**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:  March 31, 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 87,754,226 shares of a21's common stock outstanding on May 11,
      2007.





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








**TABLE
                OF CONTENTS**PagePART
                I – FINANCIAL INFORMATIONITEM
                1.   FINANCIAL STATEMENTS (unaudited)Condensed
                Consolidated Balance Sheets at March 31, 2007 and
              December
                31, 2006
            
            2Condensed
                Consolidated Statements of Operations for the three months ended
                March 31,
                2007 and 2006
            
            3Condensed
                Consolidated Statements of Changes in Stockholders’ Equity and (Capital
                Deficiency) for the three months ended March 31, 2007
            
            4Condensed
                Consolidated Statements of Cash Flows for the three months
                ended
              March
                31, 2007 and 2006
            
            5Notes
                to Condensed Consolidated Financial Statements
            
            7ITEM
                2.     MANAGEMENT’S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND
              RESULTS
                OF OPERATIONS (MD&A)
            
            23ITEM
                3.     CONTROLS AND PROCEDURES
            
            25PART
                II – OTHER INFORMATIONITEM
                1.      LEGAL PROCEEDINGS
            
            26ITEM
                2.      UNREGISTERED SALES  OF
                EQUITY SECURITIES AND USE OF PROCEEDS
            
            26ITEM
                3.      DEFAULTS UPON SENIOR
                SECURITIES
            
            27ITEM
                4.      SUBMISSION OF MATTERS TO A VOTE OF
                SECURITY HOLDERS
            
            27ITEM
                5.      OTHER INFORMATION
            
            27ITEM
                6.      EXHIBITS
            
            28








1


**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED BALANCE SHEETS****($
                in thousands, except per share amounts)****(unaudited)****March
                31,**
            
            
            **December
                31,****2007**
            
            
            **2006**ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            4,740
            
            
            $
            5,455Accounts
                receivable, net allowance for doubtful accounts of $144 and $108,
                at March
                31, 2007 and December 31, 2006, respectively
            
            
            2,626
            
            
            
            2,773Inventory
            
            
            765
            
            
            
            844Prepaid
                expenses and other current assets
            
            
            660
            
            
            
            441Total
                current assets
            
            
            8,791
            
            
            
            9,513Property,
                plant and equipment, net
            
            
            7,149
            
            
            
            7,300Photo
                collection, net
            
            
            1,577
            
            
            
            1,520Goodwill
            
            
            8,732
            
            
            
            8,648Contracts
                with photographers, net
            
            
            666
            
            
            
            718Deferred
                rent receivable
            
            
            521
            
            
            
            549Intangible
                assets, net
            
            
            5,001
            
            
            
            5,232Restricted
                cash
            
            
            750
            
            
            
            750Other
            
            
            94
            
            
            
            384Total
                assets
            
            $
            33,281
            
            
            $
            34,614LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESAccounts
                payable
            
            $
            1,974
            
            
            $
            2,770Accrued
                compensation
            
            
            254
            
            
            
            359Accrued
                expenses
            
            
            503
            
            
            
            430Royalties
                payable
            
            
            1,386
            
            
            
            1,288Warrant
                obligation
            
            
            ---
            
            
            
            18Deferred
                revenue
            
            
            373
            
            
            
            242Other
            
            
            93
            
            
            
            106Total
                current liabilities
            
            
            4,583
            
            
            
            5,213LONG-TERM
                LIABILITIESSenior
                secured convertible notes payable, net – related party
            
            
            15,500
            
            
            
            15,500Secured
                notes payable, net – related party (ArtSelect Sellers)
            
            
            2,537
            
            
            
            2,499Loan
                payable from sale-leaseback of building, less current
                portion
            
            
            7,391
            
            
            
            7,403Other
            
            
            107
            
            
            
            112Total
                liabilities
            
            
            30,118
            
            
            
            30,727




COMMITMENTS
                AND CONTINGENCIESMINORITY
                INTEREST
            
            $
            1,071
            
            
            $
            2,254STOCKHOLDERS'
                EQUITYCommon
                stock; $.001 par value; 200,000,000 shares authorized; 89,565,821
                and
                87,191,575 shares issued and 85,886,046 and 83,511,800 shares outstanding
                at March 31, 2007 and December 31, 2006, respectively
            
