**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB**








**[X]
      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      Quarterly Period ended:  June 30, 2007





OR





**[
      ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      transition period from ________ to ________





Commission
                File No.: 000-51285
              ---------
              
              **a21,
                INC.**
              (Exact
                Name of Small Business Issuer as Specified in its Charter)
              
              DELAWARE                                                      74-2896910
              -----                                           ----------
              (State
                or Other Jurisdiction
                of                                                                                     
                (I.R.S. Employer
              Incorporation
                or
                Organization)                                                                                     Identification
                Number)





**7660
      CENTURION PARKWAY, JACKSONVILLE, FLORIDA 32256**


(Principal
      Executive Office)





Issuer's
      telephone number, including area code: (904) 565-0066








Check
      whether the Issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days. Yes
      [X]
      No [  ]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes [  ] No [X]





There
      were 87,990,589 shares of a21's common stock outstanding on August 8,
      2007.





Transitional
      Small Business Disclosure Format (check one): Yes [ ] No [X]








**TABLE
                OF CONTENTS**PagePART
                I – FINANCIAL INFORMATIONITEM
                1.  FINANCIAL STATEMENTS (unaudited)
            
            2Condensed
                Consolidated Balance Sheets at June 30, 2007 and
              December
                31, 2006
            
            2Condensed
                Consolidated Statements of Operations for the three and six months
                ended
                June 30, 2007 and 2006
            
            4Condensed
                Consolidated Statement of Changes in Stockholders’ Equity and (Capital
                Deficiency) for the six months ended June 30, 2007
            
            5Condensed
                Consolidated Statements of Cash Flows for the six months ended June
                30,
                2007 and 2006
            
            6Notes
                to Condensed Consolidated Financial Statements
            
            8ITEM
                2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS
                OF OPERATIONS (MD&A)
            
            25ITEM
                3.  CONTROLS AND PROCEDURES
            
            29PART
                II – OTHER INFORMATIONITEM
                1.  LEGAL PROCEEDINGS
            
            30ITEM
                2.  UNREGISTERED SALES  OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            
            30ITEM
                3.  DEFAULTS UPON SENIOR SECURITIES
            
            30ITEM
                4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            
            30ITEM
                5.  OTHER INFORMATION
            
            30ITEM
                6.  EXHIBITS
            
            31








Page
          1


**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED BALANCE SHEETS****($
                in thousands, except per share amounts)****(unaudited)****June
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006**ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            3,873
            
            
            $
            5,455Accounts
                receivable, net allowance for doubtful accounts of $213 and $108,
                at June
                30, 2007 and December 31, 2006, respectively
            
            
            2,727
            
            
            
            2,773Inventory
            
            
            760
            
            
            
            844Prepaid
                expenses and other current assets
            
            
            680
            
            
            
            441Total
                current assets
            
            
            8,040
            
            
            
            9,513Property,
                plant and equipment, net
            
            
            7,006
            
            
            
            7,300Photo
                collection, net
            
            
            1,476
            
            
            
            1,520Goodwill
            
            
            8,740
            
            
            
            8,648Intangible
                assets, net
            
            
            4,891
            
            
            
            5,232Restricted
                cash
            
            
            750
            
            
            
            750Other
            
            
            1,205
            
            
            
            1,651Total
                assets
            
            $
            32,108
            
            
            $
            34,614LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESAccounts
                payable and accrued expenses
            
            $
            2,600
            
            
            $
            3,559Royalties
                payable
            
            
            1,452
            
            
            
            1,288Deferred
                revenue
            
            
            406
            
            
            
            242Other
            
            
            97
            
            
            
            124Total
                current liabilities
            
            
            4,555
            
            
            
            5,213LONG-TERM
                LIABILITIESSenior
                secured convertible notes payable, net – related party
            
            
            15,500
            
            
            
            15,500Secured
                notes payable, net – related party (ArtSelect Sellers)
            
            
            2,555
            
            
            
            2,499Loan
                payable from sale-leaseback of building, less current
                portion
            
            
            7,380
            
            
            
            7,403Other
            
            
            103
            
            
            
            112Total
                liabilities
            
            
            30,093
            
            
            
            30,727


Page
          2





**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED BALANCE SHEETS (continued)****($
                in thousands, except per share amounts)****(unaudited)****June
                30,**
            
            
            **December
                31,****2007**
            
            
            **2006**COMMITMENTS
                AND CONTINGENCIESMINORITY
                INTEREST
            
            
            1,071
            
            
            
            2,254STOCKHOLDERS'
                EQUITYCommon
                stock; $.001 par value; 200,000,000 shares authorized; 90,141,872
                and
                87,191,575 shares issued and 86,462,097 and 83,511,800 shares outstanding
                at June 30, 2007 and December 31, 2006, respectively
            
            
            90
            
            
            
            87Treasury
                stock (at cost, 3,679,775 shares)
            
            
            ---
            
            
            
            ---Additional
                paid-in capital
            
            
            25,891
            
            
            
            24,341Accumulated
                deficit
            
            
            (25,478
            )
            
            
            (23,286
            )Accumulated
                other comprehensive income
            
            
            441
            
            
            
            491Total
                stockholders' equity
            
            
            944
            
            
            
            1,633Total
                liabilities and stockholders' equity
            
            $
            32,108
            
            
            $
            34,614The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





Page
          3








**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****($
                in thousands except per share amounts)****(unaudited)****Three
                Months Ended**
            
            
            **Six
                Months Ended****June
                30,**
            
            
            **June
                30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**REVENUELicensing
                revenue
            
            $
            3,038
            
            
            $
            3,022
            
            
            $
            6,206
            
            
            $
            5,957Product
                revenue
            
            
            2,658
            
            
            
            1,489
            
            
            
            5,614
            
            
            
            1,489TOTAL
                REVENUE
            
            
            5,696
            
            
            
            4,511
            
            
            
            11,820
            
            
            
            7,446COSTS
                AND EXPENSESCost
                of licensing revenue (excludes related amortization of $285 and $383
                for
                three months, and $564 and $766 for six months ended June 30, 2007
                and
                2006, respectively)
            
            
            1,012
            
            
            
            1,007
            
            
            
            1,962
            
            
            
            1,910Cost
                of product revenue (excludes related amortization of $44 and $88
                for three
                and six months ended June 30, 2007)
            
            
            1,253
            
            
            
            694
            
            
            
            2,651
            
            
            
            694Selling,
                general and administrative
            
            
            3,646
            
            
            
            3,819
            
            
            
            7,309
            
            
            
            6,624Depreciation
                and amortization
            
            
            632
            
            
            
            830
            
            
            
            1,251
            
            
            
            1,433TOTAL
                OPERATING EXPENSES
            
            
            6,543
            
            
            
            6,350
            
            
            
            13,173
            
            
            
            10,661OPERATING
                LOSS
            
            
            (847
            )
            
            
            (1,839
            )
            
            
            (1,353
            )
            
            
            (3,215
            )Interest
                expense
            
            
            (442
            )
            
            
            (447
            )
            
            
            (884
            )
            
            
            (800
            )Warrant
                income (expense)
            
            
            ---
            
            
            
            174
            
            
            
            (1
            )
            
            
            (91
            )Other
                income, net
            
            
            84
            
            
            
            62
            
            
            
            97
            
            
            
            48NET
                LOSS BEFORE INCOME TAX EXPENSE
            
            
            (1,205
            )
            
            
            (2,050
            )
            
            
            (2,141
            )
            
            
            (4,058
            )Income
                tax expense
            
            
            (24
            )
            
            
            (44
            )
            
            
            (51
            )
            
            
            (71
            )NET
                LOSS
            
            
            (1,229
            )
            
            
            (2,094
            )
            
            
            (2,192
            )
            
            
            (4,129
            )Disproportionate
                deemed dividends
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            (157
            )NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS
            
            $
            (1,229
            )
            
            $
            (2,094
            )
            
            $
            (2,192
            )
            
            $
            (4,286
            )NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS PER SHARE, BASIC AND
                DILUTED
            
            $
            (0.01
            )
            
            $
            (0.03
            )
            
            $
            (0.03
            )
            
            $
            (0.06
            )WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
                DILUTED
            
            
            86,418,141
            
            
            
            77,566,527
            
            
            
            86,254,523
            
            
            
            74,817,306The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





Page
          4





**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENT OF CHANGES IN****STOCKHOLDERS’
                EQUITY AND (CAPITAL DEFICIENCY)****(in
                thousands)****(unaudited)**COMMON
                STOCK
            
            
            TREASURY
                STOCKNUMBER
                OF SHARES
            
            
            AMOUNT
            
            
            NUMBER
                OF SHARES
            
            
            AMOUNT
            
            
            ADDITIONAL
                PAID-IN CAPITAL
            
            
            ACCUMULATED
                DEFICIT
            
            
            ACCUMULATED
                OTHER COMPREHENSIVE INCOME
            
            
            TOTALBalance
                at December 31, 2006
            
            
            87,192
            
            
            $
            87
            
            
            
            (3,680
            )
            
            $
            ---
            
            
            $
            24,341
            
            
            $
            (23,286
            )
            
            $
            491
            
            
            $
            1,633Stock
                options exercised
            
            
            97
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            29
            
            
            
            ---
            
            
            
            ---
            
            
            
            29Stock
                warrants exercised
            
            
            68
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            19
            
            
            
            ---
            
            
            
            ---
            
            
            
            19Share-based
                compensation
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            323
            
            
            
            ---
            
            
            
            ---
            
            
            
            323Issuance
                of common stock upon the conversion of SuperStock Seller Preferred
                stock
            
            
            2,112
            
            
            
            2
            
            
            
            ---
            
            
            
            ---
            
            
            
            1,180
            
            
            
            ---
            
            
            
            ---
            
            
            
            1,182Vesting
                of restricted stock compensation
            
            
            673
            
            
            
            1
            
            
            
            ---
            
            
            
