority of the shares of common stock entitled to vote in any election of directors may elect all of the directors standing for election, subject to the rights of holders of any outstanding preferred stock. Holders of common stock are entitled to receive ratably any dividends that the board of directors may declare out of funds legally available therefor, subject to any preferential dividend rights of outstanding preferred stock. Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to receive ratably our net assets available after the payment of all debts and other liabilities and subject to the prior rights of holders of any outstanding preferred stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of our capital stock are fully paid and nonassessable.

Preferred Stock

We are authorized to issue 5,000,000 shares of preferred stock, which may be issued from time to time in one or more series upon authorization by the Board of Directors. The Board of Directors, without further approval of the stockholders, is authorized to fix the number of shares constituting any series, as well as the dividend rights and terms, conversion rights and terms, voting rights and terms, redemption rights and terms, liquidation preferences and any other rights, preferences, privileges and restrictions applicable to each series of preferred stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could also adversely affect the voting power and dividend and liquidation rights of the holders of common stock. The issuance of preferred stock could also, under certain circumstances, have the effect of making it more difficult for a third party to acquire, or discouraging a third party from acquiring, a majority of our outstanding voting stock or otherwise adversely affect the market price of our common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of common stock until the Board of Directors determines the specific rights of that series of preferred stock.

Registration Rights

New Enterprise Associates 11, Limited Partnership, NEA Ventures 2005, L.P. and Printworks Series E, LLC, who collectively hold 10,066,104 shares of our common stock, have the right to require us to register the resale of their shares under the Securities Act pursuant the terms of an investor rights agreement among us, these holders and certain other holders. Subject to limitations specified in the agreement, these registration rights include the following:

Demand Registration Rights.    If holders of a majority of these 10,066,104 shares of our common stock request that we register all or a portion of these shares, we will also be required to register, upon request,

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2,346,964 shares of common stock held by the other holders party to the investor rights agreement, subject to limitations that the underwriters may impose on the number of shares included in the registration. We are only required to file two registration statements upon the exercise of these demand registration rights.

Piggyback Registration Rights.    If we propose to file a registration statement under the Securities Act to register our shares of common stock, New Enterprise Associates 11, Limited Partnership, NEA Ventures 2005, L.P., Printworks Series E, LLC and the other holders party to the investor rights agreement are entitled to notice of such registration and have the right, subject to limitations that the underwriters may impose on the number of shares included in the registration, to include their shares in the registration. These holders of our common stock also have the right to include their shares in our future registrations, including secondary offerings of our common stock.

Form S-3 Registration Rights.    If we become eligible to file registration statements on Form S-3 (which eligibility is expected to commence in August 2007), the holders party to the investor rights agreement, who collectively hold shares of our common stock, can require us to register their shares on Form S-3 if the aggregate offering price to the public is at least $10 million. We will not be required to effect more than two registrations on Form S-3 in any given calendar year and are not required to effect a registration on a Form S-3 during the period beginning 30 days prior to, and 90 days following, any public offering of our common stock, subject to certain exceptions.

Expenses of Registration.    With specified exceptions, we are required to pay all expenses of registration, including the fees and expenses of one legal counsel to the holders, up to a prescribed maximum amount, but excluding underwriters’ discounts and commissions.

The registration rights described above will terminate, with respect to any particular stockholder, upon the earlier of (i) an acquisition of us under certain circumstances or (ii) three years after the completion of the initial public offering, which was completed in August 2006. Each party to the investor rights agreement has agreed not to sell or otherwise dispose of any shares of our common stock for a period of 90 days, 45 days in the case of 850,000 shares, following the effective date of this offering.

Elimination of Liability in Certain Circumstances

Our certificate of incorporation eliminates the liability of our directors to us or our stockholders for monetary damages resulting from breaches of their fiduciary duties as directors. Directors remain liable for breaches of their duty of loyalty to us or our stockholders, as well as for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, and transactions from which a director derives improper personal benefit. Our certificate of incorporation does not absolve directors of liability for payment of dividends or stock purchases or redemptions by us in violation of Section 174 (or any successor provision of the Delaware General Corporation Law).

The effect of this provision is to eliminate the personal liability of directors for monetary damages for actions involving a breach of their fiduciary duty of care, including any such actions involving gross negligence. We do not believe that this provision eliminates the liability of our directors to us or our stockholders for monetary damages under the federal securities laws. The certificate of incorporation and by-laws also provide indemnification for the benefit of our directors and officers to the fullest extent permitted by the Delaware General Corporation Law as it may be amended from time to time, including most circumstances under which indemnification otherwise would be discretionary.

Number of Directors; Removal; Vacancies

We currently have six directors. Our by-laws provide that the number of directors may be changed by the board of directors. Vacancies on the board of directors may be filled only by the affirmative vote of a majority of the remaining directors then in office. Our by-laws provide that directors may be removed, with or without cause, at meetings of stockholders by the affirmative vote of the holders of a majority of the outstanding shares entitled to vote generally in the election of directors.

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Special Meetings of Stockholders; Limitations on Stockholder Action by Written Consent

Our certificate of incorporation provides that special meetings of our stockholders may be called only by our chairman of the board, our chief executive officer, our board of directors or holders of not less than a majority of the outstanding shares entitled to vote on the matter or matters for which the meeting is being called. Any action required or permitted to be taken by our stockholders must be effected at an annual or special meeting of stockholders and may not be effected by written consent unless the action to be effected and the taking of such action have been approved in advance by our board of directors.

Amendments; Vote Requirements

Certain provisions of our certificate of incorporation and by-laws provide that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend our certificate of incorporation or by-laws, including those provisions relating to action by written consent and the ability of stockholders to call special meetings.

Authorized but Unissued Shares

The authorized but unissued shares of common stock are available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions, and employee benefit plans. The existence of authorized but unissued shares of common stock could render it more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Advance Notice Requirements for Stockholder Proposals and Nomination of Directors

Our by-laws provide that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders, must provide timely notice in writing. To be timely, a stockholder’s notice must be delivered to or mailed and received at our principal executive offices not less than 60 days nor more than 90 days prior to the anniversary date of the immediately preceding annual meeting of stockholders. However, in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, such notice will be timely only if received not later than the close of business on the tenth day following the date on which notice of the date of the annual meeting was mailed to stockholders or made public, whichever first occurs. Our by-laws also specify requirements as to the form and content of a stockholder’s notice.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is The Bank of New York.

Listing

Our common stock is listed on the Nasdaq Global Market under the symbol “INWK.”

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SHARES ELIGIBLE FOR FUTURE SALE

Following this offering, we will have 47,472,961 shares of common stock outstanding. After giving effect to the 3,458,642 shares of our common stock sold in this offering, 15,637,142 shares of our common stock will be freely tradable without restriction or further registration under the Securities Act, except that any shares purchased by our affiliates, as that term is defined in Rule 144, may generally only be sold in compliance with the limitations of Rule 144 described below.

31,835,819 shares of common stock outstanding following this offering will be “restricted securities” as the term is defined under Rule 144. We issued and sold these restricted securities in private transactions in reliance on exemptions from registration under the Securities Act. Restricted securities may be sold in the public market only if they are registered or if they qualify for an exemption under Rule 144 or Rule 701 under the Securities Act, as summarized below.

We have agreed with the underwriters that we will not, without the prior written consent of Morgan Stanley, issue any additional shares of common stock or securities convertible into, exercisable for or exchangeable for shares of common stock for a period of 90 days (subject to extensions) after the date of this prospectus, except that we may grant options to purchase shares of common stock under our stock incentive plan and issue shares of common stock upon the exercise of outstanding options and warrants.

Our officers and directors and certain of our other stockholders, who will hold an aggregate of 31,583,742 shares of common stock upon completion of this offering, have agreed that they will not, without the prior written consent of Morgan Stanley, offer, sell, pledge or otherwise dispose of any shares of our common stock or any securities convertible into or exercisable or exchangeable for, or any rights to acquire or purchase, any of our common stock, or publicly announce an intention to effect any of these transactions, for a period of 90 days (subject to extensions) after the date of this prospectus without the prior written consent of Morgan Stanley, except that (i) nothing will prevent any of them from exercising outstanding options and warrants and (ii) up to 850,000 shares of common stock may be disposed of by NEA Enterprise Associates II, Limited Partnership after 45 days (subject to extensions). These lock-up agreements are subject to such stockholders’ rights to transfer their shares of common stock as a bona fide gift or to a trust for the benefit of an immediate family member or to an affiliate, provided that such donee or transferee agrees in writing to be bound by the terms of the lock-up agreement.

Taking into account the lock-up agreements, and assuming Morgan Stanley does not release these stockholders from these agreements, the following shares will be eligible for sale in the public market at the following times:

Ÿ on the date of this prospectus, 15,637,142 shares of our common stock will be immediately available for sale in the public market;

Ÿ 45 days after the date of this prospectus, 850,000 shares of our common stock will be eligible for sale, subject to certain extensions;

Ÿ 90 days after the date of this prospectus, 30,578,351 shares of our common stock will be eligible for sale, subject to volume, manner of sale and other limitations under Rule 144; and

Ÿ 157,391 shares of our common stock will be eligible for sale under Rule 144 from time to time upon the expiration of various one-year holding periods.

In general, under Rule 144, a stockholder who owns restricted shares that have been outstanding for at least one year is entitled to sell, within any three-month period, a number of these restricted shares that does not exceed the greater of:

Ÿ one percent of the then outstanding shares of common stock, or approximately 474,730 shares immediately after this offering; or

Ÿ the average weekly trading volume in the common stock on the Nasdaq Global Market during the four calendar weeks preceding the sale.

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Our affiliates must comply with the restrictions and requirements of Rule 144, other than the one-year holding period requirement, to sell shares of common stock which are not restricted securities.

Under Rule 144(k), a stockholder who is not currently, and who has not been for at least three months before the sale, an affiliate of ours and who owns restricted shares that have been outstanding for at least two years may resell these restricted shares without compliance with the above requirements. The one- and two-year holding periods described above do not begin to run until the full purchase price is paid by the person acquiring the restricted shares from us or an affiliate of ours.

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CERTAIN MATERIAL U.S. FEDERAL INCOME TAX

CONSEQUENCES TO NON-U.S. HOLDERS

The following summary describes certain material United States federal income tax consequences of the ownership and disposition of common stock by a Non-U.S. Holder (as defined below) holding shares of our common stock as capital assets (i.e., generally for investment) as of the date of this prospectus. This discussion does not address all aspects of United States federal income taxation and does not deal with estate, gift, foreign, state and local tax consequences that may be relevant to such Non-U.S. Holders in light of their personal circumstances. Special U.S. tax rules may apply to certain Non-U.S. Holders, such as “controlled foreign corporations,” “passive foreign investment companies,” corporations that accumulate earnings to avoid U.S. federal income tax, investors in partnerships or other pass-through entities for U.S. federal income tax purposes, dealers in securities, holders of securities held as part of a “straddle,” “hedge,” “conversion transaction” or other risk reduction transaction, and certain former citizens or long-term residents of the United States that are subject to special treatment under the Internal Revenue Code of 1986, as amended (the “Code”). Such entities and persons should consult their own tax advisors to determine the U.S. federal, state, local and other tax consequences that may be relevant to them. Furthermore, the discussion below is based upon the provisions of the Code, and Treasury regulations promulgated thereunder, rulings and judicial decisions as of the date hereof, and such authorities may be repealed, revoked or modified with or without retroactive effect so as to result in United States federal income tax consequences different from those discussed below.

If a partnership (or an entity treated as a partnership for U.S. federal income tax purposes) holds our common stock, the tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Persons who are partners in partnerships holding our common stock should consult their tax advisors.

The authorities on which this summary is based are subject to various interpretations, and any views expressed within this summary are not binding on the Internal Revenue Service (which we also refer to as the IRS) or the courts. No assurance can be given that the IRS or the courts will agree with the tax consequences described in this prospectus.

As used herein, a “Non-U.S. Holder” means a beneficial owner of our common stock that is not any of the following for U.S. federal income tax purposes:

Ÿ a citizen or resident of the United States,

Ÿ a corporation, or other entity treated as a corporation for United States federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia,

Ÿ an estate the income of which is subject to United States federal income taxation regardless of its source, or

Ÿ a trust (i) which is subject to primary supervision by a court situated within the United States and as to which one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

Prospective purchasers are urged to consult their own tax advisors regarding the U.S. federal income tax consequences, as well as other U.S. federal, state, and local income and estate tax consequences, and non-U.S. tax consequences, to them of acquiring, owning, and disposing of our common stock.

Dividends

If we make distributions on our common stock, such distributions paid to a Non-U.S. Holder will generally constitute dividends for U.S. federal income tax purposes to the extent such distributions are paid from our

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current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the Non-U.S. Holder’s investment to the extent of the Non-U.S. Holder’s adjusted tax basis in our common stock. Any remaining excess will be treated as capital gain. See “— Gain on Disposition of Common Stock” for additional information.

Dividends paid to a Non-U.S. Holder generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. A Non-U.S. Holder of common stock who wishes to claim the benefit of an applicable treaty rate for dividends will be required to (a) complete IRS Form W-8BEN (or appropriate substitute form) and certify, under penalty of perjury, that such holder is not a U.S. person and is eligible for the benefits with respect to dividends allowed by such treaty or (b) hold common stock through certain foreign intermediaries and satisfy the certification requirements for treaty benefits of applicable Treasury regulations. Special certification requirements apply to certain Non-U.S. Holders that are “pass-through” entities for U.S. federal income tax purposes. A Non-U.S. Holder eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS.

The United States withholding tax discussed in the preceding paragraph generally will not apply to dividends that are effectively connected with the conduct of a trade or business by the Non-U.S. Holder within the United States, and, if a treaty applies, attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder. Dividends effectively connected with the conduct of a trade or business, as well as those attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder under an applicable treaty, are subject to United States federal income tax generally in the same manner as if the Non-U.S. Holder were a U.S. person, as defined under the Code. Certain IRS certification and disclosure requirements must be complied with in order for effectively connected dividends to be exempt from withholding. Any such effectively connected dividends received by a Non-U.S. Holder that is a foreign corporation may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

Gain on Disposition of Common Stock

A Non-U.S. Holder generally will not be subject to United States federal income tax (or any withholding thereof) with respect to gain recognized on a sale or other disposition of common stock unless:

Ÿ the gain is effectively connected with a trade or business of the Non-U.S. Holder in the United States and, where a tax treaty applies, is attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder,

Ÿ the Non-U.S. Holder is an individual who is present in the United States for 183 or more days during the taxable year of disposition and meets certain other requirements, or

Ÿ we are or have been a “U.S. real property holding corporation” within the meaning of Section 897(c)(2) of the Code, also referred to as a USRPHC, for United States federal income tax purposes at any time within the five-year period preceding the disposition (or, if shorter, the Non-U.S. Holder’s holding period for the common stock).

Gain recognized on the sale or other disposition of common stock and effectively connected with a United States trade or business, or attributable to a United States permanent establishment or fixed base of the Non-U.S. Holder under an applicable treaty, is subject to United States federal income tax on a net income basis generally in the same manner as if the Non-U.S. Holder were a U.S. person, as defined under the Code. Any such effectively connected gain from the sale or disposition of common stock received by a Non-U.S. Holder that is a foreign corporation may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

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An individual Non-U.S. Holder who is present in the United States for 183 or more days during the taxable year of disposition generally will be subject to a 30% tax imposed on the gain derived from the sale or disposition of our common stock, which may be offset by U.S. source capital loses realized in the same taxable year.

In general, a corporation is a USRPHC if the fair market value of its “U.S. real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide (domestic and foreign) real property interest and its other assets used or held for use in a trade or business. For this purpose, real property interests include land, improvements and associated personal property.

We believe that we currently are not a USRPHC. In addition, based on these financial statements and current expectations regarding the value and nature of our assets and other relevant data, we do not anticipate becoming a USRPHC.

If we become a USRPHC, a Non-U.S. Holder nevertheless will not be subject to United States federal income tax if our common stock is regularly traded on an established securities market, within the meaning of applicable Treasury regulations, and the Non-U.S. Holder holds no more than five percent of our outstanding common stock, directly or indirectly, during the applicable testing period. Our common stock has been approved for quotation on the Nasdaq Global Market and we expect that our common stock may be regularly traded on an established securities market in the United States so long as it is so quoted.

Information Reporting and Backup Withholding

We must report annually to the IRS and to each Non-U.S. Holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the information returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the Non-U.S. Holder resides under the provisions of an applicable income tax treaty.

The United States imposes a backup withholding tax on dividends and certain other types of payments to United States persons (currently at a rate of 28%) of the gross amount. Dividends paid to a Non-U.S. Holder will not be subject to backup withholding if proper certification of foreign status (usually on an IRS Form W-8BEN) is provided, and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person, or the holder is a corporation or one of several types of entities and organizations that qualify for exemption, also referred to as an exempt recipient.

Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against such holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.

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UNDERWRITING

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. are acting as representatives, have severally agreed to purchase, and we and the selling stockholders have agreed to sell to them, severally, the number of shares indicated below:

Name	Number of Shares
Morgan Stanley & Co. Incorporated
J.P. Morgan Securities Inc.
Jefferies & Company
Piper Jaffray & Co.
William Blair & Company, L.L.C.
Total	8,000,000

The underwriters and the representatives are collectively referred to as the “underwriters” and the “representatives,” respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.

The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representative.

The selling stockholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to 1,200,000 additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

The following table shows the per share and total public offering price, underwriting discounts and commissions to be paid by us and the selling stockholders, and proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional 1,200,000 shares of common stock.

	Per Share	No Exercise	Full Exercise
Public offering price	$	$	$
Underwriting discounts and commissions to be paid by:
Us
The selling stockholders
Proceeds, before expenses, to us
Proceeds, before expenses, to the selling stockholders

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The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $580,000.

The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

Our common stock is listed on the Nasdaq Global Market under the symbol “INWK.”

We, all directors and officers and certain of our stockholders and option holders have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, we and they will not, during the period ending 90 days after the date of this prospectus:

Ÿ offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock;

Ÿ file any registration statement with the Securities and Exchange Commission relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or

Ÿ enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock;

whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, we and each such person agrees that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the underwriters, it will not, during the period ending 90 days after the date of this prospectus, make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.

The restrictions described in the immediately preceding paragraph do not apply to:

Ÿ the sale of shares to the underwriters;

Ÿ the grant of options or the issuance of shares of common stock pursuant to any employee benefit plan described in this prospectus;

Ÿ the filing with the Securities and Exchange Commission of any registration statement on Form S-8 in respect of any employee benefit plan described in this prospectus;

Ÿ transactions by a selling stockholder relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares;

Ÿ the offer or sale of, or transfer to its partners, who may then offer or sell, up to 850,000 shares of common stock owned by New Enterprise Associates 11, Limited Partnership to its limited partners (which may then offer or sell such shares) 45 days after the date of this prospectus;

Ÿ transfers of shares of common stock or any security convertible, exchangeable or exercisable into common stock as a bona fide gift;

Ÿ transfers of shares of common stock to any trust, partnership, limited liability company or other entity for the direct or indirect benefit of the signer or the immediate family of the signer;

Ÿ transfers of shares of common stock to any beneficiary of the signer pursuant to a will or other testamentary document or applicable laws of descent;

Ÿ transfers of shares of common stock or any securities convertible into or exercisable or exchangeable for common stock to the company;

Ÿ distributions of shares of common stock or any security convertible, exchangeable or exercisable into common stock to limited partners or stockholders of the signer; or

91

Ÿ transfers of shares of common stock to any wholly-owned subsidiary of the signer or to the parent corporation of the signer or any wholly-owned subsidiary of the signer or to the parent corporation of the signer or any wholly-owned subsidiary of such parent corporation;

provided that in the case of any of the last seven bullets, (i) each donee distributee or transferee shall sign and deliver a lock-up agreement and (ii) no filing under Section 16(a) of the Exchange Act, reporting a reduction in beneficial ownership of shares of common stock, shall be required or shall be voluntarily made in connection with such transfer or distribution during the 90 day period (including extensions).

