8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 11, 2006

INNERWORKINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-52170	20-5997364
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

600 West Chicago Avenue Suite 850 Chicago, Illinois	60610
(Address of principal executive offices)	(Zip Code)

(312) 642-3700

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

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

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

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

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

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

EXPLANATORY NOTE

This Current Report on Form 8-K/A (“Amendment No. 1”) amends and restates Item 9.01 of the Current Report on Form 8-K previously filed by InnerWorkings, Inc. (the “Company”) with the Securities and Exchange Commission on October 12, 2006 to include historical financial statements of Applied Graphics, Inc. (“Applied Graphics”) and certain pro forma financial information required by Item 9.01 of Form 8-K with respect to the Company’s acquisition of Applied Graphics.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired

The audited balance sheet of Applied Graphics as of October 31, 2005 and the related statements of income, retained earnings and cash flows of Applied Graphics for the year ended October 31, 2005, and the notes related thereto, are filed as Exhibit 99.2 to this Amendment No. 1 and incorporated by reference herein.

The unaudited balance sheet of Applied Graphics as of July 31, 2006 and the unaudited statements of income and cash flows of Applied Graphics for the nine months ended July 31, 2006 and 2005, and the notes related thereto, are filed as Exhibit 99.3 to this Amendment No. 1 and incorporated by reference herein.

(b) Pro Forma Financial Information

The unaudited pro forma condensed consolidated balance sheet of the Company as of September 30, 2006 and the unaudited pro forma condensed consolidated income statements of the Company for the nine months ended September 30, 2006 and the year ended December 31, 2005, and the notes related thereto, are filed as Exhibit 99.4 to this Amendment No. 1 and incorporated by reference herein.

(d) Exhibits:

Exhibit No.	Description
10.1*	Purchase Agreement dated as of October 11, 2006 by and among InnerWorkings, Inc., Applied Graphics, Inc. and the owners of the capital stock of the Applied Graphics, Inc.
99.1*	Press Release dated October 11, 2006.
99.2	Audited balance sheet of Applied Graphics, Inc. as of October 31, 2005 and the related statements of income, retained earnings and cash flows of Applied Graphics, Inc. for the year ended October 31, 2005.
99.3	Unaudited balance sheet of Applied Graphics, Inc. as of July 31, 2006 and the unaudited statements of income and cash flows of Applied Graphics, Inc. for the nine months ended July 31, 2006 and 2005.
99.4	Unaudited pro forma condensed consolidated balance sheet of InnerWorkings, Inc. as of September 30, 2006 and unaudited pro forma condensed consolidated income statements of InnerWorkings, Inc. for the nine months ended September 30, 2006 and the year ended December 31, 2005.

* Previously filed with the Current Report on Form 8-K filed by the Company on October 12, 2006.

SIGNATURES

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

	INNERWORKINGS, INC.
Dated: December 22, 2006	By:	/s/ Nicholas J. Galassi
	Name:	Nicholas J. Galassi
	Title:	Chief Financial Officer

Exhibit Index

Exhibit No.	Description
10.1*	Purchase Agreement dated as of October 11, 2006 by and among InnerWorkings, Inc., Applied Graphics, Inc. and the owners of the capital stock of the Applied Graphics, Inc.
99.1*	Press Release dated October 11, 2006.
99.2	Audited balance sheet of Applied Graphics, Inc. as of October 31, 2005 and the related statements of income, retained earnings and cash flows of Applied Graphics, Inc. for the year ended October 31, 2005.
99.3	Unaudited balance sheet of Applied Graphics, Inc. as of July 31, 2006 and the unaudited statements of income and cash flows of Applied Graphics, Inc. for the nine months ended July 31, 2006 and 2005.
99.4	Unaudited pro forma condensed consolidated balance sheet of InnerWorkings, Inc. as of September 30, 2006 and unaudited pro forma condensed consolidated income statements of InnerWorkings, Inc. for the nine months ended September 30, 2006 and the year ended December 31, 2005.

* Previously filed with the Current Report on Form 8-K filed by the Company on October 12, 2006.

