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**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, 2006





OR





**o 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.**


(Name
      of
      Small Business Issuer in its Charter)





TEXAS
            
            74-2896910(State
                or Other Jurisdiction of
            
            (I.R.S.
                EmployerIncorporation
                or Organization)
            
            Identification
                Number)




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


(Principal
      Executive Office)





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





**SECURITIES
      REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE**





**SECURITIES
      REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Common stock, par value $0.001
      per share**





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 **o**





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





There
      were 77,568,169 shares of the Company's common stock outstanding on May 8,
      2006.





Transitional
      Small Business Disclosure Format (check one): Yes **o** No **x**









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**TABLE
                OF
                CONTENTS**




PagePART
                I - FINANCIAL INFORMATIONITEM
                1. FINANCIAL STATEMENTS (unaudited)
            3Condensed
                Consolidated Balance Sheets at March 31, 2006 andDecember
                31, 2005
            3Condensed
                Consolidated Statements of Operations for the three
                months ended March 31, 2006 and 2005
            5Condensed
                Consolidated Statements of Changes in Stockholders
                Equity and Comprehensive Income at December 31, 2005 and the three
                months
                ended March 31, 2006
            6Condensed
                Consolidated Statements of Cash Flows for the three months endedMarch
                31, 2006 and 2005
            7Notes
                to Condensed Consolidated Financial
                Statements
            9ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS
                OF OPERATIONS (MD&A)
            25ITEM
                3. CONTROLS AND PROCEDURES
            30PART
                II - OTHER INFORMATIONITEM
                1. LEGAL PROCEEDINGS
            30ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            30ITEM
                3. DEFAULTS UPON SENIOR SECURITIES
            30ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                HOLDERS
            30ITEM
                5. OTHER INFORMATION
            30ITEM
                6. EXHIBITS
            31






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**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED BALANCE
                SHEETS****($
                in thousands, except per share amounts)****(unaudited)**




**March
                31,**
            
            **December
                31,****2006**
            
            **2005**ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            1,442
            
            $
            1,194Accounts
                receivable, net allowance for doubtful accounts of $55 and
                $57
            
            
            2,085
            
            
            1,840Inventory
            
            
            156
            
            
            156Prepaid
                expenses and other current assets
            
            
            317
            
            
            277Total
                current assets
            
            
            4,000
            
            
            3,467Property,
                plant and equipment, net
            
            
            7,527
            
            
            7,602Photo
                collection, net
            
            
            1,667
            
            
            1,715Goodwill
            
            
            2,340
            
            
            2,263Contracts
                with photographers, net
            
            
            877
            
            
            929Deferred
                rent receivable
            
            
            543
            
            
            541Intangible
                assets, net
            
            
            3,631
            
            
            3,882Other
            
            
            147
            
            
            115Total
                assets
            
            $
            20,732
            
            $
            20,514LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESNotes
                payable, unsecured
            
            $
            1,050
            
            $
            1,050Accounts
                payable
            
            
            1,086
            
            
            1,200Accrued
                expenses
            
            
            519
            
            
            373Royalties
                payable
            
            
            1,271
            
            
            1,180Warrant
                obligation
            
            
            451
            
            
            187Deferred
                revenue
            
            
            235
            
            
            151Other
            
            
            99
            
            
            272Total
                current liabilities
            
            
            4,711
            
            
            4,413LONG-TERM
                LIABILITIESLoan
                payable from sale-leaseback of building, less current
                portion
            
            
            7,431
            
            
            7,438Senior
                secured notes payable, net - related party
            
            
            2,341
            
            
            2,316Other
            
            
            125
            
            
            126Total
                liabilities
            
            
            14,608
            
            
            14,293






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**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED BALANCE SHEETS (continued)****($
                in thousands, except per share amounts)****(unaudited)**




**March
                31,**
            
            **December
                31,****2006**
            
            **2005**COMMITMENTS
                AND CONTINGENCIESMINORITY
                INTEREST
            
            2,800
            
            2,800STOCKHOLDERS'
                EQUITYPreferred
                stock; $.001 par value; 100,000 shares authorized; no shares and
                14,480
                shares issued and outstanding at March 31, 2006 and December 31,
                2005,
                respectively
            
            
            ---
            
            
            0Common
                stock; $.001 par value; 100,000,000 shares authorized; 81,146,476and
                74,115,012 shares issued at March 31, 2006 and December 31, 2005,
                respectively and 77,466,701 and 70,435,237 shares outstanding at
                March 31,
                2006 and December 31, 2005, respectively
            
            
            81
            
            
            74Treasury
                stock (at cost, 3,679,775 shares)
            
            
            ---
            
            
            ---Additional
                paid-in capital
            
            
            19,784
            
            
            17,583Deferred
                compensation
            
            
            (41
            )
            
            (115
            )Accumulated
                deficit
            
            
            (16,601
            )
            
            (14,185
            )Accumulated
                comprehensive income
            
            
            101
            
            
            64Total
                stockholders' equity
            
            
            3,324
            
            
            3,421Total
                liabilities and stockholders' equity
            
            $
            20,732
            
            $
            20,514The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.







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**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF
                OPERATIONS****($
                in thousands, except per share amounts)****(unaudited)**




**Three
                Months Ended****March
                31,****2006**
            
            **2005**Revenue
            
            $
            2,935
            
            $
            2,312Cost
                of revenue (excludes amortization expense of $362 and
                $174)
            
            
            903
            
            
            712Selling,
                general and administrative expenses
            
            
            3,186
            
            
            1,566Depreciation
                and amortization expenses
            
            
            603
            
            
            353TOTAL
                OPERATING EXPENSES
            
            
            4,692
            
            
            2,631OPERATING
                LOSS
            
            
            (1,757
            )
            
            (319
            )Interest
                expense
            
            
            (353
            )
            
            (397
            )Warrant
                expense
            
            
            (265
            )
            
            ---Other
                expense, net
            
            
            (14
            )
            
            (266
            )NET
                LOSS BEFORE INCOME TAX EXPENSE
            
            
            (2,389
            )
            
            (982
            )Income
                tax expense
            
            
            (27
            )
            
            ---NET
                LOSS
            
            
            (2,416
            )
            
            (982
            )Disproportionate
                deemed dividends
            
            
            (157
            )
            
            ---NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS
            
            $
            (2,573
            )
            $
            (982
            )NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS PER SHARE, BASIC AND
                DILUTED
            
            $
            (0.04
            )
            $
            (0.03
            )WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
                DILUTED
            
            
            72,142,537
            
            
            38,136,237The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.







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**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CHANGES IN****STOCKHOLDERS'
                EQUITY AND COMPREHENSIVE INCOME****(in
                thousands)**




(unaudited)PREFERRED
                STOCK
            
            COMMON
                STOCK
            
            TREASURY
                STOCK
            
            
            
            
            
            
            
            ACCUMULATEDNUMBER
                OF
            
            
            
            NUMBER
                OF
            
            
            
            NUMBER
                OF
            
            
            
            ADDITIONAL
              PAID-IN
            
            DEFERRED
            
            ACCUMULATED
            
            OTHER
              COMPREHENSIVESHARES
            
            AMOUNT
            
            SHARES
            
            AMOUNT
            
            SHARES
            
            AMOUNT
            
            CAPITAL
            
            COMPENSATION
            
            DEFICIT
            
            INCOME
            
            TOTALBalance
                at December 31, 2005
            
            
            14
            
            $
            ---
            
            
            74,115
            
            $
            74
            
            
            (3,680
            )
            $
            ---
            
            $
            17,583
            
            $
            (115
            )
            $
            (14,185
            )
            $
            63
            
            $
            3,420Stock
                options exercised
            
            
            ---
            
            
            ---
            
            
            508
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            31
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            31Stock
                warrants exercised
            
