**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-QSB/A**


**(Amendment
      No.1)**





**x** **QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      Quarterly Period ended: June 30, 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)





DELAWARE
            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 [
      ]





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





There
      were 83,305,846 shares of a21's common stock outstanding on August 17,
      2006.





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












**EXPLANATORY
      NOTE**





The
      purpose of this Amendment No. 1 to Quarterly Report on Form 10-QSB/A is to
      restate the unaudited financial statements of a21, Inc. (the “Company”, “we”, or
“our”) for the fiscal period ended June 30, 2006, filed with the Securities and
      Exchange Commission (“SEC”) on August 21, 2006 to reflect a reduction in
      selling, general and administrative expenses and a decrease to warrant expense. In
      connection with our adoption of SFAS 123(R) during 2006, we previously
      recognized stock compensation expense during the three and six months ended
      June
      30, 2006 as if all options granted were fully vested at grant date rather than
      over the requisite service (vesting) period as proscribed by SFAS 123(R),
      resulting in an over expensing of related stock compensation of $277,000 and
      $658,000 for the three and six months ended June 30, 2006. Also, during the
      period ended June 30, 2006, we had erroneously reversed compensation cost
      totaling $69,000 previously recognized during the quarter ended March 31, 2006
      for restricted stock grants that had vested, and recognized no compensation
      cost
      for restricted stock grants that vested with a value of $18,000 during the
      quarter ended June 30, 2006. Finally, during May and June 2006 we modified
      and
      accelerated the vesting of options to purchase our common stock held by two
      former executives as part of their separation agreements with the Company.
      The
      fair value of these modifications was $70,000 which should have been recognized
      as additional stock based compensation expense during the three and six months
      ended June 30, 2006. These errors resulted in a net over expensing of stock
      compensation expense of $120,000 and $501,000 for the three and six months
      ended
      June 30, 2006.





In
      connection with our April 2006 $15.5 million financing, we previously recorded
      an increase of $56,000 to Additional Paid-In Capital for the fair value of
      warrants cancelled in exchange for the issuance of notes payable, in error.
      The
      excess of fair value of the warrants returned and cancelled over the value
      of
      the notes issued of $46,000, plus an additional $10,000 decrease in fair value
      of the warrant liability prior to the exchange, totaling $56,000, should have
      been recorded as a reduction of warrant expense for the three and six months
      ended June 30, 2006. Also, during the quarter ended June 30, 2006, we had
      recorded the value of our convertible preferred stock issued as part of the
      price to purchase ArtSelect, Inc. at $4.83 million, based on an erroneous
      preliminary estimate. The actual value was ultimately determined to be $3.15
      million.





Finally,
      there was an error in our calculation of the weighted average number of common
      shares outstanding, basic and diluted for the six months ended June 30, 2006
      of
      77,569,680 previously reported, which should have been 74,817,306.





The
      following table illustrates the effect on net loss and loss per share of the
      corrections of errors to stock based compensation expense, warrant expense
      and
      weighted average shares:





**$
                in thousands, except per share amounts**
            
            **Three
                months ended June 30, 2006**
            
            **Six
                months ended June 30, 2006**Net
                loss, as previously reported
            
            $
            (2,270
            )
            $
            (4,686
            )Stock
                based employee compensation, as previously reported
            
            
            (259
            )
            
            (1,310
            )Stock
                based employee compensation, as restated
            
            
            (139
            )
            
            (809
            )Net
                stock based employee compensation adjustment
            
            
            120
            
            
            501Warrant
                income (expense), as previously reported
            
            
            118
            
            
            (147
            )Warrant
                income (expense), as restated
            
            
            174
            
            
            (91
            )Net
                warrant income adjustment
            
            
            56
            
            
            56Net
                loss, as restated
            
            
            (2,094
            )
            
            (4,129
            )Basic
                and diluted loss per share, as previously reported
            
            $
            (0.03
            )
            $
            (0.06
            )Basic
                and diluted loss per share, as restated
            
            $
            (0.03
            )
            $
            (0.06
            )





2


The
      following table illustrates the effect on goodwill and convertible preferred
      stock of the correction of the error in estimating the value of our convertible
      preferred stock issued for the acquisition of ArtSelect, Inc.:





**$
                in thousands**
            
            **As
                of June 30, 2006**Goodwill,
                as previously reported
            
            $
            7,478Goodwill,
                as restated
            
            $
            5,798Convertible
                Preferred Stock, as previously reported
            
            $
            4,830Convertible
                Preferred Stock, as restated
            
            $
            3,150








The
      Items
      which are amended and restated herein for the correction of these errors
      are:


1.
            Part
                I, Item 1 - Consolidated Financial
                Statements;


2.
            Part
                I, Item 1 - Consolidated Financial Statements: Note O - Restatements
                and
                related changes to: Note B[1] - Basis of Presentation and Going Concern,
                Note B[21] - Comprehensive Income (Loss) and Accumulated Other
                Comprehensive Income, Note B[22] - Share Based Payments, Note C -
                Acquisitions, Note F - Goodwill and Other Intangible Assets, Note
                I -
                Operating Segments, Note J - Debt Financings, Note L - Convertible
                Preferred Stock and Stockholders’ Equity, and Note M - Commitments and
                Other Matters


3.
            Part
                I, Item 2 - Management’s Discussion and Analysis of Financial Condition
                and Results of Operations;


4.
            Part
                I, Item 3 - Controls and Procedures


5.
            Part
                II, Item 6 - Exhibits





In
      addition, unrelated to the correction of the errors described above, certain
      applicable notes to the condensed consolidated financial statements and
      Management’s Discussion and Analysis of Financial Condition and Results of
      Operations have been added or modified in order to clarify certain disclosures
      herein including:


1.
      Part
      I, Item 1 - Consolidated Financial Statements: Note B[21] - Comprehensive Income
      (Loss) and Accumulated Other Comprehensive Income, Note B[22] - Share Based
      Payments, Note J - Debt Financings, and Note L - Convertible Preferred Stock
      and
      Stockholders’ Equity.


2.Part
      I,
      Item 2 - Management’s Discussion and Analysis of Financial Condition and Results
      of Operations.





Except
      as
      otherwise noted herein, this Amendment No. 1 to Quarterly Report on Form
      10-QSB/A does not reflect events occurring after the August 21, 2006 filing
      of
      our Quarterly Report on Form 10-QSB in any way, except as required to reflect
      the effects of this restatement of our financial statements for the periods
      presented, as deemed necessary in connection with the completion of restated
      financial statements.





The
      remaining Items contained within this Amendment No. 1 to our Quarterly Report
      on
      Form 10-QSB/A consist of all other Items originally contained in our Quarterly
      Report on Form 10-QSB for the quarterly period ended June 30, 2006 though some
      items have been updated to conform to the disclosure contained in our Quarterly
      Report on Form 10-QSB for the period ending September 30, 2006. These changes
      do
      not substantially change the previous disclosure and are being made for the
      purposes of consistency. These remaining Items are largely not amended hereby,
      but are included for the convenience of the reader. In order to preserve the
      nature and character of the disclosures set forth in such Items as originally
      filed, except as expressly noted herein, this report continues to speak as
      of
      the date of the original filing, and we have not updated the disclosures in
      this
      report to speak as of a later date. While this report primarily relates to
      the
      historical periods covered, events may have taken place since the original
      filing that might have been reflected in this report if they had taken place
      prior to the original filing.