            ---
            
            
            
            (1
            )
            
            
            ---
            
            
            
            ---
            
            
            
            ---Net
                loss
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            (2,192
            )
            
            
            ---
            
            
            
            (2,192
            )Foreign
                currency translation adjustment
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            
            
            
            
            (50
            )
            
            
            (50
            )Comprehensive
                loss
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            (2,242
            )Balance
                at June 30, 2007
            
            
            90,142
            
            
            $
            90
            
            
            
            (3,680
            )
            
            $
            ---
            
            
            $
            25,891
            
            
            $
            (25,478
            )
            
            $
            441
            
            
            $
            944The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements





Page
          5





**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS****($
                in thousands)****(unaudited)****FOR
                THE SIX MONTHS ENDED JUNE 30,**
            
            **2007**
            
            
            **2006**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (2,192
            )
            
            $
            (4,129
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                   and amortization
            
            
            1,251
            
            
            
            1,433Share-based
                compensation
            
            
            323
            
            
            
            809Other
            
            
            74
            
            
            
            391Changes
                in assets and liabilities:Accounts
                receivable
            
            
            46
            
            
            
            (418
            )Prepaid
                expenses and other current assets
            
            
            (26
            )
            
            
            (483
            )Inventory
            
            
            84
            
            
            
            60Accounts
                payable and accrued expenses
            
            
            (620
            )
            
            
            852Deferred
                revenue
            
            
            163
            
            
            
            87Other
            
            
            7
            
            
            
            (169
            )NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (890
            )
            
            
            (1,567
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Acquisition
                of ArtSelect, net of cash acquired of $231
            
            
            ---
            
            
            
            (4,476
            )Investment
                in property, plant and equipment
            
            
            (14
            )
            
            
            (141
            )Investment
                in technology
            
            
            (199
            )
            
            
            (143
            )SuperStock
                acquisition earn-out
            
            
            (285
            )
            
            
            (206
            )Investment
                in photo collection
            
            
            (266
            )
            
            
            (195
            )Restricted
                cash for lease deposit
            
            
            ---
            
            
            
            (750
            )Other
            
            
            (5
            )
            
            
            (9
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (769
            )
            
            
            (5,920
            )








Page
          6








**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)****($
                in thousands)****(unaudited)****FOR
                THE SIX MONTHS ENDED JUNE 30,**
            
            **2007**
            
            
            **2006**CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from senior secured convertible notes payable – related party,
                net
            
            
            ---
            
            
            
            15,285Payment
                of senior secured notes payable – related party
            
            
            ---
            
            
            
            (2,250
            )Payment
                of unsecured notes payable
            
            
            ---
            
            
            
            (1,050
            )Net
                proceeds from the exercise of stock options
            
            
            29
            
            
            
            100Net
                proceeds from the exercise of stock warrants
            
            
            19
            
            
            
            1,200Payment
                of SuperStock seller promissory note payable
            
            
            (33
            )
            
            
            (33
            )Other
            
            
            41
            
            
            
            37NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            56
            
            
            
            13,289EFFECT
                OF EXCHANGE RATES ON CASH AND CASH EQUIVALANTS
            
            
            21
            
            
            
            22NET
                (DECREASE) INCREASE IN CASH
            
            
            (1,582
            )
            
            
            5,824CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
            
            
            5,455
            
            
            
            1,194CASH
                AND CASH EQUIVALENTS AT END OF PERIOD
            
            $
            3,873
            
            
            $
            7,018SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Foreign
                income taxes paid
            
            $
            51
            
            
            $
            178Interest
                paid
            
            
            809
            
            
            
            635SUPPLEMENTAL
                DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:Issuance
                of convertible preferred stock as part of ArtSelect
                acquisition
            
            
            ---
            
            
            
            3,150Issuance
                of senior secured note payable as part of ArtSelect
                acquisition
            
            
            ---
            
            
            
            2,350Issuance
                of warrants as part of ArtSelect acquisition
            
            
            ---
            
            
            
            375Issuance
                of common stock for financing costs
            
            
            ---
            
            
            
            62Issuance
                of senior convertible debt in exchange for cancellation of
                warrants
            
            
            ---
            
            
            
            215Conversion
                of SuperStock Seller Preferred stock into common stock (see Note
                H)
            
            
            1,182
            
            
            
            ---Cashless
                exercise of warrants for common stock
            
            
            19
            
            
            
            ---Accrued
                purchase price payable
            
            
            110
            
            
            
            85The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.











Page
          7


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**





**NOTE
      A - FINANCIAL STATEMENT PRESENTATION AND THE DESCRIPTION OF
      BUSINESS**





The
      unaudited condensed consolidated financial statements of a21, Inc. (“a21”, “the
      Company”, “we”) have been prepared pursuant to the rules and regulations of the
      Securities and Exchange Commission (“SEC”) and, in the opinion of management,
      reflect all adjustments (consisting only of normal recurring accruals) necessary
      to present fairly a21’s financial position at June 30, 2007, and the results of
      operations for the interim periods presented. Certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      have been condensed or omitted pursuant to such SEC rules and regulations.
      Results of operations for interim periods are not necessarily indicative of
      those to be achieved for full fiscal years. These condensed consolidated
      financial statements should be read in conjunction with our audited financial
      statements included in our annual report on Form 10-KSB for the year ended
      December 31, 2006, as filed with the SEC.





a21,
      Inc.
      (the “Company”) was incorporated in the State of Texas in October 1998, under
      the name Saratoga Holdings I, Inc. In April 2002, we changed our name from
      Saratoga Holdings I, Inc. to a21, Inc.  In February 2004, we completed
      the acquisition of all of the voting common stock, representing 83% of the
      outstanding equity, of SuperStock, Inc. In October 2005, our UK subsidiary
      SuperStock Ltd. completed the acquisition of all of the outstanding stock of
      Ingram Publishing Limited, and in May 2006, we completed the acquisition of
      ArtSelect, Inc. through the merger of a wholly owned subsidiary into ArtSelect.
      On July 31, 2006, we changed our state of incorporation from Texas to
      Delaware.





Through
      SuperStock, we aggregate visual content from photographers, photography
      agencies, archives, libraries and private collections and license the visual
      content to our customer base consisting of four major groups: creative
      (advertising and design agencies), editorial (publishing and media entities),
      corporate (in-house communications departments and outside corporate
      communications firms) and consumers (the general public). SuperStock products
      are sold directly and through a global network of distributors.





ArtSelect
      supplies home and office framed and unframed wall décor to retailers,
      catalogers, membership organizations and consumers through both online and
      traditional retail and wholesale distribution channels in the United
      States.








**NOTE
      B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





[1]
      Liquidity:




At
      June
      30, 2007, we had cash of $3.9 million and working capital of $3.5
      million.





Our
      future plans include further developing our distribution channels for
      SuperStock, gaining new key customer relationships for ArtSelect, improving
      the
      leveraging of SuperStock’s owned and licensed image content, and seeking
      integration cost reduction opportunities where feasible across the Company.
      Additionally, we are in discussions with several potential acquisition targets
      that, if successful, could result in an enhanced market position and incremental
      cash flow from operations. However, there can be no assurance that these efforts
      will be successful. We may have to seek additional funding sooner than expected.
      There can be no assurance that sufficient additional capital needed to sustain
      operations will be obtained by us, if needed, or that our operations will become
      profitable.





[2]
      Principles of consolidation:





The
      consolidated financial statements include all of our accounts including our
      primary operating subsidiaries, SuperStock, ArtSelect (acquired May 2006),
      and
      SuperStock Limited (UK). The minority interest in the consolidated balance
      sheets at June 30, 2007 and December 31, 2006, represents the interest of the
      holders of preferred shares of SuperStock (“SuperStock Seller Preferred”), which
      are exchangeable into a21 common shares. All significant inter-company balances
      and transactions have been eliminated.


Page
          8





[3]
      Revenue recognition:





Revenue
      is recognized when the following criteria are met: evidence of an arrangement
      exists, the price is fixed or determinable, collectibility is reasonably assured
      and delivery has occurred or services have been rendered.





Licensing
      fee revenue is recorded at invoiced amounts except in the case of licensing
      rights through distributors, where revenue is recorded at our share of invoiced
      amounts. Distributors typically earn and retain a percentage of the license
      fee
      according to their contract, and we record the remaining license fee as revenue.
      Persuasive evidence of an arrangement exists and the price is fixed or
      determinable at the time the customer agrees to the terms and conditions of
      the
      license agreement. We maintain a credit department and credit policies that
      set
      credit limits and ascertain customer credit worthiness, thus reducing our risk
      of credit loss. Based on our policies and procedures, as well as our historical
      experience, we are able to determine that the likelihood of collection is
      reasonably assured prior to recognizing revenue. These first three general
      revenue recognition criteria have been met at or prior to the time of delivery
      of the imagery, regardless of the format or delivery medium. Delivery occurs
      upon making digital images available for download by the customer, or upon
      shipment of CD, analog film and transparencies.  We also sell
      subscriptions of certain images for terms ranging from one to twelve months.
      Subscription revenue is recognized over the respective term of the subscription
      agreement and, accordingly, $406,000 and $242,000 is recorded as deferred
      revenue as of June 30, 2007 and December 31, 2006.







Revenue
      from product sales is recognized when the product is shipped and title is
      transferred to the customer. Revenue sold via ArtSelect’s website and/or related
      sub-domains is recognized on a gross basis. Revenue sold through customers’
distribution channels is recognized net of related costs. We base our estimates
      for sales returns on historical experience.





[4]
      Cost
      of revenue:





Cost
      of
      licensing fee revenue reflects royalties on revenue generated from images
      licensed under contracts with photographers. Royalties are expensed in the
      period that they are incurred. Cost of revenue excludes amortization of revenue
      generating assets. Cost of product sales reflects payments made to suppliers
      of
      art content, framing materials, and shipment and handling costs.