            
            ---
            
            
            ---
            
            
            4,000
            
            
            4
            
            
            ---
            
            
            ---
            
            
            1,196
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            1,200Issuance
                of common stock upon the conversion of preferred stock issued as
                part of
                the purchase price of Ingram Publishing Limited
            
            
            (14
            )
            
            ---
            
            
            2,523
            
            
            3
            
            
            ---
            
            
            ---
            
            
            (3
            )
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---Stock
                options compensation expense
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            1,027
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            1,027Charge
                for the cost of variable option compensation
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            (50
            )
            
            ---
            
            
            ---
            
            
            ---
            
            
            (50
            )Amortization
                of deferred compensation
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            74
            
            
            ---
            
            
            ---
            
            
            74Net
                loss
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            (2,416
            )
            
            ---
            
            
            (2,416
            )Foreign
                currency translation adjustment
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            38
            
            
            38Comprehensive
                loss
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            (2,378
            )Balance
                at March 31, 2006
            
            
            ---
            
            $
            ---
            
            
            81,146
            
            $
            81
            
            
            (3,680
            )
            $
            ---
            
            $
            19,784
            
            $
            (41
            )
            $
            (16,601
            )
            $
            101
            
            $
            3,324


The
        accompanying notes are an integral part of these Condensed Consolidated
        Financial Statements.
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**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH
                FLOW****($
                in thousands)**




**(unaudited)****FOR
              THE THREE MONTHS ENDED MARCH 31,**
            
            **2006**
            
            **2005**CASH
                FLOWS USED IN OPERATING ACTIVITIES:Net
                loss
            
            $
            (2,416
            )
            $
            (982
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            603
            
            
            353Amortization
                of finance costs
            
            
            30
            
            
            106Loss
                on disposal of equipment
            
            
            65
            
            
            ---Change
                in fair value of warrant obligation
            
            
            265
            
            
            ---Stock
                option compensation
            
            
            977
            
            
            ---Deferred
                compensation
            
            
            74
            
            
            ---Loss
                on extinguishment of debt
            
            
            ---
            
            
            371Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (245
            )
            
            (314
            )Prepaid
                expenses and other current assets
            
            
            (52
            )
            
            ---Accounts
                payable and accrued expenses
            
            
            121
            
            
            (184
            )Deferred
                revenue
            
            
            84
            
            
            ---Foreign
                income tax payable
            
            
            (178
            )
            
            ---Other
            
            
            9
            
            
            ---NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (663
            )
            
            (650
            )






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**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOW
                (continued)****($
                in thousands)**




**(unaudited)****FOR
                  THE THREE MONTHS ENDED MARCH 31,**
            
            **2006**
            
            **2005**CASH
                FLOWS USED IN INVESTING ACTIVITIES:SuperStock
                acquisition earnout
            
            
            (67
            )
            
            ---Investment
                in property, plant and equipment
            
            
            (132
            )
            
            (236
            )Investment
                in photo collection
            
            
            (76
            )
            
            ---Other
            
            
            (40
            )
            
            ---NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (315
            )
            
            (236
            )CASH
                FLOWS PROVIDED BY FINANCING ACTIVITIES:Proceeds
                from senior secured notes payable - related party
            
            
            ---
            
            
            2,250Payment
                of convertible subordinated notes payable
            
            
            ---
            
            
            (1,250
            )Net
                proceeds from the exercise of stock options
            
            
            31
            
            
            ---Net
                proceeds from the exercise of stock warrants
            
            
            1,200
            
            
            ---Payment
                of promissory note payable
            
            
            ---
            
            
            (33
            )Other
            
            
            (7
            )
            
            1NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            1,224
            
            
            968EFFECT
                OF EXCHANGE RATES ON CASH AND CASH EQUIVALANTS
            
            
            2
            
            
            51NET
                INCREASE IN CASH
            
            
            248
            
            
            133CASH
                AT BEGINNING OF PERIOD
            
            
            1,194
            
            
            717CASH
                AT END OF PERIOD
            
            $
            1,442
            
            $
            850




SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Foreign
                income taxes paid
            
            $
            178
            
            $
            ---Interest
                paid
            
            
            297
            
            
            99SUPPLEMENTAL
                DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:Debt
                discount recorded for the issuance of warrants in connection with
                seniorsecured
                notes payable
            
            
            ---
            
            
            39The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.






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**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., a Texas
      corporation (“a21”, “the Company”, “we”) herein 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 the financial position at March
      31, 2006 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 amended annual report on Form
      10-KSB/A for the year ended December 31, 2005 filed with the SEC.





a21,
      Inc.
      was incorporated in the State of Texas on October 28, 1998, under the name
      Saratoga Holdings I, Inc. and subsequently renamed a21, Inc. We license and
      acquire stock photography for worldwide distribution to advertisers and
      publishers through sublicense and license agreements.




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. Our 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). Our products
      are sold directly and through a global network of distributors in over 100
      countries.




Our
      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.





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





[1]
      Basis
      of presentation / Going Concern:





The
      accompanying condensed consolidated financial statements have been prepared
      assuming that we will continue as a going concern. We have sustained significant
      recurring losses and at March 31, 2006, had an accumulated deficit of $16.6
      million and a working capital deficit of $711,000 that raise substantial doubt
      about our ability to continue as a going concern and as such caused our
      independent registered public accounting firm to included a going concern
      explanatory paragraph in their report in connection with their audit of our
      consolidated financial statements for the year ended December 31, 2005. In
      addition to cash we will generate and require from operations in 2006, we will
      need to raise cash from equity and debt financings to fund any shortfall from
      cash from operations and to fund any acquisitions. Should we need more or
      generate less cash, we will need additional funding to cover any potential
      shortfall. If we are unable to secure any required funding, we will not be
      able
      to implement our business plan and may not be able to conduct business as a
      going concern. (see Note L)




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The
      condensed consolidated financial statements do not include any adjustments
      relating to the recoverability and classification of recorded asset amounts
      or
      the amounts or classification of liabilities that might be necessary should
      we
      be unable to continue as a going concern. Our continuation as a going concern
      is
      dependent upon our ability to generate sufficient cash flows to meet our
      obligations on a timely basis, to obtain additional financing as may be required
      and ultimately to attain profitable operations and positive cash flows. Our
      future plans include the development of our distribution channel, leveraging
      owned and licensed image content offering, and the production and acquisition
      of
      new in-demand image content to be made available to both direct and distribution
      customers. 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 also continue to incur
      operating expenses to enhance our market position and expand our product
      offering by producing or acquiring newer, in-demand image content for our
      customers. 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 or that our operations will become
      profitable.





[2]
      Principles of consolidation:





The
      condensed consolidated financial statements include all accounts of the Company
      including our subsidiaries, SuperStock (U.S.), SuperStock Limited (UK),
      including Ingram Publishing (which was acquired in October 2005), and SuperStock
      Canada. The minority interest in the consolidated balance sheet at March 31,
      2006 and December 31, 2005 represents the interest of the holders of preferred
      shares of SuperStock, which are exchangeable into common shares of a21, Inc.
      The
      minority interest was valued at the market value of the a21, Inc. common shares
      at the acquisition date as if exchanged. All significant intercompany 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. 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. 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, accordingly, $235,000 and $151,000 is recorded as deferred revenue
      as
      of March 31, 2006 and December 31, 2005, respectively.





[4]
      Cost
      of revenue:





Cost
      of
      revenue reflects royalties on revenue generated from images licensed by us
      under
      contracts with photographers. Royalties are expensed in the period that they
      are
      incurred. Cost of revenue excludes of amortization of revenue generating
      assets.





[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 from those estimates. The
      recoverability of the carrying values of long-lived assets, including goodwill
      and identifiable intangible assets represents sensitive estimates subject to
      change.