3




**TABLE
                OF CONTENTS**PagePART
                I - FINANCIAL INFORMATIONITEM
                1. FINANCIAL STATEMENTS (unaudited)Condensed
                Consolidated Balance Sheets at June 30, 2006 andDecember
                31, 2005Condensed
                Consolidated Statements of Operations for the three and six months
                ended
                June 30, 2006 and 2005Condensed
                Consolidated Statement of Changes in Stockholders Equity for the
                six
                months ended June 30, 2006Condensed
                Consolidated Statements of Cash Flows for the six months endedJune
                30, 2006 and 2005Notes
                to Condensed Consolidated Financial StatementsITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS
                OF OPERATIONS (MD&A)ITEM
                3. CONTROLS AND PROCEDURESPART
                II - OTHER INFORMATIONITEM
                1. LEGAL PROCEEDINGSITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDSITEM
                3. DEFAULTS UPON SENIOR SECURITIESITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM
                5. OTHER INFORMATIONITEM
                6. EXHIBITS





4




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




**June
                30,**
            
            **December
                31,****2006**
            
            **2005****(Restated
                - See Note
                O)**ASSETSCURRENT
                ASSETSCash
                and cash equivalents
            
            $
            7,018
            
            $
            1,194Accounts
                receivable, net allowance for doubtful accounts of $66 and
                $57
            
            
            2,831
            
            
            1,840Inventory
            
            
            852
            
            
            156Prepaid
                expenses and other current assets
            
            
            708
            
            
            277Total
                current assets
            
            
            11,409
            
            
            3,467Property,
                plant and equipment, net
            
            
            8,135
            
            
            7,602Photo
                collection, net
            
            
            1,655
            
            
            1,715Goodwill
            
            
            5,798
            
            
            2,263Contracts
                with photographers, net
            
            
            824
            
            
            929Deferred
                rent receivable
            
            
            553
            
            
            541Intangible
                assets, net
            
            
            9,416
            
            
            3,882Restricted
                cash
            
            
            750
            
            
            ---Other
            
            
            110
            
            
            115Total
                assets
            
            $
            38,650
            
            $
            20,514LIABILITIES
                AND STOCKHOLDERS' EQUITYCURRENT
                LIABILITIESNotes
                payable, unsecured
            
            $
            ---
            
            $
            1,050Accounts
                payable
            
            
            1,717
            
            
            850Accrued
                compensation
            
            
            540
            
            
            154Accrued
                expenses
            
            
            1,008
            
            
            569Royalties
                payable
            
            
            1,356
            
            
            1,180Warrant
                obligation
            
            
            63
            
            
            187Deferred
                revenue
            
            
            237
            
            
            151Other
            
            
            112
            
            
            272Total
                current liabilities
            
            
            5,033
            
            
            4,413LONG-TERM
                LIABILITIESSenior
                secured convertible notes payable, net - related party
            
            
            15,500
            
            
            ---Senior
                secured notes payable, net - related party
            
            
            2,368
            
            
            ---Loan
                payable from sale-leaseback of building, less current
                portion
            
            
            7,425
            
            
            7,438Senior
                secured notes payable, net - related party
            
            
            ---
            
            
            2,316Other
            
            
            119
            
            
            126Total
                liabilities
            
            
            30,445
            
            
            14,293


F-1





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




**June
                30,**
            
            **December
                31,****2006**
            
            **2005****(Restated
                - See Note O)**COMMITMENTS
                AND CONTINGENCIESMINORITY
                INTEREST
            
            
            2,590
            
            
            2,800CONVERTIBLE
                PREFERRED STOCK, $.001 par value; 3,150 shares issued and
                outstanding
            
            
            3,150
            
            
            ---STOCKHOLDERS'
                EQUITYPreferred
                stock; $.001 par value; 100,000 shares authorized; no shares and
                14,480
                shares issued and outstanding at June 30, 2006 and December 31, 2005,
                respectively
            
            
            ---
            
            
            ---Common
                stock; $.001 par value; 100,000,000 shares authorized; 81,735,620
                and
                74,115,012 shares issued; and 78,055,845 and 70,435,237 shares
                outstanding, at June 30, 2006 and December 31, 2005,
                respectively
            
            
            82
            
            
            74Treasury
                stock (at cost, 3,679,775 shares)
            
            
            ---
            
            
            ---Additional
                paid-in capital
            
            
            20,356
            
            
            17,583Deferred
                compensation
            
            
            ---
            
            
            (115
            )Accumulated
                deficit
            
            
            (18,314
            )
            
            (14,185
            )Accumulated
                comprehensive income
            
            
            341
            
            
            64Total
                stockholders' equity
            
            
            2,465
            
            
            3,421Total
                liabilities and stockholders' equity
            
            $
            38,650
            
            $
            20,514The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





F-2








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




**Three
                Months Ended**
            
            
            **Six
                Months Ended****June
                30,**
            
            
            **June
                30,****2006**
            
            
            **2005**
            
            
            **2006**
            
            
            **2005****(Restated
                - See Note O)**
            
            
            
            
            
            **(Restated
                - See Note O)**Revenue
            
            $
            4,511
            
            $
            2,327
            
            $
            7,446
            
            $
            4,639COSTS
                AND EXPENSESCost
                of revenue (excludes related amortization for three months of $383
                and
                $174, six months of $766 and $348)
            
            
            1,701
            
            
            716
            
            
            2,604
            
            
            1,428Selling,
                general and administrative
            
            
            3,819
            
            
            1,954
            
            
            6,624
            
            
            3,520Depreciation
                and amortization
            
            
            830
            
            
            359
            
            
            1,433
            
            
            712TOTAL
                OPERATING EXPENSES
            
            
            6,350
            
            
            3,029
            
            
            10,661
            
            
            5,660OPERATING
                LOSS
            
            
            (1,839
            )
            
            (702
            )
            
            (3,215
            )
            
            (1,021
            )Interest
                expense
            
            
            (447
            )
            
            (332
            )
            
            (800
            )
            
            (729
            )Warrant
                income (expense)
            
            
            174
            
            
            ---
            
            
            (91
            )
            
            ---Other
                income (expense), net
            
            
            18
            
            
            49
            
            
            (23
            )
            
            (217
            )NET
                LOSS
            
            
            (2,094
            )
            
            (985
            )
            
            (4,129
            )
            
            (1,967
            )Disproportionate
                deemed dividends
            
            
            ---
            
            
            ---
            
            
            (157
            )
            
            ---NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS
            
            $
            (2,094
            )
            $
            (985
            )
            $
            (4,286
            )
            $
            (1,967
            )NET
                LOSS ATTRIBUTED TO COMMON STOCKHOLDERS PER SHARE, BASIC AND
                DILUTED
            
            $
            (0.03
            )
            $
            (0.02
            )
            $
            (0.06
            )
            $
            (0.05
            )WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
                DILUTED
            
            
            77,566,527
            
            
            40,112,391
            
            
            74,817,306
            
            
            39,129,773




The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





F-3





**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENT OF CHANGES IN****STOCKHOLDERS'
                EQUITY****(in
                thousands)****(unaudited)**




PREFERRED
                STOCK
            
            COMMON
                STOCK
            
            TREASURY
                STOCK
            
            
            
            
            
            
            
            ACCUMULATEDADDITIONAL
            
            
            
            
            
            OTHERNUMBER
                OF
            
            
            
            NUMBER
                OF
            
            
            
            NUMBER
                OF
            
            
            
            PAID-IN
            
            DEFERRED
            
            ACCUMULATED
            
            COMPREHENSIVESHARES
            
            AMOUNT
            
            SHARES
            
            AMOUNT
            
            SHARES
            
            AMOUNT
            
            CAPITAL
            
            COMPENSATION
            
            DEFICIT
            
            INCOME
            
            TOTAL**(Restated
                See Note O)**
            
            
            
            **(Restated
                See Note O)**Balance
                at December 31, 2005
            
            
            14
            
            $
            --
            
            
            74,115
            
            $
            74
            
            
            (3,680
            )
            $
            ---
            
            $
            17,583
            
            $
            (115
            )
            $
            (14,185
            )
            $
            64
            
            $
            3,421Stock
                options exercised
            
            
            ---
            
            
            ---
            
            
            678
            
            
            1
            
            
            ---
            
            
            ---
            
            
            100
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            101Stock
                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
                based compensation
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            809
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            809Stock
                issuance for brokers’ cost in connection with issuance of Senior Secured
                Convertible Issuance
            
            
            ---
            
            
            ---
            
            
            107
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            62
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            62Warrants
                issued in connection with ArtSelect acquisition
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            375
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            375Issuance
                of common stock upon the conversion of SuperStock seller preferred
                stock
            
            
            ---
            
            
            ---
            
            
            375
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            210
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            210Reversal
                of deferred compensation
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            (115
            )
            
            115
            
            
            ---
            
            
            ---
            
            
            ---Cancellation
                of restricted stock due to executive separation
            
            
            ---
            
            
            ---
            
            
            (62
            )
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---Shares
                payable settlement costs
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            139
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            139Net
                loss
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            (4,129
            )
            