[5]
      Use
      of estimates:





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting period. Actual results could differ significantly from those
      estimates. The recoverability of the carrying values of long-lived assets,
      including goodwill and identifiable intangible assets represent sensitive
      estimates subject to change.





[6]
      Fair
      value of financial instruments:





Our
      financial instruments consist primarily of cash and cash equivalents, accounts
      receivable, accounts payable, accrued expenses, and short-term debt, which
      approximate fair value because of their short maturities. The carrying amount
      of
      long-term debt approximates fair value due to the market rate of interest
      incurred by us. The fair value of our notes payable to stockholders and an
      affiliated company are not reasonably determinable based on the related party
      nature of the transactions.


Page
          9





[7]
      Cash
      and cash equivalents:





We
      consider all highly liquid debt instruments purchased with an original maturity
      of three months or less to be cash equivalents. At June 30, 2007 and December
      31, 2006, we had no investments with maturities greater than three months.
      We
      are required to maintain a security deposit in accordance with our lease
      agreement for the SuperStock facility. This consists of restricted cash funded
      by us to secure a letter of credit in the amount of $750,000 at June 30, 2007
      and December 31, 2006.





[8]
      Accounts Receivable and Allowance for Doubtful Accounts:





Accounts
      receivable are trade receivables, net of allowances for doubtful accounts.
      We
      estimate our allowance for doubtful accounts based on historical loss ratios,
      existing economic conditions, and specific account analysis of high-risk
      accounts. Concentration of credit risk is limited due to the dispersion of
      customers. No single customer represents more than 10% of the total accounts
      receivable.





[9]
      Inventory:





Inventory
      is valued at the lower of cost or market and is determined on the first-in,
      first-out (FIFO) basis. Inventories include raw materials and finished goods.
      Raw materials include prints, mats, frames, molding, and packaging material.
      Finished goods consist of pre-framed art and compact disk products produced
      for
      resale. The requirements for any provisions of estimated losses for obsolete,
      excess, or slow-moving inventories are reviewed periodically.





[10]
      Deferred Rent Receivable





During
      2004, we entered into an agreement to sublease a significant portion of our
      headquarters and SuperStock facility for a term of six years with an option
      to
      renew for an additional two-year term. Statement of Financial Accounting
      Standards (“SFAS”) 13, “Accounting for Leases”, requires rental income from an
      operating lease be recognized on a straight-line basis over the non-cancelable
      lease term. Accordingly, we recognize total contractual minimum lease payments,
      including scheduled rent increases, as rental income evenly over the lease
      term.
      Accrued revenues from contractually scheduled rent increases in excess of
      amounts currently due are reported as a long-term receivable. We monitor this
      asset for collection risk and will establish reserves for any amounts deemed
      not
      collectible. However, amounts collected in future periods may vary from our
      expectations.





[11]
      Defined Contribution Employee Benefit Plan





We
      maintain defined contribution retirement plans pursuant to Section 401(k) of
      the
      Internal Revenue Code (the Plan), in which U.S. employees at least 21 years
      of
      age may participate after completing six months of service. Eligible employees
      may contribute up to a certain percentage of their annual compensation to the
      Plan, subject to the annual IRS limitations. The Company may match employee
      contributions on a discretionary basis. No company match was made during 2007
      or
      2006.





[12]
      Foreign Currency:





We
      translate assets and liabilities of foreign subsidiaries, whose functional
      currency is the local currency, at exchange rates in effect as of the balance
      sheet date. We translate revenue and expenses at the monthly average rates
      of
      exchange prevailing during the year. We include the adjustment resulting from
      translating the financial statements of such foreign subsidiaries in accumulated
      other comprehensive income, which is reflected as a separate component of
      stockholders’ equity. Gains and losses, which are denominated in currency other
      than a subsidiary’s local currency and re-measured in the subsidiary’s local
      currency, are recognized in the condensed consolidated statements of
      operations.


Page
          10





[13]
      Land
      and building and property and equipment and depreciation:





The
      land
      and building in Jacksonville, Florida with our SuperStock and corporate offices
      were sold and leased back in a SuperStock transaction accounted for as a
      financing transaction. The building is being depreciated over the twenty-year
      term of the related lease. Property and equipment consisting of furniture,
      fixtures and equipment, photography and computer equipment are recorded at
      cost.
      Depreciation of property and equipment is computed by the straight-line method
      over the assets' estimated lives. The estimated applicable life for furniture,
      fixtures, and equipment is 7 years; the applicable, estimated life of
      photography and computer equipment is 5 to 7 years.





Expenditures
      for major additions and improvements are capitalized. Maintenance and repairs
      are charged to operations as incurred. Upon sale or retirement of property
      and
      equipment, the related cost and accumulated depreciation are removed from the
      accounts and any gain or loss is reflected in operations.





[14]
      Photo collection and contracts with photographers:





Expenditures
      for additions and improvements to the photo collection are capitalized. The
      photo collection is categorized by type of imagery (fine art, vintage and
      contemporary). Depreciation of the photo collection is computed by the
      straight-line method over the assets’ estimated lives of forty years for fine
      art and vintage images and four years for contemporary images. Upon sale or
      retirement of any portion of the collection, the related cost and accumulated
      depreciation are removed from the accounts and any gain or loss is reflected
      in
      operations.





Contracts
      with photographers have an average life of ten years including those that are
      automatically renewable. Amortization of the photographer’s contracts is based
      on projected revenues expected to be generated over the estimated average
      ten-year life of the underlying images covered by the respective
      contracts.





[15]
      Goodwill and intangible assets:





We
      test
      goodwill for impairment at least annually, or more often if deemed necessary
      based on certain circumstances.  The Company’s impairment test
      performed on October 1, 2006, concluded that no impairment of goodwill
      exists.  As circumstances change, it is reasonably possible that
      future goodwill impairment tests could results in a loss from impairment to
      goodwill, which would be included in the determination of net income or
      loss.





Intangible
      assets with definite lives are amortized over their estimated useful life and
      reviewed for impairment in accordance with SFAS 144 (as defined below).
      Intangible assets with definite lives are amortized using either the
      straight-line method or based on expected usage of the asset, depending on
      the
      nature of the asset over their expected useful life.





The
      Company capitalizes software development costs for modifications to various
      web
      site components and management information systems that result in additional
      functionality in accordance with AICPA Statement of Position (SOP), 98-1,
“Accounting for the Costs of Computer Software Developed or Obtained for
      Internal Use.”  Software development costs are amortized on a
      straight-line basis over four years.





[16]
      Long-lived assets:





We
      evaluate our long-lived assets in accordance with SFAS No. 144, *Accounting
      for the Impairment or Disposal of Long-Lived Assets* (“SFAS 144”), pursuant
      to which an impairment loss is recognized if the carrying amount of a long-lived
      asset is not recoverable and exceeds its undiscounted cash flows.  A
      long-lived asset is tested for recoverability whenever events or changes in
      circumstances indicate that its carrying amount may not be
      recoverable.  Our consideration of SFAS 144 involves significant
      assumptions and estimates based on management’s best judgments of current and
      future circumstances, including currently enacted tax laws, the future
      weighted-average cost of capital, and our future financial performance. No
      impairment charges have been incurred during 2007.





Page
          11


[17]
      Other income, net:





**($
                in thousands)**
            
            **Three
                months ended June 30,**
            
            
            **Six
                months ended June 30,****2007**
            
            
            **2006**
            
            
            **2007**
            
            
            **2006**Currency
                transaction gain
            
            $
            27
            
            
            $
            83
            
            
            $
            31
            
            
            $
            95Interest
                income
            
            
            38
            
            
            
            ---
            
            
            
            90
            
            
            
            ---Loss
                on disposal of assets
            
            
            1
            
            
            
            ---
            
            
            
            (29
            )
            
            
            ---Other
            
            
            18
            
            
            
            (21
            )
            
            
            5
            
            
            
            (47
            )$
            84
            
            
            $
            62
            
            
            $
            97
            
            
            $
            48





[18]
      Income taxes:




We
      recognize deferred tax assets and liabilities for both the expected impact
      of
      differences between the financial statements and tax bases of assets and
      liabilities, and for the expected future tax benefit to be derived from
      offsetting the net operating loss and tax credit carry-forwards against taxable
      income, if any. We established a valuation allowance to reflect the likelihood
      of realization of deferred tax assets. Deferred tax assets are reduced by a
      valuation allowance if it is more likely than not that some portion or all
      of
      the deferred tax assets will not be realized. The difference in basis of the
      investment in foreign subsidiary relates to goodwill which is a temporary
      difference.  The Company recognizes accrued interest and penalties
      associated with uncertain tax positions as part of income tax expense, if
      applicable.






[19]
      Net loss attributed to common stockholders per share:




We
      calculate net loss attributed to common stockholders per share in accordance
      with the provisions of SFAS No. 128, "Earnings per Share”. SFAS No. 128 requires
      a dual presentation of "basic" and "diluted" income (loss) per share on the
      face
      of the consolidated statements of operations. Basic income (loss) per share
      is
      computed by dividing the net loss attributed to common stockholders by the
      weighted average number of shares of common stock outstanding during each
      period. Diluted loss per share includes the effect, if any, from the potential
      exercise or conversion of securities, such as stock options and warrants, which
      would result in the issuance of incremental shares of common stock.





For
      the
      three and six months ended June 30, 2007 and 2006, the basic and diluted net
      loss attributed to common stockholders per share is the same since the effect
      from the potential exercise of 13,335,305 and 15,473,193 outstanding stock
      options and warrants as of June 30, 2007 and 2006, respectively, would have
      been
      anti-dilutive.





For
      the
      three and six months ended June 30, 2007 and 2006, 1,913,253 and 4,625,139
      shares of common stock issuable upon the conversion of the SuperStock Seller
      Preferred, respectively, have also been excluded from the weighted average
      shares outstanding due to their anti-dilutive effect.