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[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, 2006 and December
      31, 2005, 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 (see Note K). Cash as of March 31, 2006
      and December 31, 2005 excludes the certificate of deposits funded and pledged
      by
      stockholders to secure a letter of credit in the amount of
      $690,000.





[8]
      Accounts Receivable:





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:





Inventories
      are valued at the lower of cost or market. The costs of compact disk products
      produced for resale are determined on the first-in, first-out (FIFO) basis.
      Physical counts of inventories are taken at least annually. The requirements
      for
      any provisions of estimated losses for obsolete, excess or slow-moving
      inventories are reviewed periodically. All inventories are categorized as
      finished goods.





[10]
      Deferred Rent Receivable





During
      2004, we entered into an agreement to sublease a significant portion of our
      facility for a term of six years with an option to renew for an additional
      two
      year term. 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 a defined contribution retirement plan 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 Plan allows us to
      make discretionary contributions.  There have been no such discretionary
      contributions made in 2006 or 2005.




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[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 remeasured in the subsidiary’s local
      currency are recognized in the condensed consolidated statement of
      operations.





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





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. Property and equipment consisting of furniture, fixtures and
      equipment, photography and computer equipment, and software are recorded at
      cost. Depreciation of property and equipment is computed by the straight-line
      method over the assets' estimated lives of furniture, fixtures and equipment
      being 7 years, photography and computer equipment ranging from 5 to 7 years,
      and
      software ranging from 3 to 4 years.





Expenditures
      for major additions and betterments 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 betterments 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 form the accounts and any gain or loss is reflected
      in
      operations.




The
      contracts with photographers have an average life of five years and are
      automatically renewable. Amortization of the photographer’s contracts is based
      on projected revenues expected to be generated over the estimated ten year
      life
      of the underlying images.





[15]
      Goodwill and intangible assets:





We
      test
      recorded goodwill for impairment annually and between annual tests in certain
      circumstances. Our goodwill impairment testing is a two-step process with Step
      I
      - being a test for potential impairment by comparing the fair value of
      reporting unit with its carrying amount. If fair value of reporting unit is
      greater than its carrying amount (including recorded goodwill), then no
      impairment exists indicating no need to perform Step II. If the reporting unit
      carrying amount (including recorded goodwill) is greater than its fair value,
      then we must complete Step II to measure the amount of impairment, if any.
      We
      estimated the implied fair value based on a market capitalization value model
      and evaluated the implied fair value of the enterprise as a single reporting
      unit. Our last annual impairment test performed as of October 1, 2005 concluded
      that no impairment of goodwill exists. As circumstances change, it is reasonably
      possible that future goodwill impairment tests could result in a loss from
      impairment of goodwill. The Company is not aware of any material change in
      circumstances, as of March 31, 2006, that would require it to test goodwill
      for
      impairment.





Intangible
      assets with definite lives are amortized over their estimated useful life and
      reviewed for impairment in accordance with SFAS 144. Intangible assets with
      definite lives are amortized using the straight line method over their expected
      useful life.




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[16]
      Long-lived assets:





We
      evaluate our long-lived assets in accordance with Statement of Financial
      Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
      Disposal of Long-Lived Assets," pursuant to which an impairment loss is
      recognized if the carrying amount of a long-lived asset is not recoverable
      and
      exceeds its fair value. 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, 2006 and
      2005.





[17]
      Other expense:





**($
                in thousands)**
            
            **Three
                months ended**
              **March
                31,****2006**
            
            **2005**Currency
                transaction loss
            
            $
            11
            
            $
            50Loss
                on extinguishment of debt
            
            
            ---
            
            
            (371
            )Other
            
            
            (25
            )
            
            55$
            (14
            )
            $
            (266
            )





[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 against loss and tax credit carryforwards
      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, if necessary, 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 permanent difference, and therefore, no
      deferred tax is recognized.




[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 condensed 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, 2006 and 2005, the basic and diluted net loss
      attributed to common stockholders per share is the same since the effect from
      the potential exercise of 15,373,269 and 36,053,740 outstanding stock options
      and warrants as of March 31, 2006 and 2005, respectively, which would have
      been
      antidilutive. 5,000,151 shares of common stock issuable upon the conversion
      of
      the SuperStock Seller Preferred have also been excluded for the three months
      ended March 31, 2006 and 2005.




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[20]
      Reclassifications:





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





[21]
      Other Accumulated Comprehensive Income:





Other
      accumulated comprehensive income consists of net loss and net unrealized foreign
      currency translation adjustments and is presented in the condensed consolidated
      balance sheets as comprehensive income.





[22]
      Stock-based compensation:





On
      January 1, 2006, we adopted Statement of Financial Accounting Standards No.
      123
      (revised 2004), "Share-Based Payment," ("SFAS 123(R)") which requires the
      measurement and recognition of compensation expense for all share-based payment
      awards made to employees and directors based on estimated fair values. SFAS
      123(R) supersedes our previous accounting under Accounting Principles Board
      Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"). In March
      2005, the Securities and Exchange Commission issued Staff Accounting Bulletin
      No. 107 ("SAB 107") relating to SFAS 123(R). We have applied the provisions
      of
      SAB 107 in its adoption of SFAS 123(R).





We
      adopted SFAS 123(R) using the modified prospective transition method, which
      requires the application of the accounting standard as of January 1, 2006,
      the
      first day of our fiscal year 2006. Our condensed consolidated financial
      statements as of and for the three months ended March 31, 2006 reflects the
      impact of SFAS 123(R). In accordance with the modified prospective transition
      method, our condensed consolidated financial statements for prior periods have
      not been restated to reflect, and do not include, the impact of SFAS
      123(R).





SFAS
      123(R) requires companies to estimate the fair value of share-based payment
      awards on the date of grant using an option-pricing model. The value of the
      portion of the award that is ultimately expected to vest is recognized as
      expense over the requisite service periods in our condensed consolidated
      statement of operations. Prior to the adoption of SFAS 123(R), we accounted
      for
      share-based awards to employees and directors using the intrinsic value method
      in accordance with APB 25. Under the intrinsic value method, no stock-based
      compensation expense had been recognized in our condensed consolidated statement
      of operations, because the exercise price of our stock options granted to
      employees and directors equaled the fair market value of the underlying stock
      at
      the date of grant.





Share-based
      compensation expense recognized during the three months ended March 31, 2006
      is
      based on the value of the portion of share-based payment awards that is
      ultimately expected to vest during the period. Share-based compensation expense
      recognized in our condensed consolidated statement of operations for the three
      months ended March 31, 2006 included compensation expense for share-based
      payment awards granted subsequent to December 31, 2005 based on the grant date
      fair value estimated in accordance with the provisions of SFAS 123(R). Because
      share-based compensation expense recognized in the condensed consolidated
      statement of operations for the three months ended March 31, 2006 is based
      on
      awards ultimately expected to vest, it has been reduced for estimated
      forfeitures. SFAS 123(R) requires forfeitures to be estimated at the time of
      grant and revised, if necessary, in subsequent periods if actual forfeitures
      differ from those
      estimates. In our pro forma information required under SFAS 123 for the periods
      prior to fiscal 2006, we accounted for forfeitures as they occurred.





We
      use
      the Black-Scholes option-pricing model ("Black-Scholes model") as its valuation
      method for share-based payment awards. Under the Black-Scholes model, the fair
      value of share-based payment awards on the date of grant using an option-pricing
      model is affected by a21’s common stock price as well as assumptions regarding a
      number of highly complex and subjective variables. These variables include,
      but
      are not limited to our expected stock price volatility over the term of the
      awards, and actual and projected employee stock option exercise
      behaviors.