            ---
            
            
            (4,129
            )Foreign
                currency translation adjustment
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            277
            
            
            277Balance
                at June 30, 2006
            
            
            ---
            
            $
            ---
            
            
            81,736
            
            $
            82
            
            
            (3,680
            )
            $
            ---
            
            $
            20,356
            
            $
            ---
            
            $
            (18,314
            )
            $
            341
            
            $
            2,465The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





F-4










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




**FOR
                THE SIX MONTHS ENDED JUNE 30,**
            
            **2006**
            
            **2005****(Restated
                - See Note O)**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (4,129
            )
            $
            (1,967
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            1,433
            
            
            712Amortization
                of finance costs
            
            
            11
            
            
            24Loss
                on disposal of equipment
            
            
            76
            
            
            16Change
                in fair value of warrant obligation
            
            
            137
            
            
            ---Gain
                on exchange of debt for cancelled warrants
            
            
            (46
            )
            
            ---Stock
                option compensation
            
            
            722
            
            
            369Compensation
                from the issuance of restricted stock
            
            
            87
            
            
            ---Deferred
                compensation
            
            
            ---
            
            
            (249
            )Amortization
                of debt discount
            
            
            ---
            
            
            106Loss
                on extinguishment of debt
            
            
            ---
            
            
            371Settlement
                of claim expense paid with common stock
            
            
            139
            
            
            ---Other
            
            
            74
            
            
            20Changes
                in assets and liabilities:Accounts
                receivable
            
            
            (418
            )
            
            (349
            )Prepaid
                expenses and other current assets
            
            
            (483
            )
            
            ---Inventory
            
            
            60
            
            
            (35
            )Accounts
                payable and accrued expenses
            
            
            852
            
            
            (181
            )Deferred
                revenue
            
            
            87
            
            
            ---Foreign
                income tax payable
            
            
            (170
            )
            
            ---Other
            
            
            1
            
            
            (36
            )NET
                CASH USED IN OPERATING
                ACTIVITIES
            
            
            (1,567
            )
            
            (1,199
            )







F-5








**a21,
                Inc. and Subsidiaries****CONDENSED
                CONSOLIDATED STATEMENTS OF CASH FLOW (continued)****($
                in thousands)****(unaudited)****FOR
                  THE SIX MONTHS ENDED JUNE 30,**
            
            **2006**
            
            **2005****(Restated
                - See Note O)**CASH
                FLOWS FROM INVESTING ACTIVITIES:Acquisition
                of ArtSelect, net of cash acquired of $231
            
            
            (4,476
            )
            
            ---Investment
                in property, plant and equipment
            
            
            (284
            )
            
            (261
            )SuperStock
                earn-out
            
            
            (206
            )
            
            ---Investment
                in photo collection
            
            
            (195
            )
            
            (9
            )Restricted
                cash for lease deposit
            
            
            (750
            )
            
            ---Other
            
            
            (9
            )
            
            ---NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (5,920
            )
            
            (270
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from senior secured convertible notes payable - related party,
                net
            
            
            15,285
            
            
            ---Payment
                of senior secured notes payable - related party
            
            
            (2,250
            )
            
            2,250Payment
                of convertible subordinated notes payable
            
            
            ---
            
            
            (1,250
            )Payment
                of unsecured notes payable
            
            
            (1,050
            )
            
            ---Net
                proceeds from the exercise of stock options
            
            
            100
            
            
            ---Net
                proceeds from the exercise of stock warrants
            
            
            1,200
            
            
            ---Payment
                of promissory note payable
            
            
            (33
            )
            
            (33
            )Other
            
            
            37
            
            
            3NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            13,289
            
            
            970EFFECT
                OF EXCHANGE RATES ON CASH AND CASH EQUIVALANTS
            
            
            22
            
            
            96NET
                INCREASE (DECREASE) IN CASH
            
            
            5,824
            
            
            (403
            )CASH
                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
            
            
            1,194
            
            
            717CASH
                AND CASH EQUIVALENTS AT END OF PERIOD
            
            $
            7,018
            
            $
            314





F-6





SUPPLEMENTAL
                DISCLOSURE OF CASH FLOW INFORMATION:Foreign
                income taxes paid
            
            $
            178
            
            $
            ---Interest
                paid
            
            
            635
            
            
            405SUPPLEMENTAL
                DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:Issuance
                of convertible preferred stock as part of ArtSelect
                acquisition
            
            
            3,150
            
            $
            ---Issuance
                of senior secured note payable as part of ArtSelect
                acquisition
            
            
            2,350
            
            
            ---Issuance
                of warrants as part of ArtSelect acquisition
            
            
            375
            
            
            ---Issuance
                of common stock for financing costs
            
            
            62
            
            
            ---Issuance
                of senior convertible debt in exchange for cancellation of
                warrants
            
            
            215
            
            
            ---Debt
                discount recorded for the issuance of warrants in connection with
                unsecured note payable and convertible subordinated notes
                payable
            
            
            ---
            
            
            10Deferred
                compensation
            
            
            ---
            
            
            369Accrued
                purchase price payable
            
            
            85
            
            
            62The
                accompanying notes are an integral part of these Condensed Consolidated
                Financial Statements.





F-7


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(UNAUDITED)**





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








The
      unaudited condensed consolidated financial statements of a21, Inc. (“a21”, “the
      Company”, “we”) 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 June 30, 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 in October 1998, under the name Saratoga
      Holdings I, Inc. In February 2004, we completed the acquisition of all of the
      voting common stock, representing 83% of the outstanding equity, of SuperStock,
      Inc. In October 2005, we completed the acquisition of all of the outstanding
      stock of Ingram Publishing Limited, and in May 2006, we completed the
      acquisition of ArtSelect, Inc. through the merger of a wholly owned subsidiary
      into ArtSelect. On July 31, 2006, we changed our state of incorporation from
      Texas to Delaware (See Note N).





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





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




F-8





**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 June 30, 2006 had an accumulated deficit of $18.3
      million that raise substantial doubt about our ability to continue as a going
      concern. Our independent registered public accounting firm 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.
      We
      will need to raise cash from equity and debt financings to fund any additional
      acquisitions, and may need to raise cash in such manner to fund our operations.
      If we are unable to secure the required funding, we may not be able to implement
      our business plan and may not be able to conduct business as a going concern.
      See Note J describing recent $15.5 million financing. At June 30, 2006, we
      had
      cash of $7.0 million and working capital of $6.4 million.





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, the leveraging
      of owned and licensed image content, 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 of our accounts
      including our primary operating subsidiaries, SuperStock (U.S.), ArtSelect
      (U.S.) (acquired on May 15, 2006), and SuperStock Limited (UK), which includes
      Ingram Publishing (acquired during October 2005). The minority interest in
      the
      consolidated balance sheets at June 30, 2006 and December 31, 2005 represents
      the interest of the holders of preferred shares of SuperStock (“SuperStock
      Seller Preferred”), which are exchangeable into common shares of a21, Inc. All
      significant intercompany balances and transactions have been eliminated.


F-9





[3]
      Revenue recognition:





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





Licensing
      fee revenue is recorded at invoiced amounts except in the case of licensing
      rights through distributors, where revenue is recorded at our share of invoiced
      amounts. Distributors typically earn and retain a percentage of the license
      fee
      according to their contract, and we record the remaining license fee as revenue.
      We also sell subscriptions of certain images for terms ranging from one to
      twelve months. Subscription revenue is recognized over the respective term
      of
      the subscription agreement and, accordingly, $237,000 and $151,000 is recorded
      as deferred revenue as of June 30, 2006 and December 31, 2005,
      respectively.





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





[4]
      Cost
      of revenue:





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





[5]
      Use
      of estimates:





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting period. Actual results could differ 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.





[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.


F-10





[7]
      Cash
      and cash equivalents:





We
      consider all highly liquid debt instruments purchased with an original maturity
      of three months or less to be cash equivalents. At June 30, 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. Cash as of June 30, 2006 and December
      31,
      2005 excludes the certificate of deposits pledged as security deposit. This
      consists of restricted cash funded by us to secure a letter of credit in the
      amount of $750,000 at June 30, 2006 and $690,000 pledged by stockholders at
      December 31, 2005.