            
            89
            
            
            
            87Treasury
                stock (at cost, 3,679,775 shares)
            
            
            ---
            
            
            
            ---Additional
                paid-in capital
            
            
            25,739
            
            
            
            24,341Accumulated
                deficit
            
            
            (24,248
            )
            
            
            (23,286
            )Accumulated
                other comprehensive income
            
            
            512
            
            
            
            491Total
                stockholders' equity
            
            
            2,092
            
            
            
            1,633Total
                liabilities and stockholders' equity
            
            $
            33,281
            
            
            $
            34,614The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





2





**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF OPERATIONS****($
                in thousands except per share amounts)****(unaudited)****Three
                Months Ended****March
                31,****2007**
            
            
            **2006**REVENUELicensing
                revenue
            
            $
            3,168
            
            
            $
            2,935Product
                revenue
            
            
            2,956
            
            
            
            ---TOTAL
                REVENUE
            
            
            6,124
            
            
            
            2,935COSTS
                AND EXPENSESCost
                of licensing revenue (excludes related amortization of $279 and $362
                for
                three months ended March 31, 2007 and 2006, respectively)
            
            
            950
            
            
            
            903Cost
                of product revenue (excludes related amortization of $44 for three
                months
                ended March 31, 2007)
            
            
            1,397
            
            
            
            ---Selling,
                general and administrative
            
            
            3,663
            
            
            
            2,805Depreciation
                and amortization
            
            
            619
            
            
            
            603TOTAL
                OPERATING EXPENSES
            
            
            6,629
            
            
            
            4,311OPERATING
                LOSS
            
            
            (505
            )
            
            
            (1,376
            )Interest
                expense
            
            
            (442
            )
            
            
            (353
            )Warrant
                expense
            
            
            (1
            )
            
            
            (265
            )Other
                income(expense), net
            
            
            13
            
            
            
            (14
            )NET
                LOSS BEFORE INCOME TAX EXPENSE
            
            
            (935
            )
            
            
            (2,008
            )Income
                tax expense
            
            
            (27
            )
            
            
            (27
            )NET
                LOSS
            
            
            (962
            )
            
            
            (2,035
            )Disproportionate
                deemed dividends
            
            
            ---
            
            
            
            (157
            )NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS
            
            $
            (962
            )
            
            $
            (2,192
            )NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS PER SHARE, BASIC AND
                DILUTED
            
            $
            (0.01
            )
            
            $
            (0.03
            )WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
                DILUTED
            
            
            84,084,622
            
            
            
            71,847,091The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





3





**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
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            170
            
            
            
            ---
            
            
            
            ---
            
            
            
            170Issuance
                of common stock upon the conversion of SuperStock Seller Preferred
                stock
            
            
            2,112
            
            
            
            2
            
            
            
            ---
            
            
            
            ---
            
            
            
            1,180
            
            
            
            ---
            
            
            
            ---
            
            
            
            1,182Vesting
                of restricted stock compensation
            
            
            97
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---Net
                loss
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            (962
            )
            
            
            ---
            
            
            
            (962
            )Foreign
                currency translation adjustment
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            
            
            
            
            21
            
            
            
            21Comprehensive
                loss
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            ---
            
            
            
            (941
            )Balance
                at March 31, 2007
            
            
            89,566
            
            
            $
            89
            
            
            
            (3,680
            )
            
            $
            ---
            
            
            $
            25,739
            
            
            $
            (24,248
            )
            
            $
            512
            
            
            $
            2,092The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements











4





**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS****($
                in thousands)****(unaudited)****FOR
                THE  THREE MONTHS ENDED MARCH 31,**
            
            **2007**
            
            
            **2006**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (962
            )
            
            $
            (2,035
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            619
            
            
            
            603Amortization
                of finance costs
            
            
            27
            
            
            
            30Loss
                on disposal of equipment
            
            
            38
            
            
            
            65Change
                in fair value of warrant obligation
            
            
            (18
            )
            
            
            265Share-based
                compensation
            
            
            170
            
            
            
            670Changes
                in assets and liabilities:Accounts
                receivable
            
            
            147
            
            
            
            (245
            )Prepaid
                expenses and other current assets
            
            
            21
            
            
            
            (52
            )Inventory
            
            
            79
            
            
            