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**General
      Share Based Compensation Information**





The
      following summarizes our stock option activity:





**Stock
                Options****Shares**
            
            **Weighted
                Average Exercise Price**Balance,
                December 31, 2005
            
            
            4,547,623
            
            $
            0.32Granted
            
            
            4,108,060
            
            $
            0.30Exercised
            
            
            (616,427
            )
            $
            0.17Forfeited/Cancelled
            
            
            (80,287
            )
            $
            0.18Balance,
                March 31, 2006
            
            
            7,958,969
            
            $
            0.32Exercisable,
                December 31, 2005
            
            
            4,547,623
            
            $
            0.32Exercisable,
                March 31, 2006
            
            
            6,142,538
            
            $
            0.33




The
      following table summarizes information about stock options at March 31, 2006:





**Options
                Outstanding****Exercise**
              **Prices**
            
            **Number**
              **Outstanding**
            
            **Weighted
                Average Remaining Contractual Life**
            
            **Number**
              **Exercisable**$0.15
            
            
            129,168
            
            
            1
                year
            
            
            129,168$0.25
            
            
            1,335,000
            
            
            1.5
                years
            
            
            1,335,000$0.30
            
            
            6,094,801
            
            
            3.5
                years
            
            
            4,278,370$0.50
            
            
            160,000
            
            
            1
                year
            
            
            160,000$1.00
            
            
            120,000
            
            
            1
                year
            
            
            120,000$1.50
            
            
            120,000
            
            
            1
                year
            
            
            120,0007,958,969
            
            
            3
                years
            
            
            6,142,538





**Valuation
      and Expense Information under SFAS 123(R)**





The
      following table summarizes share-based compensation expense under SFAS 123(R)
      for the three months ended March 31, 2006:





**($
                in thousands)**Share-based
                compensation expense included in selling, general, and administrative
                expenses
            
            $
            1,027Tax
                benefit
            
            
            —Share-based
                compensation expense, net tax
            
            $
            1,027






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The
      pro
      forma effect on our net loss and loss per share of applying the fair-value
      method of accounting would have been as follows for the three months ended
      March
      31, 2005:





**$
                in thousands, except per share amounts**Net
                loss
            
            $
            (982
            )Less:
                Stock-based employee compensation using the fair value
                method
            
            
            (79
            )Pro
                forma net loss
            
            $
            (1,061
            )Loss
                per share - basic and dilutedAs
                reported
            
            $
            (0.03
            )Pro
                forma
            
            $
            (0.03
            )





The
      fair
      value of each option is measured at the grant date using the Black-Scholes
      option-pricing model which requires the use of a number of assumptions including
      volatility, risk-free interest rate, and expected dividends. The following
      weighted average assumptions were used for stock options granted during the
      three months ended March 31, 2006: no annual dividends; expected volatility
      of
      111%; risk free interest rate of 3.00%, and expected life ranging from
      approximately 3 to 3.5 years and March 31, 2005: no annual dividends; expected
      volatility of 80%; risk free interest rate of 3.00%, and expected life of 5
      years.





Compensation
      benefit of $50,000 was recorded in the condensed consolidated statements of
      operations for the three months ended March 31, 2006, pursuant to variable
      accounting for certain options. The fair value of the Company’s stock was less
      than the exercise price of these options on March 31, 2005 and, accordingly,
      there was no related compensation expense for the three months ended March
      31,
      2005.





[23]
      Advertising





Advertising
      expenses of $175,000 and $102,000 were expensed for the three months ended
      March
      31, 2006 and 2005, respectively. Advertising costs are charged to expense as
      incurred.




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





Property,
      plant and equipment are summarized as follows:





**($
                in thousands)**
            
            **March
                31,**
              **2006**
            
            **December
                31,**
              **2005**Land
                and building
            
            
            7,768
            
            
            7,768Office
                equipment and furnishings
            
            
            390
            
            
            375Photo/Computer
                equipment
            
            
            466
            
            
            430Software
            
            
            160
            
            
            147Less:
                Accumulated depreciation
            
            
            (1,257
            )
            
            (1,118
            )Total,
                net
            
            $
            7,527
            
            $
            7,602





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.





Depreciation
      expense was $139,000 and $166,000 for the three months ended March 31, 2006
      and
      2005, respectively .




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





Goodwill
      of $2.3 million at March 31, 2006 is comprised of $1.2 million of goodwill
      associated with the acquisition of SuperStock and $1.1 million of goodwill
      associated with the acquisition of Ingram.





**($
                in thousands)**Goodwill
                at December 31, 2005
            
            $
            2,263SuperStock
                earnout
            
            
            67Cumulative
                foreign currencytranslation
                of Ingram goodwill
            
            
            10Goodwill
                at March 31, 2006
            
            $
            2,340




Identifiable
      intangible assets, net of amortization at March 31, 2006 are as
      follows:





**($
                in thousands)**
            
            **Cost**
            
            **Accumulated**
              **Amortization**
            
            **Foreign
                Currency Translation**
            
            **Net**
            
            **Average
                Useful Life (in months)**SuperStock
                non-compete covenants
            
            $
            116
            
            $
            (60
            )
            $
            ---
            
            $
            56
            
            
            48Ingram
                license agreements
            
            
            2,440
            
            
            (244
            )
            
            (12
            )
            
            2,184
            
            
            60Ingram
                non-compete agreements
            
            
            790
            
            
            (132
            )
            
            (4
            )
            
            654
            
            
            36Ingram
                customer relationships
            
            
            420
            
            
            (70
            )
            
            (2
            )
            
            348
            
            
            36Ingram
                distribution agreements
            
            
            270
            
            
            (45
            )
            
            (1
            )
            
            224
            
            
            36Ingram
                trademark
            
            
            220
            
            
            (55
            )
            
            ---
            
            
            165
            
            
            24Intangible
                assets
            
            $
            4,256
            
            $
            (606
            )
            $
            (19
            )
            $
            3,631





Amortization
      expense during the three months ended March 31, 2006 and 2005 totaled $280,000
      and $7,000, respectively. Approximate annual amortization expense is as follows
      for each of the following years: 2006:$1.1 million, 2007:$1.1 million,
      2008:$863,000, 2009:$488,000, and 2010:$366,000.





**($
                in thousands)**Intangible
                assets, net at December 31, 2005
            
            $
            3,882Cumulative
                foreign currency translation
            
            
            29Amortization
                expense
            
            
            (280
            )Intangible
                assets, net at March 31, 2006
            
            $
            3,631





**NOTE
      E - PHOTO COLLECTION AND CONTRACTS WITH PHOTOGRAPHERS**





The
      photo
      collection as of March 31, 2006 and December 31, 2005, was $2.7 million and
      $2.6
      million, respectively. The book value of the photo collection, net of
      accumulated amortization was $1.7 million and $1.7 million at March 31, 2006
      and
      December 31, 2005, respectively. Amortization expense was $124,000 and $123,000
      for the three months ended March 31, 2006 and 2005, respectively. Approximate
      annual amortization expense is as follows for each of the following years:
      2006:$506,000, 2007:$510,000, 2008:$116,000, 2009:$37,000, and
      2010:$22,000.





Contracts
      with photographers as of March 31, 2006 and December 31, 2005 was $1.3 million.
      The book value of contracts with photographers, net of accumulated amortization
      was $877,000 and $929,000 as of March 31, 2006 and December 31, 2005,
      respectively. Amortization expense was $52,000 and $51,000 for the three months
      ended March 31, 2006 and 2005, respectively. Approximate annual amortization
      expense is as follows for each of the following years: 2006:$210,000,
      2007:$208,000, 2008:$169,000, 2009:$124,000, and 2010:$61,000.