EX-99.2

Exhibit 99.2

Applied Graphics, Inc.

Financial Statements

Year Ended October 31, 2005

Contents

Report of Independent Auditors	1
Financial Statements
Balance Sheet	2
Statement of Operations	3
Statement of Stockholders’ Equity	4
Statement of Cash Flows	5
Notes to Financial Statements	6

Report of Independent Registered Public Accounting Firm

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 operations, stockholders’ 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 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, stockholders’ equity 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

1

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.

2

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.

3

Applied Graphics, Inc.

Statement of Stockholders’ Equity

Year Ended October 31, 2005

	Common A			Additional Paid- in Capital		Retained Earnings		Total
	Shares	Amount
Balance at November 1, 2004	3,795	$	3,795	$	265,412	$	1,049,896	$	1,319,103
Net income	—		—				166,606		166,606
Balance at October 31, 2005	3,795	$	3,795	$	265,412	$	1,216,502	$	1,485,709

See accompanying notes to financial statements.

4

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.

5

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, the Company recognizes 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 statement 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.

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

6

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

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

7

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

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.

8

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.

9

EX-99.3

Exhibit 99.3

Applied Graphics, Inc.

Financial Statements

Nine Months Ended July 31, 2006 and 2005

Contents

Financial Statements
Balance Sheets	1
Statements of Operations	2
Statements of Cash Flows	3
Notes to Financial Statements	4

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.

1

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.

2

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.

3

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.

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

4

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

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.

5

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.

6

EX-99.4

Exhibit 99.4

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 and serves as a complete outsourcer for the back-end execution of all their marketing efforts, which is located throughout California and Hawaii. In connection with the acquisition, the Company 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, the Company also established a presence in the West Coast market.

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 acquisition occurred on January 1, 2005.

The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the Applied acquisition as if it had 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 consolidated income statement of Applied for the nine months ended July 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 consolidated income statement of Applied for the fiscal year ended October 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 consolidated 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 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 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 are for illustration purposes only and do not necessarily indicate the operating results or financial position that would have been achieved if the Applied acquisition 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.

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 8-K filing, and the Company’s historical consolidated financial statements filed under our Form S-1 filing and Form 10-Q filing.

InnerWorkings, Inc

Unaudited Pro Forma Condensed Consolidated Balance Sheet

September 30, 2006

	InnerWorking, Inc. September 30, 2006			Applied Graphics July 31, 2006		Acquisition Pro Forma Adjustments			Pro Forma as Adjusted
Assets
Current assets:
Cash and cash equivalents	$	34,283,536		$	44,543	$	(7,000,000	)(1)	$	27,328,079
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		(6,919,313	)		86,036,726
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)(7)		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	$	(1,895,183	)	$	109,325,756
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	)(7)		—
Total liabilities		25,583,014			5,264,359		(55,040	)		30,792,333
Stockholders’ deficit/members' equity:
Common Stock		115,344,105			3,795		(3,795	)(8)		115,344,105
Additional paid-in capital		5,322,591			265,412		(265,412	)(8)		5,322,591
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	)(8)		(2,102,629	)
Total stockholders' deficit/members’ equity		78,533,423			1,840,143		(1,840,143	)		78,533,423
Total liabilities and stockholders' deficit/members’ equity	$	104,116,437		$	7,104,502	$	(1,895,183	)	$	109,325,756