            ---Accounts
                payable and accrued expenses
            
            
            (807
            )
            
            
            121Deferred
                revenue
            
            
            131
            
            
            
            84Deferred
                rent receivable
            
            
            28
            
            
            
            ---Foreign
                income tax payable
            
            
            15
            
            
            
            (178
            )Other
            
            
            30
            
            
            
            9NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (482
            )
            
            
            (663
            )




CASH
                FLOWS FROM INVESTING ACTIVITIES:Investment
                in property, plant and equipment
            
            $
            (4
            )
            
            $
            (96
            )Investment
                in software
            
            
            (68
            )
            
            
            (36
            )SuperStock
                acquisition earn-out
            
            
            ---
            
            
            
            (67
            )Investment
                in photo collection
            
            
            (208
            )
            
            
            (76
            )Other
            
            
            (3
            )
            
            
            (40
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (283
            )
            
            
            (315
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Net
                proceeds from the exercise of stock options
            
            
            29
            
            
            
            31Net
                proceeds from the exercise of stock warrants
            
            
            19
            
            
            
            1,200Payment
                of SuperStock seller promissory note payable
            
            
            (33
            )
            
            
            ---Other
            
            
            31
            
            
            
            (7
            )NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            46
            
            
            
            1,224EFFECT
                OF EXCHANGE RATES ON CASH AND CASH EQUIVALANTS
            
            
            4
            
            
            
            2NET
                (DECREASE) INCREASE IN CASH
            
            
            (715
            )
            
            
            248CASH
                AND CASH EQUIVALANTS AT BEGINNING OF PERIOD
            
            
            5,455
            
            
            
            1,194CASH
                AND CASH EQUIVALANTS AT END OF PERIOD
            
            $
            4,740
            
            
            $
            1,442





5





**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)****($
                in thousands)****(Unaudited)****FOR
                THE THREE MONTHS ENDED MARCH 31,**
            
            **2007**
            
            
            **2006**SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Foreign
                income taxes paid
            
            $
            25
            
            
            $
            178Interest
                paid
            
            
            191
            
            
            
            297SUPPLEMENTAL
                DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:Conversion
                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
            
            
            78
            
            
            
            67The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





6


**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 March 31, 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
      March
      31, 2007, we had cash of $4.7 million and working capital of $4.2
      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), which includes Ingram Publishing (acquired October
      2005). The minority interest in the consolidated balance sheets at March 31,
      2007 and December 31, 2006, represents the interest of the holders of preferred
      shares of SuperStock (“SuperStock Seller Preferred”),


7


which
      are
      exchangeable into common shares of a21, Inc. All significant inter-company
      balances and transactions have been eliminated.





[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, $373,000 and $242,000 is recorded as deferred
      revenue as of March 31, 2007, and December 31, 2006, respectively.







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.





[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 March 31, 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 March 31, 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.





[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


8


method
      over the assets' estimated lives. The estimated applicable life for furniture,
      fixtures, and equipment is 7 years; the applicable, estimated lives 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 for the three months ended March 31,
      2007.





9


[17]
      Other income(expense), net:





**($
                in thousands)**
            
            **Three
                months ended March 31,****2007**
            
            
            **2006**Currency
                transaction gain
            
            $
            4
            
            
            $
            11Interest
                income
            
            
            52
            
            
            
            3Loss
                on disposal of assets
            
            
            (30
            )
            
            
            (3
            )Other
            
            
            (13
            )
            
            
            (25
            )$
            13
            
            
            $
            (14
            )





[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 months ended March 31, 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 15,361,229 and 15,373,269 outstanding stock options
      and warrants as of March 31, 2007 and 2006, respectively, would have been
      anti-dilutive.





For
      the
      three months ended March 31, 2007 and 2006, 1,913,253 and 5,000,151 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 2006 period financial statements to
      conform to the same prior 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.





10


[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 three months ended March 31,
      2007.