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**NOTE
      F - MINORITY INTEREST**





As
      part
      of the transaction to acquire all of the voting common stock, representing
      83%
      of the outstanding equity of SuperStock, in consideration for the sale and
      purchase of such shares, the sellers received 1,666,717 shares of non-voting
      participating preferred stock of SuperStock, which is exchangeable for 5,000,151
      shares of a21’s common stock. The preferred stock has no voting rights, pays no
      dividend, and, except for exchange rights into common stock, it has no other
      special rights except liquidation. In liquidation, it is senior to the common
      stock of SuperStock and has distribution rights to the greater of $4.25 million
      or 17% of the total liquidation distributions after creditors. The minority
      interest is valued as if it was exchanged into a21’s common stock at the closing
      price on the day of the acquisition.





**NOTE
      G - OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION**





We
      have
      operated domestically and internationally, since February 2004. Our revenue
      is
      generated through a diverse customer base, and there is no reliance on a single
      customer or small group of customers; no customer represented 10% or more of
      our
      total revenue in the periods presented. The following table presents information
      about our domestic and international activity as of March 31, 2006 and 2005,
      and
      for the three months then ended.




**($
                in thousands)****March
                31, 2006**
            
            **Domestic**
            
            **UK**
            
            **Other**
              **International**
            
            **Total**Revenue
            
            $
            2,023
            
            $
            865
            
            $
            47
            
            $
            2,935Segment
                operating loss
            
            
            (1,484
            )
            
            (280
            )
            
            7
            
            
            (1,757
            )Segment
                total assets
            
            
            14,829
            
            
            5,800
            
            
            103
            
            
            20,732Segment
                long-lived assets
            
            
            11,314
            
            
            4,728
            
            
            ---
            
            
            16,042






**($
                in thousands)****March
                31, 2005**
            
            **Domestic**
            
            **UK**
            
            **Other**
              **International**
            
            **Total**Revenue
            
            $
            1,967
            
            $
            295
            
            $
            50
            
            $
            2,312Segment
                operating loss
            
            
            (317
            )
            
            (9
            )
            
            7
            
            
            (319
            )Segment
                total assets
            
            
            15,498
            
            
            312
            
            
            83
            
            
            15,893Segment
                long-lived assets
            
            
            12,221
            
            
            9
            
            
            ---
            
            
            12,230




Domestic
      segment information for the three months ended March 31, 2006 and 2005,
      respectively, includes $463,000 and $483,000 of revenue and $382,000 and
      $360,000 of accounts receivables attributable to foreign distributors that
      are
      SuperStock customers. International segment information reflects the operation
      of foreign subsidiaries. Those amounts are not based on the geographic origin
      of
      customers which is not readily determinable.




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**NOTE
      H - DEBT FINANCINGS**





[1]
      Notes
      Payable, unsecured (see Note L)





During
      February 2004, we received $1.1 million in connection with the issuance of
      unsecured notes payable (the “Original Notes”), which accrued interest at 12%
      for up to twelve months along with 630,000 callable warrants at $0.45 per share
      (the “Original Warrants”). On June 24, 2005, we amended and restated the
      Original Notes (the “Restated Notes”). The aggregate amount outstanding under
      the Restated Notes at March 31, 2006 is $1.1 million. The Restated Notes mature
      on July 15, 2006 (the “Maturity Date”) and bear interest due quarterly
      commencing on September 30, 2005 at a rate of 12% per annum, which increases
      to
      18% per annum after the Maturity Date.





[2]
      Senior Secured Notes Payable - Related party (see Note L)





On
      February 22, 2005, we consummated a $2.3 million financing transaction in the
      form of two-year interest only senior (non-convertible) secured notes and
      retired $1.3 million of our two-year convertible subordinated notes issued
      in
      conjunction with our acquisition of SuperStock. The investors in the transaction
      were existing stockholders of ours. In the transaction, SuperStock issued new
      12% senior secured notes due in February 2007 in the principal amount of $2.3
      million (the "Senior Notes") and retired all of its outstanding 13% convertible
      subordinated notes.





Five
      year
      warrants to purchase 937,500 shares of a21’s common stock originally issued to
      the holders of previously outstanding subordinated notes were amended and
      restated whereby, inclusive of the right to purchase an additional 125,000
      shares of the a21’s common stock, the holders of the Senior Notes received two
      year warrants to purchase an aggregate of 500,000 shares of a21’s common stock
      at $0.225 per share and an aggregate of 562,500 shares of common stock at $0.45
      per share (together, the "Warrants"). During the year ended December 31, 2005,
      we recorded an additional debt discount of $10,000 for the excess of the fair
      value of the warrants to purchase 1,062,500 shares of a21 common stock on the
      date of issuance over the fair value of the warrants to purchase 937,500 shares
      of common stock calculated at the time of amendment (reflecting the remaining
      term and the stock price on that date). Pursuant to the provisions of Emerging
      Issues Task Force No. 00-19, “Accounting for Derivative Financial Instruments
      Indexed to, and Potentially Settled in, A Company’s Own Stock” (“EITF 00-19”),
      we recorded the value of the 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, 2006 and December 31, 2005, the warrants were valued at $451,000
      and $187,000, respectively, and the increase in valuation of $265,000 was
      recorded as non-operating warrant expense for the three months ended March
      31,
      2006.




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**NOTE
      I - LOAN PAYABLE ON BUILDING**





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





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





The
      following table summarizes our annual maturities under the loan payable on
      building as of March 31, 2006:




**Year
                Ending March 31,****($
                in thousands)**2006
            
            $
            212007
            
            
            402008
            
            
            612009
            
            
            872010
            
            
            118Thereafter
            
            
            7,1257,452Less:
                Current Portion
            
            
            (21
            )Long
                Term Portion
            
            $
            7,431





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




**NOTE
      J - STOCKHOLDERS’ EQUITY**





[1]
      Common and Preferred stock:





We
      are
      authorized to issue 100,000,000 shares of a21 $.001 par value common
      stock.





We
      are authorized to issue 100,000 shares of its $.001 par value preferred stock at
      face value $100 per share. The holders of a21’s preferred stock shall be
      entitled to the same dividend rights as the holders of the shares of a21’s
      common stock and shall share in all dividends declared on common stock as if
      each share preferred stock was a share of common stock. In the event of any
      voluntary or involuntary liquidation, dissolution or winding up of the Company,
      the holders of shares of a21’s preferred stock shall be entitled to either i)
      their pro rata share of the assets as if the holders’ preferred shares were
      converted into common shares or ii) the face value of the holders’ preferred,
      whichever is greater, but before any payment shall be made to the holders of
      shares of common stock. Each holder of preferred stock shall have no voting
      rights and shall not be entitled to notice of meetings of the stockholders,
      except as otherwise expressly provided by provisions of applicable
      law.




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On
      March
      6, 2006, we received $1.2 million in connection with the exercise of warrants
      to
      purchase 4,000,000 shares of a21’s common stock held by a significant
      stockholder of ours. The stockholder previously acquired the warrants from
      another of our significant stockholders, through a prior transaction. In
      connection with the exercise of the warrants, we set the exercise price of
      the
      warrants to $0.30 per unregistered share, which is approximately 10% less than
      what the exercise price would have been pursuant to the original terms of the
      warrants, but higher than the minimum $0.25 per unregistered share as stated
      in
      the warrant modification agreement. This accommodation was granted by us in
      order to facilitate the transaction. As a result of the repricing of the
      warrants, we recorded a deemed dividend of $157,000, increasing the net loss
      attributed to common stockholders.





In
      partial consideration for the acquisition of the outstanding stock of Ingram,
      the stockholders received 14,480 shares of a21’s preferred stock. On
      March
      14, 2006, we issued 2,522,648 shares of a21 common stock upon the conversion
      of
      the preferred stock by the holders thereof. The preferred shares were converted
      into a21 common stock at a price per share of the a21 common stock of $0.574,
      the average of the closing price of the a21’s common stock for the 20 trading
      day period ending on March 13, 2006. At March 31, 2006 and December 31, 2005,
      there are 0 and 14,480 shares of preferred stock issued and outstanding,
      respectively.