The 90 day restricted period described in the preceding paragraph (and the 45 day restricted period with respect to 850,000 shares of common stock held by New Enterprise Associates 11, Limited Partnership) will be extended if:

Ÿ during the last 17 days of such restricted period we issue an earnings release or material news or a material event relating to us occurs, or

Ÿ prior to the expiration of such restricted period, we announce that we will release earnings results during the 16 day period beginning on the last day of such restricted period,

in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18 day period beginning on the issuance of the earnings release or the occurrence of material news or a material event.

In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representative may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters that may make Internet distributions on the same basis as other allocations.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Member State it has not made and will not make an offer of shares to

92

the public in that Member State, except that it may, with effect from and including such date, make an offer of shares to the public in that Member State:

(a) at any time to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(b) at any time to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or

(c) at any time in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of the above, the expression an “offer of shares to the public” in relation to any shares in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in that Member State.

United Kingdom

Each underwriter has represented and agreed that it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of the shares in circumstances in which Section 21(1) of such Act does not apply to us and it has complied and will comply with all applicable provisions of such Act with respect to anything done by it in relation to any shares in, from or otherwise involving the United Kingdom.

Other Relationships

Most of the underwriters acted as underwriters in the initial public offering of our common stock. Certain of the underwriters or their affiliates may provide in the future financial advisory services to us in the ordinary course of business, for which they may receive customary fees and commissions. JPMorgan Chase Bank, N.A., an affiliate of J.P. Morgan Securities Inc., is the provider of our line of credit. See “Management Discussion and Analysis—Liquidity and Capital Resources.”

93

LEGAL MATTERS

The validity of the common stock offered hereby has been passed upon for us by Winston & Strawn LLP, Chicago, Illinois. Certain legal matters with respect to this offering have been passed upon for the underwriters by Sidley Austin LLP, Chicago, Illinois.

EXPERTS

The consolidated financial statements of InnerWorkings, LLC at December 31, 2004 and 2005, and for each of the three years in the period ended December 31, 2005, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. The financial statements of Graphography Limited LLC at December 31, 2005 and for the year then ended, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing. The financial statements of Applied Graphics, Inc. at October 31, 2005 and for the year ended appearing in this Prospectus and Registration Statement have been audited by Smith, Lange & Phillips LLP, an independent auditor, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have filed with the Securities and Exchange Commission a registration statement on Form S-1, including exhibits, schedules and any amendments with respect to the common stock we are offering hereby. This prospectus is a part of the registration statement and includes all of the information which we believe is material to you in considering whether to make an investment in our common stock. We refer you to the registration statement for additional information about us, our common stock and this offering, including the full texts of the exhibits, some of which have been summarized in this prospectus. With respect to each such contract or other document filed as a part of the registration statement, reference is made to the exhibit for a more complete description of the matters involved, and each such statement shall be deemed qualified in its entirety by such reference. The registration statement is available for inspection and copying at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site that makes available the registration statement. The address of the SEC’s Internet site is http://www.sec.gov. As a result of this offering, we will be required to file reports and other information with the Securities and Exchange Commission pursuant to the informational requirements of the Securities Exchange Act of 1934.

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission. You may read and copy all or any portion of the registration statement or any other information we file at the Securities and Exchange Commission’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You can request copies of these documents, upon payment of a duplicating fee, by writing to the Securities and Exchange Commission. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information about the operation of the public reference room. Our filings, including the registration statement, are also available to the public from commercial document retrieval services and at the Securities and Exchange Commission’s web site at (http://www.sec.gov).

94

InnerWorkings, LLC

Consolidated Financial Statements

Years Ended December 31, 2003, 2004, and 2005

Contents

Report of Independent Registered Public Accounting Firm	F-3
Consolidated Financial Statements
Consolidated Balance Sheets	F-4
Consolidated Statements of Operations	F-5
Consolidated Statements of Members’ Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

InnerWorkings, Inc.

Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2005 and 2006—unaudited

Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets	F-22
Condensed Consolidated Statements of Operations	F-24
Condensed Consolidated Statements of Cash Flows	F-25
Notes to Condensed Consolidated Financial Statements	F-26

Graphography Limited LLC

Financial Statements

Year Ended December 31, 2005

Contents

Report of Independent Auditors	F-36
Consolidated Financial Statements
Consolidated Balance Sheet	F-37
Consolidated Statement of Operations	F-38
Consolidated Statement of Members’ Equity	F-39
Consolidated Statement of Cash Flows	F-40
Notes to Financial Statements	F-41

Graphography Limited LLC

Financial Statements

Three Months Ended March 31, 2005 and 2006—unaudited

Consolidated Financial Statements
Consolidated Balance Sheets	F-44
Consolidated Statements of Operations	F-45
Consolidated Statements of Cash Flows	F-46
Notes to Financial Statements	F-47

F-1

Applied Graphics, Inc.

Financial Statements

Year Ended October 31, 2005

Contents

Report of Independent Auditors	F-48
Financial Statements
Balance Sheet	F-49
Statement of Operations	F-50
Statement of Stockholders’ Equity	F-51
Statement of Cash Flows	F-52
Notes to Financial Statements	F-53

Applied Graphics, Inc.

Financial Statements

Nine Months Ended July 31, 2005 and 2006—unaudited

Contents

Financial Statements
Balance Sheets	F-57
Statements of Operations	F-58
Statements of Cash Flows	F-59
Notes to Financial Statements	F-60

InnerWorkings, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Statements

Unaudited Pro Forma Condensed Consolidated Financial Statements	F-63
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2006	F-65
Unaudited Pro Forma Condensed Consolidated Income Statement for the Year Ended December 31, 2005	F-66
Unaudited Pro Forma Condensed Consolidated Income Statement for the Nine Months Ended September 30, 2006	F-67
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements	F-68

F-2

Report of Independent Registered Public Accounting Firm

The Members

InnerWorkings, LLC

We have audited the accompanying consolidated balance sheets of InnerWorkings, LLC as of December 31, 2004 and 2005, and the related consolidated statements of operations, members’ equity, and cash flows for each of the three years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of InnerWorkings, LLC as of December 31, 2004 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December, 31, 2005, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Chicago, Illinois

March 15, 2006

F-3

I nnerWorkings, LLC

Consolidated Balance Sheets

	December 31,
	2004			2005
Assets
Current assets:
Cash and cash equivalents	$	1,475,791		$	2,962,740
Accounts receivable, net of allowance for doubtful accounts of $173,839 in 2005 and $153,693 in 2004		9,878,792			14,520,055
Unbilled revenue		894,595			1,974,920
Prepaid expenses		659,615			2,612,752
Advances to related parties		173,348			124,534
Other current assets		47,677			1,486,407
Total current assets		13,129,818			23,681,408
Property and equipment, net		448,034			1,538,794
Intangibles and other assets:
Goodwill		234,500			352,954
Intangible assets, net of accumulated amortization of $236,711 in 2005 and $98,351 in 2004		790,149			930,774
Deposits		57,757			12,176
Investment		—			125,000
Other assets		53,139			43,559
		1,135,545			1,464,463
Total assets	$	14,713,397		$	26,684,665
Liabilities and members’ equity
Current liabilities:
Accounts payable—trade	$	8,609,120		$	13,488,237
Distribution payable		—			2,987,000
Outstanding line of credit		678,154			2,923,511
Current maturities of capital lease obligations		52,972			109,185
Customer deposits		240,840			284,407
Other liabilities		—			51,697
Accrued expenses		81,443			297,310
Total current liabilities		9,662,529			20,141,347
Capital lease obligations, less current maturities		75,175			283,645
Commitments and contingencies		—			—
Mandatorily redeemable preferred stock—Class D		2,021,774			—
Total liabilities		11,759,478			20,424,992
Class D, convertible redeemable preferred shares, $3.125 par value, 1,600,000 shares authorized, 1,600,000 shares issued and outstanding; liquidation preference of $5,007,525		—			5,007,525
Class C, convertible redeemable preferred shares, $1.00 par value, 2,580,000 shares authorized at December 31, 2004 and December 31, 2005; 2,580,000 issued and outstanding at 2004; liquidation preference of $2,862,853 at 2004		2,862,853			—
Members’ equity:
Class B, convertible preferred shares, $.80 par value, 937,500 shares authorized, 937,500 shares issued and outstanding; liquidation preference of $1,500,000		750,000			770,625
Class A, common shares, $0 par value, 31,926,375 shares authorized, 29,521,375 and 31,926,375 shares issued and outstanding, respectively		528,591			2,635,091
Member receivable		(188,469	)		(188,469	)
Additional paid-in capital		—			46,500
Accumulated deficit		(999,056	)		(2,011,599	)
Total members’ equity		91,066			1,252,148
Total liabilities and members’ equity	$	14,713,397		$	26,684,665

See accompanying notes to consolidated financial statements.

F-4

InnerWorkings, LLC

Consolidated Statements of Operations

	Years Ended December 31,
	2003			2004			2005
Revenue	$	16,228,456		$	38,883,542		$	76,869,586
Cost of goods sold (exclusive of depreciation and amortization)		12,487,388			30,482,928			61,271,453
Gross profit		3,741,068			8,400,614			15,598,133
Operating expenses:
Selling, general, and administrative expenses		2,959,352			6,105,317			10,605,248
Depreciation and amortization		17,713			223,027			387,911
Income from operations		764,003			2,072,270			4,604,974
Other income (expense):
Interest income		2,785			9,222			78,627
Interest expense		(88,555	)		(131,551	)		(98,128	)
Minority interest		(7,618	)		(191,837	)		58,244
Other, net		—			(1,294	)		(9,580	)
Total other income (expense)		(93,388	)		(315,460	)		29,163
Net income		670,615			1,756,810			4,634,137
Dividends on preferred shares		(176,029	)		(462,000	)		(761,825	)
Net income applicable to common shareholders	$	494,586		$	1,294,810		$	3,872,312
Basic earnings per share	$	0.02		$	0.04		$	0.12
Diluted earnings per share	$	0.02		$	0.04		$	0.12
Pro forma basic earnings (loss) per share (Note 9)	$	0.01		$	0.02		$	0.08
Pro forma diluted earnings (loss) per share (Note 9)	$	0.01		$	0.02		$	0.08

See accompanying notes to consolidated financial statements.

F-5

InnerWorkings, LLC

Consolidated Statements of Members’ Equity

	Common A					Class B Preferred			Member Receivable			Additional Paid-In Capital		Retained Earnings (Deficit)
	Shares		Amount			Shares	Amount										Total
Balance at January 1, 2003	15,384,375		$	327,091		937,500	$	750,000	$	(188,469	)	$	—	$	(322,565	)	$	566,057
Net income	—			—		—		—		—			—		670,615			670,615
Shares issued	13,969,000			—		—		—		—			—		—			—
Preferred Series C dividends	—			—		—		—		—			—		(108,529	)		(108,529	)
Distributions on Common A	—			—		—		—		—			—		(740,267	)		(740,267	)
Preferred Series B dividends	—			—		—		—		—			—		(67,500	)		(67,500	)
Balance at December 31, 2003	29,353,375			327,091		937,500		750,000		(188,469	)		—		(568,246	)		320,376
Net income	—			—		—		—		—			—		1,756,810			1,756,810
Shares issued	2,568,000			835,500		—		—		—			—		(634,000	)		201,500
Shares repurchased	(2,400,000	)		(634,000	)	—		—		—			—		—			(634,000	)
Preferred Series C dividends	—			—		—		—		—			—		(387,000	)		(387,000	)
Distributions on Common A	—			—		—		—		—			—		(1,091,620	)		(1,091,620	)
Preferred Series B dividends	—			—		—		—		—			—		(75,000	)		(75,000	)
Balance at December 31, 2004	29,521,375			528,591		937,500		750,000		(188,469	)		—		(999,056	)		91,066
Net income	—			—		—		—		—			—		4,634,137			4,634,137
Shares issued	200,000			160,000		—		—		—			—		—			160,000
Shares granted – expensed	175,000			87,500		—		—		—			—		—			87,500
Shares issued in connection with preferred Series D investment	450,000			279,000		—		—		—			—		—			279,000
Shares issued upon conversion of preferred Series C	1,580,000			1,580,000		—		—		—			—		—			1,580,000
Options issued in connection with Insight purchase	—			—		—		—		—			46,500		—			46,500
Preferred Series D dividends (since February 2005 amendment)	—			—		—		—		—			—		(526,667	)		(526,667	)
Preferred Series D accretion	—			—		—		—		—			—		(69,751	)		(69,751	)
Preferred Series C dividends	—			—		—		—		—			—		(135,783	)		(135,783	)
Distributions on Common A	—			—		—		—		—			—		(4,815,104	)		(4,815,104	)
Preferred Series B dividends	—			—		—		20,625		—			—		(99,375	)		(78,750	)
Balance at December 31, 2005	31,926,375		$	2,635,091		937,500	$	770,625	$	(188,469	)	$	46,500	$	(2,011,599	)	$	1,252,148

See accompanying notes to consolidated financial statements.

F-6

InnerWorkings, LLC

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2003			2004			2005
Operating activities
Net income	$	670,615		$	1,756,810		$	4,634,137
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Minority interest		7,618			191,837			(58,244	)
Noncash stock compensation expense								87,500
Depreciation and amortization		17,713			223,027			387,911
Bad debt provision		125,022			148,616			176,392
Deferred financing amortization		—			—			9,580
Change in assets:
Accounts receivable		(2,922,835	)		(6,460,798	)		(4,817,655	)
Unbilled revenue		(502,815	)		(304,512	)		(1,080,325	)
Prepaid expenses and other		(616,591	)		(77,783	)		(3,346,286	)
Change in liabilities:
Accounts payable		2,207,179			5,371,898			4,879,117
Customer deposits		110,703			130,136			43,568
Accrued expenses and other		206,071			(124,628	)		51,148
Net cash provided by (used in) operating activities		(697,320	)		854,603			966,843
Investing activities
Purchases of property and equipment		(70,388	)		(309,834	)		(1,005,447	)
Investment in Echo		—			—			(125,000	)
Purchase of customer list		—			—			(37,500	)
Purchase of Ocular		—			(681,225	)		—
Net cash used in investing activities		(70,388	)		(991,059	)		(1,167,947	)
Financing activities
Net borrowings (repayments) of note payable, bank		(84,202	)		678,154			2,245,357
Payment of deferred financing fees		—			(30,339	)		—
Principal payments on capital lease obligations		—			(45,031	)		(58,908	)
Advances to related parties		(28,000	)		(344,803	)		(208,189	)
Payments of distributions		(740,265	)		(1,458,347	)		(1,611,690	)
Payment of dividends on preferred shares		(125,376	)		(229,800	)		(838,517	)
Issuance of shares		2,460,000			2,300,000			2,160,000
Payments for share repurchase		—			(224,000	)		—
Net cash provided by financing activities		1,482,157			645,834			1,688,053
Increase in cash and cash equivalents		714,449			509,378			1,486,949
Cash and cash equivalents, beginning of year		251,964			966,413			1,475,791
Cash and cash equivalents, end of year	$	966,413		$	1,475,791		$	2,962,740
Supplemental disclosure of cash flow information
Cash paid during the year for interest	$	88,555		$	27,277		$	71,300
Noncash investing activity
Settlement of accounts receivable as part of Ocular acquisition	$	—		$	441,775		$	—
Settlement of advances to related parties as part of acquisition	$	—		$	—		$	313,438
Issuance of options in connection with Insight acquisition	$	—		$	—		$	46,500
Purchase of furniture and equipment with capital lease	$	—		$	173,178		$	323,591
Noncash financing activity
Share repurchase in exchange for reduction in prepaid commission	$	—		$	410,000		$	—

See accompanying notes to consolidated financial statements.

F-7

InnerWorkings, LLC

Notes to Consolidated Financial Statements

December 31, 2003, 2004, and 2005

1. Description of the Business

InnerWorkings, LLC (IW or the Company) is majority owned by Incorp, LLC. The Company is a leading provider of print procurement services to large and middle market companies in the United States. The Company’s services range from procuring, purchasing and delivering print products in individual transactions through a competitive bid process to offering comprehensive outsourced enterprise solutions.

In January 2003, the Company acquired all outstanding member units of Insight, LLC (Insight) from its controlling member. Subsequent to the acquisition, certain intangible assets of Express Productions, Inc. (see Note 7) were acquired by Insight in exchange for a 49% ownership interest resulting from recently issued member units of Insight. In March 2005, the Company purchased the remaining 49% interest in Insight in exchange for 150,000 options to purchase Class A common nonvoting units in IW at an exercise price of $.50 per unit. The consolidated financial statements include the results of Insight from the date of acquisition.

The Company is organized pursuant to the Delaware Limited Liability Company Act, which limits the liability of the individual members. The term of existence began with the filing of the Certificate of Formation with the Delaware Secretary of State and continues indefinitely.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of IW and its subsidiary, Insight. All significant intercompany accounts and transactions have been eliminated in the consolidation.

Pro Forma Earnings Per Share

Except as noted below, pro forma earnings per share is calculated by dividing the pro forma net income by weighted average number of common shares outstanding. The shares used in computing pro forma earnings per share have been adjusted to reflect 777,778 shares assumed to have been issued resulting in proceeds sufficient to pay for the preferential distribution and for the conversion of the preferred shares to Class A common shares. In addition, the pro forma earnings per share have been adjusted to reflect 276,683 shares assumed to have been issued to liquidate the outstanding debt as of the offering date.

Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when the product is shipped from a third party to the customer, which is when title transfers. Unbilled revenue relates to shipments that have been made to customers for which the related account receivable has not yet been billed.

F-8

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

In accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, we recognize revenue on a gross basis, as opposed to a net basis similar to a commission arrangement, because we bear the risks and benefits associated with revenue-generated activities by: (1) acting as a principal in the transaction; (2) establishing prices; (3) being responsible for fulfillment of the order; (4) taking the risk of loss for collection, delivery and returns; and (5) marketing our products, among other things.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms. Invoices require payment within 30 to 60 days from the invoice date. Accounts receivable are stated at the amount billed to the customer. Customer account balances with invoices dated over 90 days old are considered delinquent. Interest is not accrued on outstanding balances.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances and, based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Fully reserved receivables are reviewed on a monthly basis and uncollectible accounts are written off when all reasonable collection efforts have been exhausted.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. The estimated useful lives, by asset class, are as follows:

Computer equipment and software	3 years
Furniture and fixtures	5 years

Goodwill and Other Intangibles

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized, but instead is tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. The Company evaluates the recoverability of goodwill using a two-step impairment test. For goodwill impairment review purposes, the Company has one reporting unit. In the first step, the fair value for the Company is compared to its book value including goodwill. In the case that the fair value is less than the book value, a second step is performed which compares the implied fair value of goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values and the net fair values of the identifiable assets and liabilities. If the implied fair value of the goodwill is less than the book value, the difference is recognized as an impairment.

SFAS No. 142 also requires that intangible assets with finite lives be amortized over their respective estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company’s intangible assets consist of customer lists and noncompete agreements, which are being amortized on the straight-line basis over their estimated useful lives of ten years and five years, respectively.

F-9

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

Following is a summary of the intangible assets as of December 31:

	2004			2005			Weighted- Average Life
Customer lists	$	646,500		$	925,485		9.7 years
Noncompete agreement		242,000			242,000		5 years
		888,500			1,167,485
Less accumulated amortization		(98,351	)		(236,711	)
Intangible assets, net	$	790,149		$	930,774

Amortization expense related to these intangible assets was $98,351 and $138,360 for the years ended December 31, 2004 and 2005, respectively.

The estimated amortization expense for the next five years is as follows:

2006	$	155,949
2007		137,199
2008		137,199
2009		100,899
2010		88,799
Thereafter		310,729
	$	930,774

Shipping and Handling Costs

Shipping and handling costs are classified in cost of sales in the consolidated statements of operations.

Investment

Investment consists of an investment in an affiliated company that IW does not control and does not have the ability to exercise significant influence over such affiliated companies’ operations and financial policies. This investment is accounted for using the cost method.