[20]
      Reclassifications:





Certain
      reclassifications have been made to the prior period financial statements to
      conform to the respective current year presentation.





[21]
      Comprehensive Income (Loss) and Accumulated Other Comprehensive
      Income:





Accumulated
      other comprehensive income consists of net unrealized foreign currency
      translation adjustments and is presented in the consolidated balance sheets
      as a
      component of stockholders’ equity.





Page
          12


[22]
      Share based payments:





We
      have a
      2005 Stock Option Plan and a 2002 Stock Option Plan, which are described in
      Note
      M below.  We apply the fair value recognition provisions of SFAS
      123(R) whereby compensation cost for all share-based payments are based on
      the grant date estimated fair value.





The
      fair
      value of each option is measured at the grant date using a Black-Scholes
      option-pricing model, which requires the use of a number of assumptions
      including volatility, risk-free interest rate, and expected dividends. There
      were no stock options granted during the six months ended June 30,
      2007.





The
      following summarizes our stock option activity for the six months ended June
      30,
      2007 (unaudited):





**Stock
                Options****Shares**
            
            
            **Weighted
                Average Exercise Price**Balance,
                December 31, 2006
            
            
            8,974,322
            
            
            $
            0.36Granted
            
            
            ---
            
            
            
            ---Exercised
            
            
            (130,000
            )
            
            $
            0.21Forfeited
            
            
            (2,310,817
            )
            
            $
            0.41Balance,
                June 30, 2007
            
            
            6,533,505
            
            
            $
            0.34Exercisable,
                December 31, 2006
            
            
            7,291,844
            
            
            $
            0.35Exercisable,
                June 30, 2007
            
            
            5,594,447
            
            
            $
            0.32








The
      130,000 options exercised during the six months ended June 30, 2007, included
      certain shares exercised on a cashless basis, resulting in the issuance of
      96,838 common shares.





The
      following table summarizes information about stock options outstanding at June
      30, 2007:





**Exercise
                Prices**
            
            
            **Number
                Outstanding**
            
            **Weighted
                Average Remaining Contractual Life**
            
            **Number
                Exercisable**$
            0.25
            
            
            
            736,000
            
            4
                months
            
            
            736,000$
            0.28
            
            
            
            1,000,000
            
            4
                1/2 years
            
            
            369,043$
            0.30
            
            
            
            3,490,838
            
            2
                1/2 years
            
            
            3,490,654$
            0.34
            
            
            
            165,000
            
            3
                1/2 years
            
            
            123,750$
            0.46
            
            
            
            425,000
            
            4
                years
            
            
            425,000$
            0.65
            
            
            
            525,000
            
            4
                years
            
            
            375,000$
            0.83
            
            
            
            191,667
            
            4
                years
            
            
            75,0006,533,505
            
            2
                1/2 years
            
            
            5,594,447





Page
          13


The
      aggregate intrinsic value of options outstanding and exercisable as of June
      30,
      2007, was $0. This amount represents the total pre-tax intrinsic value (the
      difference between our closing stock price on the last trading day of the second
      quarter of 2007 and the exercise price, multiplied by the number of in-the-money
      options) that would have been received by the option holders had all option
      holders exercised their options on June 30, 2007.





The
      following is a summary of the status of and changes to the Company’s non-vested
      restricted shares as of and for the six months ended June 30, 2007:





**Non-vested**
              **Shares**
            
            
            **Weighted
                Average Grant-Date Fair Value**Balance,
                December 31, 2006
            
            
            1,594,658
            
            
            $
            0.27Granted
            
            
            666,666
            
            
            $
            0.25Vested
            
            
            (673,664
            )
            
            $
            0.27Cancelled
            
            
            (59,167
            )
            
            $
            0.27Balance,
                June 30, 2007
            
            
            1,528,493
            
            
            $
            0.26








Share-based
      compensation expense of $153,000 and $323,000 was recognized for the three
      and
      six months ended June 30, 2007, respectively, for the fair value of restricted
      shares and options that vested during the period.  As of June 30,
      2007, there was $463,000 of total unrecognized compensation cost related to
      non-vested share based compensation arrangements, including options and
      restricted stock grants. That cost is expected to be recognized over a
      weighted-average period of about 3 years.








[23]
      Advertising





Advertising
      expenses were $36,000 and $218,000 for the three months ended June 30, 2007
      and
      2006, respectively. Advertising expenses of $136,000 and $393,000 were incurred
      for the six months ended June 30, 2007 and 2006,
      respectively.  Advertising costs are expensed as
      incurred.








[24]
      Recently Issued Accounting Pronouncements





In
      July 2006, the Financial Accounting Standards Board (FASB) issued FASB
      Interpretation No.48, “Accounting for Uncertainty in Income Taxes – an
      interpretation of FASB Statement No.109” (“FIN 48”). FIN 48 clarifies the
      accounting for income taxes by prescribing the minimum recognition threshold
      a
      tax position is required to meet before being recognized in the financial
      statements. FIN 48 is effective for fiscal years beginning after
      December 15, 2006. The adoption of FIN 48 effective January 1, 2007, had no
      impact on our consolidated financial statements (see Note L).





In
      September 2006, the FASB issued SFAS 157, "Fair Value Measurements." SFAS 157
      simplifies and codifies guidance on fair value measurements under generally
      accepted accounting principles. This standard defines fair value, establishes
      a
      framework for measuring fair value and prescribes expanded disclosures about
      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, with early adoption permitted. We are currently evaluating
      the effect, if any, the adoption of SFAS 157 will have on our financial
      condition, results of operations and cash flows.





Page
          14


In
      December 2006, the FASB issued FASB Staff Position (FSP) 00-19-2, “Accounting
      for Registration Payment Arrangements,” which is effective for financial
      statements issued for fiscal years beginning after December 15,
      2006.   This FSP specifies that the contingent obligation to make
      future payments or otherwise transfer consideration under a registration payment
      arrangement, whether issued as a separate agreement or included as a provision
      of a financial instrument or other agreement, should be separately recognized
      and measured in accordance with FASB Statement No. 5, *Accounting for
      Contingencies.*  On April 27, 2006, we entered into a Registration
      Rights Agreement dated April 27, 2006, between a21 and the Agent (as defined
      below), on its own behalf and on behalf of the holders of the Senior Convertible
      Notes (as defined below). Pursuant to the Registration Rights Agreement, the
      Company was required to use commercially reasonable efforts to keep a
      registration statement continuously effective until either all securities
      covered by the registration statement were sold, or until all registrable
      securities covered by the registration statement could be sold immediately
      without registration.  Further, if the SEC did not declare effective a
      registration statement for the sale of the underlying shares of a21’s common
      stock by January 22, 2007, we would have been obligated to pay the holder of
      the
      Senior Convertible Notes liquidated damages as provided in the Registration
      Rights Agreement up to a maximum of 24% of the proceeds of the Senior
      Convertible Notes. On January 12, 2007, the SEC declared our Registration
      Statement on Form SB-2 effective.  The Company concludes that it is
      not probable that it will be required to remit any payments to the investors
      for
      failing to maintain the effectiveness of the related Registration
      Statement.  Therefore, the adoption of FSP 00-19-2 did not have a
      material affect on our consolidated results of operations or consolidated
      financial position.





In
      February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
      Assets and Financial Liabilities.” SFAS 159 permits entities to choose to
      measure many financial instruments and certain other items at fair value. The
      objective is to improve financial reporting by providing entities with the
      opportunity to mitigate volatility in reported earnings caused by measuring
      related assets and liabilities differently. This Statement is expected to expand
      the use of fair value measurement. SFAS 159 is effective for financial
      statements issued for fiscal years beginning after November 15, 2007. Early
      adoption is permitted provided the entity also elects to apply the provisions
      of
      FASB Statement No. 159, “Fair Value Measurements*.*” We are currently
      evaluating the effect, if any, the adoption of SFAS 159 will have on our
      financial condition, results of operations and cash flows.








**NOTE
      C - ACQUISITION**




On
      May
      16, 2006, we acquired ArtSelect, Inc. ArtSelect supplies home and office framed
      and unframed wall décor to retailers, catalogers, membership organizations, and
      consumers through both online and traditional retail and wholesale distribution
      channels.  The primary reason for the acquisition of ArtSelect was
      that it provided us with technology, business partners, and infrastructure
      to
      sell framed imagery.







Page
          15


**PROFORMA
      EFFECT OF ACQUISITION**





The
      results of operations of ArtSelect have been included in the consolidated
      financial statements of the Company since May 16, 2006. The unaudited proforma
      information below presents the results of operations for the six months ended
      June 30, 2006, as if the acquisition of ArtSelect had occurred on January 1,
      2006, the first day of the period presented. The unaudited proforma information
      is presented for informational purposes only and is not intended to represent
      or
      be indicative of the results of operations of the combined companies had these
      events occurred at the beginning of the six months ended June 30, 2006, nor
      is
      it indicative of future results:





**($
                in thousands, except per share amounts)**
            
            **Six
                months ended June 30, 2006**Total
                revenue
            
            $
            12,040Net
                loss
            
            
            (4,277
            )Net
                loss per share, basic and diluted
            
            $
            (0.06
            )Proforma
                weighted average number of common shares outstanding, basic and
                diluted
            
            
            74,817,306








**NOTE
      D - INVENTORY**





The
      major
      components of inventory are summarized as follows:





**($
                in thousands)**
            
            **June
                30, 2007**
            
            
            **December
                31, 2006**Framed
                art raw materials
            
            
            524
            
            
            
            650Framed
                art finished goods
            
            
            200
            
            
            
            158Compact
                disk product
            
            
            36
            
            
            
            36$
            760
            
            
            $
            844








**NOTE
      E - PROPERTY, PLANT AND EQUIPMENT**





Property,
      plant, and equipment are summarized as follows:





**($
                in thousands)**
            
            **June
                30, 2007**
            
            
            **December
                31, 2006**Land
                and building
            
            
            7,768
            
            
            
            7,768Office
                equipment and furnishings
            
            
            728
            
            
            
            721Technology
                equipment
            
            
            504
            
            
            
            508Less:
                Accumulated depreciation
            
            
            (1,994
            )
            
            
            (1,697
            )$
            7,006
            
            
            $
            7,300








Land
      and
      building were sold and leased back in a transaction accounted for as a financing
      transaction. The building is being depreciated over the twenty-year term of
      the
      related lease.