[2]
      Stock
      options and warrants:





Stock
      options and warrants have been granted to officers, directors and employees
      based upon 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.





As
      discussed above, on March 6, 2006, we received $1.2 million in connection with
      the exercise of warrants.





On
      February 16, 2006, an information statement was mailed or furnished to our
      stockholders in connection with the authorization and approval by a majority
      of
      the Board of Directors of the Stock Plan at a meeting held on March 10, 2005
      and
      the subsequent adoption of such corporate action by written consent on February
      9, 2006 of a majority of our stockholders. Such adoption constitutes the
      approval and consent of the action. The Stock 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 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 Stock Plan. Stock options issued under the 2005
      Plan typically have a five-year term and vest prorata over that
      term.  The
      exercise price 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.




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Pursuant
      to our 2002 Directors, Officers And Consultants Stock Option, Stock Warrant
      And
      Stock Award Plan, as amended (the "2002 Plan"), 3,000,000 shares of a21 common
      stock are reserved for issuance. The 2002 Plan authorizes our board of directors
      to issue warrants, options, restricted or unrestricted common stock and other
      awards to our employees, consultants and directors and our affiliates. Certain
      options and warrants to be granted under 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 and warrants granted
      under
      the 2002 Plan will be nonqualified options or warrants which are not intended
      to
      qualify as ISOs. 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 expire after a
      ten-year period and are subject to acceleration upon the occurrence of certain
      events. As of March 31, 2006 and December 31, 2005 there were 496,264 shares
      available for grant under the Stock Plan.





**NOTE
      K - COMMITMENTS AND OTHER MATTERS**





[1]
      Employment agreement:





Effective
      January 3, 2006, we entered into an employment agreement with our Vice President
      and Chief Financial Officer. The agreement continues for a term of 36 months
      unless earlier terminated in accordance with its terms. Pursuant to the
      agreement, he is entitled to receive an annual base salary of $114,000, subject
      to increases as shall be determined by the Chief Executive Officers of a21
      and
      SuperStock. He was granted an option to purchase 165,000 shares of our common
      stock at a purchase price of $0.34 per share. These options
      issued were accounted for under the fair value method under SFAS 123R with
      a
      charge to the statement of operations .
      The
      strike price of such options was at the market trading value at the time of
      the
      grant. The options are exercisable as to 25% of the total shares represented
      thereby on each of June 30, 2006, December 31, 2006, June 30, 2007, and December
      31, 2007. The employment agreement also (1) provides that the stock options
      granted shall vest immediately upon a change in control as defined of a21,
      and
      (2) includes a confidentiality covenant, a non-competition covenant and contains
      a prohibition on the solicitation of the employees, suppliers, vendors and
      customers of a21 and SuperStock.





[2]
      Lease
      commitments




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. 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 a deferred receivable of $543,000 and
      $541,000 at March 31, 2006 and December 31, 2005, 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.




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[3]
      Lease
      Deposit Arrangement





At
      March
      31, 2006, we were party to an arrangement with certain of our existing
      stockholders, Ahab International, Ltd. and Ahab Partners, L.P. (collectively
      “Ahab”). As part of this arrangement, since November 2005, we had executed an
      agreement with Ahab pursuant to which Ahab pledged an aggregate amount of
      $690,000 in the form of certificate of deposits (the “CDs”). The CDs replaced
      the deposits maintained by us which secured the letter of credit issued in
      lieu
      of the security deposit per the capital lease agreement for our headquarters
      facility. The agreement had a three year term which is the term of the
      requirement to maintain a security deposit under the capital lease agreement.
      In
      conjunction with the April 27, 2006 financing transaction (see Note L), we
      paid
      outstanding interest at a rate of 10% per annum plus Ahab retains the interest
      earned on the CDs. In connection with the arrangement, we entered into a
      security agreement pursuant to which Ahab maintained a security interest in
      the
      CDs. As such, we provided a guarantee to Ahab in the event any liquidation
      of
      the security deposit was to occur.





On
      April
      27, 2006, as part of the financing transaction (see Note L), we also released
      the $690,000 certificate of deposits, which had been pledged by Ahab to secure
      the letter of credit issued by SuperStock in connection with its capital lease
      for our headquarters in Jacksonville Florida.  Upon
      release of the Ahab CDs, we established replacement CDs held in our name and
      funded by the proceeds of the $15.5 million financing transaction.





The
      lease
      agreement also requires us to fund additional deposits through July 1, 2006,
      for
      a total of $750,000 including restricted cash of $30,000 reported as other
      non-current assets as of March 31, 2006.





[4]
      Litigation:





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.





**NOTE
      L - SUBSEQUENT EVENT**





Convertible
      Debt Financing




On
      April
      27, 2006, we
      entered into a securities purchase agreement with certain purchasers and
      Queequeg Partners, LP, as agent (the “Purchase Agreement”), whereby we issued
      $15.5 million of 5% Senior Secured Convertible Notes (the “Notes”) in
      consideration for which we received $11.7 million in cash, after payments to
      retire warrants to purchase 637,500 shares of a21’s common stock, the repayment
      of certain outstanding debt of $3.3 million (net of certain amounts reinvested
      by certain note-holders), interest due of $216,000, and the payment of a finders
      fee of $100,000 to Axiom Capital Management. 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 ) ,
      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
      International, Ltd. (“Ahab International”) and Ahab Partners, L.P. (“Ahab
      Partners”) to secure the letter of credit issued by SuperStock in connection
      with its capital lease for our headquarters in Jacksonville Florida.




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The
      Notes
      are secured by substantially all of our assets and, after we increase the number
      of shares of our authorized common stock, will be convertible into a21’s common
      stock at a minimum conversion price of $0.65 per share, subject to adjustment
      as
      provided in the Notes. In addition, the conversion price of the 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. The interest on the Notes is payable
      quarterly in arrears, and the principal will be due and payable on March 31,
      2011. If the 45 day volume weighted average price of a21’s common stock equals
      or exceeds $1 per share, the Notes will automatically be converted into a21’s
      common stock under certain conditions.




The
      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
      Notes, the breach of any representation or warranty in the Purchase Agreement,
      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 Notes at the direction of the
      holders of a majority of the outstanding principal amount of the Notes or
      automatically, depending on the particular event of default.




Pursuant
      to the terms of the Purchase Agreement, for so long as StarVest beneficially
      owns at least 8,000,000 shares of a21’s common stock, we must nominate
      StarVest’s designee for a position on our Board of Directors. In addition, for
      so long as at least 40% of the aggregate principal amount of the Notes are
      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 right to provide up to 25% of the amount
      of
      any additional financing the amount of which will be in excess of $2
      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 Notes
      (the
“Registration Rights Agreement”). Pursuant to the Registration Rights Agreement,
      if the SEC has not declared effective a registration statement relating to
      the
      resale of the shares of a21’s common stock that the notes are convertible into
      by January 22, 2007, we will be obligated to pay the holder of the Notes
      liquidated damages as provided in the Registration Rights Agreement.




In
      connection with the transactions described above, the following indebtedness
      of
      the Company has been repaid in full:




1.
            The
                $2.25 million 12% Senior Secured Note, dated as of February 22,
                2005.




2.
            The
                $1.05 million 12% unsecured promissory notes dated February 29,
                2004




The
      principal and interest due under the notes described above of $184,000 was
      repaid on April 27, 2006 by the issuance of Notes in the aggregate principal
      amount 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 have been terminated:




1.
            Warrants,
                expiring on February 21, 2007, granting the right to purchase 300,000
                shares of a21’s common stock, par value $0.001 per share, at an exercise
                price of $0.177 per share, which was issued in connection with the
                Cohanzick and Steffens Notes.