The
      following summarizes our stock option activity for the three months ended March
      31, 2007 (unaudited):





**Stock
                Options****Shares**
            
            
            **Weighted
                Average Exercise Price**Balance,
                December 31, 2006
            
            
            8,974,322
            
            
            $
            0.36Granted
            
            
            ---
            
            
            
            ---Exercised
            
            
            (130,000
            )
            
            
            0.21Forfeited
            
            
            (507,393
            )
            
            
            0.22Cancelled
            
            
            ---
            
            
            
            ---Balance,
                March 31, 2007
            
            
            8,336,929
            
            
            $
            0.37Exercisable,
                December 31, 2006
            
            
            7,291,844
            
            
            $
            0.35Exercisable,
                March 31, 2007
            
            
            6,873,008
            
            
            $
            0.35








The
      130,000 options exercised during the three months ended March 31, 2007, included
      certain shares exercised on a cashless basis, resulting in the issuance of
      96,838 common shares.





11


The
      following table summarizes information about stock options outstanding at March
      31, 2007:





**Exercise
                Prices**
            
            
            **Number
                Outstanding**
            
            **Weighted
                Average Remaining Contractual Life**
            
            **Number
                Exercisable**$
            0.25
            
            
            
            1,046,000
            
            7
                months
            
            
            1,046,0000.28
            
            
            
            1,000,000
            
            4
                1/2 years
            
            
            ---0.30
            
            
            
            4,500,929
            
            2
                1/2 years
            
            
            4,548,6750.34
            
            
            
            165,000
            
            4
                years
            
            
            82,5000.46
            
            
            
            425,000
            
            4
                1/2 years
            
            
            425,0000.50
            
            
            
            160,000
            
            2
                months
            
            
            160,0000.65
            
            
            
            525,000
            
            4
                1/2 years
            
            
            325,0000.83
            
            
            
            275,000
            
            4
                1/2 years
            
            
            45,8331.00
            
            
            
            120,000
            
            2
                months
            
            
            120,0001.50
            
            
            
            120,000
            
            2
                months
            
            
            120,0008,336,929
            
            2
                1/2  years
            
            
            6,873,008





The
      aggregate intrinsic value of options outstanding and exercisable as of March
      31,
      2007, was $21,000. This amount represents the total pre-tax intrinsic value
      (the
      difference between our closing stock price on the last trading day of the first
      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 March 31, 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 three months ended March 31,
      2007:





**Non-vested**
              **Shares**
            
            
            **Weighted
                Average Grant-Date Fair Value**Balance,
                December 31, 2006
            
            
            1,594,658
            
            
            $
            0.27Granted
            
            
            500,000
            
            
            
            0.24Vested
            
            
            (97,613
            )
            
            
            0.22Cancelled
            
            
            (28,864
            )
            
            
            0.27Balance,
                March 31, 2007
            
            
            1,968,181
            
            
            $
            0.26








Share-based
      compensation expense of $170,000 was recognized during the three months ended
      March 31, 2007, for the fair value of restricted shares and options that vested
      during the period.  At March 31, 2007, there was $821,000 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 $99,000 and $175,000 for the three months ended March 31, 2007
      and
      2006, respectively. Advertising costs are expensed as incurred.





12


[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.





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.







13


**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 three months ended
      March 31, 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 three months ended March 31, 2006,
      nor
      is it indicative of future results:





**($
                in thousands, except per share amounts)**
            
            **Three
                months ended March 31, 2006**Total
                revenue
            
            $
            6,041Net
                loss
            
            
            (2,163
            )Net
                loss per share, basic and diluted
            
            $
            (0.03
            )Proforma
                weighted average number of common shares outstanding, basic and
                diluted
            
            
            71,847,091








**NOTE
      D - INVENTORY**





The
      major
      components of inventory are summarized as follows:





**($
                in thousands)**
            
            **March
                31, 2007**
            
            
            **December
                31, 2006**Framed
                art raw materials
            
            $
            561
            
            
            $
            650Framed
                art finished goods
            
            
            168
            
            
            
            158Compact
                disk product
            
            
            36
            
            
            
            36$
            765
            
            
            $
            844








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





Property,
      plant, and equipment are summarized as follows:





**($
                in thousands)**
            
            **March
                31, 2007**
            
            
            **December
                31, 2006**Land
                and building
            
            $
            7,768
            
            
            $
            7,768Office
                equipment and furnishings
            
            
            724
            
            
            
            721Technology
                equipment
            
            
            498
            
            
            
            508Less:
                Accumulated depreciation
            
            
            (1,841
            )
            
            
            (1,697
            )$
            7,149
            
            
            $
            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.