[8]
      Accounts Receivable and Allowance for Doubtful Accounts:





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





[9]
      Inventories:





Inventories
      are valued at the lower of cost or market and are determined on the first-in,
      first-out (FIFO) basis. For ArtSelect, inventories include raw materials and
      finished goods. Raw materials include prints, mats, frames, molding, and
      packaging material. Finished goods consist of preframed art. For SuperStock,
      inventories include the costs of compact disk products produced for resale
      categorized as finished goods. The requirements for any provisions of estimated
      losses for obsolete, excess, or slow-moving inventories are reviewed
      periodically. At June 30, 2006, our reserve for inventories was $104,000
      including a provision of slow moving SuperStock compact disk products of $89,000
      recorded during the three months ended June 30, 2006, classified as a cost
      of
      sales in the consolidated statement of operations.





[10]
      Deferred Rent Receivable





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





[11]
      Defined Contribution Employee Benefit Plan





We
      maintain defined contribution retirement plans pursuant to Section 401(k) of
      the
      Internal Revenue Code (the Plan), in which U.S. employees at least 21 years
      of
      age may participate after completing six months of service. Eligible employees
      may contribute up to a certain percentage of their annual compensation to the
      Plan, subject to the annual IRS limitations. The Company may match employee
      contributions on a discretionary basis. No such discretionary matching
      contributions were made in 2006 or 2005.


F-11





[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 statements of
      operations.





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





Land
      and
      building were sold and leased back in a SuperStock transaction accounted for
      as
      a financing transaction. The building is being depreciated over the twenty-year
      term of the related lease. Property and equipment consisting of furniture,
      fixtures and equipment, photography and computer equipment, 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 5 years.





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





[14]
      Photo collection and contracts with photographers:





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




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


F-12





[15]
      Goodwill and intangible assets:





We
      last
      performed our annual goodwill impairment test as of October 1, 2005 and
      determined there was no impairment as of that date.


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. (See Note F)





[16]
      Long-lived assets:





We
      evaluate our long-lived assets in accordance with SFAS No. 144, "Accounting
      for
      the Impairment or Disposal of Long-Lived Assets," 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 and six months ended
      June
      30, 2006 and 2005.





[17]
      Other income (expense):




**($
                in thousands)**
            
            **Three
                months ended June 30,**
            
            **Six
                months ended June 30,****2006**
            
            **2005**
            
            **2006**
            
            **2005**Currency
                transaction (loss) gain
            
            $
            83
            
            $
            52
            
            $
            95
            
            $
            105Loss
                on extinguishment of debt
            
            
            ---
            
            
            ---
            
            
            ---
            
            
            (371
            )Expense
                from foreign sales tax credit
            
            
            (44
            )
            
            ---
            
            
            (71
            )
            
            ---Other
            
            
            (21
            )
            
            (3
            )
            
            (47
            )
            
            49$
            18
            
            $
            49
            
            $
            (23
            )
            $
            (217
            )





F-13





[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 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 not deductible.






[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 and six months ended June 30, 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 15,473,193 and 33,532,590 outstanding stock
      options and warrants as of June 30, 2006 and 2005, respectively, would have
      been
      antidilutive.





For
      the
      three and six months ended June 30, 2006, 4,625,139 shares of common stock
      issuable upon the conversion of the SuperStock Seller Preferred have been
      excluded. For the three and six months ended June 30, 2005, 5,000,151 shares
      of
      common stock issuable upon the conversion of the SuperStock Seller Preferred
      have been excluded.





[20]
      Reclassifications:





Certain
      reclassifications have been made to the 2005 period financial statements to
      conform to the 2006 period presentation.





[21]
      Comprehensive Income (Loss) and Accumulated Other 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 a component of stockholders’ equity.





Comprehensive
      income (loss) was as follows:








($
                in thousands)
            
            Six
                Months Ended June 30,2006
            
            2005Net
                loss
            
            $
            (4,129
            )
            $
            (1,967
            )Foreign
                currency translation adjustments
            
            
            277
            
            
            96Total
                comprehensive loss
            
            $
            (3,852
            )
            $
            (1,871
            )





F-14





[22]
      Share based payments:





We
      have a
      2005 Stock Option Plan and a 2002 Stock Option Plan, which are described in
      our
      consolidated financial statements for the year ended December 31, 2005
      filed on Form 10-KSB/A. Prior to January 1, 2006 we accounted for our
      stock-based compensation plans under the recognition and measurement provisions
      of APB Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”),
      and related Interpretations, as permitted by FASB Statement No. 123,
      Accounting for Stock-Based Compensation (“SFAS 123”). Accordingly,
      no compensation cost was recognized for options granted to employees and
      directors at exercise prices, which equaled or exceeded the market price of
      our
      Common Stock at the date of grant. In addition, for certain options with
      modifications of terms which resulted in variable accounting, compensation
      cost
      was recognized by marking the option’s value to market at each reporting
      period.  Stock-based
      employee compensation cost (benefit) was recognized as a component of
      selling, general and administrative expense in the Statement of Operations.
      For
      the three and six months ended June 30, 2005, there was no stock-based
      compensation expensed for employees.





Effective
      January 1, 2006, we adopted the fair value recognition provisions of SFAS
      123(R), using the modified-prospective transition method. Under that transition
      method, employee compensation cost recognized in 2006 includes:
      (i) compensation cost for all share-based payments granted prior to, but
      not yet vested as of January 1, 2006, based on the grant date fair value
      estimated in accordance with the original provisions of SFAS 123 and
      (ii) compensation cost for all share-based payments granted subsequent to
      January 1, 2006, based on the grant date fair value estimated in accordance
      with the provisions of SFAS 123(R). Results for prior periods have not been
      restated.


F-15





As
      a
      result of adopting SFAS 123(R) on January 1, 2006, our net loss for the
      three and six months ended June 30, 2006, is approximately $121,000 and
      $722,000 higher, respectively, than if we had continued to account for
      share-based compensation under APB 25. The adoption of this standard had no
      impact on our provision for income taxes due to the valuation allowance for
      our
      U.S. deferred tax assets due to our lack of operating history. Total
      compensation cost for share based payment arrangements recognized for the three
      and six month periods ended June 30, 2006 was $139,000 and $809,000,
      respectively. SFAS 123(R) requires the cash flows resulting from the tax
      benefits resulting from tax deductions in excess of the compensation cost
      recognized for those options (excess tax benefits) to be classified as financing
      cash flows.





The
      following table illustrates the effect on net loss and loss per share if we
      had
      applied the fair value recognition provisions of SFAS 123 to options granted
      to
      employees under our stock option plans during the three and six months ended
      June 30, 2005 (unaudited):





**$
                in thousands, except per share amounts**
            
            **Three
                months ended June 30, 2005**
            
            **Six
                months ended June 30, 2005**Net
                loss
            
            $
            (985
            )
            $
            (1,967
            )Stock
                based employee compensation included in net loss
            
            
            ---
            
            
            ---Less:
                Stock-based employee compensation using the fair value
                method
            
            
            (39
            )
            
            (61
            )Pro
                forma net loss
            
            $
            (1,024
            )
            $
            (2,028
            )Loss
                per share - basic and dilutedAs
                reported
            
            $
            (0.02
            )
            $
            (0.05
            )Pro
                forma
            
            $
            (0.03
            )
            $
            (0.05
            )





The
      above
      pro forma disclosures are provided for 2005 because employee stock options
      were
      not accounted for using the fair-value method during that period. No pro forma
      disclosure has been presented for the three and six months ended June 30,
      2006 as share-based payments to employees have been accounted for under SFAS
      123(R)’s fair-value method for such periods. The
      fair
      value of each option is measured at the grant date using a Black-Scholes
      option-pricing model, which requires the use of a number of assumptions
      including volatility, risk-free interest rate, and expected dividends. The
      following weighted average assumptions were used for stock options granted
      during the three and six months ended June 30, 2005: no annual dividends;
      expected volatility of 80%; risk free interest rate of 3.00%, and expected
      life
      of 5 years.