Income Taxes

Through December 31, 2005, IW and its subsidiary are treated as partnerships for federal income tax purposes. Federal taxes are not payable by or provided for the companies. Members are taxed individually on their share of each of the Company’s earnings.

On January 3, 2006, as discussed in Note 18, IW converted from an LLC to a “C” corporation. In connection with this conversion, the Company will account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes (SFAS No. 109), under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. A valuation allowance is established to reduce the carrying value of deferred tax assets if it is considered more likely than not that such assets will not be realized. Any change in the valuation allowance would be charged to income in the period such determination was made. For informational purposes, the pro forma earnings per share include a pro forma adjustment for income taxes that would have been recorded if the Company was a “C” corporation, calculated in accordance with SFAS No. 109.

F-10

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

Advertising

Costs of advertising, which are expensed as incurred by the Company, were $49,807, $31,770, and $81,298 for each of the years ended December 31, 2003, 2004, and 2005, respectively.

Stock-Based Compensation

The Company accounts for stock-based employee compensation arrangements in accordance with provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and complies with the disclosure requirements of Financial Accounting Standards Board (FASB) No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure—An Amendment of FASB Statement No. 123. Under APB No. 25, compensation expense is based on the difference, if any, on the grant date between the estimated fair value of the Company’s stock and the exercise price of options to purchase that stock. The compensation expense is then amortized over the vesting period of the stock options.

To value option grants in accordance with SFAS No. 123, the Company used the minimum value method. Net income on a pro forma basis, if compensation expense for employee option-based awards were determined using the minimum value method, is as follows:

	Years Ended December 31,
	2004		2005
Net income, as reported	$	1,756,810	$	4,634,137
Pro forma adjustment – net of tax:
Stock-based compensation, included in net income		—		87,500
Minimum value compensation expense		—		(158,160	)
Pro forma net income	$	1,756,810	$	4,563,477
Net income per share, as reported:
Basic	$	0.04	$	0.12
Diluted	$	0.04	$	0.12
Pro forma net income per share:
Basic	$	0.04	$	0.12
Diluted	$	0.04	$	0.12

To value option grants in accordance with SFAS No. 123, the Company used the minimum value method. The minimum values of the options issued were immaterial. The following assumptions were utilized in the valuation for options granted:

Dividend yield	—%
Risk-free interest rate	3.2%-4.5%
Expected life	3 years

F-11

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

3. Property and Equipment

Property and equipment at December 31, 2004 and 2005, consisted of the following:

	2004		2005
Computer equipment	$	115,933	$	354,915
Software		220,807		805,940
Furniture and fixtures		206,068		710,992
		542,808		1,871,847
Less accumulated depreciation		94,774		333,053
	$	448,034	$	1,538,794

Internal Use Software

The Company has adopted the provisions of AICPA Statement of Position (SOP) 98-1, Accounting for the Costs of Software Developed or Obtained for Internal Use. Accordingly, certain costs incurred in the planning and evaluation stage of internal use computer software are expensed as incurred. Costs incurred during the application development stage are capitalized and included in property and equiptment. Capitalized internal use software costs are amortized over the expected economic life of three to five years using the straight-line method. The total amortization expense for the years ended December 31, 2004 and 2005, was $32,798 and $110,053, respectively. At December 31, 2004 and 2005, unamortized internal use software costs were $196,838 and $671,917, respectively.

4. Notes Payable, Bank

During 2005, the Company entered into a $10,000,000 line of credit with a bank that matures on June 30, 2006. Outstanding borrowings are limited to 80% of eligible accounts receivable, as defined in the agreement. Outstanding borrowings under the line of credit were $2,923,511 at December 31, 2005. Interest is payable monthly at the prime rate (7.25% at December 31, 2005). The note is collateralized by substantially all of the Company’s assets. The Company is required to comply with certain nonfinancial covenants.

5. Distribution Payable

On December 31, 2005, the Company converted from a cash basis tax payer to an accrual basis tax payer. As a result, each owner of the Company owes taxes on the net income generated as a result of the conversion. The Company has decided to distribute funds to reimburse each owner for their portion of the tax liability created from the conversion to an accrual basis tax payer. The total amount to be distributed to the owners as of December 31, 2005, is $2,987,000. The distribution to each owner will occur in the second quarter of 2006.

6. Commitments and Contingencies

Lease Commitments

During 2004 and 2005, the Company entered into various capital leases for furniture and fixtures that may be purchased for a nominal amount upon expiration of the leases at various dates through November 2010. Monthly payments range from $580 to $6,516. The cost and accumulated depreciation of the capital leases included in furniture and fixtures at December 31, 2005, was $491,779 and $47,818, respectively. Amortization of the related assets is included in depreciation and amortization in the accompanying statements of operations.

In December 2003 (as amended in June 2005), the Company entered into an operating lease agreement for a new facility. The lease agreement expires December 31, 2015, and requires escalating base monthly rental

F-12

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

payments ranging from $16,436 to $80,136, plus an additional monthly rental payment for real estate taxes and common area maintenance fees related to the building.

The Company assumed various operating leases for office space and equipment in connection with the acquisition of Ocular Group, LLC (see Note 8). The lease agreements expire at various dates through November 2006, and require escalating base monthly rental payments ranging from $4,706 to $6,249, plus an additional monthly rental payment for common area maintenance fees.

Total rent expense for the years ended December 31, 2003, 2004, and 2005 was $100,813, $307,305, and $360,627, respectively.

Minimum annual rental payments are as follows:

	Capital Leases		Operating Leases
2006	$	131,003	$	544,785
2007		88,410		598,233
2008		85,156		790,797
2009		85,156		856,268
2010		74,938		874,076
Thereafter		—		4,555,880
Total minimum lease payments		464,663	$	8,220,039
Less amounts representing interest		71,833
	$	392,830

7. Insight, LLC

In January 2003, the Company acquired a 100% ownership interest in Insight, LLC, a start-up entity with no net assets, liabilities, or historical operating results, from the Company’s majority holder in exchange for 13,000,000 Class A units of IW. Insight allowed the Company to gain access to a new business market and build relationships with very large strategic customers. Subsequently, in October 2003, Insight commenced operations by acquiring certain customer relationships from Express Productions, Inc. in exchange for the issuance of 4,900,000 Class A units of Insight (a 49% interest). Insight also assumed approximately $124,000 of customer deposit obligations in exchange for a note receivable from the shareholders of Express Productions, Inc. As a result of this transaction, the ownership in Insight was reduced to 51%. In March 2005, the Company purchased the remaining 49% interest in Insight in exchange for 150,000 options to purchase Class A common nonvoting units in IW at an exercise price of $.50 per unit (estimated fair value of $.37 per unit) and the forgiveness of advances to minority holders of approximately $313,000. As a result of this acquisition, IW recorded a customer list valued at $241,485 and goodwill of $118,454. The results of operations of Insight have been included in the consolidated financials statements for 2003, 2004, and 2005, with a corresponding minority interest expense for the periods prior to March 2005.

8. Business Combination

Ocular Group, LLC

On April 6, 2004, IW acquired certain assets and assumed certain obligations of Ocular Group, LLC. (Ocular), a company which sold promotional products and print-related services manufactured or produced by third parties. Ocular allowed the Company to gain access to a new business market and build relationships with very strategic customers. The results of Ocular’s operations have been included in the consolidated financial statements since the date of acquisition.

F-13

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

The aggregate purchase price of the acquisition was $1,123,000. At the time of acquisition, the Company had trade receivables from Ocular of $441,775, and as a result, the Company paid in cash the net amount of $681,225, including $42,000 in direct costs related to the acquisition. The Company also assumed certain contractual operating lease obligations.

The following table summarizes the estimated fair values of the assets acquired at the date of the acquisition:

Customer list	$	646,500
Noncompete agreement		242,000
Goodwill		234,500
Net assets acquired	$	1,123,000

9. Earnings (Loss) Per Share

Basic earnings per common share is calculated by dividing net income available to common shareholders by weighted average number of common shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted average shares outstanding plus share equivalents that would arise from the exercise of share options and the conversion of preferred shares. Conversion of 3,397,500 Series B and C preferred shares were excluded from the calculation in 2003, 4,157,500 of Series B, C and D preferred shares were excluded from the calculation in 2004 and 1,600,000 of Series D preferred shares were excluded from the calculation in 2005, as they were anti-dilutive.

The computation of basic and diluted earnings (loss) per common share for the years ended December 31, 2003, 2004, and 2005, is as follows:

	Years Ended December 31,
	2003			2004			2005
Numerator:
Net income	$	670,615		$	1,756,810		$	4,634,137
Preferred stock dividends		(176,029	)		(462,000	)		(761,825	)
Numerator for basic earnings per share		494,586			1,294,810			3,872,312
Effect of dilutive securities:
Preferred stock dividends		—			—			78,750
		—			—			78,750
Numerator for diluted earnings per share	$	494,586		$	1,294,810		$	3,951,062
Denominator:
Denominator for basic earnings per share – weighted-average shares		26,138,638			29,448,772			31,009,580
Effect of dilutive securities:
Convertible preferred shares		—			—			937,500
Employee stock options		—			—			760,212
Dilutive potential common shares		—			—			1,697,712
Denominator for dilutive earnings per share		26,138,638			29,448,772			32,707,292
Basic earnings per share	$	0.02		$	0.04		$	0.12
Diluted earnings per share	$	0.02		$	0.04		$	0.12

F-14

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

Pro Forma Earnings Per Share

Pro forma earnings per share has been adjusted for the preferred stock dividends declared in 2005. The $761,825 in preferred stock dividends have been added back to net income, assuming the conversion of all preferred shares occurred at the beginning of 2005.

	Years Ended December 31,
	2003			2004			2005
Numerator:
Historical net income applicable to common shareholders	$	494,586		$	1,294,810		$	3,872,312
Effect of pro forma adjustments:
Provision for income taxes		(261,540	)		(685,156	)		(1,807,313	)
Preferred stock dividends		—			—			761,825
Interest expense on line of credit, net of tax		—			—			59,858
		(261,540	)		(685,156	)		(985,630	)
Pro forma numerator for basic and diluted earnings per share	$	233,046		$	609,654		$	2,886,682
Denominator:
Historical denominator for basic earnings (loss) per share – weighted-average shares		26,138,638			29,448,772			31,009,580
Effect of pro forma adjustments:
Preferential distribution		—			—			777,778
Conversion of preferred to common shares		—			—			2,537,500
Liquidation of debt		—			—			276,683
Denominator for pro forma basic earnings per share		26,138,638			29,448,772			34,601,541
Effect of dilutive securities:
Employee stock options		—			—			760,212
Denominator for pro forma diluted earnings per share		26,138,638			29,448,772			35,361,753
Pro forma basic earnings per share	$	0.01		$	0.02		$	0.08
Pro forma diluted earnings per share	$	0.01		$	0.02		$	0.08

The pro forma earnings per share computation does not include 5,943,513 of incremental shares to be issued in connection with the completion of the Company’s initial public offering.

F-15

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

10. Unit Option Plan

In January 2004, the Company adopted the 2004 Unit Option Plan (the Plan) covering 4,323,500 shares of Class A common stock. Under the Plan, the Company may issue options, at the discretion of the Board, to purchase Class A nonvoting member units. The Plan is administered by the Board of Managers who determines the exercise price of options, number of units to be issued, and the vesting period. As specified in the Plan, the exercise price per share to be issued shall not be less than the fair market value on the effective date of grant. The term of an option shall not exceed ten years, and the options generally vest ratably over four years from the date of grant. A summary of stock option activity is as follows:

	Years Ended December 31,
	2004					2005
	Number of Shares	Weighted- Average Exercise Price		Fair Value Share Price		Number of Shares	Weighted- Average Exercise Price		Fair Value Share Price
Options outstanding at beginning of period	—	$	—	$	—	2,985,000	$	0.50	$	—
Granted	2,985,000		0.5		0.43	1,338,500		0.67		0.43-0.65
Exercised	—		—		—	—		—		—
Forfeited	—		—		—	—		—		—
Options outstanding at end of period	2,985,000		0.5		—	4,323,500		0.55		—
Options exercisable at end of period	585,000		0.5		—	1,493,500		0.56		—
Weighted-average minimum value of options granted during the period	—		—		—	—		0.11		—

As of December 31, 2005, there were 4,323,500 options issued pursuant to the Plan. These options have exercise prices ranging from $0.50 to $1.00, vest ratably over four years and have a weighted-average remaining contractual life of nine years. At December 31, 2005, 1,493,500 shares were vested.

The fair value of the Company’s common stock for options granted during 2005 was estimated by its management. The Company did not obtain contemporaneous valuations by an independent valuation specialist during this period. In August 2005, the Company engaged an independent valuation specialist to perform a retrospective valuation of its common stock as of November 30, 2004. The independent specialist arrived at a fair value using the income approach and determined the fair value of the Company’s common stock to be $0.43 per share. The Company applied the independent specialist’s methodology and determined the fair value of its common stock to be $0.65 per share as of June 30, 2005 and as of September 30, 2005. The Company accounted for stock-based compensation during this period in accordance with APB Opinion No. 25. The exercise price of all of the options that the Company granted during this period was at or above fair market value. As a result, there was no intrinsic value associated with these option grants. Pursuant to APB Opinion No. 25, the Company was not required to record any compensation expense in connection with these option grants.

To value option grants in accordance with SFAS No. 123, the Company used the minimum value method. The minimum values of the options issued in 2004 were immaterial. The following assumptions were utilized in the valuation for options granted:

Dividend yield	—%
Risk-free interest rate	3.2%-4.5%
Expected life	3 years

F-16

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

11. Redeemable Preferred Shares and Members’ Equity

Class A Common Stock

The Company has authorized 31,926,375 common shares, of which 29,521,375 and 31,926,375 shares were issued and outstanding at December 31, 2004 and 2005, respectively. In February 2004, the Company repurchased 2,400,000 Class A voting shares for $634,000.

Preferred Shares

The Company has authorized 937,500 Class B preferred shares, all of which were issued and outstanding at December 31, 2004 and 2005. As of December 31, 2004 and 2005, the Company had a receivable of $188,469 for proceeds to be received for the issuance of Class B shares. Class B preferred shares are entitled to receive a distribution preference over Class A shares at a rate of $.064 per Class B preferred in the first year and increasing $.08 per year to a maximum of $.096 per year, as defined in the agreement, which are payable quarterly in advance beginning on the date of issuance. Class B preferred shares are also entitled to a liquidation preference over the Class A common shares at a rate of $1.60 per Class B preferred share. Class B preferred shares are convertible at the option of each Class B preferred share in such a number of Class A voting common shares as is determined by dividing $.80 by the Class B conversion price, as defined in the agreement. The Class B conversion price shall initially be $.80, and then adjusted, as defined in the agreement. The Class B preferred shares shall also be automatically converted upon the consent of the majority of the outstanding Class B preferred shareholders or upon the filing of a registration statement on Form S-1 under the Securities Act of 1933, as defined in the agreement.

Class C Preferred Shares

The Company had authorized 2,580,000 Class C preferred shares, of which 2,580,000 were issued and outstanding at December 31, 2004. The Class C preferred shares were entitled to receive preferential cumulative distributions payable in arrears on a quarterly basis at an annual rate of $.08 per unit, beginning subsequent to June 2003. No Class A or Class B holders would have been paid until all Class C distributions were satisfied. The Class C preferred shares also received a liquidation preference of $1.00 per Class C preferred share before any Class B or Class A members may have received any liquidation payments. Class C preferred shares were convertible automatically into shares of Class A voting common shares upon the consent of the majority of the outstanding Class C preferred shareholders or upon the filing of a registration on Form S-1 under the Securities Act of 1933, as defined in the agreement. The number of Class C preferred shares converted would have been in such a number of Class A voting common shares as was determined by dividing $1.00 by the Class C preferred conversion price in effect at the time of conversion. The Class C preferred conversion price was $1.00 initially, and then adjusted, as defined in the agreement. The Class C preferred share members of the Company had a put option effective March 31, 2008, that required the Company to purchase any such shares of Class C preferred shares held by the holder. The purchase price per Class C preferred share was equal to $1.00 per unit, plus interest computed at 15% per annum, noncompounded, less the amount of all distributions paid to the Class C preferred shareholders. The Company also had a call option on its Class C preferred shares any time after March 31, 2004, that required the holders of the Class C preferred shares to sell any or all shares held. The purchase price was equal to $1.00 per unit, plus interest computed at 15% per annum, noncompounded, less the amount of all distributions paid to the Class C preferred shareholders. In February 2005, the Company received $2,000,000 and 1,000,000 Class C units from a member in exchange for 450,000 Class A voting units and 960,000 Class D preferred units. In addition, in June 2005, the Class C shareholders elected to convert the remaining 1,580,000 Class C units into 1,580,000 Class A voting units.

F-17

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

Class D Preferred Shares

The Company has authorized 1,600,000 Class D preferred shares, of which 640,000 and 1,600,000 shares were issued and outstanding at December 31, 2004 and December 31, 2005, respectively. The Class D preferred shares are entitled to preferential cumulative distributions payable in arrears on a monthly basis at an annual rate of $.375 per unit, beginning subsequent to August 2004. No Class A, Class B, or Class C holders shall be paid until all Class D holders’ distributions are satisfied. In addition, the Class D preferred shares are entitled to receive preferential distributions at an annual rate of $.09375 per unit payable in a lump sum upon the preference satisfaction date, as defined in the agreement. The Company was required under the original terms to pay the preference satisfaction amount, defined as the sum of the Class D preferred purchase price per share plus all accrued and unpaid dividends, in August 2008 (the preference satisfaction date), which could be extended to August 2009. If the preference satisfaction amount is distributed, each D Preferred Unit shall entitle its holder to all of the rights of an A Common Unit, and the preferential rights of each D Preferred Unit shall automatically terminate. In addition, if the preference satisfaction amount is distributed, the Class D holders shall receive 100,000 A Common units. As the Class D preferred shares were mandatorily redeemable at a fixed date, these shares were classified as a liability on the consolidated balance sheet at December 31, 2004, pursuant to SFAS No. 150, Accounting for Certain Financial Instruments With Characteristics of Both Liabilities and Equity, and the related dividends were reflected as interest expense. In February 2005, the terms of the Class D preferred share were amended to remove the required payment date; the holders now have the right to demand redemption of the Class D preferred shares, no earlier than August 15, 2008, and no later than August 15, 2009 (the Final Preference Satisfaction Date). In the event the holders do not demand repayment, the Company shall immediately issue 200,000 Class A voting shares to the holders of the Class D preferred shares as additional consideration. The Class D preferred shares also receive a liquidation preference of $3.125 per share before any Class C, Class B, or Class A members receive any liquidation payments.

The Class D preferred stock (i) may, at the option of a holder, be converted into Class A common stock and (ii) will automatically convert into Class A common stock (1) upon the election of the holders of at least a majority of the outstanding shares of Class D preferred stock or (2) upon the closing of a firmly underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, covering the offer and sale of common stock for the Company’s account. The number of shares of Class A common stock to which a Class D preferred stock holder is entitled upon conversion is calculated by multiplying the applicable conversion rate then in effect (currently 1.0) by the number of Class D preferred shares to be converted. As of December 31, 2004, 640,000 shares of Class A common stock and as of December 31, 2005, 1,600,0000 shares of Class A common stock would have been required to be issued upon the conversion of all of the issued and outstanding shares of Class D preferred stock. These shares have been excluded from the calculation of diluted earnings per share for the years ended December 31, 2004 and 2005, as the impact resulting from the conversion and dividends paid would be anti dilutive.

12. Significant Customer

Sales to one customer were approximately $3,900,000 and $12,000,000 for the years ended December 31, 2004 and 2005, respectively. The amount included in accounts receivable at December 31, 2004 and 2005, for this customer was approximately $1,990,000 and $13,000, respectively.

13. Major Vendor

Purchases from one vendor were approximately $3,000,000 for 2004. The amount included in accounts payable at December 31, 2004, for this vendor was approximately $148,000. There were no individually significant vendors for 2003 or 2005.

F-18

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

14. Concentration of Credit Risk

The Company maintains its cash balances in various financial institutions located in the United States. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000 per institution. The uninsured cash balance at December 31, 2005, was $2,530,014.