Page
          16





Depreciation
      expense was $152,000 and $187,000 for the three months ended June 30, 2007
      and
      2006, respectively.  Depreciation expense was $306,000 and $327,000
      for the six months ended June 20, 2007 and 2006, respectively.








**NOTE
      F - GOODWILL AND OTHER INTANGIBLE ASSETS**





**($
                in thousands)**Goodwill
                at December 31, 2006
            
            $
            8,648SuperStock
                earn-out
            
            
            110Cumulative
                foreign currencytranslation
                of Ingram goodwill
            
            
            (18
            )Goodwill
                at June 30, 2007
            
            $
            8,740








Identifiable
      intangible assets, net of amortization at June 30, 2007 are as
      follows:





**($
                in thousands)**
            
            **Cost**
            
            
            **Accumulated**
              **Amortization**
            
            
            **Foreign
                Currency Translation**
            
            
            **Net**
            
            
            **Average
                Useful Life (in months)**SuperStock
                non-compete covenants
            
            $
            116
            
            
            $
            (116
            )
            
            $
            ---
            
            
            $
            ---
            
            
            
            34SuperStock
                software
            
            
            278
            
            
            
            (113
            )
            
            
            ---
            
            
            
            165
            
            
            
            36
                – 60Ingram
                license agreements
            
            
            1,142
            
            
            
            (681
            )
            
            
            210
            
            
            
            671
            
            
            
            60Ingram
                non-compete agreements
            
            
            430
            
            
            
            (358
            )
            
            
            51
            
            
            
            123
            
            
            
            36Ingram
                customer relationships
            
            
            420
            
            
            
            (245
            )
            
            
            31
            
            
            
            206
            
            
            
            36Ingram
                distribution agreements
            
            
            270
            
            
            
            (157
            )
            
            
            19
            
            
            
            132
            
            
            
            36Ingram
                trademark
            
            
            220
            
            
            
            (192
            )
            
            
            9
            
            
            
            37
            
            
            
            24ArtSelect
                trade name
            
            
            80
            
            
            
            ---
            
            
            
            ---
            
            
            
            80
            
            
            N/AArtSelect
                software
            
            
            1,220
            
            
            
            (306
            )
            
            
            ---
            
            
            
            914
            
            
            
            48ArtSelect
                customer relationships
            
            
            2,800
            
            
            
            (237
            )
            
            
            ---
            
            
            
            2,563
            
            
            
            216Intangible
                assets
            
            $
            6,976
            
            
            $
            (2,405
            )
            
            $
            320
            
            
            $
            4,891





Amortization
      expense during the three months ended June 30, 2007 and 2006 totaled $268,000
      and $431,000, respectively. Amortization expense during the six months ended
      June 30, 2007 and 2006 was $532,000 and $711,000,
      respectively.  Approximate remaining annual amortization expense is as
      follows for each of the following years:  2007: $541,000, 2008:
      $880,000, 2009: $636,000, 2010: $427,000 and 2011: $203,000.





**($
                in thousands)**Intangible
                assets, net at December 31, 2006
            
            $
            5,232Addition
                to cumulative foreign currency translation
            
            
            30SuperStock
                software additions, net
            
            
            28ArtSelect
                software additions, net
            
            
            133Amortization
                expense
            
            
            (532
            )Intangible
                assets, net at June 30, 2007
            
            $
            4,891





Page
          17





**NOTE
      G – PHOTO COLLECTION**





The
      gross
      book value of our photo collection as of June 30, 2007 and December 31, 2006
      was
      $3.2 million and $2.9 million, respectively.  The book value of the
      photo collection, net of accumulated amortization was $1.5 million at June
      30,
      2007 and December 31, 2006, respectively.  Amortization expense was
      $159,000 and $131,000 for the three months ended June 30, 2007 and 2006,
      respectively.  Amortization expense was $310,000 and $255,000 for the
      six months ended June 30, 2007 and 2006, respectively.  Approximate
      remaining annual amortization expense is as follows for each of the following
      years: 2007: $319,000, 2008: $249,000, 2009: $169,000, 2010: $133,000 and 2011:
      $32,000.








**NOTE
      H - MINORITY INTEREST**





Minority
      interest represents 637,751 shares of SuperStock Seller Preferred held by the
      former owners of SuperStock at June 30, 2007, which is exchangeable for
      1,913,253 shares of a21’s common stock. The SuperStock Seller Preferred has no
      voting rights, pays no dividend, and, except for exchange rights into common
      stock, it has no other special rights except a liquidation preference. In
      liquidation, it is senior to the common stock of SuperStock and has distribution
      rights to the greater of $1.6 million or 7% of the total liquidation
      distributions after creditors. The minority interest is valued as if it had
      been
      exchanged into a21’s common stock at the closing price on the day of the
      acquisition.





On
      January 10, 2007, we issued 2,111,886 shares of a21 common stock upon the
      conversion of 703,962 shares of SuperStock Seller Preferred with a respective
      adjustment to equity of $1,182,000 representing the allocable, original fair
      value of the SuperStock Seller Preferred as if it had been exchanged into a21’s
      common stock at the closing price on the day of the acquisition.








**NOTE
      I - OPERATING SEGMENTS**





Effective
      with the ArtSelect acquisition during May 2006, we operate in the following
      segments: Corporate, SuperStock, and ArtSelect. No customer represented 10%
      or
      more of our total revenue in the periods presented.





7%
      and
      10% of our total revenues were based in the U.K. for the three months ended
      June
      30, 2007 and 2006, respectively.  8% and 13% of our total revenues
      were based in the U.K. for the six months ended June 30, 2007 and 2006,
      respectively.  92% and 85% of our total assets were based domestically
      in the U.S. as of June 30, 2007 and December 31, 2006.





The
      following tables present information about our segment activity as of June
      30,
      2007, and for the three and six months then ended:





**($
                in thousands)****Three
                months ended**
              **June
                30, 2007**
            
            **Corporate**
            
            
            **SuperStock**
            
            
            **ArtSelect**
            
            
            **Total**Revenue
            
            $
            ---
            
            
            $
            3,038
            
            
            $
            2,658
            
            
            $
            5,696Segment
                operating income(loss)
            
            
            (731
            )
            
            
            (184
            )
            
            
            68
            
            
            
            (847
            )Segment
                total assets
            
            
            358
            
            
            
            20,125
            
            
            
            11,625
            
            
            
            32,108Segment
                long-lived assets
            
            
            ---
            
            
            
            13,069
            
            
            
            9,658
            
            
            
            22,727





Page
          18





**($
                in thousands)****Six
                months ended**
              **June
                30, 2007**
            
            **Corporate**
            
            
            **SuperStock**
            
            
            **ArtSelect**
            
            
            **Total**Revenue
            
            $
            ---
            
            
            $
            6,206
            
            
            $
            5,614
            
            
            $
            11,820Segment
                operating income(loss)
            
            
            (1,271
            )
            
            
            (219
            )
            
            
            137
            
            
            
            (1,353
            )








The
      following tables present information about our segment activity as of June
      30,
      2006, and for the three and six months then ended:





**Three
                months ended**
              **June
                30, 2006**
            
            **Corporate**
            
            
            **SuperStock**
            
            
            **ArtSelect**
            
            
            **Total**Revenue
            
            $
            ---
            
            
            $
            3,022
            
            
            $
            1,489
            
            
            $
            4,511Segment
                operating loss
            
            
            (973
            )
            
            
            (801
            )
            
            
            (65
            )
            
            
            (1,839
            )Segment
                total assets
            
            
            498
            
            
            
            26,696
            
            
            
            11,456
            
            
            
            38,650Segment
                long-lived assets
            
            
            ---
            
            
            
            16,091
            
            
            
            9,737
            
            
            
            25,828








**($
                in thousands)****Six
                months ended**
              **June
                30, 2006**
            
            **Corporate**
            
            
            **SuperStock**
            
            
            **ArtSelect**
            
            
            **Total**Revenue
            
            $
            ---
            
            
            $
            5,958
            
            
            $
            1,488
            
            
            $
            7,446Segment
                operating income(loss)
            
            
            (1,951
            )
            
            
            (1,199
            )
            
            
            (65
            )
            
            
            (3,215
            )





The
      SuperStock segment information reflects the operation of foreign
      subsidiaries.








**NOTE
      J – DEBT FINANCINGS**





The
      following table summarizes the future maturities of long-term debt obligations
      at June 30, 2007 (in thousands):





2007
            
            
            2008
            
            
            2009
            
            
            2010
            
            
            2011Senior
                Secured Convertible Notes
            
            
            ---
            
            
            
            ---
            
            
            $
            ---
            
            
            
            ---
            
            
            $
            15,500Secured
                Notes (ArtSelect)
            
            
            ---
            
            
            
            ---
            
            
            
            2,555
            
            
            
            ---
            
            
            
            ---Total:
            
            
            ---
            
            
            
            ---
            
            
            $
            2,555
            
            
            
            ---
            
            
            $
            15,500





Page
          19





**$15.5
      Million Senior Secured Convertible Notes**




During
      April 2006, we entered into a securities purchase agreement (“Purchase
      Agreement”) with certain purchasers and Queequeg Partners, LP, as agent
      (“Agent”), whereby we issued $15.5 million of 5% Senior Secured Convertible
      Notes (“Senior Convertible Notes”) in consideration for which we received
      net proceeds of $11.7 million in cash after the repayment of certain
      outstanding debt of $3.3 million, the retirement of warrants to
      purchase 637,500 shares of a21’s common stock, the repayment of total
      interest due of $216,000, and the payment of a finder’s fee of $100,000.
      Queequeg Partners L.P. and Queequeg, Ltd. (each of which are affiliated
      with Ahab Capital Management, Inc., which was a 10% beneficial owner of a21’s
      common stock prior to April 27, 2006) (collectively “Ahab”), and StarVest
      Partners, LP (“StarVest”), which was a 10% beneficial owner of a21’s common
      stock prior to April 27, 2006, purchased a portion of the Notes sold in
      this transaction. As part of this transaction, we released $690,000 of
      certificate of deposits (“CDs”), which had been pledged by Ahab to secure
      the letter of credit issued by SuperStock in connection with its capital
      lease for our facility in Jacksonville, Florida, and replaced the deposit with
      new CDs from the net proceeds of the financing.