F-16


As
      a
      result of the February 9, 2006 stockholder approval of our 2005 Stock Plan,
      although the exercise price of $0.30 was greater than the prevailing market
      price of the underlying common stock when originally granted during 2005, for
      GAAP purposes the grant date used to measure fair value of 4,108,060 stock
      options valued at $1.1 million was the February 9, 2006 stockholder approval
      date, at which time the market price of the underlying common stock was $0.37. The
      weighted-average grant-date fair value of these option grants was $0.28 per
      share. The weighted average fair value of all options granted during the six
      months ended June 30, 2006 was $0.32 per share. The fair value of options
      granted is estimated using the Black-Scholes option pricing model. The following
      assumptions were
      used for stock options granted during the three and six months ended June 30,
      2006, respectively:  no annual dividends; expected volatility of 117%; risk
      free interest rate ranging from 3.50% to 4.00%; expected life ranging from
      3 to
      5 years. Expected
      volatility is based primarily on historical volatility. Historical volatility
      was computed using daily pricing observations for the most recent two years.
      We
      believe this method produces an estimate that is representative of our
      expectations of the future volatility over the expected term of our options.
      We
      currently have no reason to believe future volatility over the expected life
      of
      these options is likely to differ materially from historical volatility. The
      weighted-average expected life is based upon share option exercises, pre and
      post vesting terminations and share option term expiration. The risk-free
      interest rate is based on the U.S. treasury security rate estimated for the
      expected life of the options at the date of grant.





During
      May and June 2006, we modified and accelerated the vesting for options to
      purchase 200,000 shares of our common stock held by certain former executives
      as
      part of their separation agreements with the Company. The fair value of the
      modifications of $70,000 has been recognized as incremental compensation expense
      during the six months ended June 30, 2006. This amount is included in the
      $809,000 of total compensation cost discussed above.





SFAS
      123(R) requires the estimation of forfeitures when recognizing compensation
      expense and that this estimate of forfeitures be adjusted over the requisite
      service period should actual forfeitures differ from such estimates. Changes
      in
      estimated forfeitures are recognized through a cumulative adjustment, which
      is
      recognized in the period of change and which impacts the amount of unamortized
      compensation expense to be recognized in future periods. We have estimated
      our
      forfeitures to be 5% based primarily on our historical forfeiture
      rate.





Additional
      information relative to our employee options outstanding at June 30, 2006
      is summarized as follows (unaudited):





The
      following summarizes our stock option activity for the six months ended June
      30,
      2006:





**Stock
                Options****Shares**
            
            **Weighted
                Average Exercise Price**Balance,
                December 31, 2005
            
            
            4,547,623
            
            $
            0.32Granted
            
            
            4,783,060
            
            $
            0.34Exercised
            
            
            (802,850
            )
            $
            0.18Forfeited
            
            
            (424,772
            )
            $
            0.30Cancelled
            
            
            (66,668
            )
            $
            0.15Balance,
                June 30, 2006
            
            
            8,036,393
            
            $
            0.35Exercisable,
                December 31, 2005
            
            
            4,547,623
            
            $
            0.32Exercisable,
                June 30, 2006
            
            
            6,314,811
            
            $
            0.33





F-17


The
      options to acquire 802,850 common shares exercised include certain options
      exercised on a cashless basis, resulting in the issuance of 678,447common
      shares.





The
      following table summarizes information about stock options outstanding at June
      30, 2006:





**Exercise
                Prices**
            
            **Number
                Outstanding**
            
            **Weighted
                Average Remaining Contractual Life**
            
            **Number
                Exercisable**$0.15
            
            54,167
            
            1
                year
            
            54,167$0.25
            
            1,256,500
            
            1
                year
            
            1,256,500$0.30
            
            5,485,726
            
            3
1⁄2
                years
            
            4,562,894$0.34
            
            165,000
            
            4
                1/2 years
            
            41,250$0.46
            
            400,000
            
            5
                years$0.50
            
            160,000
            
            1
                year
            
            160,000$0.83
            
            275,000
            
            5
                years
            
            ---$1.00
            
            120,000
            
            1
                year
            
            120,000$1.50
            
            120,000
            
            1
                year
            
            120,0008,036,393
            
            3
                years
            
            6,314,811





The
      aggregate intrinsic value of options outstanding and exercisable at June 30,
      2006 was $343,000 and $306,000, respectively. This amount represents the total
      pre-tax intrinsic value (the difference between our closing stock price on
      the
      last trading day of the second quarter of 2006 and the exercise price,
      multiplied by the number of in-the-money options) that would have been received
      by the option holders had all option holders exercised their options on
      June 30, 2006. The total intrinsic value of options exercised during the
      six months ended June 30, 2006 was $356,000.





Prior
      to
      January 1, 2006 the Company had granted 3,190,000 non-plan restricted shares
      to
      certain members of management that included 838,750 shares not fully vested
      as
      of that date. During the six months ended June 30, 2006, 671,250 of such
      shares vested and the fair value of the vested shares of $18,000 and $87,000
      has
      been recognized as compensation expense during the three and six months ended
      June 30, 2006, respectively. The following is a summary of the status of
      and changes to the Company’s non-vested shares as of and for the six months
      ended June 30, 2006:





**Non-vested**
              **Shares**
            
            **Weighted
                Average Grant-Date Fair Value**Balance,
                December 31, 2005
            
            
            838,750
            
            $
            0.14Granted
            
            
            ---
            
            $
            ---Vested
            
            
            (671,250
            )
            $
            0.13Forfeited
            
            
            (62,500
            )
            $
            0.12Balance,
                June 30, 2006
            
            
            105,000
            
            $
            0.19





F-18





At
      June
      30, 2006, there was $732,000 of total unrecognized compensation cost related
      to
      non-vested share based compensation arrangements, including options and
      restricted stock grants. That cost is expected to be recognized over a
      weighted-average period of 15 months. The total fair value of options and
      restricted stock grants that vested during the six months ended June 30, 2006
      was $809,000.





[23]
      Advertising





Advertising
      expenses were $218,000 and $252,000 for the three months ended June 30, 2006
      and
      2005, respectively. Advertising expenses of $393,000 and $354,000 were expensed
      for the six months ended June 30, 2006 and 2005, respectively. Advertising
      costs
      are charged to expense as incurred.





**NOTE
      C - ACQUISITIONS**


****


On
      May
      16, 2006, we acquired ArtSelect, Inc. ArtSelect supplies home and office framed
      and unframed wall décor to retailers, catalogers, membership organizations, and
      consumers through both online and traditional retail and wholesale distribution
      channels.





In
      consideration, the stockholders of ArtSelect received $4.5 million of cash,
      $2.35 million in secured notes, and $3.15 million of a21 convertible preferred
      stock valued at $3.15 million. The selling stockholders of ArtSelect also
      received warrants to purchase 750,000 shares of a21’s common stock at $1.00 per
      share valued at $0.50 each or $375,000, exercisable for common stock. We have
      also incurred approximately $205,000 in related transaction costs, which has
      been recorded as purchase capital. Final adjustments will be made to the
      purchase price after finalization of ArtSelect’s closing balance sheet expected
      by December 31, 2006





**($
                in thousands)**Cash
            
            $
            4,500Convertible
                preferred stock
            
            
            3,150Seller
                secured notes
            
            
            2,350Warrants
            
            
            375Capitalized
                transaction costs
            
            
            205$
            10,580





The
      seller notes bear interest at 6% per year and mature on the earlier to occur
      of
      a change of control or May 15, 2009. The first year of interest on the notes
      will be accrued and added to the principal of the notes. After the first year,
      interest will be payable quarterly, in arrears. The notes are secured by
      substantially all the assets of ArtSelect (provided that, with respect to up
      to
      $3.0 million of the assets of ArtSelect, the notes are junior to the
      previously issued $15.5 million Senior Secured Notes described in Note J).





The
      convertible preferred stock fair value was determined using the as-if converted
      value $3.15 million. The convertible preferred stock has certain liquidation
      preferences and, pursuant to an exchange agreement entered into with each of
      the
      holders of preferred stock, after a21 increases the number of its authorized
      shares of common stock, is exchangeable for a21’s common stock at a minimum
      price per share of $0.75, subject to adjustment pursuant to weighted average
      anti-dilution provisions contained in the transaction documents.