15. Benefit Plans

The Company adopted a 401(k) savings plan effective February 1, 2005, covering all of the Company’s employees upon completion of 90 days of service. Employees may contribute a percentage of eligible compensation on both a before-tax basis and after-tax basis. The Company has the right to make discretionary contributions to the plan. For the years ended December 31, 2004 and 2005, the Company did not make any contributions to the plan.

16. New Accounting Pronouncement

On December 16, 2004, the FASB published SFAS No. 123 (revised 2004), Share-Based Payment. This statement eliminates the alternative to use the intrinsic value method of accounting that was permitted in SFAS No. 123 as originally issued and will require recognition of compensation expense related to all equity awards granted after the required effective date and to awards modified, repurchased, or canceled after that date based on the grant date fair values of the awards. This statement is effective as of the first annual reporting period that commences after June 15, 2005. The Company has not yet determined the impact of adopting this statement on its consolidated financial position, results of operations, or cash flows.

17. Related-Party Transactions

In February 2002, InnerWorkings, LLC sold 57,812 Class A common units and 231,250 Series B preferred units to Orange Media, LLC. As consideration for the Class A common units and the Series B preferred units, Orange Media, LLC issued a demand note to InnerWorkings, LLC in the principal amount of $188,469. The note accrued interest at a fixed rate equal to 2.78%, which was due and payable on the date on which the principal amount of the note was paid. The principal and accrued and unpaid interest on the note was paid by Orange Media in May 2006.

In November 2003, the Company entered into a consulting agreement with Zion Consulting, Inc., a business consulting firm. Under the terms of the consulting agreement, the Company paid $34,000, $87,340 and $90,000, to Zion Consulting for services rendered during the years ended December 31, 2003, 2004 and 2005, respectively. The sole stockholder and president of Zion Consulting is the spouse of one of the Company’s stockholders.

In February 2004, InnerWorkings, LLC purchased a total of 2,400,000 Class A common units from two of our employee stockholders and re-issued the same number of Class A common units to Incorp. As consideration for these transactions, Incorp made cash payments totaling $100,000 to these stockholders and we agreed to eliminate the outstanding commission balances for each of these stockholders, which totaled $410,000 as of the date of the transfer, and to make monthly cash payments to these stockholders totaling $224,000 over a two-year period ending February 2006.

In February 2005, the Company acquired a 10.2% ownership interest in Echo Global Logistics, LLC (Echo), an enterprise transportation start-up management firm with no net assets, liabilities or historical operating results for $125,000. The remaining investors in Echo include certain shareholders and directors of IW, as well as key members of the Company’s management team. The Company provides general management services to Echo, including financial management, legal, accounting, tax, treasury services, employee benefit plan, and marketing

F-19

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

services, which are billed based on the percentage of time the Company’s employees spend on these services. The Company also shares office space with Echo, for which the Company bills them a monthly charge based upon the pro rata space Echo occupies. The total amount billed for general management services and shared office space during the year ended December 31, 2005, was approximately $194,000. In addition, Echo has provided transportation services to the Company during 2005. As consideration for these services, Echo has billed the Company approximately $209,000 for the year ended December 31, 2005. The net receivable due from Echo at December 31, 2005, was $42,971.

18. Subsequent Events

Sale of Series E Preferred Shares

In January 2006, the Company issued 10,167,730 shares of Series E units in exchange for $50,000,000 in cash. The Company retained $10,000,000 for working capital and general corporate purposes, while the remaining $40,000,000 redeemed shares held by certain existing shareholders. The Series E preferred shares accrue preferential cumulative dividends at an annual rate of 4%. Series E preferred shares are also entitled to a liquidation preference over the other junior preferred and common stock shareholders an amount equal to 50% of the original purchase price per share plus any accrued but unpaid dividends. In addition, the Series E units shall be automatically converted into common stock with the consent of the Series E shareholders upon a firmly underwritten public offering of common shares at a public offering price no less than 1.75 times the original purchase price within 18 months of the closing and 2.00 times after 18 months and a total offering no less than $25,000,000.

As a result of the issuance of Series E units, the Company amended the Series B and Series D dividend rights. The dividend rights were amended to pay a cash dividend at the rate of 4% of the original issue price. In addition, the dividends shall be cumulative and accrue from and after the date of issuance. The dividends will only become payable upon the occurrence of certain events, including a liquidation event, conversion or redemption of the shares or if the Board declares them to be paid.

Conversion to InnerWorkings, Inc.

On January 3, 2006, the Company completed its conversion to a corporate structure whereby InnerWorkings, LLC converted to InnerWorkings, Inc. As a result, each voting A common unit of the LLC converted to a fully paid share of Class A Common Stock, with a par value $0.0001 per share. The non-voting A common units converted to a fully paid share of Class B Common Stock, with a par value of $0.0001 per share. In addition, each B and D preferred unit of the LLC converted to fully paid shares of Series B and Series D Preferred Stock, respectively, both with a par value of $0.0001.

F-20

InnerWorkings, LLC

Notes to Consolidated Financial Statements—(Continued)

19. Quarterly Financial Data (Unaudited)

	March 31,			June 30,			September 30,			December 31,
2004
Revenue	$	5,318,272		$	8,550,913		$	9,795,395		$	15,218,962
Cost of goods sold		4,035,232			6,584,730			7,574,237			12,288,729
Gross profit		1,283,040			1,966,183			2,221,158			2,930,233
Operating expenses:
Selling, general, and administrative expenses		1,257,898			1,620,199			1,564,962			1,662,258
Depreciation and amortization		11,278			48,926			52,079			110,744
Income from operations		13,864			297,058			604,117			1,157,231
Other income (expense), net		1,596			(33,841	)		(139,903	)		(143,312	)
Net income		15,460			263,217			464,214			1,013,919
Dividends on preferred shares		(115,500	)		(115,500	)		(115,500	)		(115,500	)
Net income applicable to common shareholders	$	(100,040	)	$	147,717		$	348,714		$	898,419
Basic earnings per share	$	—		$	0.01		$	0.01		$	0.03
Diluted earnings per share	$	—		$	0.01		$	0.01		$	0.03
2005
Revenue	$	12,419,713		$	18,739,174		$	23,467,034		$	22,243,665
Cost of goods sold		9,900,166			14,789,152			18,669,715			17,912,420
Gross profit		2,519,547			3,950,022			4,797,319			4,331,245
Operating expenses:
Selling, general, and administrative expenses		1,896,882			2,717,425			3,096,873			2,894,068
Depreciation and amortization		66,172			84,185			105,190			132,364
Income from operations		556,493			1,148,412			1,595,256			1,304,813
Other income (expense), net		18,156			5,994			8,755			(3,742	)
Net income		574,649			1,154,406			1,604,011			1,301,071
Dividends on preferred shares		(184,756	)		(228,408	)		(170,625	)		(178,036	)
Net income applicable to common shareholders	$	389,893		$	925,998		$	1,433,386		$	1,123,035
Basic earnings per share	$	0.01		$	0.03		$	0.04		$	0.04
Diluted earnings per share	$	0.01		$	0.03		$	0.04		$	0.03

F-21

InnerWorkings, Inc.

Condensed Consolidated Balance Sheets

	December 31, 2005		September 30, 2006
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,962,740	$	34,283,536
Marketable securities		—		9,969,356
Accounts receivable, net of allowance for doubtful accounts of $173,839 in 2005 and $285,302 in 2006		14,520,055		29,535,931
Unbilled revenue		1,974,920		6,530,966
Prepaid expenses		2,612,752		5,332,651
Advances to related parties		124,534		—
Deferred income taxes		—		729,709
Other current assets		1,486,407		824,359
Total current assets		23,681,408		87,206,508
Property and equipment, net		1,538,794		2,399,395
Intangibles and other assets:
Goodwill		352,954		5,128,981
Intangible assets, net of accumulated amortization of $236,711 in 2005 and $429,550 in 2006		930,774		3,443,935
Deposits		12,176		76,505
Investment		125,000		125,000
Deferred income taxes		—		5,699,740
Other assets		43,559		36,373
		1,464,463		14,510,534
Total assets	$	26,684,665	$	104,116,437

See accompanying notes to consolidated financial statements.

F-22

InnerWorkings, Inc.

Condensed Consolidated Balance Sheets (continued)

	December 31, 2005			September 30, 2006
				(Unaudited)
Liabilities and stockholders’ deficit/members’ equity
Current liabilities:
Accounts payable—trade	$	13,488,237		$	19,092,994
Due to seller		—			1,070,000
Distribution payable		2,987,000			—
Outstanding line of credit		2,923,511			—
Current maturities of capital lease obligations		109,185			74,094
Customer deposits		284,407			1,432,188
Other liabilities		51,697			41,504
Deferred revenue		—			489,247
Accrued expenses		297,310			3,144,563
Total current liabilities		20,141,347			25,344,590
Capital lease obligations, less current maturities		283,645			238,424
Commitments and contingencies		—			—
Total liabilities		20,424,992			25,583,014
Class D, convertible redeemable preferred shares, $3.125 par value, 1,600,000 shares authorized, 1,600,000 shares issued and outstanding in 2005; liquidation preference of $5,000,000		5,007,525			—
Stockholders’ deficit/members’ equity:
Class B, convertible preferred shares, $.80 par value, 937,500 shares authorized, 937,500 shares issued and outstanding in 2005; liquidation preference of $1,500,000		770,625			—
Class A, common shares, $0 par value, 60,000,000 shares authorized, 31,926,375 shares issued and outstanding in 2005		2,635,091			—
Common Stock, par value $0.0001 per share, no shares authorized, no shares issued and outstanding; 200,000,000 shares authorized, 44,014,319 shares issued and outstanding					115,344,105
Member receivable		(188,469	)		—
Additional paid-in capital		46,500			5,322,591
Treasury stock at cost		—			(40,000,000	)
Unrealized loss on marketable securities		—			(30,644	)
Accumulated deficit		(2,011,599	)		(2,102,629	)
Total stockholders’ equity		1,252,148			78,533,423
Total liabilities and stockholders’ deficit/members’ equity	$	26,684,665		$	104,116,437

See accompanying notes to consolidated financial statements.

F-23

InnerWorkings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended September 30,						Nine months ended September 30,
	2005			2006			2005			2006
Revenue	$	23,467,034		$	41,784,814		$	54,625,921		$	99,361,724
Cost of goods sold		18,669,715			32,239,588			43,359,033			78,227,822
Gross profit		4,797,319			9,545,226			11,266,888			21,133,902
Operating expenses:
Selling, general, and administrative expenses		3,096,873			5,665,111			7,711,180			12,770,496
Depreciation and amortization		105,190			240,123			255,547			574,016
Income from operations		1,595,256			3,639,992			3,300,161			7,789,390
Other income (expense):
Interest income		18,829			314,897			54,035			492,231
Interest expense		(7,678	)		(64,050	)		(72,188	)		(148,539	)
Minority interest		—			—			58,244			—
Other, net		(2,396	)		(2,394	)		(7,186	)		(4,784	)
Total other income (expense)		8,755			248,453			32,905			338,908
Income before taxes		1,604,011			3,888,445			3,333,066			8,128,298
Income tax expense		—			(1,521,225	)		—			(3,215,327	)
Net income		1,604,011			2,367,220			3,333,066			4,912,971
Dividends on preferred shares		(170,625	)		(293,740	)		(583,789	)		(1,408,740	)
Net income applicable to common shareholders	$	1,433,386		$	2,073,480		$	2,749,277		$	3,504,231
Basic earnings per share	$	0.04		$	0.06		$	0.09		$	0.13
Diluted earnings per share	$	0.04		$	0.05		$	0.09		$	0.13
Pro forma basic earnings per share (Note 2)	$	0.03		$	0.06		$	0.05		$	0.13
Pro forma diluted earnings per share (Note 2)	$	0.03		$	0.05		$	0.05		$	0.12

See accompanying notes to consolidated financial statements.

F-24

InnerWorkings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2005			2006
Cash flows from operating activities
Net income	$	3,333,066		$	4,912,971
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Minority interest		(58,244	)		—
Deferred income taxes		—			174,130
Depreciation and amortization		255,547			574,016
Noncash stock compensation expense		87,500			311,230
Bad debt provision		27,939			111,463
Deferred financing expense		7,186			7,186
Change in assets, net of acquisitions:
Accounts receivable		(1,203,213	)		(10,711,332	)
Unbilled revenue		(1,270,838	)		(3,618,186	)
Prepaid expenses and other		(3,469,345	)		(314,637	)
Change in liabilities, net of acquisitions:
Accounts payable		4,855,418			557,487
Customer deposits		597,568			(3,175,288	)
Accrued expenses and other		42,893			3,252,725
Net cash provided by (used in) operating activities		3,205,477			(7,918,235	)
Cash flows from investing activities
Purchases of property and equipment		(706,964	)		(980,300	)
Purchase of marketable securities		(762,220	)		(10,000,000	)
Investment in Echo		(125,000	)		—
Purchase of Graphography		—			(2,975,929	)
Purchase of CoreVision		(37,500	)		(10,000	)
Net cash used in investing activities		(1,631,684	)		(13,966,229	)
Cash flows from financing activities
Net repayments of note payable, bank		(678,154	)		(4,796,414	)
Collection of member receivable		—			188,469
Principal payments on capital lease obligations		(40,079	)		(80,312	)
Tax benefit of stock options exercised		—			370,213
Advances to related parties		(188,038	)		124,534
Payments of distributions		(1,399,853	)		(3,107,634	)
Payment of dividends on preferred shares		(821,642	)		(1,646,136	)
Preference payments on preferred shares		—			(5,500,000	)
Issuance of shares		2,160,000			110,294,066
Payment of issuance costs		—			(2,641,526	)
Payments for share repurchase		—			(40,000,000	)
Net cash provided by (used in) financing activities		(967,766	)		53,205,260
Increase in cash and cash equivalents		606,027			31,320,796
Cash and cash equivalents, beginning of period		1,475,791			2,962,740
Cash and cash equivalents, end of period	$	2,081,818		$	34,283,536
Supplemental disclosure of cash flow information
Cash paid during the period for interest	$	55,435		$	86,125
Non-cash investing activity
Settlement of advances to related parties as part of Insight acquisition	$	313,438		$	—
Issuance of options in connection with Insight acquisition		46,500			—
Due to seller in connection with CoreVision acquisition					1,070,000
Non-cash financing activity
Unrealized loss on available for sale investments	$	—		$	30,644

See accompanying notes to consolidated financial statements.

F-25

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Three and Nine Months Ended September 30, 2005 and 2006

1. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited consolidated financial statements of InnerWorkings, Inc. (the “Company,” formerly known as InnerWorkings, LLC) included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and accounting principles generally accepted in the United States for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying unaudited financial statements have been included, and all adjustments are of a normal and recurring nature. These interim consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s most recent audited financial statements.

Goodwill and Other Intangibles

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized, but instead is tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. The Company evaluates the recoverability of goodwill using a two-step impairment test. For goodwill impairment review purposes, the Company has one reporting unit. In the first step the fair value for the Company is compared to its book value including goodwill. In the case that the fair value is less than the book value, a second step is performed which compares the implied fair value of goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values and the net fair values of the identifiable assets and liabilities. If the implied fair value of the goodwill is less than the book value, the difference is recognized as an impairment.

SFAS No. 142 also requires that intangible assets with finite lives be amortized over their respective estimated useful lives, and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company’s intangible assets consist of customer lists and non-compete agreements, which are being amortized on the straight-line basis over their estimated useful lives of 15 years and five years, respectively.

Following is a summary of the intangible assets:

	December 31, 2005			September 30, 2006			Weighted- Average Life
Customer lists	$	925,485		$	3,522,485		13.6 years
Noncompete agreement		242,000			351,000		4.1 years
		1,167,485			3,873,485
Less accumulated amortization		(236,711	)		(429,550	)
Intangible assets, net	$	930,774		$	3,443,935

Amortization expense related to these intangible assets was $95,895 and $192,839 for the three and nine months ended September 30, 2006, respectively.

F-26

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

The estimated amortization expense for the next five years is as follows:

2006 (remaining 3 months)	$	95,896
2007		364,832
2008		333,040
2009		274,032
2010		261,932
Thereafter		2,114,203
	$	3,443,935

Stock-Based Compensation

During the nine month period ended September 30, 2006, the Company issued 1,262,050 options. Using the Black-Scholes option valuation model and the assumptions listed below, the Company recorded $311,230 in compensation expense for the nine month period ended September 30, 2006.

Prior to January 1, 2006, the Company accounted for stock-based employee compensation arrangements in accordance with provisions of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and complied with the disclosure requirements of Financial Accounting Standards Board (FASB) No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure – An Amendment of FASB Statement No. 123. Effective January 1, 2006, the Company adopted the fair value recognition provisions of FAS 123 (R), Share-Based Payments, using the prospective transition method and Black-Scholes as the option valuation model. Under the prospective transition method, the Company continues to account for nonvested equity awards outstanding at the date of adopting Statement 123 (R) in the same manner as they had been accounted for prior to adoption. As a result, under APB No. 25, compensation expense is based on the difference, if any, on the grant date between the estimated fair value of the Company’s stock and the exercise price of options to purchase that stock. The compensation expense is then amortized over the vesting period of the stock options. As of December 31, 2005, all options granted under APB No. 25 had exercise prices which were equal to or exceeded fair value on the date of the grant and therefore no compensation expense was recorded.

In May 2006, the Company cancelled contingent options to purchase 300,000 shares of common stock previously granted to John R. Walter, the Chairman of the Board, and granted Mr. Walter new options to purchase 400,000 shares of common stock, and the Company cancelled contingent options to purchase 600,000 shares of common stock previously granted to Steven E. Zuccarini, the Chief Executive Officer, and granted Mr. Zuccarini new options to purchase 750,000 shares of common stock, in each case at an exercise price of $4.92 per share.

The cancellation of the outstanding contingent options and the related grant of new options was accounted for as a modification in accordance with SFAS No. 123 (R). These options will vest ratably over six years. The Company calculates compensation expense under SFAS No. 123 (R) based on the Black-Scholes value of options at the time of grant and records compensation expense in equal amounts as the options vest. The Company engaged an independent valuation specialist to perform, contemporaneous with the granting of the above options, an appraisal of the fair market value of the common shares as of May 8, 2006. It determined the fair value to be $5.35 per share on that date.