The
      Senior Convertible Notes are secured by substantially all of our assets and
      are
      convertible into 23,846,149 of a21’s common stock at a minimum conversion price
      of $0.65 per share, subject to adjustment as provided in the Senior Convertible
      Notes. In addition, the conversion price of the Senior Convertible Notes may
      be
      adjusted based on a weighted average anti-dilution formula in the event of
      issuances of a21’s common stock at a price per share below $0.65. The minimum
      conversion price is set at $0.50 per share on a diluted basis. The interest
      on
      the Senior Convertible Notes is payable quarterly in arrears, and the principal
      will be due and payable on June 30, 2011. If the 45-day volume weighted average
      price of a21’s common stock equals or exceeds $1 per share, the Senior
      Convertible Notes will automatically be converted into a21’s common stock under
      certain conditions.




The
      Senior Convertible Notes include customary events of default, including the
      failure to pay any principal or interest when due, the breach of any covenant
      or
      term or condition of the Senior Convertible Notes, the breach of any
      representation or warranty in the Purchase Agreement, Senior Convertible Notes
      or other documents executed in connection with the transactions contemplated
      thereby, defaults in the performance of any other indebtedness of greater than
      $500,000, the insolvency or bankruptcy, and the SEC issuing a stop trade order
      or suspension of trading relating to a21’s common stock.  Upon the
      occurrence of an event of default, each Note will become due and payable, either
      upon notice from the agent for the holders of Senior Convertible Notes at the
      direction of the holders of a majority of the outstanding principal amount
      of
      the Senior Convertible Notes or automatically, depending on the particular
      event
      of default.




Pursuant
      to the terms of the Purchase Agreement, for so long as StarVest beneficially
      owns at least 8,000,000 shares of a21’s common stock, StarVest has the right to
      name a designee to our Board of Directors. In addition, for so long as at least
      40% of the aggregate principal amount of the Senior Convertible Notes is
      outstanding, we may not, without the prior written consent of the Agent, engage
      in certain activities or transactions, including, but not limited to, declaring
      dividends, liquidating, dissolving, effecting a reorganization or change of
      control, or incurring certain indebtedness. The Purchase Agreement also provides
      that the purchasers have a pro-rata “first right of refusal” to provide up to
      25% of the amount of any additional financing the amount of which will be in
      excess of $2.0 million.




We
      also
      entered into a Registration Rights Agreement dated April 27, 2006, between
      a21
      and the Agent, on its own behalf and on behalf of the holders of the Senior
      Convertible Notes. Pursuant to the Registration Rights Agreement, if the SEC
      did
      not declare effective a registration statement for the sale of the underlying
      shares of a21’s common stock by January 22, 2007, we would have been obligated
      to pay the holder of the Senior Convertible Notes liquidated damages as provided
      in the Registration Rights Agreement.  On January 12, 2007, the SEC
      declared our Registration Statement on Form SB-2 effective.


Page
          20







**Secured
      Notes – Related Party (ArtSelect Sellers)**





In
      partial consideration for the sale of ArtSelect to a21, the stockholders of
      ArtSelect received $2.4 million in secured notes. The seller notes bear interest
      at 6% per year and mature on the earlier to occur of a change of control or
      May
      15, 2009. The first year of interest on the notes will be accrued and added
      to
      the principal of the notes. After the first year, interest will be payable
      quarterly, in arrears. The notes are secured by substantially all the assets
      of
      ArtSelect (provided that, with respect to up to $3.0 million of the assets
      of
      ArtSelect, the notes are junior to the previously issued $15.5 million
      Senior Convertible Notes described above). The notes balance, including accrued
      interest, recorded on our condensed consolidated balance sheet at was $2.6
      million and $2.5 million at June 30, 2007 and December 31, 2006, respectively,
      and is included in the caption “Secured notes payable, net- related party
      (ArtSelect Sellers)”.





**NOTE
      K – LOAN PAYABLE ON BUILDING**





During
      June 2004, we completed the sale and leaseback of the land and an approximately
      73,000 square foot building in which our headquarters is located in
      Jacksonville, Florida. The facility was sold for $7.7 million and resulted
      in
      net proceeds of $7.5 million, of which $4.0 million was used to repay a bank
      note that was secured by a first mortgage on the facility and $1.6 million
      was
      used to repay other indebtedness to the selling stockholders of SuperStock.
      The
      building was leased back for a term of twenty years. The lease provides us
      with
      two five-year renewal options at specified payments.





Based
      on
      the terms of the leasing arrangement, the transaction does not qualify for
      sale
      recognition and has been accounted for as a financing transaction pursuant
      to
      SFAS No. 98, "Accounting for Leases". Accordingly, the accompanying financial
      statements reflect the net proceeds from the sale of the land and building
      as a
      loan payable with an effective interest rate of 10.1%. The building is included
      in property and equipment and is being depreciated on a straight-line basis
      over
      the twenty-year term of the lease.








The
      following table summarizes our annual maturities under the loan payable on
      building at June 30, 2007:





**($
                in thousands)**2007
            
            
            222008
            
            
            552009
            
            
            802010
            
            
            1102011
            
            
            144Thereafter
            
            
            7,0147,425Less:
                Current Portion
            
            
            (45
            )Long
                Term Portion
            
            $
            7,380





The
      current portion of the loan payable is included in other current
      liabilities.


Page
          21





The
      following table summarizes our related annual lease payments on
      building:





**($
                in thousands)**2007
            
            $
            3982008
            
            
            8042009
            
            
            8222010
            
            
            8432011
            
            
            864Thereafter
            
            
            12,799Total
                payments
            
            
            16,530Less
                interest
            
            
            (9,105
            )Net
            
            $
            7,425








**NOTE
      L - INCOME TAXES**





In
      July
      2006, the Financial Accounting Standards Board (“FASB”) issued FASB
      Interpretation No. 48, *Accounting for Uncertainty in Income Taxes**–
an Interpretation of FASB Statement No. 109* (“FIN 48”).  FIN 48
      clarifies the accounting for uncertainty in income taxes recognized in an
      enterprise’s financial statements in accordance with FASB Statement No. 109,
*Accounting for Income Taxes*.  FIN 48 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
      Company adopted the provisions of FIN 48 effective January 1,
      2007.  The Company recognizes accrued interest and penalties
      associated with uncertain tax positions as part of income tax expense, if
      applicable.  As of the date of adoption, the Company did not have any
      unrecognized tax benefits recorded as a provision for the uncertainty of certain
      tax positions. As such, no estimated interest and penalties on the provision
      for
      the uncertainty of certain tax positions is included in the consolidated
      financial statements.  The Company does not currently anticipate any
      significant changes to the unrecognized tax benefits during the remainder of
      2007.





The
      Company is subject to U.S. federal income tax as well as income tax of various
      state and foreign jurisdictions.  Income tax returns are generally
      subject to examination for a period of three to five years after filing of
      the
      respective return.  The state impact of any federal changes remains
      subject to examination by various states for a period of up to one year after
      formal notification to the states.  The Company currently does not
      have any returns under review.








**NOTE
      M – CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY**





[1]
      Common and Preferred stock:





The
      number of the Company’s authorized shares of common stock is 200,000,000
      shares.





We
      are
      authorized to issue 100,000 shares of $.001 par value preferred stock having
      rights, preferences, and privileges which may be determined by our Board of
      Directors.




During
      May 2007, we issued 100,000 shares of fully vested common stock to a
      non-employee consultant as partial payment for services provided to the
      Company.




During
      April 2007, we issued 66,666 shares of our restricted common stock as partial
      compensation to a Board Director for his service on the Board of Directors,
      which will vest on the one year anniversary of his election to the Board, which
      is March 22, 2008.


Page
          22




During
      March 2007, we issued a total of 125,000 shares of our restricted common stock
      as compensation incentives to three new managers, which will vest in equal
      shares on the six-month anniversary of their respective hire date over a period
      of three years.  In addition, we issued 25,000 shares of fully vested
      common stock to a non-employee consultant as partial payment for services
      provided to the Company.





On
      January 8, 2007, we issued 350,000 shares of our restricted common stock as
      part
      of an employment agreement with our Executive Vice President, Sales and
      Marketing, of which 43,750 shares will vest on the six month anniversary of
      his
      employment agreement (see Note N[4]) and the remainder will vest in forty-two
      equal monthly installments on the first day of each month thereafter such that
      all of such options and restricted stock will be vested by the forty-eight
      month
      anniversary of the date of the agreement. All unvested shares of restricted
      stock will immediately vest upon a change in control of a21.








[2]
      Stock
      options and warrants:





Stock
      options and warrants have been granted to officers, directors and employees
      pursuant to employment agreements and other grants at the discretion of the
      Board of Directors. Warrants have been granted through other financing and
      investment agreements with certain of our investors.