On
      May
      16, 2006, the holders of convertible preferred stock elected to exchange all
      of
      the convertible preferred stock for an aggregate of 4,200,000 shares of a21’s
      common stock at a the minimum conversion price of $0.75 per share. Pursuant
      to
      the terms of the exchange agreement with such holders, the exchange stock was
      issued by a21 in August 2006 after we reincorporated in Delaware, pursuant
      to
      which a21 increased the number of authorized shares of its common stock in
      part
      to accommodate such exchange.





F-19


The
      Warrants expire four years from the closing date of the acquisition. The fair
      value of the warrants has been determined using a Black-Scholes model by
      applying the following assumptions: risk-free interest rate, 4.9%; volatility,
      129%; underlying stock price, $0.64; exercise price, $1.00; term, 4
      years.





The
      aggregate purchase price was approximately $10.6 million. The following
      summarizes the preliminary fair values assigned to the assets acquired and
      liabilities assumed at the date of acquisition, which are subject to adjustment
      to reflect the final purchase price allocation.





($
                in thousands)Tangible
                assets
            
            $
            2,587Specifically
                identifiable intangible assets*
            
            
            6,000Goodwill
            
            
            3,258Liabilities
                assumed
            
            
            (1,265
            )$
            10,580





*
      -
      preliminary estimate; subject to completion of formal valuation by independent
      expert.





**PROFORMA
      EFFECT OF ACQUISITIONS**





As
      previously disclosed in our Form 10-KSB/A filed for the year ended December
      31,
      2005, in October 2005, the Company’s UK-based SuperStock Limited subsidiary
      completed the acquisition of all of the outstanding stock of Ingram Publishing
      Limited (“Ingram”) from its stockholders.





The
      results of operations of ArtSelect and Ingram have been included in the
      consolidated financial statements of the Company since May 16, 2006 and October
      12, 2005, respectively. The unaudited proforma information below presents the
      results of operations as if the acquisitions of ArtSelect and Ingram had
      occurred on the first day of the periods presented. The unaudited proforma
      information is presented for informational purposes only and is not intended
      to
      represent or be indicative of the results of operations of the combined
      companies had these events occurred at the beginning of the period presented
      nor
      is it indicative of future results:




($
                in thousands, except per share amounts)
            
            Six
                months
              ended
                June 30,2006
            
            2005Total
                revenue
            
            $
            12,040
            
            $
            12,305Net
                loss
            
            
            (4,277
            )
            
            (1,837
            )Net
                loss per share, basic and diluted
            
            $
            (0.06
            )
            $
            (0.05
            )Proforma
                weighted average number of common shares outstanding, basic and
                diluted
            
            
            74,817,306
            
            
            39,129,773








F-20





**NOTE
      D - INVENTORIES**





The
      major
      components of inventories are summarized as follows:





**($
                in thousands)**
            
            **June
                30, 2006**
            
            **December
                31, 2005**Framed
                art materials
            
            
            575
            
            
            ---Framed
                art finished product
            
            
            186
            
            
            ---Compact
                disk product
            
            
            91
            
            
            156$
            852
            
            $
            156








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





Property,
      plant, and equipment are summarized as follows:





**($
                in thousands)**
            
            **June
                30, 2006**
            
            **December
                31, 2005**Land
                and building
            
            
            7,768
            
            
            7,768Office
                equipment and furnishings
            
            
            652
            
            
            375Technology
                equipment
            
            
            467
            
            
            430Software
            
            
            685
            
            
            147Less:
                Accumulated depreciation
            
            
            (1,437
            )
            
            (1,118
            )$
            8,135
            
            $
            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 $187,000 and $166,000 for the three months ended June 30, 2006
      and
      2005, respectively . Depreciation
      expense was $327,000 and $334,000 for the six months ended June 30, 2006 and
      2005, respectively .








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





Goodwill
      is comprised of $3.3 million of goodwill associated with the acquisition of
      ArtSelect, $1.3 million of goodwill associated with the acquisition of
      SuperStock, and $1.3 million of goodwill associated with the acquisition of
      Ingram. Superstock and Ingram are both included in the “Superstock” segment in
      Note I below.





**($
                in thousands)**Goodwill
                at December 31, 2005
            
            $
            2,263SuperStock
                earnout
            
            
            136Cumulative
                foreign currency
              translation
                of Ingram goodwill
            
            
            141ArtSelect
                goodwill
            
            
            3,258Goodwill
                at June 30, 2006
            
            $
            5,798





F-21





Identifiable
      intangible assets, net of amortization at June 30, 2006 are as
      follows:





**($
                in thousands)**
            
            **Cost**
            
            **Accumulated**
              **Amortization**
            
            **Foreign
                Currency Translation**
            
            **Net**
            
            **Average
                Useful Life (in months)**SuperStock
                non-compete covenants
            
            $
            116
            
            $
            (68
            )
            $
            ---
            
            $
            48
            
            
            48Ingram
                license agreements
            
            
            2,440
            
            
            (366
            )
            
            123
            
            
            2,197
            
            
            60Ingram
                non-compete agreements
            
            
            790
            
            
            (198
            )
            
            35
            
            
            627
            
            
            36Ingram
                customer relationships
            
            
            420
            
            
            (105
            )
            
            19
            
            
            334
            
            
            36Ingram
                distribution agreements
            
            
            270
            
            
            (68
            )
            
            12
            
            
            214
            
            
            36Ingram
                trademark
            
            
            220
            
            
            (82
            )
            
            8
            
            
            146
            
            
            24ArtSelect
                intangible assets*
            
            
            6,000
            
            
            (150
            )
            
            ---
            
            
            5,850
            
            
            60Intangible
                assets
            
            $
            10,256
            
            $
            (1,037
            )
            $
            197
            
            $
            9,416





*
      -
      preliminary estimate; completion of formal valuation by independent expert
      and
      any purchase accounting adjustments are expected by December 31, 2006. We
      estimate the most significant ArtSelect intangible asset to be customer
      relationships.





Amortization
      expense during the three months ended June 30, 2006 and 2005 totaled $431,000
      and $7,000, respectively. Amortization expense during the six months ended
      June
      30, 2006 and 2005 totaled $711,000 and $15,000, respectively.





Approximate
      remaining annual amortization expense is as follows for each of the following
      years: 2006: $1.2 million, 2007: $2.3 million, 2008: $2.1 million, 2009: $1.7
      million, and 2010: $1.6 million.





**($
                in thousands)**Intangible
                assets, net at December 31, 2005
            
            $
            3,882Cumulative
                foreign currency translation
            
            
            245ArtSelect
                intangible assets
            
            
            6,000Amortization
                expense
            
            
            (711
            )Intangible
                assets, net at June 30, 2006
            
            $
            9,416








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





The
      photo
      collection as of June 30, 2006 and December 31, 2005 was $2.8 million and $2.6
      million, respectively. The book value of the photo collection, net of
      accumulated amortization was $1.7 million at June 30, 2006 and December 31,
      2005, respectively. Amortization expense was $131,000 and $124,000 for the
      three
      months ended June 30, 2006 and 2005, respectively. Amortization expense was
      $255,000 and $246,000 for the six months ended June 30, 2006 and 2005,
      respectively. Approximate remaining annual amortization expense is as follows
      for each of the following years: 2006: $266,000, 2007: $542,000, 2008: $148,000,
      2009: $68,000, and 2010: $39,000.





Contracts
      with photographers as of June 30, 2006 and December 31, 2005, was $1.3 million.
      The book value of contracts with photographers, net of accumulated amortization
      was $824,000 and $929,000 as of June 30, 2006 and December 31, 2005,
      respectively. Amortization expense was $53,000 and $52,000 for the three months
      ended June 30, 2006 and 2005, respectively. Amortization expense was $105,000
      and $102,000 for the six months ended June 30, 2006 and 2005, respectively.
      Approximate remaining annual amortization expense is as follows for each of
      the
      following years: 2006: $104,000, 2007: $208,000, 2008: $169,000, 2009: $124,000,
      and 2010: $61,000.