The following assumptions were utilized in the valuation for options granted in 2006:

Dividend yield	—	%
Risk-free interest rate	4.63 - 5.02	%
Expected life	5 years
Volatility	33.5	%

F-27

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

To value option grants prior to January 1, 2006, the Company used the minimum value method. Net income on a pro forma basis for the three and nine-month periods ended September 30, 2005, as if compensation expense for employee option-based awards were determined using the minimum value method, is as follows:

	Three Months Ended September 30, 2005			Nine Months Ended September 30, 2005
Net income, as reported	$	1,604,011		$	3,333,066
Pro forma adjustment:
Stock-based compensation, included in net income		—			87,500
Compensation expense		(20,727	)		(132,642	)
Pro forma net income	$	1,583,284		$	3,287,924
Net income per share, as reported
Basic	$	0.04		$	0.09
Diluted	$	0.04		$	0.09
Pro forma net income per share:
Basic	$	0.04		$	0.09
Diluted	$	0.04		$	0.09

To value option grants in accordance with SFAS No. 123, the Company used the minimum value method. The minimum values of the options issued were immaterial. The following assumptions were utilized in the valuation for options granted:

Dividend yield	—  %
Risk-free interest rate	3.2% - 4.2%
Expected life	3 years

F-28

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

2. Earnings Per Share

Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share is calculated by dividing net income by the weighted average shares outstanding plus share equivalents that would arise from the exercise of share options and the conversion of preferred shares. Conversion of 1,600,000 Series D preferred shares were excluded from the calculation for the three and nine months ended September 30, 2005 as they were anti-dilutive. The computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2005 and 2006 are as follows:

	Three Months Ended September 30						Nine Months Ended September 30
	2005			2006			2005			2006
Numerator:
Net income	$	1,604,011		$	2,367,220		$	3,333,066		$	4,912,971
Preferred stock dividends		(170,625	)		(293,740	)		(583,789	)		(1,408,740	)
Numerator for basic earnings per share		1,433,386			2,073,480			2,749,277			3,504,231
Effect of dilutive securities:
Preferred stock dividends		20,625			293,740			61,875			1,408,740
		20,625			293,740			61,875			1,408,740
Numerator for diluted earnings per share	$	1,454,011		$	2,367,220		$	2,811,152		$	4,912,971
Denominator:
Denominator for basic earnings per share— weighted-average shares		31,926,375			34,222,084			30,700,624			27,517,682
Effect of dilutive securities:
Convertible preferred shares		937,500			6,634,953			937,500			6,759,228
Employee stock options		271,245			2,695,395			251,700			2,526,837
Dilutive potential common shares		1,208,745			9,330,348			1,189,200			9,286,065
Denominator for dilutive earnings per share		33,135,120			43,552,432			31,889,824			36,803,747
Basic earnings per share	$	0.04		$	0.06		$	0.09		$	0.13
Diluted earnings per share	$	0.04		$	0.05		$	0.09		$	0.13

F-29

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

Pro Forma Earnings Per Share

Pro forma earnings per share is calculated by dividing the pro forma net income by weighted average number of common shares outstanding. The shares used in computing pro forma earnings per share have been adjusted to reflect shares assumed to have been issued resulting in the conversion of the preferred shares to common shares.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005			2006		2005			2006
Numerator:
Historical net income applicable to common shareholders	$	1,433,386		$	2,073,480	$	2,749,277		$	3,504,231
Effect of pro forma adjustments:
Provision for income taxes		(625,564	)		—		(1,299,896	)		—
Preferred stock dividends		—			293,740		—			1,408,740
		(625,564	)		293,740		(1,299,896	)		1,408,740
Pro forma numerator for basic and diluted earnings per share	$	807,822		$	2,367,220	$	1,449,381		$	4,912,971
Denominator:
Historical denominator for basic earnings per share— weighted-average shares		31,926,375			34,222,084		30,700,624			27,517,682
Effect of pro forma adjustments:
Conversion of preferred to common shares		—			6,352,615		—			10,587,692
Denominator for pro forma basic earnings per share		31,926,375			40,574,699		30,700,624			38,105,374
Effect of dilutive securities:
Employee stock options		271,245			2,695,395		251,700			2,526,837
Denominator for pro forma diluted earnings per share		32,197,620			43,270,094		30,952,324			40,632,211
Pro forma basic earnings per share	$	0.03		$	0.06	$	0.05		$	0.13
Pro forma diluted earnings per share	$	0.03		$	0.05	$	0.05		$	0.12

3. Series E Preferred Shares and Redemption of Class A Common

In January 2006, the Company issued 10,167,730 shares of Series E preferred stock in exchange for $50,000,000 in cash, or $4.92 per share. The Company retained $10,000,000 for working capital and general corporate purposes, and used the remaining $40,000,000 to redeem shares held by certain existing shareholders. The Series E preferred shares accrued preferential cumulative dividends at an annual rate of 4%. The Series E preferred shares were also entitled to a liquidation preference over the other junior preferred and common stock shareholders in an amount equal to 50% of the original purchase price per share plus any accrued but unpaid dividends. As a result of the Company’s initial public offering completed in August 2006, the 10,167,730 Series E preferred shares were converted into 10,167,730 shares of common stock. In addition, $1,263,441 in accrued dividends were paid to and a $500,000 preference payment was made to the Series E shareholders.

F-30

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

The terms and conditions relating to the issuance of Series E preferred stock and related redemption transactions were determined through arms-length negotiations among the Series E preferred investors, the holders of a majority of the common shares and the Company. As part of the arms-length negotiations, the parties agreed that $40 million of the Series E investment would be used to redeem shares of common stock on a pro rata basis at $4.92 per share. In particular, the parties agreed on the ownership percentages that the shares of Series E preferred stock and common stock, each as a class, would represent in the Company on a post-transaction basis. This ownership percentage, rather than relative priority or dividend rights, was the key factor in determining the redemption price. To arrive at the appropriate ownership percentage for the holders of common stock, it was determined that $40 million of the Series E investment proceeds would redeem 8,130,081 shares of common stock at a redemption price of $4.92 per share. A redemption price of more or less than $4.92 per share would have resulted in the holders of common stock, as a class, owning a larger or smaller percentage of the Company, on a post-transaction basis, than was agreed to in the arms-length negotiations relating to the Series E investment.

4. Income Taxes

The provision for income taxes consists of the following components:

	Three Months Ended September 30, 2006		Nine Months Ended September 30, 2006
Current
Federal	$	894,877	$	2,495,476
State		210,957		545,721
Total current		1,105,834		3,041,197
Deferred
Federal		364,002		168,110
State		51,389		6,020
Total deferred		415,391		174,130
Income tax expense	$	1,521,225	$	3,215,327

The provision for income taxes for the three and nine months ended September 30, 2006 differs from the amount computed by applying the U.S. federal income tax rate of 34% to pretax income because of the effect of the following items:

	Three Months Ended September 30, 2006		Nine Months Ended September 30, 2006
Tax expense at U.S. federal income tax rate	$	1,321,543	$	2,763,093
State income taxes, net of federal income tax effect		184,746		390,084
Recognition of deferred taxes upon conversion to corporation		—		29,253
Nondeductible expenses and other		14,936		32,897
Income tax expense	$	1,521,225	$	3,215,327

F-31

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

At September 30, 2006, the Company’s deferred tax assets and liabilities consisted of the following:

	September 30, 2006
Current deferred tax assets:
Reserves and allowances	$	101,242
Deferred revenue		745,516
Other		(117,049	)
Total current deferred tax assets		729,709
Noncurrent deferred tax assets:
Income tax basis in excess of financial statement basis in intangible assets		12,511,943
Less: Valuation allowance		(6,603,184	)
Other		120,757
Acquired intangible assets		20,473
Total noncurrent deferred tax assets		6,049,989
Total deferred tax assets		6,779,698
Noncurrent deferred tax liabilities:
Fixed assets		(350,249	)
Total deferred tax liabilities		(350,249	)
Net deferred tax asset	$	6,429,449
Net current deferred tax asset	$	729,709
Net noncurrent deferred tax asset		5,699,740
Net deferred tax asset	$	6,429,449

On January 3, 2006, the Company converted from an LLC to a “C” corporation. In connection with this conversion, the Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes (SFAS No. 109), under which deferred assets and liabilities are recognized based upon anticipated future tax consequences attributable to differences between financial statement carrying values of assets and liabilities and their respective tax bases. As a result of the $40,000,000 share redemption (see note 3), the tax basis of the Company increased resulting in the recognition of a deferred tax asset of $13,200,000, for which a valuation allowance of $6,600,000 was recorded with a corresponding net increase to additional paid in capital of $6,600,000.

5. Acquisitions

Graphography Acquisition

On May 31, 2006, we acquired Graphography Limited LLC, a provider of production management services including print procurement and promotion services located in New York. Through this acquisition, we added two significant enterprise clients and established a presence in the New York market, which we view as an important step in the achievement of our geographic expansion objectives. The acquisition price, net of cash acquired, consisted of $4,525,000 in cash paid on May 31, 2006 and up to an additional $3,000,000 in cash payable contingent on the revenue generated by Graphography on or prior to May 31, 2010. Any contingent payments will be recorded as additional goodwill on the balance sheet. Approximately $2,100,000 of the goodwill will be deductible for tax purposes. The Company also assumed certain contractual operating lease obligations.

F-32

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

The following table summarizes the estimated fair values of the assets acquired at the date of the acquisition. The customer lists have an average weighted life of 15 years and the non-compete agreements have an average weighted life of 2 years. The allocation of purchase price is based on preliminary estimates and assumptions and subject to revision when valuation and integration plans are finalized. Accordingly, revisions to the allocation of purchase price, which may be significant, will be reported in a future period as increases or decrease to amounts previously reported.

Current assets (including cash acquired of $1,549,071)	$	7,357,491
Property and equipment		24,283
Customer list		2,597,000
Non-compete agreements		109,000
Goodwill		2,117,650
Liabilities assumed		(7,680,424	)
Net purchase price	$	4,525,000

The following unaudited pro forma information presents a summary of our consolidated statements of operations for the three and nine months ended September 30, 2005 and 2006 as if we had acquired Graphography as of the beginning of each period presented.

	Three months ended September 30				Nine months ended September 30
	2005		2006		2005		2006
Revenue	$	30,183,021	$	41,784,814	$	74,527,920	$	109,999,383
Income from operations		1,864,792		3,639,992		3,887,899		7,843,327
Net income		1,869,222		2,367,220		3,911,255		4,943,917
Basic income per share	$	0.05	$	0.06	$	0.11	$	0.13
Diluted income per share	$	0.05	$	0.05	$	0.10	$	0.12

CoreVision Acquisition

On September 1, 2006, we acquired CoreVision Group, Inc. (CoreVision), a provider of production management services including print procurement and promotion services located in Carol Stream, Illinois, with sales offices located in Grand Rapids, Michigan and Kansas City, Missouri. Through this acquisition, we added 15 sales executives, including our first sales executives in the states of Michigan and Missouri. We believe this acquisition will continue to support our geographic expansion objectives. The acquisition price, net of cash acquired, consisted of approximately $1,080,000 in cash, $10,000 paid in September 2006 and the remaining $1,070,000 to be paid over the next 11 months. There is up to an additional $2,500,000 in cash payable contingent on the gross profit generated by CoreVision on or prior to December 31, 2009. Any contingent payments will be recorded as additional goodwill on the balance sheet. The Company also assumed certain contractual operating lease obligations.

F-33

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

The following table summarizes the estimated fair values of the assets acquired at the date of the acquisition. The allocation of purchase price is based on preliminary estimates and assumptions and subject to revision when valuation and integration plans are finalized. Accordingly, revisions to the allocation of purchase price, which may be significant, will be reported in a future period as increases or decrease to amounts previously reported.

Current assets	$	2,913,103
Property and equipment		238,752
Other assets		45,826
Goodwill		2,374,704
Liabilities assumed		(4,492,385	)
Net purchase price	$	1,080,000

The results of CoreVision’s operations do not have a material impact on the Company’s financials. As a result, summary pro forma financial information is not provided.

6. Conversion to InnerWorkings, Inc.

On January 3, 2006, the Company completed its conversion to a corporate structure whereby InnerWorkings, LLC converted to InnerWorkings, Inc. As a result, each voting Class A common unit of the LLC converted to a fully paid share of Class A Common Stock, with a par value of $0.0001 per share. The non-voting Class A common units converted to a fully paid share of Class B Common Stock, with a par value of $0.0001 per share. In addition, each B and D preferred unit of the LLC converted to fully paid shares of Series B and Series D Preferred Stock, respectively, both with a par value of $0.0001 per share. In connection with the conversion, the undistributed losses as of the conversion date were reclassified to additional paid in capital.

7. SNP Transaction

In March 2006, the Company entered into an agreement with SNP Corporation Ltd. to grant a non-exclusive, non-transferable license to use certain non-core applications of the Company’s software in China, Singapore and Hong Kong. Pursuant to the terms of the agreement, SNP paid the Company $1,000,000 in five monthly installments of $200,000, beginning in April 2006. The initial term of the agreement is one year and is automatically renewed for successive one-year terms in the absence of a termination by either party. The revenue for this license agreement is being recognized ratably over the 12-month initial term of the agreement. In the event the agreement is renewed, SNP will pay the Company 1% of the gross revenue for all transactions processed through the licensed software during the term of the agreement. In addition, in April 2006, the Company sold 254,065 shares of its Class A common stock to SNP at a price of $4.92 per share for a total purchase price of $1,250,000 million.

8. Related Parties

In November 2003, the Company entered into a consulting agreement with Zion Consulting, Inc., a business consulting firm. Under the terms of the consulting agreement, the Company paid $22,500, $67,500 and $79,600 to Zion Consulting for services rendered during the three and nine months ended September 30, 2005 and nine months ended September 30, 2006, respectively. The sole shareholder and president of Zion Consulting is the spouse of one of the Company’s stockholders. We terminated this agreement as of June 30, 2006.

In February 2005, the Company acquired a 10.2% ownership interest in Echo Global Logistics, LLC (Echo), an enterprise transportation start-up management firm with no net assets, liabilities or historical operating results, for $125,000. The remaining investors in Echo include certain shareholders and directors of IW, as well as key members of the Company’s management team. The Company provides general management services to Echo,

F-34

InnerWorkings, Inc.

Notes to Condensed Consolidated Financial Statements—(Continued)

including financial management, legal, accounting, tax, treasury services, employee benefit plan and marketing services, which are billed based on the percentage of time the Company’s employees spend on these services. The total amount billed for general management services during the three and nine months ended September 30, 2006 was $9,856 and $29,152, respectively. In addition, Echo provided transportation services to the Company during 2006. As consideration for these services, Echo billed the Company $209,650 and $519,996 for the three and nine months ended September 30, 2006, respectively. The Company also sub-leases a portion of our office space to Echo. Effective January 1, 2006, the Company entered into a sub-lease agreement with Echo pursuant to which Echo leases approximately 20% of our office space for approximately $7,500 per month.

The Company sub-leases a portion of our office space to Incorp, LLC, our largest stockholder. Effective January 1, 2006, the Company entered into a sub-lease agreement with Incorp pursuant to which Incorp leases approximately 20% of our office space for approximately $7,500 per month.

9. Initial Public Offering

In August 2006, we completed our initial public offering (IPO) in which we sold 10,590,000 common shares at a price to the public of $9.00 per share. 7,060,000 shares were sold by the Company and 3,530,000 shares were sold by the selling shareholders. The net proceeds to us from the IPO, after preference payments, dividend payments and repayment of outstanding indebtedness under our line of credit, were approximately $46.9 million. In connection with the IPO, we recapitalized all of our outstanding shares of capital stock into shares of our common stock on a one-for-one basis.

10. Recently Issued Accounting Pronouncements

In July 2006, FASB issued Statement of Financial Accounting Standards Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109, “Accounting for Income Taxes.” FIN 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The new FASB standard also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The Company intends to adopt the FIN 48 effective January 1, 2007 and has not yet determined the impact, if any, this adoption will have.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. This Statement is required to be adopted by the Company in the first quarter of its fiscal year 2008. The Company is currently evaluating the potential impact of adopting SFAS 157.

11. Subsequent Events

Applied Graphics Acquisition

In October 2006, we acquired Applied Graphics, Inc., a provider of production management and print-on-demand services with locations in California and Hawaii. The acquisition price consisted of $7,000,000 in cash paid in October 2006 and up to an additional $4,850,000 in cash payable contingent on the satisfaction of attainment of certain performance measures by Applied Graphics on or prior to September 30, 2008.

F-35

Report of Registered Public Accounting Firm

The Members

Graphography Limited LLC

We have audited the accompanying balance sheet of Graphography Limited LLC as of December 31, 2005 and the related statements of operations, members’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Graphography Limited LLC at December 31, 2005, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

/s/    Ernst & Young LLP

Chicago, Illinois

May 25, 2006

F-36

Graphography Limited LLC

Balance Sheet

December 31, 2005

Assets
Current assets:
Cash and cash equivalents	$	223,019
Accounts receivable		3,567,907
Unbilled revenue		893,664
Prepaid expenses		16,184
Other current assets		6,082
Total current assets		4,706,856
Property and equipment, net		32,751
Other assets:
Deposits		35,634
Note receivable—member		559,164
Other assets		1,950
		596,748
Total assets	$	5,336,355
Liabilities and members’ equity
Current liabilities:
Accounts payable—trade	$	3,653,235
Line of credit		500,000
Customer deposits		92,385
Other accrued liabilities		47,186
Accrued expenses		226,174
Total current liabilities		4,518,980
Members’ equity:
Class A, common units, $0 par value, 1,000 units authorized, issued and outstanding		1,000
Retained earnings		816,375
Total members’ equity		817,375
Total liabilities and members’ equity	$	5,336,355

See accompanying notes to financial statements.

F-37

Graphography Limited LLC

Statement of Operations

Year Ended December 31, 2005

Revenue	$	23,762,831
Cost of goods sold		20,545,842
Gross profit		3,216,989
Operating expenses:
Selling, general, and administrative expenses		2,853,677
Depreciation and amortization		26,149
Income from operations		337,163
Other income (expense):
Interest income		16,278
Interest expense		(18,556	)
Total other expense		(2,278	)
Net income	$	334,885

See accompanying notes to financial statements.

F-38

Graphography Limited LLC

Statement of Members’ Equity

Year Ended December 31, 2005

	Common A			Retained Earnings			Total
	Shares	Amount
Balance at January 1, 2005	1,000	$	1,000		489,264			490,264
Net income	—		—		334,885			334,885
Distributions	—		—		(7,774	)		(7,774	)
Balance at December 31, 2005	1,000	$	1,000	$	816,375		$	817,375

See accompanying notes to financial statements.

F-39

Graphography Limited LLC

Statement of Cash Flows

Year Ended December 31, 2005

Cash flows from operating activities
Net income	$	334,885
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		26,149
Change in assets:
Accounts receivable		(1,138,310	)
Unbilled revenue		1,786,548
Prepaid expenses and other		1,091
Change in liabilities:
Accounts payable		304,354
Accrued expenses and other		(2,161,035	)
Net cash used in operating activities		(846,318	)
Cash flows from investing activities
Purchases of property and equipment		(4,006	)
Cash flows from financing activities
Net line of credit borrowings		500,000
Advances to related parties		(50,253	)
Payments of distributions		(7,774	)
Net cash provided by financing activities		441,973
Decrease in cash and cash equivalents		(408,351	)
Cash and cash equivalents, beginning of year		631,370
Cash and cash equivalents, end of year	$	223,019
Supplemental disclosure of cash flow information
Cash paid during the year for interest	$	18,556

See accompanying notes to financial statements.

F-40

Graphography Limited LLC

Notes to Financial Statements

December 31, 2005

1. Description of the Business

Graphography Limited LLC (the Company) provides large and middle market companies in the United States with turnkey production management solutions, providing clients with an end-to-end solution for all their print, direct mail, premium, display and promotional needs. The Company analyzes, competitively bids, procures, manages and executes production programs on behalf of clients and serves as a complete outsource for the back-end execution of all their marketing efforts.

The Company is organized pursuant to the Delaware Limited Liability Company Act, which limits the liability of the individual members. The term of existence began with the filing of the Certificate of Formation with the Delaware Secretary of State and continues indefinitely.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when the product is shipped from a third party to the customer, which is the time that title transfers. In accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, we recognize revenue on a gross basis, as opposed to a net basis similar to a commission arrangement, because we bear the risks and benefits associated with revenue-generated activities by: (1) acting as a principal in the transaction; (2) establishing prices; (3) being responsible for fulfillment of the order; (4) taking the risk of loss for collection, delivery and returns; and (5) marketing our products, among other things.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms. Invoices require payment within 30 to 60 days from the invoice date. Accounts receivable are stated at the amount billed to the customer. Customer account balances with invoices dated over 90 days old are considered delinquent. Interest is not accrued on outstanding balances.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances and, based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Fully reserved receivables are reviewed on a monthly basis and uncollectible accounts are written off when all reasonable collection efforts have been exhausted.

F-41

Graphography Limited LLC

Notes to Financial Statements—(Continued)

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. The estimated useful lives, by asset class, are as follows:

Software	3 years
Computer equipment	5 years
Furniture and fixtures	5 years

Shipping and Handling Costs

Shipping and handling costs are classified in cost of sales in the statements of operations.

Income Taxes

As a limited liability company, the Company is treated as a partnership for federal, state and local income tax purposes. Accordingly, there is no provision for income taxes at the Company level. Members are taxed individually on their share of the Company’s earnings.

Advertising

Costs of advertising, which are expensed as incurred by the Company, were $150,051 for the year ended December 31, 2005.