Our
      2005
      Stock Incentive Plan (the “2005 Plan”) provides for the grant of options, stock
      appreciation rights (“SARs”), performance share awards, restricted stock, and
      unrestricted stock of up to an aggregate of 6,000,000 shares of a21 common
      stock
      to officers, employees, and independent contractors of ours or our affiliates.
      If any award expires, is cancelled, or terminates unexercised or is forfeited,
      the number of shares subject thereto is again available for grant under the
      2005
      Plan. A committee selected by our Board of Directors has the authority to
      approve option grants and the terms, which include the option price and the
      vesting terms. Stock options issued under the 2005 Plan typically have a
      five-year term and vest pro-rata over that term except when otherwise adapted
      to
      specific terms per executive management agreements and their respective terms.
      The exercise price typically shall be no less than the fair market value of
      a
      share of a21’s common stock on the date of grant of the options. See Note B
      [22]. As of June 30, 2007, there were 1,070,572 shares available for grant
      under
      the 2005 Plan.





Our
      2002
      Directors, Officers And Consultants Stock Option, Stock Warrant And Stock Award
      Plan, as amended (the "2002 Plan"), provides for the grant
      of  warrants, options, restricted or unrestricted common stock, and
      other awards of up to an aggregate of 3,000,000 shares of a21 common
      stock  to our employees, consultants and directors and our affiliates.
      If any award expires, is cancelled, or terminates unexercised or is forfeited,
      the number of shares subject thereto is again available for grant under the
      2002
      Plan. A committee selected by our Board of Directors has the authority to
      approve option grants and the terms, which include the option price and the
      vesting terms. Options granted under the 2002 Plan typically expire after a
      ten-year period except when otherwise adapted to specific terms per executive
      management agreements and their respective terms, and are subject to
      acceleration upon the occurrence of certain events. The exercise price typically
      shall be no less than the fair market value of a share of a21’s common stock on
      the date of grant of the options. See Note B [22]. As of June 30, 2007, there
      were 2,236,000 shares available for grant under the 2002 Plan.





Certain
      options and warrants to be granted under the 2005 Plan and the 2002 Plan are
      intended to qualify as Incentive Stock Options (“ISOs”) pursuant to Section 422
      of the Internal Revenue Code of 1986, as amended, while other options granted
      under the plans will be nonqualified options that are not intended to qualify
      as
      ISOs.


Page
          23





**NOTE
      N - COMMITMENTS AND OTHER
      MATTERS**





[1]
      Lease
      commitments





As
      described in Notes E and K above, we have capitalized our facility under the
      terms of a sale and leaseback transaction. In September 2004, we entered into
      an
      agreement to sublease a significant portion of its facility for a term of six
      years with an option to renew for an additional two-year term. The sublease
      requires monthly rent payments to us beginning in November 2004 with annual
      increases through the term of the sublease. The total lease payments in
      accordance with the terms of the agreement are $3.5 million. Sublease payments
      of approximately $169,000 and $131,000 were received for the three months ended
      June 30, 2007 and 2006, respectively.  Sublease payments of
      approximately $338,000 and $262,000 were received for the six months ended
      June
      30, 2007 and 2006, respectively.  Sublease payments are scheduled as
      follows for each of the following years:  2007: $342,000, 2008:
      $701,000, 2009: $722,000 and 2010: $616,000. Rental income is recognized on
      a
      straight-line basis over the term of the sublease, and the excess of rental
      income recognized over rental payments received is recorded as deferred rent
      receivable, which was $494,000 and $549,000 as of June 30, 2007 and December
      31,
      2006, respectively.





In
      a
      lease agreement for SuperStock Limited in the UK, we sublet the entire facility
      to a third party as of June 2002, until the expiration of the lease in 2014.
      In
      accordance with the lease agreement, our UK subsidiary would be liable for
      approximately $90,000 per year under the covenants in the lease in the event
      the
      lessee who has sublet the facility is unable to perform under such
      terms.





[2]
      Lease
      Deposit Arrangement





A
      security deposit is required under the capital lease agreement for our facility
      in Florida. The lease deposit of $750,000 is included in restricted cash
      non-current assets as of June 30, 2007 and December 31, 2006.





[3]
      Legal:





We
      are
      involved in various claims and lawsuits in the ordinary course of business.
      Management believes that there are no such matters outstanding that would have
      a
      material adverse effect on our results of operations and financial
      position.





[4]
      Employment Agreements





On
      January 8, 2007, we entered into an employment agreement our Executive Vice
      President, Sales and Marketing. He will receive a salary of $185,000 per year
      and a signing bonus of $15,000. He will be entitled to an annual bonus based
      on
      certain performance criteria established by the Board of Directors and a minimum
      bonus of $25,000 for 2007. In addition, only with respect to the year ending
      December 31, 2007, he will be entitled to an additional bonus equal to 2% of
      our
      net sales above a certain net sales threshold to be established by our Board
      of
      Directors. We granted him 350,000 restricted shares of a21’s common stock, of
      which 43,750 shares will vest on the six month anniversary of his employment
      agreement and the remainder will vest in forty-two equal monthly installments
      on
      the first day of each month thereafter such that all of such options and
      restricted stock will be vested by the forty-eight month anniversary of the
      date
      of the agreement.








**NOTE
      O – SUBSEQUENT EVENT**





On
      August
      8, 2007, we entered into a separation agreement with our Executive Chairman,
      pursuant to which he resigned his position as our Executive Chairman and as our
      director and all other positions he had with us or any of our subsidiaries.
      Pursuant to this agreement, his prior employment agreement with us was
      terminated. He will receive an amount equal to seven (7) month’s salary, an
      aggregate of $96,250, paid in installments over such seven (7) month period.
      He
      will also receive a bonus pursuant to the terms of his prior employment
      agreement in the amount of $37,125.


Page
          24


**ITEM
      2. MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





*The
      following discussion should be read in conjunction with the information
      contained in our condensed consolidated financial statements and the notes
      thereto appearing elsewhere herein and in conjunction with the Management’s
      Discussion and Analysis set forth in our Annual Report on Form 10-KSB for the
      year ended December 31, 2006.*








**PRELIMINARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





The
      statements contained in this Form 10-QSB that are not purely historical are
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
      1934,
      as amended. These include statements about our expectations, beliefs, intentions
      or strategies for the future, which are indicated by words or phrases such
      as
“anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “management
      believes” and similar words or phrases. The forward-looking statements are based
      on our current expectations and are subject to certain risks, uncertainties,
      and
      assumptions. Our actual results could differ materially from results anticipated
      in these forward-looking statements. All forward-looking statements included
      in
      this document are based on information available to us on the date hereof,
      and
      we assume no obligation to update any such forward-looking
      statements.








**OVERVIEW**





Through
      our subsidiary SuperStock, we aggregate visual content from photographers,
      photography agencies, archives, libraries, and private collections and license
      the visual content to our customers. SuperStock’s customer base consists of four
      major groups: creative (advertising and design agencies), editorial (publishing
      and media entities), corporate (in-house communications departments and outside
      corporate communications firms) and consumers (the general public). SuperStock’s
      products are sold directly and through a global network of distributors in
      over
      100 countries. SuperStock’s subsidiary Ingram is a UK-based provider of
      subscription, CD-ROM and individual royalty free images as well as vector
      graphics and fonts, vehicle online templates, and print price guides for the
      worldwide graphics design, printing, sign making, advertising and publishing
      communities. Our subsidiary ArtSelect supplies home and office framed and
      unframed wall décor to retailers, catalogers, membership organizations and
      consumers through both online and traditional retail and wholesale distribution
      channels. We are headquartered in Jacksonville, Florida, with other operating
      and sales offices in Iowa, New York City and London.








**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





This
      discussion and analysis of our financial condition and results of operations
      are
      based on our financial statements that have been prepared under accounting
      principles generally accepted in the United States of America (“GAAP”). The
      preparation of financial statements in conformity with GAAP requires our
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and the disclosure of contingent assets and liabilities
      at the date of the financial statements and the reported amounts of revenue
      and
      expenses during the reporting period. Actual results could materially differ
      from those estimates. We have summarized significant accounting policies in
      Note
      B to the unaudited condensed consolidated financial statements included in
      this
      quarterly report on Form 10-QSB.


Page
          25


**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED JUNE 30, 2007, COMPARED TO THREE MONTHS ENDED JUNE 30,
      2006**




REVENUES.
      Revenues were $5.7 million for the three months ended June 30, 2007, compared
      to
      $4.5 million for the same prior year period.  Nearly all of the
      increase was attributable to ArtSelect, our acquisition of which occurred on
      May
      15, 2006.  On an organic basis, SuperStock revenues are marginally
      higher, while ArtSelect revenues are slightly lower.   Both
      businesses are affected by the challenging market conditions that have prevailed
      so far during 2007.  ArtSelect revenues are affected by the
      home-buying market, which impacts consumer purchasing of home décor
      products.




COST
      OF
      REVENUE. Cost of revenue was $2.3 million for the three months ended June 30,
      2007, compared to $1.7 million the same prior year period.  The
      increase of approximately $600,000 is attributable to the ArtSelect acquisition
      phasing, offset by lower SuperStock cost of revenue. As a percentage of
      revenues, cost of sales was 37% and 38% for the three months ended June 30,
      2007
      and 2006, respectively. The cost of sales percentage reflects the weighted
      impact of higher variable cost for ArtSelect’s raw materials including prints,
      mats, frames, molding, and packaging material as well as shipping and handling
      costs. Cost of sales as a percentage of revenues may also vary in any period
      depending on SuperStock’s relative mix of stock photography distributed that is
      either licensed from third parties or owned by us.




SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were $3.6 million for the
      three months ended June 30, 2007, compared to $3.8 million for the same prior
      year period reflecting ArtSelect expenses for the full three months offset
      by
      lower corporate expenses including professional fees and SuperStock operating
      expenses.




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $632,000 for the three
      months ended June 30, 2007, compared to $830,000 for the same prior year period.
      The decrease was primarily attributable to lower amortization resulting from
      Ingram intangible asset impairment charge recorded during the three months
      ended
      December 31, 2006.