2.
            Warrants,
                expiring on February 21, 2007, granting the right to purchase 337,500
                shares of a21’s common stock, par value $0.001 per share, at an exercise
                price of $0.377 per share, which were also issued in connection with
                certain Notes.




Each
      of
      the Common Stock Purchase Warrants were returned to us and canceled in
      consideration of us issuing 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).




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**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/A for
      the
      year ended December 31, 2005.*





**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 operating subsidiary, SuperStock, we aggregate visual content from
      photographers, photography agencies, archives, libraries and private collections
      and license the visual content to our customers. Our 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).
      Our products are sold directly and through a global network of distributors
      in
      over 100 countries. Our 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.





**SUBSEQUENT
      EVENT**





**Convertible
      Debt Financing**




On
      April
      27, 2006, we
      entered into a securities purchase agreement with certain purchasers and
      Queequeg Partners, LP, as agent (the “Purchase Agreement”), whereby we issued
      $15.5 million of 5% Senior Secured Convertible Notes (the “Notes”) in
      consideration for which we received $11.7 million in cash, after payments to
      retire warrants to purchase 637,500 shares of a21’s common stock, the repayment
      of certain outstanding debt of $3.3 million (net of certain amounts reinvested
      by certain note-holders), interest due of $216,000, and the payment of a finders
      fee of $100,000 to Axiom Capital Management. 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 ) ,
      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
      International, Ltd. (“Ahab International”) and Ahab Partners, L.P. (“Ahab
      Partners”) to secure the letter of credit issued by SuperStock in connection
      with its capital lease for our headquarters in Jacksonville Florida. Upon
      release of the Ahab CDs, we established replacement CDs in our name having
      been
      funded by the proceeds of the financing. As a result, the related security
      agreement was canceled.




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The
      Notes
      are secured by substantially all of our assets and, after we increase the number
      of shares of our authorized common stock, will be convertible into a21’s common
      stock at a minimum conversion price of $0.65 per share, subject to adjustment
      as
      provided in the Notes. In addition, the conversion price of the 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. The interest on the Notes is payable
      quarterly in arrears, and the principal will be due and payable on March 31,
      2011. If the 45 day volume weighted average price of a21’s common stock equals
      or exceeds $1 per share, the Notes will automatically be converted into a21’s
      common stock under certain conditions.




The
      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
      Notes, the breach of any representation or warranty in the Purchase Agreement,
      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 Notes at the direction of the
      holders of a majority of the outstanding principal amount of the Notes or
      automatically, depending on the particular event of default.




Pursuant
      to the terms of the Purchase Agreement, for so long as StarVest beneficially
      owns at least 8,000,000 shares of a21’s common stock, we must nominate
      StarVest’s designee for a position on our Board of Directors. In addition, for
      so long as at least 40% of the aggregate principal amount of the Notes are
      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 right to provide up to 25% of the amount
      of
      any additional financing the amount of which will be in excess of $2
      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 Notes
      (the
“Registration Rights Agreement”). Pursuant to the Registration Rights Agreement,
      if the SEC has not declared effective a registration statement relating to
      the
      resale of the shares of a21’s common stock that the notes are convertible into
      by January 22, 2007, we will be obligated to pay the holder of the Notes
      liquidated damages as provided in the Registration Rights Agreement.




In
      connection with the transactions described above, the following indebtedness
      of
      the Company has been repaid in full:




3.
            The
                $2.25 million 12% Senior Secured Note, dated as of February 22,
                2005.




4.
            The
                $1.05 million 12% unsecured promissory notes dated February 29,
                2004




The
      principal and interest due under the notes described above of $184,000 was
      repaid on April 27, 2006 by the issuance of Notes in the aggregate principal
      amount 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 have been terminated:




1.
            Warrants,
                expiring on February 21, 2007, granting the right to purchase 300,000
                shares of a21’s common stock, par value $0.001 per share, at an exercise
                price of $0.177 per share, which was issued in connection with the
                Cohanzick and Steffens Notes.




2.
            Warrants,
                expiring on February 21, 2007, granting the right to purchase 337,500
                shares of a21’s common stock, par value $0.001 per share, at an exercise
                price of $0.377 per share, which were also issued in connection with
                the
                Cohanzick and Steffens Notes.




Each
      of
      the Common Stock Purchase Warrants were returned to us and canceled in
      consideration of us issuing 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).




Please
      refer to our Current Report on Form 8-K dated May 3, 2006 for additional
      information relating to our Convertible Debt Financing and related
      transactions.




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**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, 2006 COMPARED TO THREE MONTHS ENDED MARCH 31,
      2005**




REVENUES.
      Revenues were $2.9 million for the three months ended March 31, 2006 compared
      to
      $2.3 million for the same prior year period. Approximately 90% of the increase
      was attributable to the Ingram acquisition which occurred during October 2005,
      with the balance of the increase attributed to SuperStock.




COST
      OF
      REVENUES. Cost of revenues was $903,000 for the three months ended March 31,
      2006 compared to $712,000 the same prior year period. This increase was
      attributable to related higher revenues. As a percentage of revenues, cost
      of
      sales was 31% for the three months ended March 31, 2006 and 2005. Cost of sales
      as a percentage of revenues may vary in any period depending on the 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 $3.2 million for the
      three months ended March 31, 2006 compared to $1.6 million for the same prior
      year period. We adopted SFAS 123(R) using the modified prospective transition
      method, which requires the application of the accounting standard as of January
      1, 2006, the first day of our fiscal year 2006. Share-based compensation expense
      recognized under SFAS 123(R) for the three months ended March 31, 2006 was
      $1.0
      million. In accordance with the modified prospective transition method, our
      condensed consolidated statement of operations for the three months ended March
      31, 2005 have not been restated to reflect, and do not include, the impact
      of
      SFAS 123(R).




Additionally,
      we incurred incremental SG&A expenses resulting from the Ingram acquisition
      which occurred during October 2005 and higher corporate expenses associated
      with
      the administration of a publicly traded corporation including legal and audit
      related expenses.




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $603,000 for the three
      months ended March 31, 2006 compared to $353,000 for the same prior year period.
      The increase was primarily attributable to incremental amortization during
      the
      three months ended March 31, 2006 of approximately $244,000 resulting from
      the
      Ingram acquisition.




INTEREST
      EXPENSE. Interest expense was was $353,000 for the three months ended March
      31,
      2006 compared to $397,000 for the same prior year period. Interest expense
      for
      the three months ended March 31, 2005 included incremental amortization of
      finance costs.




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WARRANT
      EXPENSE. Pursuant to the provisions of Emerging Issues Task Force No. 00-19,
      “Accounting for Derivative Financial Instruments Indexed to, and Potentially
      Settled in, A Company’s Own Stock” (“EITF 00-19”), during 2005, we recorded the
      value of certain February 2005 warrants as a current liability, with subsequent
      changes in fair value to be reflected in the condensed consolidated statement
      of
      operations. The classification of the warrants was determined based upon the
      terms of the warrants relative to registration rights and because the terms
      did
      not include a liquidated damages provision. As of March 31, 2006, the warrants
      were valued at $451,000, and the increase in valuation of $265,000 during the
      three months ended March 31, 2006 was recorded as non-operating warrant
      expense.




OTHER
      EXPENSE, NET. Other expense, net was $14,000 for the three months ended March
      31, 2006 compared to other expense, net of $266,000 for the same prior year
      period. The other expense, net for the three months ended March 31, 2005
      includes a $371,000 loss on the extinguishment of the convertible subordinated
      notes payable.