3. Property and Equipment

Property and equipment at December 31, 2005, consisted of the following:

	2005
Computer equipment	$	223,207
Software		18,981
Furniture and fixtures		83,643
		325,831
Less accumulated depreciation		(293,080	)
	$	32,751

4. Line of Credit

During 2005, the Company entered into a $750,000 line of credit with a bank that matures in June 2006. Outstanding borrowings under the line of credit were $500,000 at December 31, 2005. Interest is payable monthly at the prime rate (7.25% at December 31, 2005) plus one percent. The note is collateralized by substantially all of the Company’s assets. The Company is required to comply with certain nonfinancial covenants.

5. Commitments and Contingencies

Lease Commitments

In June 1996 (as amended in August 1997), the Company entered into an operating lease agreement for a new facility. The lease agreement expires December 31, 2006, and requires base monthly rental payments of $17,353, plus an additional monthly rental payment for real estate taxes and common area maintenance fees related to the building. In addition, the Company leases office equipment under various operating leases.

Total rent expense for the year ended December 31, 2005, was $243,951.

F-42

Graphography Limited LLC

Notes to Financial Statements—(Continued)

Minimum annual rental payments are as follows:

2006	$	221,214
2007		8,942
2008		2,700
Total minimum lease payments	$	232,856

6. Significant Customers

Sales to two customers were approximately $12,000,000 and $9,000,000, respectively, for the year ended December 31, 2005. The amount included in accounts receivable at December 31, 2005, for these customers was approximately $811,000 and $1,520,000, respectively.

7. Major Vendor

Purchases from one vendor were approximately $2,800,000 for 2005. The amount included in accounts payable at December 31, 2005, for this vendor was approximately $395,000.

8. Concentration of Credit Risk

The Company maintains its cash balances in various financial institutions located in the United States. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000 per institution. The uninsured cash balance at December 31, 2005, was $71,680.

9. Benefit Plans

The Company adopted a 401(k) savings plan effective January 1, 2002, covering all of the Company’s employees. Employees may contribute a percentage of eligible compensation on both a before-tax basis and after-tax basis. The Company has the right to make discretionary contributions to the plan. For the year ended December 31, 2005, the Company did not make any contributions to the plan.

10. Related-Party Transactions

The Company engages an accounting firm to handle certain financial statement reporting and tax compliance requirements. One of the partners at this accounting firm is related to a member of the Company. As of December 31, 2005, the Company accrued approximately $25,000 related to services performed in 2005.

As of December 31, 2005, the Company had a note receivable of $559,164 arising from advances made to one of the members. The note is payable upon demand.

F-43

Graphography Limited LLC

Balance Sheets

	December 31, 2005		March 31, 2006
			(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	223,019	$	985,207
Accounts receivable		3,567,907		1,694,639
Unbilled revenue		893,664		3,491,976
Prepaid expenses		16,184		10,143
Other current assets		6,082		3,987
Total current assets		4,706,856		6,185,952
Property and equipment, net		32,751		27,050
Other assets:
Deposits		35,634		35,634
Note receivable—member		559,164		565,423
Other assets		1,950		2,950
		596,748		604,007
Total assets	$	5,336,355	$	6,817,009
Liabilities and members’ equity
Current liabilities:
Accounts payable—trade	$	3,653,235	$	3,695,235
Line of credit		500,000		—
Customer deposits		92,385		2,098,418
Other accrued liabilities		47,186		2,826
Accrued expenses		226,174		101,000
Total current liabilities		4,518,980		5,897,479
Members’ equity:
Class A, common units, $0 par value, 1,000 units authorized, issued and outstanding		1,000		1,000
Retained earnings		816,375		918,530
Total members’ equity		817,375		919,530
Total liabilities and members’ equity	$	5,336,355	$	6,817,009

See accompanying notes to unaudited financial statements.

F-44

Graphography Limited LLC

Statements of Operations

	Three Months Ended March 31,
	2005			2006
	(Unaudited)
Revenue	$	4,946,367		$	6,903,604
Cost of goods sold		4,230,194			5,698,641
Gross profit		716,173			1,204,963
Operating expenses:
Selling, general, and administrative expenses		675,768			684,199
Depreciation and amortization		4,590			5,701
Income from operations		35,815			515,063
Other income (expense):
Interest income		1,046			—
Interest expense		(1,571	)		(2,360	)
Total other expense		(525	)		(2,360	)
Net income	$	35,290		$	512,703

See accompanying notes to unaudited financial statements.

F-45

Graphography Limited LLC

Statements of Cash Flows

	Three Months March 31,
	2005			2006
	(Unaudited)
Cash flows from operating activities
Net income	$	35,290		$	512,703
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		4,590			5,701
Change in assets:
Accounts receivable		2,182,220			1,873,268
Unbilled revenue		(1,805,835	)		(2,598,312	)
Prepaid expenses and other		1,068			7,135
Change in liabilities:
Accounts payable		1,494,653			42,000
Customer deposits		(2,320,865	)		2,006,032
Accrued expenses and other		72,249			(169,534	)
Net cash provided by (used in) operating activities		(336,630	)		1,678,994
Cash flows from investing activities
Purchases of property and equipment		(3,173	)		—
Cash flows from financing activities
Repayments of line of credit		300,000			(500,000	)
Advances to related parties		(3,279	)		(6,258	)
Payments of distributions		(12,229	)		(410,548	)
Net cash provided (used in) by financing activities		284,492			(916,806	)
Increase in cash and cash equivalents		(55,311	)		762,188
Cash and cash equivalents, beginning of period		631,370			223,019
Cash and cash equivalents, end of period	$	576,059		$	985,207
Supplemental disclosure of cash flow information
Cash paid during the year for interest	$	1,571		$	2,360

See accompanying notes to consolidated financial statements.

F-46

Graphography Limited LLC

Notes to Financial Statements

March 31, 2006 and 2005

1. Summary of Significant Accounting Policies

Basis of Presentation

The unaudited financial statements of Graphography Limited LLC (the Company) included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and accounting principles generally accepted in the United States for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation of the accompanying unaudited financial statements have been included, and all adjustments are of a normal and recurring nature. These interim financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company’s most recent audited financial statements.

Unbilled Revenue

Unbilled revenue relates to shipments that have been made to customers for which the related accounts receivable has not yet been billed.

Customer Deposits

Customer deposits relate to payments made to the Company prior to invoicing the customer for their shipment. Once the customer is invoiced, the customer deposit is applied to the outstanding accounts receivable.

Income Taxes

As a limited liability company, the Company is treated as a partnership for federal, state and local income tax purposes. Accordingly, there is no provision for income taxes at the company level through March 31, 2006. Members are taxed individually on their share of the Company’s earnings.

2. Related Parties

The Company engages an accounting firm to handle certain financial statement reporting and tax compliance requirements. One of the partners at this accounting firm is related to a member of the Company. As of March 31, 2006, the Company accrued approximately $25,000 related to services performed in 2005.

As of March 31, 2006, the Company had a note receivable of $565,423 arising from advances made to one of its members. The note is payable upon demand.

3. Subsequent Events

On May 31, 2006, the Company was sold to InnerWorkings, Inc. for an acquisition price of $4.525 million in cash paid on May 31, 2006. The acquisition agreement provides that up to an additional $3.0 million in cash may be paid by InnerWorkings, Inc. contingent on the future revenue generated by the Company. The additional cash consideration, if any, will be paid on or prior to May 31, 2010 and will be treated as additional purchase price.

F-47

Report of Independent Auditors

The Board of Directors and Stockholders

Applied Graphics, Inc.

We have audited the accompanying balance sheet of Applied Graphics, Inc. as of October 31, 2005, and the related statement of income and retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Applied Graphics, Inc. as of October 31, 2005, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Smith, Lange & Phillips LLP

San Francisco, California

September 29, 2006

F-48

Applied Graphics, Inc.

Balance Sheet

October 31, 2005

Assets
Current assets:
Accounts receivable, net of allowance for doubtful accounts of $30,000	$	4,590,156
Inventory		592,095
Employee advances		127,310
Prepaid expenses		84,424
Deferred tax asset		123,990
Total current assets		5,517,975
Property and equipment, net		359,495
Other assets:
Employee advances		112,500
Deposits		45,378
Cash surrender value of life insurance		647,615
Goodwill		220,961
		1,026,454
Total assets	$	6,903,924
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable—trade	$	1,243,625
Line of credit		2,100,858
Customer deposits		43,862
Income taxes payable		14,790
Current portion of capital lease obligations		12,961
Accrued expenses		1,542,154
Total current liabilities		4,958,250
Capital lease obligations, less current portion		13,715
Deferred tax liability		71,250
Commitments and contingencies		225,000
Notes payable – related party		150,000
Total liabilities		5,418,215
Stockholders’ equity:
Class A, common stock, $1 par value, 4,000 units authorized, 3,795 shares issued and outstanding		3,795
Additional paid-in capital		265,412
Retained earnings		1,216,502
Total stockholders’ equity		1,485,709
Total liabilities and stockholders’ equity	$	6,903,924

See accompanying notes to financial statements.

F-49

Applied Graphics, Inc.

Statement of Operations

Year Ended October 31, 2005

Revenue	$	30,104,243
Cost of goods sold		19,822,569
Gross profit		10,281,674
Operating expenses:
Selling, general, and administrative expenses		9,684,421
Depreciation		148,779
Income from operations		448,474
Other income (expense):
Other income		13,346
Interest expense		(155,422	)
Total other expense		(142,076	)
Income before taxes		306,398
Income tax expense		(139,792	)
Net income	$	166,606

See accompanying notes to financial statements.

F-50

Applied Graphics, Inc.

Statement of Stockholders’ Equity

Year Ended October 31, 2005

	Common A			Retained Earnings		Additional Paid- in Capital		Total
	Shares	Amount
Balance at November 1, 2004	3,795	$	3,795	$	1,049,896	$	265,412	$	1,319,103
Net income	—		—		166,606				166,606
Balance at October 31, 2005	3,795	$	3,795	$	1,216,502	$	265,412	$	1,485,709

See accompanying notes to financial statements.

F-51

Applied Graphics, Inc

Statement of Cash Flows

Year Ended October 31, 2005

Cash flows from operating activities
Net income	$	166,606
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		148,779
Change in assets:
Accounts receivable		(217,296	)
Inventory		(232,743	)
Employee advances		(177,577	)
Prepaid expenses and other		16,744
Change in liabilities:
Accounts payable		109,731
Accrued expenses and other		138,186
Net cash used in operating activities		(47,570	)
Cash flows from investing activities
Purchases of property and equipment		(123,774	)
Cash flows from financing activities
Net line of credit borrowings		241,869
Payments on capital lease obligations		(20,525	)
Payments of distributions		(50,000	)
Net cash provided by financing activities		171,344
Change in cash and cash equivalents		—
Cash and cash equivalents, beginning of year		—
Cash and cash equivalents, end of year	$	—
Supplemental disclosure of cash flow information
Cash paid during the year for taxes	$	253,760
Cash paid during the year for interest	$	155,422

See accompanying notes to financial statements.

F-52

Applied Graphics, Inc.

Notes to Financial Statements

October 31, 2005

1. Description of the Business

Applied Graphics, Inc. (the Company) consists of eleven business locations, which provide business forms, products, custom printing and specialty promotional items to businesses and individuals. The Company analyzes, competitively bids, procures, manages and executes production programs on behalf of clients and serves as a complete outsource for the back-end execution of all their marketing efforts.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when the product is shipped from a third party to the customer, which is the time that title transfers. In accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, we recognize revenue on a gross basis, as opposed to a net basis similar to a commission arrangement, because we bear the risks and benefits associated with revenue-generated activities by: (1) acting as a principal in the transaction; (2) establishing prices; (3) being responsible for fulfillment of the order; (4) taking the risk of loss for collection, delivery and returns; and (5) marketing our products, among other things.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms. Invoices require payment within 30 to 60 days from the invoice date. Accounts receivable are stated at the amount billed to the customer. Customer account balances with invoices dated over 90 days old are considered delinquent. Interest is not accrued on outstanding balances.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances and, based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Fully reserved receivables are reviewed on a monthly basis and uncollectible accounts are written off when all reasonable collection efforts have been exhausted.

Inventory

Inventory is stated at the lower of cost or market. Cost is determined by the first-in, first-out method, and market represents the lower of replacement cost or estimated realizable value. Inventory consists primarily of finished goods.

F-53

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. The estimated useful lives, by asset class, are as follows:

Leasehold improvements	15 years
Computer equipment	3 -5 years
Furniture and fixtures	7 years

Goodwill

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized, but instead is tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. The Company evaluates the recoverability of goodwill using a two-step impairment test. For goodwill impairment review purposes, the Company has one reporting unit. In the first step, the fair value for the Company is compared to its book value including goodwill. In the case that the fair value is less than the book value, a second step is performed which compares the implied fair value of goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values and the net book values of the identifiable assets and liabilities. If the implied fair value of the goodwill is less than the book value, the difference is recognized as an impairment.

Shipping and Handling Costs

Shipping and handling costs are classified in cost of sales in the statement of operations.

Income Taxes

The Company records its income tax liability in accordance with Financial Accounting Standards Board Statement 109 (“FAS 109”), Accounting for Income Taxes. Under the provisions of FAS 109, an entity recognizes deferred tax assets and liabilities for future tax consequences of events that have been previously recognized in the Company’s financial statements or tax returns. The primary differences relate to depreciation and amortization differences, inventory capitalization and state tax deductions. Deferred tax assets are recognized for deductible temporary differences, with a valuation allowance established against the resulting assets to the extent it is more likely than not that the related tax benefit will not be realized. The measurement of deferred tax assets and liabilities is based on provisions on the enacted tax law; the effects of future changes in tax laws or rates are not anticipated.

Advertising

Costs of advertising, which are expensed as incurred by the Company, were $10,384 for the year ended October 31, 2005.

3. Property and Equipment

Property and equipment at October 31, 2005, consisted of the following:

	2005
Computer equipment	$	431,555
Leasehold improvements		16,462
Furniture and fixtures		306,646
		754,663
Less accumulated depreciation		(395,168	)
	$	359,495

F-54

4. Line of Credit

During 2005, the Company entered into a $3,050,000 line of credit with a bank that matures in April 2006. Outstanding borrowings under the line of credit were $2,100,858 at October 31, 2005. Interest is payable monthly at the prime rate (6.75% at October 31, 2005). The note is collateralized by substantially all of the Company’s assets and personally guaranteed by an existing shareholder. The Company is required to comply with certain financial and nonfinancial covenants.

5. Income Taxes

The provision for income taxes consists of the following components:

	Year Ended October 31, 2005
Current
Federal	$	178,007
State		42,863
Total current		220,870
Deferred
Federal		(63,548	)
State		(17,530	)
Total deferred		(81,078	)
Income tax expense	$	139,792

The provision for income taxes for the twelve months ended October 31, 2005, differs from the amount computed by applying the U.S. federal income tax rate of 34% to pretax income because of the effect of the following items:

	Twelve Months Ended October 31, 2005
Tax expense at U.S. federal income tax rate	$	104,175
State income taxes, net of federal income tax effect		16,998
Nondeductible expenses and other		18,619
Income tax expense	$	139,792

At October 31, 2005, the Company’s deferred tax assets and liabilities consisted of the following:

	October 31, 2005
Current deferred tax assets:
Reserves and allowances	$	109,242
Other		14,748
Total current deferred tax assets		123,990
Noncurrent deferred tax assets:
Other		1,185
Total noncurrent deferred tax assets		1,185
Total deferred tax assets		125,175
Noncurrent deferred tax liabilities:
Fixed assets		(72,435	)
Total deferred tax liabilities		(72,435	)
Net deferred tax asset	$	52,740
Net current deferred tax asset	$	123,990
Net noncurrent deferred tax liability		(71,250	)
Net deferred tax asset	$	52,740

F-55

6. Commitments and Contingencies

Lease Commitments

During 2004, the Company entered into a capital lease for furniture and computer equipment that may be purchased for a nominal amount upon expiration of the lease in October 2007. Monthly payments are $1,178. The cost and accumulated depreciation of the capital leases included in furniture and fixtures at October 31, 2005, was $38,924 and $7,142, respectively. Amortization of the related assets is included in depreciation in the accompanying statement of operations.

During 2004 and 2005, the Company renewed various operating lease agreements for existing facilities. The lease agreements have varying expiration dates through November 2010, and require escalating base monthly rental payments ranging from $636 to $15,000, plus an additional monthly rental payment for real estate taxes and common area maintenance fees related to the building.

Total rent expense for the year ended October 31, 2005, was $520,592.

Minimum annual rental payments are as follows:

	Capital Leases			Operating Leases
Years Ending October 31,
2006	$	14,139		$	594,408
2007		14,134			321,882
2008					223,205
2009					198,119
2010					102,480
Thereafter					8,330
Total minimum lease payments		28,273		$	1,448,424
Less amounts representing interest		(1,597	)
	$	26,676

Sales tax

The Company is currently undergoing a sales tax audit by a state tax authority. The Company has determined that it is probable that they will be responsible for additional sales tax and has determined an estimated amount based on a draft report issued by the sales tax auditor. As of October 31, 2005, the Company has accrued an estimated liability of $225,000.

7. Concentration of Credit Risk

The Company maintains its cash balances in various financial institutions located in the United States. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000 per institution.

8. Benefit Plans

The Company sponsors a 401(k) savings plan, covering all of the Company’s employees. Employees may contribute a percentage of eligible compensation on both a before-tax basis and after-tax basis. The Company has the right to make discretionary contributions to the plan. For the year ended October 31, 2005, the Company had contributed $80,377 to the plan.

9. Related-Party Transactions

The Company leases office space from a partnership which includes certain shareholders of the Company. For the year ended October 31, 2005, the Company paid total rent of $172,000 to the partnership.

As of October 31, 2005, the Company had notes payable of $150,000 from its shareholders. The notes are due on December 31, 2006, and bear interest at 12% per annum. The notes were paid off on June 20, 2006.

F-56

Applied Graphics, Inc.

Balance Sheets

	October 31, 2005		July 31, 2006
			(Unaudited)
Assets
Current assets:
Cash	$	—	$	44,543
Accounts receivable, net of allowance for doubtful accounts of $30,000		4,590,156		4,592,338
Inventory		592,095		753,386
Employee advances		127,310		125,724
Prepaid expenses		84,424		105,760
Deferred tax asset		123,990		127,780
Total current assets		5,517,975		5,749,531
Property and equipment, net		359,495		313,699
Other assets:
Employee advances		112,500		84,375
Deposits		45,378		47,368
Cash surrender value of life insurance		647,615		688,568
Goodwill		220,961		220,961
		1,026,454		1,041,272
Total assets	$	6,903,924	$	7,104,502
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable—trade	$	1,243,625	$	1,012,876
Line of credit		2,100,858		2,444,470
Customer deposits		43,862		155,768
Income taxes payable		14,790		111,181
Current portion of capital lease obligations		12,961		12,961
Accrued expenses		1,542,154		1,242,535
Total current liabilities		4,958,250		4,979,791
Capital lease obligations, less current portion		13,715		4,528
Deferred tax liability		71,250		55,040
Commitments and contingencies		225,000		225,000
Notes payable – related party		150,000		—
Total liabilities		5,418,215		5,264,359
Stockholders’ equity:
Class A, common stock, $1 par value, 4,000 units authorized, 3,795 shares issued and outstanding		3,795		3,795
Additional paid-in capital		265,412		265,412
Retained earnings		1,216,502		1,570,936
Total stockholders’ equity		1,485,709		1,840,143
Total liabilities and stockholders’ equity	$	6,903,924	$	7,104,502

See accompanying notes to financial statements.

F-57

Applied Graphics, Inc.

Statements of Operations

	Nine months Ended July 31,
	2005			2006
	(Unaudited)
Revenue	$	21,873,528		$	24,394,436
Cost of goods sold		14,144,129			15,777,894
Gross profit		7,729,399			8,616,542
Operating expenses:
Selling, general, and administrative expenses		7,225,675			7,808,590
Depreciation		106,200			99,566
Income from operations		397,524			708,386
Other income (expense):
Other income		9,987			58,474
Loss on disposal of property and equipment		—			(41,839	)
Interest expense		(116,098	)		(138,839	)
Total other expense		(106,111	)		(122,204	)
Income before taxes		291,413			586,182
Income tax expense		(90,000	)		(231,748	)
Net income	$	201,413		$	354,434

See accompanying notes to financial statements.