INTEREST
      EXPENSE. Interest expense was $442,000 for the three months ended June 30,
      2007,
      compared to $447,000 for the same prior year period reflecting the relative
      outstanding debt during the three months ended June 30, 2007, compared to the
      same prior year period.




OTHER
      INCOME, NET. Other income, net was $84,000 for the three months ended June
      30,
      2007, compared to $62,000 for the same prior year period, with the increase
      primarily related to higher interest income and gains from the effect of foreign
      currency exchange.




INCOME
      TAX EXPENSE.  Income tax expense was $24,000 for the three months
      ended June 30, 2007, compared to $44,000 for the same prior year period,
      reflecting amounts paid to foreign taxing authorities.




NET
      LOSS
      ATTRIBUTED TO COMMON STOCKHOLDERS. Net loss attributed to common stockholders
      was $1.2 million or $0.01 per share, for the three months ended June 30,
      2007, compared to net loss of $2.1 million, or $0.03 per share, for the same
      prior year period.


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          26




**SIX
      MONTHS ENDED JUNE 30, 2007, COMPARED TO SIX MONTHS ENDED JUNE 30,
      2006**




REVENUES.
      Revenues were $11.8 million for the six months ended June 30, 2007, compared
      to
      $7.4 million for the same prior year period.  Nearly all of the
      increase was attributable to ArtSelect, our acquisition which occurred on May
      15, 2006. On an organic basis, SuperStock revenues are marginally higher, while
      ArtSelect revenues are slightly lower.




COST
      OF
      REVENUE. Cost of revenue was $4.6 million for the six months ended June 30,
      2007, compared to $2.6 million the same prior year period.  Nearly all
      of the increase was attributable to the ArtSelect acquisition phasing. As a
      percentage of revenues, cost of sales was 39% and 35% for the six months ended
      June 30, 2007 and 2006, respectively. The increase in cost of sales percentage
      reflects the weighted impact of the relative variable cost for ArtSelect’s raw
      materials including prints, mats, frames, molding, and packaging material as
      well as shipping and handling costs. Cost of sales as a percentage of revenues
      may also vary in any period depending on SuperStock’s relative mix of stock
      photography distributed that is either licensed from third parties or owned
      by
      us.




SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were $7.3 million for the
      six months ended June 30, 2007, compared to $6.6 million for the same prior
      year
      period. The increase in SG&A expenses was primarily attributable to an
      increase of $1.9 million for the full six months for ArtSelect, offset by a
      reduction of $486,000 in share-based compensation and a decrease of $727,000
      due
      to organic reductions in corporate expenses, including professional fees and
      SuperStock’s operating expenses including compensation costs.




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $1.3 million for the six
      months ended June 30, 2007, compared to $1.4 million for the same prior year
      period. The decrease was primarily attributable to lower amortization resulting
      from Ingram intangible asset impairment charge recorded during the fourth
      quarter of 2006, offset by incremental depreciation and amortization
      expense resulting from the acquisition of ArtSelect.




INTEREST
      EXPENSE. Interest expense was $884,000 for the six months ended June 30, 2007,
      compared to $800,000 for the same prior year period reflecting the relative
      outstanding debt during the six months ended June 30, 2007, compared to the
      same
      prior year period.




OTHER
      INCOME, NET. Other income, net was $97,000 for the six months ended June 30,
      2007, compared to $48,000 for the same prior year period, which was primarily
      related to higher interest income of $90,000 during 2007.




INCOME
      TAX EXPENSE.  Income tax expense was $51,000 for the six months ended
      June 30, 2007, compared to $71,000 for the same prior year period, reflecting
      amounts paid to foreign taxing authorities.




NET
      LOSS
      ATTRIBUTED TO COMMON STOCKHOLDERS. Net loss attributed to common stockholders
      was $2.2 million or $0.03 per share, for the six months ended June 30,
      2007, compared to net loss of $4.3 million, or $0.06 per share, for the same
      prior year period.


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          27





**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      June 30, 2007, we had $3.9 million of cash and cash equivalents and working
      capital of $3.5 million, compared to $5.5 million in cash and cash equivalents
      and working capital of $4.3 million at December 31, 2006. The decrease in cash
      is primarily due to overall cash used in operating and investing activities
      during the six months ended June 30, 2007.




Net
      cash
      used in operating activities for the six months ended June 30, 2007 was
      $890,000, compared to net cash used in operating activities of $1.6 million
      for
      the same prior year period. The net cash used in operating activities during
      the
      six months ended June 30, 2007, was substantially due to the net loss of $2.2
      million adjusted by $1.3 million for depreciation and amortization, and a
      $620,000 decrease in accounts payable and accrued expenses due to phasing of
      accruals including severance costs. Net cash used in operating activities in
      the
      six months ended June 30, 2006, was due primarily to the net loss of $4.1
      million adjusted for, $1.4 million for depreciation and amortization, $809,000
      of share-based compensation, and an increase in accounts payable and accrued
      expenses of $852,000, offset by an increase in accounts receivable of $418,000
      and an increase in prepaid expenses and other current assets of
      $483,000.




Net
      cash
      used in investing activities for the six months ended June 30, 2007, was
      $769,000, compared to net cash used in investing activities for the same prior
      year period, of $5.9 million. Net cash used in investing activities for the
      six months ended June 30, 2007, was primarily due to $285,000 for the
      SuperStock acquisition earn-out payment, $266,000 investment in SuperStock’s
      photo collection, and $199,000 investment in technology.  Net cash
      used in investing activities in the six months ended June 30, 2006, was
      primarily due to $4.5 million used as partial consideration for the ArtSelect
      acquisition and $750,000 used for a lease security deposit on our headquarters
      and SuperStock building in Jacksonville, Florida.




Net
      cash
      provided by financing activities for the six months ended June 30, 2007, was
      $56,000, compared to net cash provided by financing activities of $13.3 million
      for the same prior year period.  Net cash provided by financing
      activities in the six months ended June 30, 2006, resulted substantially
      from the $15.3 million Senior Convertible debt financing offset by repayments
      of
      $3.3 million of outstanding debt.





Our
      future plans include further developing our direct online and distribution
      channels for SuperStock, gaining new key customer relationships and introducing
      new product offerings for ArtSelect, improving the leveraging of SuperStock’s
      owned and licensed image content, and seeking integration cost reduction
      opportunities where feasible across the Company. Additionally, we are in
      discussions with several potential acquisition targets that, if successful,
      could result in an enhanced market position and incremental cash flow from
      operations. However, there can be no assurance that these efforts will be
      successful. We may have to seek additional funding sooner than expected. There
      can be no assurance that sufficient additional capital needed to sustain
      operations will be obtained by us, if needed, or that our operations will become
      profitable.







**OFF
      BALANCE SHEET ARRANGEMENTS**





We
      have
      not entered into any off balance sheet arrangements as of June 30,
      2007.





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          28


**ITEM
      3. CONTROLS AND PROCEDURES**





**EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES**





Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and the principal financial officer, we conducted
      an
      evaluation of the effectiveness of the design and operation of our disclosure
      controls and procedures as of the end of the period covered by this report
      (the
“Evaluation Date”). Based on this evaluation, our principal executive officer
      and principal financial officer concluded as of the Evaluation Date that our
      disclosure controls and procedures were effective at ensuring that the material
      information required to be disclosed in the Exchange Act reports is recorded,
      processed, summarized and reported as required in applicable SEC rules and
      forms.





During
      the quarter ended June 30, 2007, there were no changes in our internal control
      over financial reporting identified in connection with management’s evaluation
      of the effectiveness of our internal control over the financial reporting that
      have materially affected, or are reasonably likely to materially affect, our
      internal control over financial reporting.





Page
          29


**PART
      II – OTHER INFORMATION ITEM**





**ITEM
      1.  LEGAL PROCEEDINGS**





We
      are
      involved in various claims and lawsuits in the ordinary course of business.
      Management believes that there are no such matters outstanding that would have
      a
      material adverse effect on our results of operations and financial
      position.








**ITEM
      2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





During
      April 2007, a21 issued 100,000 shares of common stock to an external consultant
      in consideration for services rendered by him to a21.  In addition,
      a21 issued 66,666 shares of common stock to John Hallberg, member of the Board
      of Directors, in consideration for services to be rendered by him to
      a21.  No fees were paid to any party in connection with the issuance
      of such securities.  a21 issued the foregoing securities in reliance
      on Section 4(2) of the Securities Act, based on the identity and number of
      investors.








**ITEM
      3.  DEFAULTS UPON SENIOR SECURITIES**





None








**ITEM
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS**





None








**ITEM
      5.  OTHER INFORMATION**





None





Page
          30





**ITEM
      6.  EXHIBITS**





The
      following exhibits are filed as part of this report:





**EXHIBIT**NUMBER
            DESCRIPTION31.1
            Certification
                Of Chief Executive Officer Pursuant To Rule 13A-14[A] Of The Securities
                Exchange Act Of 1934, As Adopted Pursuant To Section 302 Of The
                Sarbanes-Oxley Act Of 200231.2
            Certification
                Of Chief Financial Officer Pursuant To Rule 13A-14[A] Of The Securities
                Exchange Act Of 1934, As Adopted Pursuant To Section 302 Of The
                Sarbanes-Oxley Act Of 200232.1
            Certification
                Of Principal Executive Officer And Principal Financial Officer Pursuant
                To
                18 U.S.C.1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley
                Act Of 2002








Page
          31











**SIGNATURES**








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





**a21,
                Inc.**Date:  August
                10, 2007
            By:
                /s/ JOHN Z. FERGUSONJohn
                Z. Ferguson
              Chief
                Executive Officer
              (Principal
                Executive Officer)Date:  August
                10, 2007
            By:
                /s/ THOMAS COSTANZAThomas
                Costanza
              Chief
                Financial Officer
              (Principal
                Financial Officer)








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          32