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

InnerWorkings, Inc

Unaudited Pro Forma Condensed Consolidated Income Statement

For the Nine Months Ended September 30, 2006

	InnerWorking, Inc. Nine months ended September 30, 2006			Applied Graphics Nine months ended July 31, 2006			Acquisition Pro Forma Adjustments			Pro Forma As Adjusted
Revenue	$	99,361,724		$	24,394,436		$	—		$	123,756,160
Cost of goods sold		78,227,822			15,777,894			—			94,005,716
Gross profit		21,133,902			8,616,542			—			29,750,444
Operating expenses:
Selling, general, and administrative expenses		12,770,496			7,808,590			—			20,579,086
Depreciation and amortization		574,016			99,566			68,073	(4)		741,655
Income from operations		7,789,390			708,386			(68,073	)		8,429,703
Other income (expense):
Interest income		492,231			—			(262,500	)(6)		229,731
Interest expense		(148,539	)		(138,839	)		—			(287,378	)
Other, net		(4,784	)		16,635			—			11,851
Total other income (expense)		338,908			(122,204	)		(262,500	)		(45,796	)
Income before income taxes		8,128,298			586,182			(330,573	)		8,383,907
Income tax expense		(3,215,327	)		(231,748	)		128,923	(5)		(3,318,152	)
Net income		4,912,971			354,434			(201,650	)		5,065,755
Dividends on preferred shares		(1,408,740	)		—			—			(1,408,740	)
Net income applicable to common shareholders	$	3,504,231		$	354,434		$	(201,650	)	$	3,657,015
Basic earnings per share	$	0.13								$	0.13
Diluted earnings per share	$	0.13								$	0.14
Number of shares used for calculation:
Basic earnings per share		27,517,682									27,517,682
Diluted earnings per share		36,803,747									36,803,747

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

InnerWorkings, Inc

Unaudited Pro Forma Condensed Consolidated Income Statement

For the Year Ended December 31, 2005

	InnerWorking, Inc. Year ended December 31, 2005			Applied Graphics Year ended October 31, 2005			Acquisition Pro Forma Adjustments			Pro Forma As Adjusted
Revenue	$	76,869,586		$	30,104,243		$	—		$	106,973,829
Cost of goods sold		61,271,453			19,822,569			—			81,094,022
Gross profit		15,598,133			10,281,674			—			25,879,807
Operating expenses:
Selling, general, and administrative expenses		10,605,248			9,684,421			—			20,289,669
Depreciation and amortization		387,911			148,779			90,764	(4)		627,454
Income from operations		4,604,974			448,474			(90,764	)		4,962,684
Other income (expense):
Interest income		78,627			—			(78,627	)(6)		—
Interest expense		(98,128	)		(155,422	)		—			(253,550	)
Minority interest		58,244			—			—			58,244
Other, net		(9,580	)		13,346			—			3,766
Total other income (expense)		29,163			(142,076	)		(78,627	)		(191,540	)
Income before income taxes		4,634,137			306,398			(169,391	)		4,771,144
Income tax expense		—			(139,792	)		66,062	(5)		(73,730	)
Net income		4,634,137			166,606			(103,329	)		4,697,414
Dividends on preferred shares		(761,825	)		—			—			(761,825	)
Net income applicable to common shareholders	$	3,872,312		$	166,606		$	(103,329	)	$	3,935,589
Basic earnings per share	$	0.12								$	0.13
Diluted earnings per share	$	0.12								$	0.12
Number of shares used for calculation:
Basic earnings per share		31,009,580									31,009,580
Diluted earnings per share		32,707,292									32,707,292

See accompanying notes to unaudited pro forma condensed consolidated financial statements.

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 $4.85 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 $3.85 million of the additional $4.85 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 current 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” (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

Because the amortization expense for the customer list is not deductible for U.S. income tax purposes, we recorded a deferred tax liability $530,969 based on these preliminary values.

(4) 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	15 years	$	90,764	$	68,073

(5) Income tax expense:

The pro forma adjustment reflects the tax rate applied to the pro forma adjustments related to the Applied acquisition as follows:

Nine months ended September 30, 2006	39.00%
Year ended December 31, 2005	39.00%

(6) Interest income:

The pro forma adjustment reflects the reduction in interest income related to the cash paid of $7.0 million.

(7) Deferred income taxes:

The pro forma adjustment reflects the reclassification of the long term deferred tax liability recorded by Applied against the long term deferred tax asset.

(8) Common stock, additional paid-in capital and retained earnings:

The pro forma adjustment to the class A common shares, additional paid-in capital and retained earnings reflects the elimination of Applied’s historical stockholder’s equity as a result of the acquisition.