F-58

Applied Graphics, Inc

Statements of Cash Flows

	Nine months Ended July 31,
	2005			2006
	(Unaudited)
Cash flows from operating activities
Net income	$	201,413		$	354,434
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation		106,200			99,566
Loss on disposal of property and equipment		—			41,839
Change in assets:
Accounts receivable		90,154			(2,182	)
Inventory		(226,852	)		(161,291	)
Employee advances		62,233			29,711
Prepaid expenses and other		(216,008	)		(68,069	)
Change in liabilities:
Accounts payable		(123,949	)		(508,061	)
Accrued expenses and other		(13,194	)		169,780
Net cash used in operating activities		(120,003	)		(44,273	)
Cash flows from investing activities
Purchases of property and equipment		(108,852	)		(95,609	)
Cash flows from financing activities
Net line of credit borrowings		269,313			343,612
Payments on capital lease obligations		(15,458	)		(9,187	)
Payments of notes payable – related party		(25,000	)		(150,000	)
Net cash provided by financing activities		228,855			184,425
Change in cash and cash equivalents		—			44,543
Cash and cash equivalents, beginning of period		—			—
Cash and cash equivalents, end of period	$	—		$	44,543
Supplemental disclosure of cash flow information
Cash paid during the year for taxes	$	190,320		$	157,339
Cash paid during the year for interest	$	116,098		$	138,839

See accompanying notes to financial statements.

F-59

Applied Graphics, Inc.

Notes to Financial Statements

July 31, 2006 and 2005

1. Description of the Business

Applied Graphics, Inc. (the Company) consists of eleven business locations, which provide business forms, products, custom printing and specialty promotional items to businesses and individuals. The Company analyzes, competitively bids, procures, manages and executes production programs on behalf of clients and serves as a complete outsource for the back-end execution of all their marketing efforts.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue is recognized when the product is shipped from a third party to the customer, which is the time that title transfers. In accordance with EITF Issue 99-19, Reporting Revenue Gross as a Principal versus Net as an Agent, we recognize revenue on a gross basis, as opposed to a net basis similar to a commission arrangement, because we bear the risks and benefits associated with revenue-generated activities by: (1) acting as a principal in the transaction; (2) establishing prices; (3) being responsible for fulfillment of the order; (4) taking the risk of loss for collection, delivery and returns; and (5) marketing our products, among other things.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

Accounts Receivable

Accounts receivable are uncollateralized customer obligations due under normal trade terms. Invoices require payment within 30 to 60 days from the invoice date. Accounts receivable are stated at the amount billed to the customer. Customer account balances with invoices dated over 90 days old are considered delinquent. Interest is not accrued on outstanding balances.

The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances and, based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Fully reserved receivables are reviewed on a monthly basis and uncollectible accounts are written off when all reasonable collection efforts have been exhausted.

Inventory

Inventory is stated at the lower of cost or market. Cost is determined by the first-in, first-out method, and market represents the lower of replacement cost or estimated realizable value. Inventory consists primarily of finished goods.

F-60

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective assets. The estimated useful lives, by asset class, are as follows:

Leasehold improvements	15 years
Computer equipment	3 -5 years
Furniture and fixtures	7 years

Goodwill

Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. In accordance with Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, goodwill is not amortized, but instead is tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. The Company evaluates the recoverability of goodwill using a two-step impairment test. For goodwill impairment review purposes, the Company has one reporting unit. In the first step, the fair value for the Company is compared to its book value including goodwill. In the case that the fair value is less than the book value, a second step is performed which compares the implied fair value of goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values and the net fair values of the identifiable assets and liabilities. If the implied fair value of the goodwill is less than the book value, the difference is recognized as an impairment.

Shipping and Handling Costs

Shipping and handling costs are classified in cost of sales in the statement of operations.

Income Taxes

The Company records its income tax liability in accordance with Financial Accounting Standards Board Statement 109 (“FAS 109”), Accounting for Income Taxes. Under the provisions of FAS 109, an entity recognizes deferred tax assets and liabilities for future tax consequences of events that have been previously recognized in the Company’s financial statements or tax returns. The primary differences relate to depreciation and amortization differences, inventory capitalization and state tax deductions. Deferred tax assets are recognized for deductible temporary differences, with a valuation allowance established against the resulting assets to the extent it is more likely than not that the related tax benefit will not be realized. The measurement of deferred tax assets and liabilities is based on provisions on the enacted tax law; the effects of future changes in tax laws or rates are not anticipated.

3. Property and Equipment

Property and equipment at July 31, 2006, consisted of the following:

	2006
Computer equipment	$	461,351
Leasehold improvements		16,462
Furniture and fixtures		314,248
		792,061
Less accumulated depreciation		(478,362	)
	$	313,699

F-61

4. Line of Credit

During 2006, the Company entered into a $3,100,000 line of credit with a bank that matures in April 2007. Outstanding borrowings under the line of credit were $2,444,470 at July 31, 2006. Interest is payable monthly at the prime rate (8.25% at July 31, 2006). The note is collateralized by substantially all of the Company’s assets and personally guaranteed by an existing shareholder. The Company is required to comply with certain financial and nonfinancial covenants.

5. Commitments and Contingencies

Sales tax

The Company is currently undergoing a sales tax audit by a state tax authority. The Company has determined that it is probable that they will be responsible for additional sales tax and has determined an estimated amount based on a draft report issued by the sales tax auditor. As of July 31, 2006, the Company has accrued an estimated liability of $225,000.

6. Concentration of Credit Risk

The Company maintains its cash balances in various financial institutions located in the United States. The balances are insured by the Federal Deposit Insurance Corporation up to $100,000 per institution.

7. Benefit Plans

The Company sponsors a 401(k) savings plan, covering all of the Company’s employees. Employees may contribute a percentage of eligible compensation on both a before-tax basis and after-tax basis. The Company has the right to make discretionary contributions to the plan. For the nine months ended July 31, 2006, the Company had made no contributions to the plan.

8. Related-Party Transactions

The Company leases office space from a partnership which includes certain shareholders of the Company. For the nine months ended July 31, 2006, the Company paid total rent of $135,000 to the partnership.

The Company had notes payable of $150,000 from its shareholders. The notes were due on December 31, 2006, and beared interest at 12% per annum. The notes were paid off on June 20, 2006.

9. Subsequent Events

In October 2006, the Company was sold to InnerWorkings, Inc. for an acquisition price of $7.0 million in cash paid in October 2006. The acquisition agreement provides that up to an additional $4.85 million in cash may be paid by InnerWorkings, Inc. contingent on certain future performance measures achieved by the Company. The additional cash consideration, if any, will be paid on or prior to September 30, 2008 and will be treated as additional purchase price.

F-62

InnerWorkings, Inc.

Unaudited Pro Forma Condensed Consolidated Financial Statements

In October 2006, InnerWorkings, Inc. (the “Company”) acquired Applied Graphics, Inc. (“Applied”), a provider of production management services, including print procurement on behalf of clients, which also serves as a complete outsource for the back-end execution of all their marketing efforts, located throughout California and Hawaii. In connection with the acquisition, we added more than 1,000 new transactional client relationships and helped further diversify our supplier network by adding over 400 new vendor relationships. As a result of the acquisition, we also established a presence in the west coast market.

In May 2006, InnerWorkings, Inc. (the “Company”) acquired Graphography Limited LLC (“Graphography”) a provider of production management services, including print procurement and promotional services, located in New York, New York. In connection with the acquisition, we added two significant enterprise clients, a Fortune 500 manufacturing and marketing company and a multi-billion dollar international beverage distributor. We also added more than 100 new transactional client relationships and helped further diversify our supplier network by adding over 400 new vendor relationships. As a result of the acquisition, we also established a presence in the New York market with an office of 22 people located in Manhattan.

For purposes of the Unaudited Pro Forma Condensed Consolidated Income Statements for the nine months ended September 30, 2006 and the twelve months ended December 31, 2005, we assume the Applied and Graphography acquisitions occurred on January 1, 2005.

The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the Applied acquisition and this offering as if they occurred on September 30, 2006.

The Company and Applied have different fiscal year ends as the Company’s fiscal year end is December 31, and Applied’s fiscal year end is October 31. As a result, the unaudited pro forma condensed consolidated income statement for the nine months ended September 30, 2006 has been derived from:

• the unaudited historical consolidated income statement of the Company for the nine months ended September 30, 2006; and

• the unaudited historical income statement of Applied for the nine months ended July 31, 2006.

• the unaudited historical income statement of Graphography for the period from January 1, 2006 through May 31, 2006.

The unaudited pro forma condensed consolidated income statement for the year ended December 31, 2005 has been derived from:

• the audited historical consolidated income statement of the Company for the year ended December 31, 2005; and

• the audited historical income statement of Applied for the fiscal year ended October 31, 2005.

• the audited historical income statement of Graphography for the year ended December 31, 2005.

The unaudited pro forma condensed consolidated balance sheet for the fiscal period ended September 30, 2006 has been derived from:

• the unaudited historical consolidated balance sheet of the Company as of September 30, 2006; and

• the unaudited historical balance sheet of Applied as of July 31, 2006.

These Unaudited Pro Forma Condensed Consolidated Financial Statements (“the unaudited pro forma financial statements”) have been prepared based on preliminary estimates of fair values of the Applied and

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Graphography assets acquired and liabilities assumed as of the acquisition date. The actual amounts recorded for the acquisition may differ from the information presented here. The purchase price has been allocated on a preliminary basis based on management’s best estimates of fair value, with the excess cost over net tangible and intangible assets acquired being allocated to goodwill. These allocations are subject to change pending a final analysis of the fair value of the assets acquired and liabilities assumed as the acquisition date. In addition, post-closing adjustments to the purchase price will affect the purchase price allocation.

The unaudited pro forma financial statements presented do not reflect the pro forma effect of the CoreVision acquisition as the acquisition was considered immaterial for financial reporting purposes.

The unaudited pro forma financial statements presented are for illustration purposes only and do not necessarily indicate the operating results or financial position that would have been achieved if the Applied or Graphography acquisitions had occurred at the beginning of the period presented, nor is it indicative of future operating results or financial position.

These unaudited pro forma financial statements do not reflect any operating efficiencies or cost savings that we may achieve with respect to the combined companies, nor do they include the effects of restructuring activities.

In addition, the unaudited pro forma financial statements presented reflect the effects of the following transactions:

• conversion from an LLC to a “C” corporation on January 3, 2006;

• conversion of the Company’s Series B, D and E preferred shares to common shares;

• use of a portion of the proceeds from the Company’s initial public offering in August 2006 to liquidate the outstanding bank debt as of that date; and

• 3,000,000 shares issued in this offering.

The unaudited pro forma financial statements should be read in conjunction with the accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements and the historical consolidated financial statements and accompanying notes included in this Form S-1 Registration Statement.

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InnerWorkings, Inc

Unaudited Pro Forma Condensed Consolidated Balance Sheet

September 30, 2006

	InnerWorkings, Inc. September 30, 2006			Applied Graphics July 31, 2006		Acquisition and Offering Pro Forma Adjustments			Pro Forma as Adjusted
Assets
Current assets:
Cash and cash equivalents	$	34,283,536		$	44,543	$	39,217,000	(1)(13)	$	73,545,079
Marketable securities		9,969,356			—		—			9,969,356
Accounts receivable, net		29,535,931			4,592,338		—			34,128,269
Inventory		—			753,386		132,273	(2)		885,659
Employee advances		—			125,724		—			125,724
Unbilled revenue		6,530,966			—		—			6,530,966
Prepaid expenses		5,332,651			105,760		—			5,438,411
Deferred income taxes		729,709			127,780		(51,586	)(2)		805,903
Other current assets		824,359			—		—			824,359
Total current assets		87,206,508			5,749,531		39,297,687			132,253,726
Property and equipment, net		2,399,395			313,699		—			2,713,094
Intangibles and other assets:
Goodwill		5,128,981			220,961		4,248,680	(3)		9,598,622
Intangible assets, net		3,443,935			—		1,361,459	(3)		4,805,394
Deposits		76,505			47,368		—			123,873
Employee advances		—			84,375		—			84,375
Investment		125,000			—		—			125,000
Cash surrender value of life insurance		—			688,568		—			688,568
Deferred income taxes		5,699,740			—		(586,009	)(3)(4)		5,113,731
Other assets		36,373			—		—			36,373
		14,510,534			1,041,272		5,024,130			20,575,936
Total assets	$	104,116,437		$	7,104,502	$	44,321,817		$	155,542,756
Liabilities and stockholders’ deficit/members’ equity
Current liabilities:
Accounts payable—trade	$	19,092,994		$	1,012,876	$	—		$	20,105,870
Line of credit		—			2,444,470		—			2,444,470
Due to seller		1,070,000			—		—			1,070,000
Current maturities of capital lease obligations		74,094			12,961		—			87,055
Customer deposits		1,432,188			155,768		—			1,587,956
Other liabilities		41,504			111,181		—			152,685
Deferred revenue		489,247			—		—			489,247
Accrued expenses		3,144,563			1,242,535		—			4,387,098
Total current liabilities		25,344,590			4,979,791		—			30,324,381
Capital lease obligations, less current maturities		238,424			4,528		—			242,952
Commitments and contingencies		—			225,000		—			225,000
Deferred income taxes		—			55,040		(55,040	)(4)		—
Total liabilities		25,583,014			5,264,359		(55,040	)		30,792,333
Stockholders’ deficit/members’ equity:
Common Stock		115,344,405			3,795		(3,495	)(5)(13)		115,344,405
Additional paid-in capital		5,322,591			265,412		(45,951,288	)(5)(13)		51,359,291
Treasury stock at cost		(40,000,000	)		—		—			(40,000,000	)
Unrealized loss on marketable securities		(30,644	)		—		—			(30,644	)
Accumulated deficit		(2,102,629	)		1,570,936		(1,570,936	)(5)		(2,102,629	)
Total stockholders’ deficit/members’ equity		78,533,423			1,840,143		44,376,857			124,750,423
Total liabilities and stockholders’ deficit/members’ equity	$	104,116,437		$	7,104,502	$	44,321,817		$	155,542,756

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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InnerWorkings, Inc

Unaudited Pro Forma Condensed Consolidated Income Statement

For the Year Ended December 31, 2005

	InnerWorkings, Inc. Historical			Graphography Historical			Applied Graphics Year ended October 31, 2005			Acquisitions Pro Forma Adjustments			IPO and Tax Pro Forma Adjustments			Pro Forma
Revenue	$	76,869,586		$	23,762,831		$	30,104,243		$	—		$	—		$	130,736,660
Cost of goods sold		61,271,453			20,545,842			19,822,569			—			—			101,639,864
Gross profit		15,598,133			3,216,989			10,281,674			—			—			29,096,796
Operating expenses:
Selling, general, and administrative expenses		10,605,248			2,853,677			9,684,421			—			—			23,143,346
Depreciation and amortization		387,911			26,149			148,779			318,397	(6)		—			881,236
Income from operations		4,604,974			337,163			448,474			(318,397	)		—			5,072,214
Other income (expense):
Interest income		78,627			16,278			—			(78,627	)(7)		—			16,278
Interest expense		(98,128	)		(18,556	)		(155,422	)		—			98,128	(9)		(173,978	)
Minority interest		58,244			—			—			—			—			58,244
Other, net		(9,580	)		—			13,346			—			—			3,766
Total other income (expense)		29,163			(2,278	)		(142,076	)		(78,627	)		98,128			(95,690	)
Income before income taxes		4,634,137			334,885			306,398			(397,024	)		98,128			4,976,524
Income tax expense		—			—			(139,792	)		24,234	(8)		(1,845,583	)(9)(10)		(1,961,141	)
Net income		4,634,137			334,885			166,606			(372,790	)		(1,747,455	)		3,015,383
Dividends on preferred shares		(761,825	)		—			—			—			761,825	(11)		—
Net income applicable to common shareholders	$	3,872,312		$	334,885		$	166,606		$	(372,790	)	$	(985,630	)	$	3,015,383
Basic earnings per share	$	0.12														$	0.07	(12)
Diluted earnings per share	$	0.12														$	0.07	(12)
Number of shares used for calculation:
Basic earnings per share		31,009,580												12,597,500			43,607,080
Diluted earnings per share		32,707,292												11,660,000			44,367,292

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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InnerWorkings, Inc

Unaudited Pro Forma Condensed Consolidated Income Statement

For the Nine Months Ended September 30, 2006

	InnerWorkings, Inc. Historical			Period from January 1, 2006 through May 31, 2006 Graphography Historical			Applied Graphics Nine months ended July 31, 2006			Acquisitions Pro Forma Adjustments			IPO Pro Forma Adjustments			Pro Forma
Revenue	$	99,361,724		$	10,637,659		$	24,394,436		$	—		$	—		$	134,393,819
Cost of goods sold		78,227,822			9,018,833			15,777,894			—			—			103,024,549
Gross profit		21,133,902			1,618,826			8,616,542			—			—			31,369,270
Operating expenses:
Selling, general, and administrative expenses		12,770,496			1,461,016			7,808,590			—			—			22,040,102
Depreciation and amortization		574,016			9,386			99,566			162,920	(6)		—			845,888
Income from operations		7,789,390			148,424			708,386			(162,920	)		—			8,483,280
Other income (expense):
Interest income		492,231			—			—			(262,500	)(7)		—			229,731
Interest expense		(148,539	)		(2,360	)		(138,839	)		—			148,539	(9)		(141,199	)
Other, net		(4,784	)		—			16,635			—			—			11,851
Total other income (expense)		338,908			(2,360	)		(122,204	)		(262,500	)		148,539			100,383
Income before income taxes		8,128,298			146,064			586,182			(425,420	)		148,539			8,583,663
Income tax expense		(3,215,327	)		—			(231,748	)		111,742	(8)		(59,416	)(9)		(3,394,749	)
Net income		4,912,971			146,064			354,434			(313,678	)		89,123			5,188,914
Dividends on preferred shares		(1,408,740	)		—			—			—			1,408,740	(11)		—
Net income applicable to common shareholders	$	3,504,231		$	146,064		$	354,434		$	(313,678	)	$	1,497,863		$	5,188,914
Basic earnings per share	$	0.13														$	0.11	(12)
Diluted earnings per share	$	0.13														$	0.10	(12)
Number of shares used for calculation:
Basic earnings per share		27,517,682												19,471,025			46,988,707
Diluted earnings per share		36,803,747												12,711,797			49,515,544

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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InnerWorkings, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

(1) Cash and cash equivalents:

The pro forma adjustment to cash and cash equivalents reflects the purchase price of $7.0 million paid to the shareholders of Applied in October 2006. In addition, there is up to an additional $4.8 million in cash purchase price which may be paid contingent upon future performance measures achieved by Applied on or prior to September 30, 2008. Approximately $3.8 million of the additional $4.8 million in additional purchase price will be paid out in equal annual installments if certain gross profit measures are achieved by Applied. The remaining $1.0 million in additional purchase price will be paid out over the next two years if additional performance measures outside of gross profit are achieved by Applied. Any such additional payments will be recorded as an increase to goodwill.

(2) Inventory

The pro forma balance sheet adjustment to inventory reflects the fair value adjustment to inventory and the corresponding deferred income tax effect.

(3) Purchase Price:

Preliminary Purchase Price Allocation

The purchase price allocation presented in these unaudited pro forma condensed consolidated financial statements will differ from the purchase price allocation to be performed as of October 1, 2006 (date of Applied acquisition). In addition, adjustments to the purchase price allocation will be made upon settlement of the working capital and other post-closing adjustments.