F-22





**NOTE
      H - MINORITY INTEREST**





Minority
      interest represents 1,541,713 shares of SuperStock Seller Preferred held by
      the
      former owners of SuperStock at June 30, 2006, which is exchangeable for
      4,625,139 shares of a21’s common stock. The SuperStock Seller Preferred has no
      voting rights, pays no dividend, and, except for exchange rights into common
      stock, it has no other special rights except liquidation. In liquidation, it
      is
      senior to the common stock of SuperStock and has distribution rights to the
      greater of $4.0 million or 16% of the total liquidation distributions after
      creditors. The minority interest is valued as if it had been exchanged into
      a21’s common stock at the closing price on the day of the
      acquisition.





On
      June
      30, 2006, we issued 375,012 shares of a21 common stock upon the conversion
      of
      125,004 shares of the preferred stock of SuperStock, Inc.





Subsequent
      to June 30, 2006, on July 20, 2006, we issued 600,000 shares of a21 common
      stock
      upon the conversion of 200,000 shares of the preferred stock of SuperStock,
      Inc.








**NOTE
      I - OPERATING SEGMENTS**





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





80%
      and
      75% of our total revenues were based domestically in the U.S. for the three
      and
      six months ended June 30, 2006, respectively. 85% and 71% of our total assets
      were based domestically in the U.S. as of June 30, 2006 and December 31, 2005,
      respectively.





The
      following table presents information about our segment activity as of June
      30,
      2006 and 2005, and for the three and six months then ended.




**(**$
                in thousands)**Three
                months**
              **June
                30, 2006**
            
            
            **Corporate**
            
            
            **SuperStock**
            
            
            **ArtSelect**
            
            
            **Total**Revenue
            
            $
            ---
            
            $
            3,023
            
            $
            1,488
            
            $
            4,511Segment
                operating loss
            
            
            (973
            )
            
            (801
            )
            
            (65
            )
            
            (1,839
            )Segment
                total assets
            
            
            498
            
            
            26,696
            
            
            11,456
            
            
            38,650Segment
                long-lived assets
            
            $
            ---
            
            
            16,091
            
            
            9,737
            
            
            25,828







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





Prior
      to
      the ArtSelect acquisition, we had operated domestically and internationally.
      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 June 30, 2005 and for the three and six months then
      ended.




**Three
                months**
              **June
                30, 2005**
            
            
            **Domestic**
            
            
            **International**
            
            
            **Total**Revenue
            
            $
            1,977
            
            $
            350
            
            $
            2,327Segment
                operating loss
            
            
            (948
            )
            
            (37
            )
            
            (985
            )Segment
                total assets
            
            
            15,925
            
            
            428
            
            
            16,353










**Six
                months**
              **June
                30, 2005**
            
            
            **Domestic**
            
            
            **International**
            
            
            **Total**Revenue
            
            $
            3,944
            
            $
            695
            
            $
            4,639Segment
                operating loss
            
            
            (1,923
            )
            
            (44
            )
            
            (1,967
            )





The
      domestic segment information for the three and six months ended June 30, 2005,
      respectively, includes $417,000 and $900,000 of revenue and $292,000 of accounts
      receivable attributable to foreign distributors that are SuperStock customers.
      The international segment information reflects the operation of foreign
      subsidiaries.


F-23


**NOTE
      J - DEBT FINANCINGS**





**$15.5
      Million Senior Secured Convertible Notes**




During
      April 2006, we entered into a securities purchase agreement (“Purchase
      Agreement”) with certain purchasers and Queequeg Partners, LP, as agent
      (“Agent”), whereby we issued $15.5 million of 5% Senior Secured Convertible
      Notes (“Senior Convertible Notes”).We received net proceeds of $11.7 million in
      cash, after the repayment of certain outstanding debt of $3.3 million, exchange
      of Notes totaling $215,000 to retire warrants to purchase 637,500 shares of
      a21’s common stock, repayment of total interest due of $216,000, and the payment
      of a finder’s fee of $100,000. Queequeg Partners L.P. and Queequeg, Ltd. (each
      of which are affiliated with Ahab Capital Management, Inc., which was a 10%
      beneficial owner of a21’s common stock prior to April 27, 2006) (collectively
“Ahab”), and StarVest Partners, LP (“StarVest”), which was a 10% beneficial
      owner of a21’s common stock prior to April 27, 2006, purchased a portion of the
      Notes sold in this transaction. As part of this transaction, we released
      $690,000 of certificate of deposits (“CDs”), which had been pledged by Ahab to
      secure the letter of credit issued by SuperStock in connection with its capital
      lease for our facility in Jacksonville, Florida and replaced the deposit with
      new CDs from the net proceeds of the financing.




The
      Senior Convertible Notes are secured by substantially all of our assets. They
      are convertible into 23,846,154 of a21’s common stock at a minimum conversion
      price of $0.65 per share, subject to adjustment as provided in the Senior
      Convertible Notes after we increase the number of authorized shares of our
      common stock. In addition, the conversion price of the Senior Convertible Notes
      may be adjusted based on a weighted average anti-dilution formula in the event
      of issuances of a21’s common stock at a price per share below $0.65. The minimum
      conversion price is set at $0.50 per share on a diluted basis. The interest
      on
      the Senior Convertible Notes is payable quarterly in arrears, and the principal
      will be due and payable on March 31, 2011. If the 45-day volume weighted average
      price of a21’s common stock equals or exceeds $1.00 per share, the Senior
      Convertible Notes will automatically be converted into a21’s common stock under
      certain conditions.




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


F-24




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




We also
      entered into a Registration Rights Agreement dated April 27, 2006, between
      a21
      and the Agent, on its own behalf and on behalf of the holders of the Senior
      Convertible Notes. Pursuant to the Registration Rights Agreement, if the SEC
      has
      not declared effective a registration statement for the sale of the underlying
      shares of a21’s common stock by January 22, 2007, we will be obligated to pay
      the holder of the Senior Convertible Notes liquidated damages as provided in
      the
      Registration Rights Agreement up to a
      maximum of 24% of the proceeds of the Senior Convertible Notes.





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





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




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


F-25




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





**Senior
      Secured Notes - ArtSelect Sellers**





In
      partial consideration for the sale of ArtSelect to a21, the stockholders of
      ArtSelect received $2.35 million in secured notes. The seller notes bear
      interest at 6% per year and mature on the earlier to occur of a change of
      control or May 15, 2009. The first year of interest on the notes will be accrued
      and added to the principal of the notes. After the first year, interest will
      be
      payable quarterly, in arrears. The notes are secured by substantially all the
      assets of ArtSelect (provided that, with respect to up to $3.0 million of the
      assets of ArtSelect, the notes are junior to the previously issued $15.5
      million Senior Notes). The $2.4 million balance, including accrued interest,
      recorded on our condensed consolidated balance sheet at June 30, 2006 is
      included in the caption “Secured notes payable, net- related
      party”.







**Warrant
      Liability**





Pursuant
      to the provisions of EITF 00-19, we recorded the value of certain warrants
      as a
      current liability, with subsequent changes in fair value to be reflected in
      the
      consolidated statement of operations. The classification of the warrants was
      determined based upon the terms of the warrants relative to respective
      registration rights agreement. As of June 30, 2006 and December 31, 2005, the
      warrants were valued at $63,000 and $187,000, respectively. The change in
      valuation for the six months ended June 30, 2006 was an expense of $137,000.
      This expense was offset by the $46,000 of income resulting from the cancellation
      of warrants valued at $261,000 exchanged for Senior Convertible Notes of
      $215,000, as described above, resulting in non-operating warrant income
      (expense) of $174,000 and ($91,000) for the three and six months ended June
      30,
      2006.








**NOTE
      K - LOAN PAYABLE ON BUILDING**





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





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





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


**($
                in thousands)**2006
            
            $
            122007
            
            
            352008
            
            
            552009
            
            
            802010
            
            
            110Thereafter
            
            
            7,1587,450Less:
                Current Portion
            
            
            (25
            )Long
                Term Portion
            
            $
            7,425





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





**NOTE
      L - CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY**





[1]
      Common and Preferred stock (See Note N):





At
      June
      30, 2006 we were authorized to issue 100,000 shares of its $.001 par value
      preferred stock at face value $100 per share, which has the rights, preferences,
      and privileges as determined by our Board of Directors. See
      Note
      N describing our reincorporation from Texas to Delaware and the subsequent
      increase in our authorized common and preferred stock.





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 one of a21’s significant
      stockholders. 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 was 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 of Ingram also 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 June 30, 2006 and December 31, 2005,
      there were none and 14,480 shares of preferred stock issued and outstanding,
      respectively.