DEEMED
      DIVIDEND. On March 6, 2006, we received $1.2 million in connection with the
      exercise of warrants to purchase 4,000,000 shares of a21’s common stock held by
      a significant stockholder of ours. The stockholder previously acquired the
      warrants from another of our significant stockholders, through a prior
      transaction. In connection with the exercise of the warrants, we set the
      exercise price of the warrants to $0.30 per unregistered share, which is
      approximately 10% less than what the exercise price would have been pursuant
      to
      the original terms of the warrants, but higher than the minimum $0.25 per
      unregistered share as stated in the warrant modification agreement. This
      accommodation was granted by us in order to facilitate the transaction. As
      a
      result of the repricing of the warrants, we recorded a deemed dividend of
      $157,000, increasing the net loss attributed to common
      stockholders.




NET
      LOSS
      ATTRIBUTED TO COMMON STOCKHOLDERS. Net loss attributed to common stockholders
      was $2.6 million or $0.04 per share, for the three months ended March 31, 2006
      compared to net loss of $982,000, or $0.03 per share, for the same prior year
      period.




**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      March 31, 2006, we had $1.4 million of cash and cash equivalents and a working
      capital deficit of $711,000, compared to $1.2 million in cash and cash
      equivalents and working capital deficit of $946,000 at December 31, 2005. The
      increase in cash is primarily due to the proceeds from the exercise of stock
      options and warrants during the three months ended March 31, 2006.




Net
      cash
      used in operating activities for the three months ended March 31, 2006 was
      $663,000, compared to net cash used in operating activities of $650,000 for
      three months ended March 31, 2005. The net cash used in operating activities
      during the three months ended March 31, 2006 was due primarily to the net loss
      of $2.4 million adjusted for $977,000 of stock options compensation and $603,000
      of depreciation and amortization. Net cash used in operating activities in
      the
      three months ended March 31, 2005 was due primarily to the net loss of $982,000
      and the increase of accounts receivable of $314,000 adjusted for $371,000 for
      loss on extinguishment of debt and $353,000 of depreciation and
      amortization.




Net
      cash
      used in investing activities for the three months ended March 31, 2006 was
      $315,000, compared to net cash used in investing activities the three months
      ended March 31, 2005 of $236,000. Net cash used in investing activities for
      the
      three months ended March 31, 2006 was primarily due to investments in building,
      property, and equipment of $132,000 and investments in our photo collection
      of
      $76,000. Net cash used in investing activities in the three months ended March
      31, 2005 was primarily due to investments in building, property, and
      equipment.




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Net
      cash
      provided by financing activities for the three months ended March 31, 2006
      was
      $1.2 million, compared to net cash provided by financing activities of $968,000
      for the same prior year period. Net cash provided by financing activities for
      the three months ended March 31, 2006 resulted substantially from net proceeds
      of warrant exercises. Net cash provided by financing activities in the three
      months ended March 31, 2005 was mainly due to the new $2.3 million senior
      secured notes payable and the retirement of the $1.3 million convertible
      subordinated notes payable.




During
      March 2006, we received $1.2 million in connection with the exercise of warrants
      to purchase four million shares of our common stock.




We
      have
      sustained recurring losses and at March 31, 2006, had an accumulated deficit
      of
      $16.6 million and a working capital deficit of $711,000 that raise substantial
      doubt about our ability to continue as a going concern. Should we not generate
      more cash than required for operations, we will need additional funding to
      cover
      any potential shortfall. If we are unable to secure required funding, we will
      not be able to implement our business plan and may not be able to conduct
      business as a going concern. Our future plans include the development our
      distribution channel leveraging our owned and licensed image content offering,
      and the production and acquisition of new in-demand image content to be made
      available to both direct and distribution customers.




On
      April
      27, 2006, we
      entered into a securities purchase agreement with certain purchasers and
      Queequeg Partners, LP, as agent, whereby we issued
      $15.5 million of 5% Senior Secured Convertible Notes in consideration for which
      we received $11.7 million in cash, after payments to retire warrants to purchase
      637,500 shares of a21’s common stock, the repayment of certain outstanding debt
      of $3.3 million, interest due of $216,000, and the payment of a finders fee
      of
      $100,000. As
      part
      of this transaction, we released $690,000 of certificate of deposits, which
      had
      been pledged by Ahab
      to
      secure the letter of credit issued by SuperStock in connection with its capital
      lease for our headquarters in Jacksonville, Florida.





**OFF
      BALANCE SHEET ARRANGEMENTS**





At
      March
      31, 2006, we were party to an arrangement with Ahab. As part of this
      arrangement, since November 2005, we had an agreement with Ahab pursuant to
      which Ahab pledged $690,000 in the form of certificate of deposits (the “CDs”).
      The CDs replaced the deposits maintained by us which secured the letter of
      credit issued in lieu of the security deposit per the capital lease agreement
      for our headquarters facility. The agreement had a three year term which is
      the
      term of the requirement to maintain a security deposit under the capital lease
      agreement. In conjunction with the April 27, 2006 financing transaction, we
      paid
      outstanding interest at a rate of 10% per annum plus Ahab retained the interest
      earned on the CDs.





On
      April
      27, 2006, as part of the $15.5 million financing transaction described above,
      the $690,000 certificate of deposits, which had been pledged by Ahab to secure
      the letter of credit issued by SuperStock in connection with its capital lease
      for our headquarters in Jacksonville Florida, were released to Ahab.  Upon
      release of the Ahab CDs, we established replacement CDs in our name having
      been
      funded by the proceeds of the financing.





We
      have
      not entered into any other off balance sheet arrangements.




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**ITEM
      3. CONTROLS AND PROCEDURES**





**EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES**





Under
        the
        supervision and with the participation of the Company's management, including
        its principal executive officer and the principal financial officer, the
        Company
        conducted an evaluation of the effectiveness of the design and operation
        of its
        disclosure controls and procedures as of the end of the period covered by
        this
        report (the “Evaluation Date”). Based on this evaluation, the Company's
        principal executive officer and principal financial officer concluded as
        of the
        Evaluation Date that the Company's disclosure controls and procedures were
        not
        effective at ensuring that the material information required to be disclosed
        in
        the Company’s Exchange Act reports is recorded, processed, summarized and
        reported as required in applicable SEC rules and forms because of the deficiency
        in internal controls over financial reporting which constitutes a material
        weakness in the design or operation of internal controls that could adversely
        affect its ability to record, process, summarize and report interim financial
        data. The material weakness identified pertains specifically to the recording
        of
        the deemed dividend related to warrants repricing.
  Except
        as
        described above, during the period covered by this report, there were no
        changes
        in our internal control over financial reporting identified in connection
        with
        management’s evaluation of the effectiveness of our internal control over the
        financial reporting that have materially affected, or are reasonably likely
        to
        materially affect, our internal control over financial reporting.





**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**





None





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None
      that
      have not been previously reported.





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





On
      February 9, 2006, stockholders entitled to vote 65.51% of the aggregate
      outstanding shares of our common stock approved by written consent our 2005
      Stock Plan (“Stock Plan”) which had been approved by our Board of Directors on
      March 10, 2005. Such adoption constitutes the approval and consent of at least
      43,673,034 of the total number of shares of common stock outstanding on February
      9, 2006 and is sufficient under the Texas Business Corporation Act and our
      Articles of Incorporation to approve the action. On February 16, 2006, an
      information statement was mailed or furnished to our stockholders in connection
      with the authorization and approval of the Stock Plan. The Stock 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 common stock to our officers, employees and independent
      contractors or our affiliates.





**ITEM
      5. OTHER INFORMATION**





None




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**ITEM
      6. EXHIBITS**





The
      following exhibits are filed as part of this report:





**EXHIBIT****NUMBER**
            
            **DESCRIPTION**31.1
            
            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







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**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 15, 2006
            By:
                /s/ ALBERT H. PLEUSAlbert
                H. Pleus
              Chairman
                and Chief Executive Officer
              (Principal
                Executive Officer)Date:
                May 15, 2006
            By:
                /s/ THOMAS COSTANZAThomas
                Costanza
              Vice
                President and Chief Financial Officer
              (Principal
                Financial Officer)





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