For purposes of the unaudited condensed consolidated balance sheet, the $7.0 million purchase price has been allocated to the assets recorded by Applied as of July 31, 2006, based on estimated fair values. Adjustments to these estimates will be included in the allocation of the purchase price of Applied, if the adjustment is determined within the purchase price allocation period of up to twelve months. The excess of the purchase price over the identifiable intangible and net tangible assets was allocated to goodwill. The preliminary purchase price of $7.0 million has been allocated as follows:

Cash	$	44,543
Accounts receivable		4,592,338
Inventory		885,659
Other current assets		359,264
Property, plant and equipment		313,699
Other non-current assets		820,311
Customer list		1,361,459
Goodwill		4,469,641
Accounts payable		(1,012,876	)
Line of credit		(2,444,470	)
Accrued expenses		(1,242,535	)
Deferred tax liability related to customer list acquired		(530,969	)
Deferred tax liability related to fair value adjustment of inventory		(51,586	)
Other liabilities		(564,478	)
Total purchase price	$	7,000,000

Goodwill and intangible assets

The pro forma adjustments to goodwill reflects the goodwill resulting from the purchase method of accounting in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations”

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(“SFAS No. 141”). We have estimated the fair value of intangible assets through the use of an independent third-party valuation firm to value these identifiable intangible assets, which are subject to amortization. These estimates are based on a preliminary valuation and are subject to change upon management’s review of the final valuation.

The following table summarizes the intangible assets and goodwill acquired:

Customer list	$	1,361,459
Goodwill acquired	$	4,469,641
Elimination of existing goodwill		(220,961	)
Goodwill pro forma adjustment	$	4,248,680

As the amortization expense for the customer list is not deductible for U.S. income tax purposes, we recorded a deferred tax liability of $530,969 based on these preliminary values.

(4) Deferred income taxes:

The pro forma adjustment reflects the reclassification of the long term deferred tax liability against the long term deferred tax asset.

(5) Common stock, additional paid-in capital and retained earnings:

The pro forma adjustment to the common stock, additional paid-in capital and retained earnings reflects the elimination of Applied’s historical stockholders’ equity as a result of the acquisition.

(6) Depreciation and amortization:

The pro forma adjustment reflects the amortization of intangible assets over their useful lives. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the Company.

	Useful Life	Year Ended December 31, 2005 Pro Forma Amortization		Nine Months Ended September 30, 2006 Pro Forma Amortization
Customer lists:
Graphography	15 years	$	173,133	$	72,139
Applied	15 years		90,764		68,073
			263,897		140,212
Non-compete agreements	2 years		54,500		22,708
Total		$	318,397	$	162,920

(7) Interest income:

The pro forma adjustment reflects the reduction in interest income related to the $7.0 million paid for the Applied acquisition, which reduces cash available for investment by the Company.

(8) Income tax expense:

The pro forma adjustment reflects the tax rate applied to the historical pre-tax income of Graphography to reflect taxation as a C corporation and to the pro forma adjustments related to the Applied and Graphography acquisitions as follows:

Nine months ended September 30, 2006	40.00%
Year ended December 31, 2005	39.00%

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(9) Interest expense:

The pro forma adjustment reflects the elimination of interest expense on the outstanding debt under our line of credit which was paid down with the proceeds from our initial public offering, and the related tax effect at 39.0% for the year ended December 31, 2005 and 40.0% for the nine months ended September 30, 2006.

(10) Income tax expense:

The pro forma adjustment reflects our conversion form an LLC to a C corporation which occurred on January 3, 2006 as if it occurred at the beginning of the period presented. The adjustment represents a combined federal and state effective tax rate of 39%.

(11) Dividends on Preferred Shares:

Pro forma adjustment reflects the elimination of preferred dividends resulting from the conversion of all our outstanding shares of Series B preferred stock, Series D preferred stock and Series E preferred stock into shares of our common stock on a share-for-share basis in connection with our initial public offering on August 16, 2006.

(12) Earnings per share:

The pro forma basic earnings per share for the year ended December 31, 2005 includes the 2,537,500 shares of Series B and D shares converted to common stock, the 3,000,000 shares issued in this offering and the 7,060,000 shares issued in connection with the initial public offering in August 2006. The pro forma diluted earnings per share include the dilutive effect of the 760,212 options outstanding using the treasury stock method.

The pro forma basic earnings per share for the nine months ended September 30, 2006 include the shares of Series B, D and E shares converted to common stock and the 3,000,000 shares issued in this offering. The pro forma diluted earnings per share include the dilutive effect of the 2,526,837 options outstanding using the treasury stock method.

(13) Offering pro forma adjustment:

The pro forma adjustment for the offering reflects the increase in cash and stockholders’ equity resulting from the net proceeds of $46.2 million received in connection with the 3,000,000 shares issued in this offering, based on an assumed public offering price of $16.42, the closing sale price of the common stock as reported on the Nasdaq Global Market on January 4, 2007, less estimated underwriting discounts and expenses payable by the Company.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth the expenses (other than underwriting discounts and commissions) expected to be incurred in connection with this offering.

Securities and Exchange Commission Registration Fee	$	15,731.71
NASD Filing Fee		15,201.60
Accounting Fees and Expenses		*
Printing Expenses		*
Legal Fees and Expenses		*
Miscellaneous		*
Total	$	*

* To be completed by amendment.

The foregoing items, except for the Securities and Exchange Commission registration fee and the NASD filing fee are estimated. All expenses will be borne by us.

Item 14. Indemnification of Directors and Officers

Delaware General Corporation Law

We are incorporated under the laws of the State of Delaware. Our second amended and restated certificate of incorporation (filed as Exhibit 3.2 to this registration statement) and amended and restated by-laws (filed as Exhibit 3.4 to this registration statement) provide for the indemnification of our directors, officers, employees and agents to the fullest extent permitted under the Delaware General Corporation Law. Section 145 of the Delaware General Corporation Law provides that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that the person’s conduct was unlawful.

In addition, we have the power to indemnify any person who was or is a party or is threatened to be made a party to, or otherwise involved (including involvement as a witness) in, any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner

II-1

the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that a Delaware Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director:

· for any breach of the director’s duty of loyalty to InnerWorkings or its stockholders;

· for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

· for payment of dividends or stock purchases or redemptions by the corporation in violation of Section 174 of the Delaware General Corporation Law; or

· for any transaction from which the director derived an improper personal benefit.

Our second amended and restated certificate of incorporation includes such a provision. As a result of this provision, InnerWorkings and its stockholders may be unable to obtain monetary damages from a director for certain breaches of his or her fiduciary duty to InnerWorkings. This provision does not, however, eliminate a director’s fiduciary responsibilities and, in appropriate circumstances, equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. The provision also does not affect a director’s responsibilities under any other laws, such as the federal securities laws.

Indemnification Agreements

We have entered into indemnification agreements, a form of which is attached as Exhibit 10.10, with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law, as amended from time to time. These indemnification agreements may require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements may also require us to advance all expenses incurred by the directors or executive officers in investigating or defending any such action, suit or proceeding. However, an individual will not receive indemnification for judgments, settlements or expenses if he or she is found liable to InnerWorkings (except to the extent the court determines he or she is fairly and reasonably entitled to indemnity for expenses that the court shall deem proper).

Underwriting Agreement

The underwriting agreement (filed as Exhibit 1.1 to this registration statement) provides that the underwriters are obligated, under certain circumstances, to provide indemnification to InnerWorkings and its officers, directors and employees for certain liabilities, including liabilities arising under the Securities Act of 1933, as amended, or otherwise.

Directors’ and Officers’ Liability Insurance

InnerWorkings maintains directors’ and officers’ liability insurance policies, which insure against liabilities that directors or officers may incur in such capacities. These insurance policies, together with the indemnification

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agreements, may be sufficiently broad to permit indemnification of our directors and officers for liabilities, including reimbursement of expenses incurred, arising under the Securities Act of 1933, as amended, or otherwise.

Item 15. Recent Sales of Unregistered Securities

We sold the following Class A common units, Series B convertible preferred units, Series C convertible preferred units and Series D convertible preferred units of InnerWorkings, LLC and Class A common shares and Series E preferred shares of InnerWorkings, Inc. to the following entities and individuals on the dates set forth below. The issuances of these securities were deemed to be exempt from registration under the Securities Act of 1933, as amended, in reliance on Section 4(2) of the Securities Act as transactions not involving a public offering.

Name of Unitholder/Stockholder	Class A Common Units/Shares	Series B Convertible Preferred Units	Series C Convertible Preferred Units		Series D Convertible Preferred Units	Series E Preferred Shares	Date of Purchase		Total Purchase Price
Incorp, LLC	9,500,000	—	—		—	—	1/7/03			(1)
Scott A. Frisoni	300,000	—	—		—	—	2/15/03			(2)
Jim Pouba	100,000	—	—		—	—	2/15/03			(2)
InnerWorkings Series C Investment Partners, LLC	387,000	—	2,580,000	(3)(4)	—	—	(5	)	$	2,580,000
Incorp, LLC	3,500,000	—	—		—	—	10/1/03			(1)
Orazio Buzza	100,000	—	—		—	—	10/20/03			(2)
Printworks, LLC	100,000	—	—		—	—	11/14/03			(4)
John R. Walter	100,000	—	—		—	—	3/25/04		$	80,000
The Soraya Nazarian Annuity Trust 2003 dated 10/01/03	—	—	—		640,000	—	8/19/04		$	2,000,000
Incorp, LLC	50,000	—	—		—	—	9/20/04			(6)
Incorp, LLC	175,000	—	—		—	—	1/2/05			(7)
Printworks, LLC	300,000	—	—		320,000	—	2/25/05		$	1,000,000
The Soraya Nazarian Annuity Trust 2003 dated 10/01/03	—	—	—		640,000	—	2/25/05		$	2,000,000
John R. Walter	200,000	—	—		—	—	5/18/05		$	160,000
Entities affiliated with New Enterprise Associates	—	—	—		—	8,134,184	1/3/06		$	40,000,000
Printworks Series E, LLC	—	—	—		—	2,033,546	1/3/06		$	10,000,000
SNP Corporation Ltd.	254,065	—	—		—	—	4/6/06		$	1,250,000

(1) These units were issued in connection with the sale of Insight, LLC by Incorp, LLC to InnerWorkings, LLC.

(2) These units were issued to the individuals listed above as partial consideration for their continued employment with InnerWorkings, LLC.

(3) In June 2005, all of the Series C preferred units were converted on a one-for-one basis into Class A common units in accordance with the terms of the Series C preferred units.

(4) In November 2003, InnerWorkings, LLC issued 100,000 Class A common units to Printworks as consideration for the business and investment relationship established as a result of Printworks’ investment in 1,000,000 Series C preferred units and 150,000 Class A common units through InnerWorkings Series C Investment Partners, LLC. In February 2005, InnerWorkings, LLC redeemed the 1,000,000 Series C preferred units and 150,000 Class A common units that were held by InnerWorkings Series C Investment Partners for the benefit of Printworks at a price of $1.00 per unit. Concurrently with this redemption, Printworks purchased 320,000 Series D preferred units and 150,000 Class B common units and InnerWorkings, LLC issued 150,000 Class B common units to Printworks in replacement of the 150,000 Class A common units that it previously held through InnerWorkings Series C Investment Partners.

(5) These units were issued in a series of transactions that began in April 2003 and concluded in January 2004.

(6) These units were issued to Incorp for the benefit of Nicholas J. Galassi as partial consideration for his continued employment with InnerWorkings, LLC.

(7) InnerWorkings, LLC issued 50,000 of these units to Incorp for the benefit of Scott A. Frisoni and 125,000 of these units to Incorp for the benefit of Nicholas J. Galassi, in each case, as partial consideration for his continued employment with InnerWorkings, LLC.

II-3

Other than the transactions listed immediately above, we have not issued and sold any unregistered securities in the three years preceding the filing of this registration statement.

Item 16. Exhibits and Financial Statement Schedules.

(a) Exhibits

Exhibit No.	Description
1.1+	Form of Underwriting Agreement.
3.1	Second Amended and Restated Certificate of Incorporation.
3.2	Amended and Restated By-Laws.
4.1*	Specimen Common Stock Certificate.
4.2*	Investor Rights Agreement effective as of January 3, 2006 by and among InnerWorkings, Inc. and certain investors set forth therein.
4.3*	Form of Recapitalization Agreement.
5.1+	Opinion of Winston & Strawn LLP.
10.1*	InnerWorkings, LLC 2004 Unit Option Plan.
10.2*	InnerWorkings, Inc. 2006 Stock Incentive Plan.
10.3*	InnerWorkings, Inc. Annual Incentive Plan
10.4*	Employment Agreement dated November 5, 2004 between InnerWorkings, Inc. and Steven Zuccarini, as amended.
10.5*	Employment Agreement dated January 1, 2005 between InnerWorkings, Inc. and Nicholas Galassi, as amended.
10.6*	Employment Agreement dated June 9, 2005 between InnerWorkings, Inc. and Eric Belcher, as amended.
10.7*	Employment Agreement dated January 1, 2005 between InnerWorkings, Inc. and Scott A. Frisoni, as amended.
10.8*	Agreement dated March 25, 2004 for John Walter to Become Chairman of InnerWorkings, LLC’s Board of Directors, as amended.
10.9*	Stock Option Grant Agreement dated October 1, 2005 between InnerWorkings, Inc. and Jack M. Greenberg.
10.10*	Form of Indemnification Agreement.
10.11*	Master Services Agreement dated September 1, 2005 by and between ServiceMaster Consumer Services, L.P. and InnerWorkings, LLC.
10.12*	Office Space Lease dated January 1, 2006 by and between InnerWorkings, Inc. and Incorp, LLC.
10.13*	Office Space Lease dated November 22, 2005 by and between InnerWorkings, Inc. and Echo Global Logistics, LLC.
10.14*	Purchase Agreement dated May 31, 2006 by and among InnerWorkings, Inc., Jerry Freundlich, David Freundlich and Graphography, Ltd.
10.15	Purchase Agreement dated as of October 11, 2006 by and among InnerWorkings, Inc., Applied Graphics, Inc. and the owners of the capital stock of Applied Graphics, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 12, 2006.)
10.16	Loan and Security Agreement dated as of June 30, 2006 by and between InnerWorkings, Inc. and JPMorgan Chase Bank, N.A.

II-4

10.17	Agreement dated October 1, 2006 between Innerworkings, Inc. and Echo Global Logistics, Inc.
21.1	Subsidiaries of InnerWorkings, Inc.
23.1	Consent of Ernst & Young LLP.
23.2	Consent of Smith, Lange & Phillips LLP
23.3+	Consent of Winston & Strawn LLP (contained in Exhibit 5.1).
24.1	Power of Attorney (included on signature page).

* Incorporated by reference to InnerWorkings Form S-1 Registration Statement (File No. 333-133950).

+ To be filed by amendment.

(b) Financial Statement Schedules

II-5

Report of Ernst & Young LLP, Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of InnerWorkings, LLC

We have audited the consolidated financial statements of InnerWorkings, LLC and Subsidiary as of December 31, 2004 and 2005, and for each of the three years in the period ended December 31, 2005, and have issued our report thereon dated March 15, 2006. Our audits also included the financial statement schedule listed in Item 16(b) of Form S-1 of this Registration Statement. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Chicago, Illinois

March 15, 2006

The following financial statement schedule is a part of this registration statement and should be read in conjunction with the consolidated financial statements of InnerWorkings:

VALUATION AND QUALIFYING ACCOUNTS

Description	Balance at Beginning of Period		Charged to Expense		Uncollectible Accounts Write Offs			Balance at End of Period
Fiscal year ended December 31, 2005
Allowance for doubtful accounts	$	153,693	$	176,392	$	(156,246	)	$	173,839
Fiscal year ended December 31, 2004
Allowance for doubtful accounts	$	125,022	$	148,616	$	(119,945	)	$	153,693
Fiscal year ended December 31, 2003
Allowance for doubtful accounts	$	51,739	$	125,022	$	(51,739	)	$	125,022

Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

Item 17. Undertakings

The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

II-6

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes:

(1) To provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(2) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

(3) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-7

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Chicago, State of Illinois, on January 5, 2007.

INNERWORKINGS, INC.
By:	/S/    NICHOLAS J. GALASSI
	Nicholas J. Galassi Chief Financial Officer

We, the undersigned officers and directors of InnerWorkings, Inc., hereby severally constitute and appoint Steven E. Zuccarini and Nicholas J. Galassi, and each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us in our names in the capacities indicated below, all pre-effective and post-effective amendments to this registration statement, including any filings pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and generally to do all things in our names and on our behalf in such capacities to enable InnerWorkings, Inc. to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/S/     STEVEN E. ZUCCARINI         Steven E. Zuccarini	Chief Executive Officer (principal executive officer) and Director	January 5, 2007
/S/     NICHOLAS J. GALASSI         Nicholas J. Galassi	Chief Financial Officer (principal accounting and financial officer)	January 5, 2007
/S/     JOHN R. WALTER         John R. Walter	Chairman of the Board	January 5, 2007
/S/     JACK M. GREENBERG         Jack M. Greenberg	Director	January 5, 2007
/S/     PETER J. BARRIS         Peter J. Barris	Director	January 5, 2007
/S/     SHARYAR BARADARAN         Sharyar Baradaran	Director	January 5, 2007
/S/     LINDA S. WOLF         Linda S. Wolf	Director	January 5, 2007

II-8

EXHIBIT INDEX

Exhibit No.	Description
1.1+	Form of Underwriting Agreement.
3.1	Second Amended and Restated Certificate of Incorporation.
3.2	Amended and Restated By-Laws.
4.1*	Specimen Common Stock Certificate.
4.2*	Investor Rights Agreement effective as of January 3, 2006 by and among InnerWorkings, Inc. and certain investors set forth therein.
4.3*	Form of Recapitalization Agreement.
5.1+	Opinion of Winston & Strawn LLP.
10.1*	InnerWorkings, LLC 2004 Unit Option Plan.
10.2*	InnerWorkings, Inc. 2006 Stock Incentive Plan.
10.3*	InnerWorkings, Inc. Annual Incentive Plan
10.4*	Employment Agreement dated November 5, 2004 between InnerWorkings, Inc. and Steven Zuccarini, as amended.
10.5*	Employment Agreement dated January 1, 2005 between InnerWorkings, Inc. and Nicholas Galassi, as amended.
10.6*	Employment Agreement dated June 9, 2005 between InnerWorkings, Inc. and Eric Belcher, as amended.
10.7*	Employment Agreement dated January 1, 2005 between InnerWorkings, Inc. and Scott A. Frisoni, as amended.
10.8*	Agreement dated March 25, 2004 for John Walter to Become Chairman of InnerWorkings, LLC’s Board of Directors, as amended.
10.9*	Stock Option Grant Agreement dated October 1, 2005 between InnerWorkings, Inc. and Jack M. Greenberg.
10.10*	Form of Indemnification Agreement.
10.11*	Master Services Agreement dated September 1, 2005 by and between ServiceMaster Consumer Services, L.P. and InnerWorkings, LLC.
10.12*	Office Space Lease dated January 1, 2006 by and between InnerWorkings, Inc. and Incorp, LLC.
10.13*	Office Space Lease dated November 22, 2005 by and between InnerWorkings, Inc. and Echo Global Logistics, LLC.
10.14*	Purchase Agreement dated May 31, 2006 by and among InnerWorkings, Inc., Jerry Freundlich, David Freundlich and Graphography, Ltd.
10.15	Purchase Agreement dated as of October 11, 2006 by and among InnerWorkings, Inc., Applied Graphics, Inc. and the owners of the capital stock of Applied Graphics, Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on October 12, 2006.)
10.16	Loan and Security Agreement dated as of June 30, 2006 by and between InnerWorkings, Inc. and JPMorgan Chase Bank, N.A.
10.17	Agreement dated October 1, 2006 between Innerworkings, Inc. and Echo Global Logistics, Inc.
21.1	Subsidiaries of InnerWorkings, Inc.
23.1	Consent of Ernst & Young LLP.
23.2	Consent of Smith, Lange & Phillips LLP
23.3+	Consent of Winston & Strawn LLP (contained in Exhibit 5.1).
24.1	Power of Attorney (included on signature page).

* Incorporated by reference to InnerWorkings Form S-1 Registration Statement (File No. 333-133950).

+ To be filed by amendment.