14





Depreciation
      expense was $154,000 and $139,000 for the three months ended March 31, 2007
      and
      2006, respectively.








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





**($
                in thousands)**Goodwill
                at December 31, 2006
            
            $
            8,648SuperStock
                earn-out
            
            
            78Cumulative
                foreign currency
              translation
                of Ingram goodwill
            
            
            6Goodwill
                at March 31, 2007
            
            $
            8,732








Identifiable
      intangible assets, net of amortization at March 31, 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
            
            
            214
            
            
            
            (99
            )
            
            
            ---
            
            
            
            115
            
            
            
            36
                – 60Ingram
                license agreements
            
            
            1,142
            
            
            
            (645
            )
            
            
            193
            
            
            
            690
            
            
            
            60Ingram
                non-compete agreements
            
            
            430
            
            
            
            (344
            )
            
            
            49
            
            
            
            135
            
            
            
            36Ingram
                customer relationships
            
            
            420
            
            
            
            (210
            )
            
            
            26
            
            
            
            236
            
            
            
            36Ingram
                distribution agreements
            
            
            270
            
            
            
            (135
            )
            
            
            17
            
            
            
            152
            
            
            
            36Ingram
                trademark
            
            
            220
            
            
            
            (165
            )
            
            
            9
            
            
            
            64
            
            
            
            24ArtSelect
                trade name
            
            
            80
            
            
            
            ---
            
            
            
            ---
            
            
            
            80
            
            
            N/AArtSelect
                software
            
            
            1,153
            
            
            
            (231
            )
            
            
            ---
            
            
            
            922
            
            
            
            48ArtSelect
                customer relationships
            
            
            2,800
            
            
            
            (193
            )
            
            
            ---
            
            
            
            2,607
            
            
            
            216Intangible
                assets
            
            $
            6,845
            
            
            $
            (2,138
            )
            
            $
            294
            
            
            $
            5,001





Amortization
      expense during the three months ended March 31, 2007 and 2006 totaled $264,000
      and $280,000, respectively. Approximate remaining annual amortization expense
      is
      as follows for each of the following years:  2007: $809,000, 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
            
            
            2SuperStock
                software retirements, net
            
            
            (36
            )ArtSelect
                software additions, net
            
            
            67Amortization
                expense
            
            
            (264
            )Intangible
                assets, net at March 31, 2007
            
            $
            5,001








**NOTE
      G – PHOTO COLLECTION AND CONTRACTS WITH PHOTOGRAPHERS**





The
      gross
      book value of our photo collection as of March 31, 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 $1.6 million and $1.5 million
      at
      March 31, 2007 and December 31, 2006, respectively. Amortization expense was
      $151,000 and $124,000 for


the
      three
      months ended March 31, 2007 and 2006, respectively. Approximate remaining annual
      amortization expense is as follows for each of the following years: 2007:
      $471,000, 2008: $234,000, 2009: $154,000, 2010: $118,000 and 2011:
      $24,000.





The
      gross
      book value of contracts with photographers as of March 31, 2007 and December
      31,
      2006, was $1.3 million. The book value of contracts with photographers, net
      of
      accumulated amortization was $666,000 and $718,000 as of March 31, 2007 and
      December 31, 2006, respectively. Amortization expense was $52,000 and $52,000
      for the three months ended March 31, 2007 and 2006, respectively. Approximate
      remaining annual amortization expense is as follows for each of the following
      years: 2007: $155,000, 2008: $169,000, 2009: $124,000, 2010: $61,000 and 2011:
      $49,000.








15




**NOTE
      H - MINORITY INTEREST**





Minority
      interest represents 637,751 shares of SuperStock Seller Preferred held by the
      former owners of SuperStock at March 31, 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.





10%
      and
      19% of our total revenues were based in the U.K. for the three months ended
      March 31, 2007 and 2006, respectively. 87% and 85% of our total assets were
      based domestically in the U.S. as of March 31, 2007, and December 31, 2006,
      respectively.





The
      following table presents information about our segment activity as of March
      31,
      2007 and 2006 and for the three months then ended:





**($
                in thousands)****Three
                months ended**
              **March
                31, 2007**
            
            **Corporate**
            
            
            **SuperStock**
            
            
            **ArtSelect**
            
            
            **Total**Revenue
            
            $
            ---
            
            
            $
            3,168
            
            
            $
            2,956
            
            
            $
            6,124Segment
                operating income(loss)
            
            
            (540
            )
            
            
            (34
            )
            
            
            69
            
            
            
            (505
            )Segment
                total assets
            
            
            759
            
            
            
            21,049
            
            
            
            11,473
            
            
            
            33,281Segment
                long-lived assets
            
            $
            ---
            
            
            $
            13,393
            
            
            $
            9,732
            
            
            $
            23,125





16





**Three
                months ended**
              **March
                31, 2006**
            
            **Corporate**
            
            
            **SuperStock**
            
            
            **ArtSelect**
            
            
            **Total**Revenue
            
            $
            ---
            
            
            $
            2,935
            
            
            $
            ---
            
            
            $
            2,935Segment
                operating loss
            
            
            (979
            )
            
            
            (397
            )
            
            
            ---
            
            
            
            (1,376
            )Segment
                total assets
            
            
            985
            
            
            
            19,747
            
            
            
            ---
            
            
            
            20,732Segment
                long-lived assets
            
            $
            ---
            
            
            $
            16,042
            
            
            $
            ---
            
            
            $
            16,042





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
      (in thousands):





2007
            
            
            2008
            
            
            2009
            
            
            2010
            
            
            2011Senior
                Secured Convertible Notes
            
            $
            ---
            
            
            $
            ---
            
            
            $
            ---
            
            
            $
            ---
            
            
            $
            15,500Junior
                Secured Notes (ArtSelect)
            
            
            ---
            
            
            
            ---
            
            
            
            2,537
            
            
            
            ---
            
            
            
            ---Total:
            
            $
            ---
            
            
            $
            ---
            
            
            $
            2,537
            
            
            $
            ---
            
            
            $
            15,500





**$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.




17




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.




We
      evaluated the terms of the Senior Convertible Notes to determine whether at
      issuance the conversion feature should be separated and measured at fair value
      under SFAS No. 133 “Derivative Instruments and Hedging Activities” (“SFAS 133”)
      and EITF Issue No. 00-19 “Accounting for Derivative Financial Instruments
      Indexed to, and Potentially Settled in, a Company’s Own Stock” (“EITF
      00-19”).  The instrument should not be accounted for as “conventional
      convertible debt”, as defined EITF 00-19, as a result of the conversion price
      reset provisions described above. We determined that the embedded conversion
      feature is not required to be separated and accounted for as a liability. With
      respect to the registration rights and the liquidated damages described above,
      we have determined that a discount on an unregistered share of the Company’s
      common stock subject to the registration rights agreement associated with the
      Senior Convertible Notes would exceed the liquidated damages.




As
      a
      result, we further evaluated whether the Senior Convertible Notes contained
      a
      beneficial conversion feature to be accounted for under EITF Issue No. 98-5
      “Accounting for Convertible securities with Beneficial Conversion Features or
      Contingently Adjustable Conversion Ratios” (“EITF 98-5”) and EITF Issue No.
      00-27 “Application of Issue No. 98-5 to Certain Convertible Instruments”. At the
      commitment date of the Senior Convertible Notes, as defined, the initial
      conversion price of $0.65 per share exceeded the quoted market price of the
      Company’s common stock; therefore at issuance the embedded conversion feature
      was not beneficial.




In
      connection with the transactions described above, we repaid the $2.25 million
      12% Senior Secured Note, dated as of February 22, 2005 and the $1.05 million
      12%
      unsecured promissory notes dated February 29, 2004, and the interest due under
      these notes of $184,000 was paid on April 27, 2006 using a portion of the
      proceeds from the issuance of the Senior Convertible Notes equal to the full
      amount of the principal and interest due.




In
      connection with the repayment of the indebtedness described above, the following
      common stock purchase warrant agreements were terminated: Warrants expiring
      on
      February 21, 2007, granting the right to purchase 300,000 shares of a21’s common
      stock, at an exercise price of $0.188 per share, which was issued in connection
      with certain repaid Notes; and Warrants expiring on February 21, 2007, granting
      the right to purchase 337,500 shares of a21’s common stock, at an exercise price
      of $0.377 per share, which were also issued in connection with certain Notes.
      These Warrants, which had a fair value of approximately $261,000 on April 27,
      2006, were returned to us and canceled in consideration of us issuing a portion
      of the Senior Convertible Notes in the aggregate principal amount equal to
      $215,000 (which is equal to the product of (i) the difference between the
      closing market price of a21’s common stock on March 30, 2006 ($0.62) and the
      exercise price of the warrants, and (ii) the number of shares of a21’s common
      stock issuable upon exercise of the warrants).  The difference between
      the fair value of the warrants received and the amount of the Senior Convertible
      Notes issued of approximately $46,000 was included as a reduction of warrant
      expense in our consolidated statement of operations for the three months ended
      June 30, 2006.


18


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 $2.5 million balance, including
      accrued interest, recorded on our condensed consolidated balance sheet at March
      31, 2007, is included in the caption “Secured notes payable, net- related party
      (ArtSelect Sellers)”.





**Warrant
      Liability**





Pursuant
      to the provisions of EITF 00-19, we recorded the value of certain warrants
      as a
      current liability, with subsequent changes in fair value to be reflected in
      the
      consolidated statement of operations. The classification of the warrants was
      determined based upon the terms of the warrants relative to respective
      registration rights agreement. As of March 31, 2007, and December 31, 2006,
      the
      warrants were valued at $0 and $18,000, respectively. The change in valuation
      for 2007 and 2006 was an expense of $1,000 and $93,000,
      respectively.  The remaining unexercised warrants expired on February
      21, 2007.








**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.





19


The
      following table summarizes our annual maturities under the loan payable on
      building:





**($
                in thousands)**2007
            
            $
            292008
            
            
            552009
            
            
            802010
            
            
            1102011
            
            
            144Thereafter
            
            
            7,0137,431Less:
                Current Portion
            
            
            (40
            )Long
                Term Portion
            
            $
            7,391





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





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





**($
                in thousands)**2007
            
            $
            5932008
            
            
            8042009
            
            
            8222010
            
            
            8432011
            
            
            864Thereafter
            
            
            12,798Total
                payments
            
            
            16,724Less
                interest
            
            
            (9,293
            )Net
            
            $
            7,431








**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.








20


**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
      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 March 31, 2007, there were 555,089 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 March 31, 2007, there
      were 500,931 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.


21





**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 $169,000 and $131,000 were received for the three months ended March 31,
      2007
      and 2006, respectively.  Sublease payments are scheduled as follows
      for each of the following years:  2007: $511,000, 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 of $521,000 and $549,000 at March 31, 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 March 31, 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. All unvested shares of restricted stock will immediately
      vest
      upon a change in control of a21. We will also pay up to $800 per month for
      his
      employee benefits, whether he chooses to use our benefit plans or benefit plans
      of his choosing. The employment agreement may be terminated by either party
      without cause on 30 days written notice to the other party. In addition, we
      may
      terminate the employment agreement immediately for cause, as defined in the
      employment agreement, and he may terminate the employment agreement for good
      reason, as defined in the employment agreement. If we terminate the agreement
      or
      he terminates the agreement for good reason, we are obligated to make certain
      payments to him, as outlined in the agreement.





[5]
      Executive Compensation





During
      February 2007, our Compensation Committee of our Board of Directors consisting
      of independent members approved cash bonus payments related to 2006 performance
      to our Executive Officers totaling $92,000.  The bonus amounts, which
      were included in accrued compensation in the accompanying consolidated balance
      sheet at December 31, 2006, were paid on March 2, 2007. These bonuses were
      measured and based upon previously agreed Management by Objective (MBO) criteria
      and payout targets for each of the respective executive officers.





22


**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.





**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED MARCH 31, 2007 COMPARED TO THREE MONTHS ENDED MARCH 31,
      2006**




REVENUES.
      Revenues were $6.1 million for the three months ended March 31, 2007, compared
      to $2.9 million for the same prior year period. Approximately 93% of the
      increase was attributable to ArtSelect, our acquisition which occurred on May
      15, 2006, with the balance of the increase attributed to organic growth in
      the
      SuperStock business.




COST
      OF
      REVENUES. Cost of revenues was $2.3 million for the three months ended
      March 31, 2007, compared to $903,000 the same prior year period. Approximately
      92% of the increase was attributable to ArtSelect, with the balance of the
      increase attributed to organic growth in the SuperStock business.




As
      a
      percentage of revenues, cost of sales was 38% and 31% for the three months
      ended
      March 31, 2007 and 2006, respectively. The increase in 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 $3.7 million for the
      three months ended March 31, 2007, compared to $2.8 million for the same prior
      year period. The increase in SG&A expenses was primarily attributable
      to $1.4 million due to ArtSelect, offset by a $500,000 reduction of
      share-based compensation expense.




23




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $619,000 for the three
      months ended March 31, 2007, compared to $603,000 for the same prior year
      period. The increase was primarily attributable to incremental depreciation
      and
      amortization expense resulting from the acquisition of ArtSelect, offset by
      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 March 31,
      2007, compared to $353,000 for the same prior year period reflecting higher
      outstanding debt during the three months ended March 31, 2007 compared to the
      same prior year period.




OTHER
      INCOME(EXPENSE), NET. Other income(expense), net was $13,000 for the three
      months ended March 31, 2007, compared to ($14,000) for the same prior year
      period.




NET
      LOSS
      ATTRIBUTED TO COMMON STOCKHOLDERS. Net loss attributed to common stockholders
      improved to $962,000 or $0.01 per share, for the three months ended March 31,
      2007, compared to net loss of $2.2 million, or $0.03 per share, for the same
      prior year period.


**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      March 31, 2007, we had $4.7 million of cash and cash equivalents and working
      capital of $4.2 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 operations and investment in
      SuperStock’s photo collection during the three months ended March 31,
      2007.




Net
      cash
      used in operating activities for the three months ended March 31, 2007 was
      $482,000, compared to net cash used in operating activities of $663,000 for
      three months ended March 31, 2006. The net cash used in operating activities
      during the three months ended March 31, 2007, was due primarily to the net
      loss
      of $962,000 adjusted $619,000 for depreciation and amortization, and a decrease
      in accounts payable and accrued expenses of $807,000. Net cash used in operating
      activities in the three months ended March 31, 2006, was due primarily to the
      net loss of $2.0 million and the increase of accounts receivable of $245,000
      adjusted for $603,000 of depreciation and amortization, and $670,000 of stock
      based compensation.




Net
      cash
      used in investing activities for the three months ended March 31, 2007, was
      $283,000, compared to net cash used in investing activities the three months
      ended March 31, 2006, of $315,000. Net cash used in investing activities
      for the three months ended March 31, 2007, was primarily due to a $208,000
      investment in SuperStock’s photo collection.  Net cash used in investing
      activities in the three months ended March 31, 2006, was primarily due to
      investment in capital investments of $275,000 including property, plant, and
      equipment and investments in photo collection, and SuperStock acquisition
      earn-out.




Net
      cash
      provided by financing activities for the three months ended March 31, 2007,
      was
      $46,000, compared to net cash provided by financing activities of $1.2 million
      for the same prior year period.  Net cash provided by financing
      activities in the three months ended March 31, 2006, was mainly due to $1.2
      million in proceeds from the exercise of stock warrants.





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.





**OFF
      BALANCE SHEET ARRANGEMENTS**





We
      have
      not entered into any off balance sheet arrangements as of March 31,
      2007.





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**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 March 31, 2007, we hired a full-time, qualified technical
      professional dedicated to focus on our SEC compliance efforts including
      financial reporting and disclosures. There were no other 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.














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**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**





On
      January 1, 2007, a21 issued 25,000 shares of common stock to an external
      consultant 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.





On
      January 8, 2007 a21 issued 350,000 shares of common stock to Bruce Slywka,
      an
      officer of a21 in consideration for services to be rendered by Mr. Slywka 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.





On
      March
      29, a21 issued 125,000 shares of common stock to certain managers of a21 in
      consideration for services to be rendered by them 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.














26








**ITEM
      3.  DEFAULTS UPON SENIOR SECURITIES**





None





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





None





**ITEM
      5.  OTHER INFORMATION**





None





27





**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








28











**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:  May
                14, 2007
            By:
                /s/ JOHN Z. FERGUSONJohn
                Z. Ferguson
              Chief
                Executive Officer
              (Principal
                Executive Officer)Date:  May
                14, 2007
            By:
                /s/ THOMAS COSTANZAThomas
                Costanza
              Vice
                President and Chief Financial Officer
              (Principal
                Financial Officer)









29