In
      partial consideration for the sale of ArtSelect to a21, the stockholders of
      ArtSelect received 10,000 shares of a21 convertible preferred stock valued
      at
      $3.15 million, determined using the as-if converted value. On May 16, 2006,
      the
      holders of convertible preferred stock elected to exchange all of the
      convertible preferred stock for an aggregate of 4,200,000 shares of a21’s common
      stock at a per share price of $0.75. Pursuant to the terms of the exchange
      agreement with such holders, the exchange stock is issuable by a21 after the
      Company reincorporates in Delaware, and, in connection therewith, increases
      the
      number of authorized shares of its common stock, in part, to accommodate such
      exchange. The trading price of a21’s common stock was $.83 at the closing date
      of the ArtSelect acquisition, which was the commitment date of the convertible
      preferred stock, compared to the conversion price of $0.75 per share, resulting
      in a contingent beneficial conversion value of $336,000 on the May 16, 2006
      acquisition date. The conversion is contingent on the increase in authorized
      shares. Once this occurs, we will record a deemed dividend of $336,000.


F-26





On
      June
      30, 2006, we issued 375,012 shares of a21 common stock upon the conversion
      of
      125,004 shares of SuperStock Seller Preferred with a respective adjustment
      to
      equity of $210,000 representing the allocable, original fair value of the
      SuperStock Seller Preferred as if it had been exchanged into a21’s common stock
      at the closing price on the day of the acquisition. On July 20, 2006, we issued
      600,000 shares of a21 common stock upon the conversion of 200,000 shares of
      the
      SuperStock Seller Preferred with a respective adjustment to equity of $336,000
      representing the allocable, original fair value of the SuperStock Seller
      Preferred as if it had been exchanged into a21’s common stock at the closing
      price on the day of acquisition.





In
      connection with the July 2006 settlement of certain claims made by a stockholder
      and three of his affiliates against the Company, we will issue 450,000 shares
      of
      our common stock in exchange for a general release of all claims such persons
      may have had against us. We have recognized the related fair value of such
      shares of $139,000 as settlement expense included in general operating expense
      in our Statement of Operations, with a corresponding increase to additional
      paid
      in capital during the three and six months ended June 30, 2006. The fair value
      was determined based upon the prevailing common stock trading market price
      per
      share at the time the agreement was reached.





[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 common stock warrants.





In
      connection with the warrants canceled as part of the consideration paid to
      us in
      the $15.5 Million Senior Secured Convertible Note financing, a net adjustment
      to
      additional paid in capital of $56,000 was made to reflect the change in warrant
      liability resulting from the cancellation of such warrants.





In
      partial consideration of the acquisition of ArtSelect by a21, the stockholders
      of ArtSelect received warrants to purchase 750,000 shares of a21’s common stock
      at $1.00 per share valued at $0.50 each or $375,000, exercisable for common
      stock.





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 2005 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 2005 Plan provides for the grant of
      options, stock appreciation rights (“SARs”), performance share awards,
      restricted stock and unrestricted stock of up to an aggregate of 6,000,000
      shares of common stock to officers, employees and independent contractors of
      ours or our affiliates. If any award expires, is cancelled, or terminates
      unexercised or is forfeited, the number of shares subject thereto is again
      available for grant under the 2005 Plan. Stock options issued under the 2005
      Plan typically have a five-year term and vest prorata over periods generally
      ranging from one to three years except as otherwise provided in accordance
      with
      specific agreements.  The
      exercise price typically is no less than the fair market value of a share of
      a21’s common stock on the date of grant of the options. See Note B[22]. As of
      June 30, 2006, there were shares available for grant under the 2005 Plan of
      1,620,292.


F-27





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 June 30, 2006 and December 31, 2005 there were 496,264 shares
      available for grant under the 2002 Plan.





[3]
      Deferred Compensation:





Grants
      of
      a21 restricted common stock made prior to January 1, 2006 to certain directors
      and officers totaling 3,190,000 shares, valued at fair value per the respective
      market trading prices at the time of the grants, resulted in unamortized
      deferred compensation of $115,000 included in the consolidated balance sheet
      for
      the unvested portion of such compensation at December 31, 2005. The deferred
      compensation was reversed upon the adoption of SFAS 123(R) effective January
      1,
      2006.





**NOTE
      M - COMMITMENTS AND OTHER MATTERS**





[1]
      Employment agreements:





On
      July
      20, 2006, our Board of Directors increased the base salary of our Chairman
      and
      Chief Executive Officer to $175,000 per year. He was also granted an option
      to
      purchase 650,000 shares of our common stock at a purchase price of $0.65 per
      share. These options
      will be accounted for under the fair value method under SFAS 123R with a charge
      to the consolidated statement of operations .
      The
      strike price of such options was above 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 October 31, 2006, April 30, 2007, October 31, 2007, and
      April
      30, 2008. The stock options granted shall vest immediately upon a change in
      control as defined.





On
      July
      20, 2006, our Board of Directors increased the base salary of our Vice President
      and Chief Financial Officer to $135,000 per year. He was also granted an option
      to purchase 200,000 shares of our common stock at a purchase price of $0.65
      per
      share. These options
      issued will be accounted for under the fair value method under SFAS 123R with
      a
      charge to the consolidated statement of operations .
      The
      options are exercisable as to 25% of the total shares represented thereby on
      each of December 31, 2006, June 30, 2007, December 31, 2007, and June 30, 2008.
      The stock options granted shall vest immediately upon a change in control as
      defined.





We
      appointed an interim President and Chief Operating Officer whom is also a member
      of our Board of Directors. We
      entered into an employment agreement with him pursuant to which, effective
      June
      19, 2006, he will receive a salary of $20,000 per month and a one-time bonus
      of
      $30,000. He was granted options to purchase 400,000 shares of a21’s common
      stock, exercisable at $0.46 per share, all of which will vest on December 31,
      2006 and expire on June 19, 2011. The fair value of theseoptions
      of approximately $120,000 is being accounted for a compensation expense under
      SFAS 123R over the vesting period.The
      employment agreement has a term of six months and may be terminated by either
      party without cause on 30 days written notice to the other party. In addition,
      we may terminate the employment agreement immediately for cause, as defined
      in
      the employment agreement.


F-28





The
      Company terminated its employment of its then President on June 19, 2006.
      Pursuant to the terms of a termination agreement between the Company and its
      then President, dated June 29, 2006, he resigned from the a21 and SuperStock
      Board of Directors and from any other positions he held with our subsidiaries.
      Pursuant to the termination agreement, we will pay him severance of
      approximately $53,000, in installments over approximately five months in
      accordance with our normal bi-monthly payroll cycle. In addition, we accelerated
      the vesting of 100,000 of his unvested stock options, and also agreed that
      his
      vested and unexercised stock options totaling 500,000 shares could be exercised
      on a cashless basis until their expiration date of September 19, 2006. Pursuant
      to the agreement he may not sell any shares of a21's common stock, including
      restricted shares owned or shares owned upon exercise of his vested options
      prior to their expiration, until June 19, 2007, except that he may sell up
      to
      350,000 shares in a private transaction with a third party. The resignation
      from
      our Board of Directors did not result from a disagreement with the Company
      on
      any matter relating to our operations, policies, or practices. The modification
      of vesting of his stock options resulted in additional fair value of
      approximately $16,000 which was recognized as compensation expense during the
      three and six months ended June 30, 2006.





The
      Company terminated its employment of its then Chief Creative Officer on May
      25,
      2006. Pursuant to the terms of an agreement between the Company and its then
      Chief Creative Officer, dated June 12, 2006, he agreed that his
      employment with the Company terminated as of May 25, 2006 and he also resigned
      from the a21 and SuperStock Board of Directors and from any other positions
      he
      held with our subsidiaries. Pursuant to the agreement, we will pay him severance
      of $120,000, in installments in accordance with our normal payroll practices.
      In
      addition, we accelerated the vesting of 62,500 of his unvested shares of
      restricted stock and 100,000 of his unvested stock options. We also agreed
      that
      he may exercise all of his vested stock options totaling 300,000 shares until
      the earlier of (i) the date such vested stock options would otherwise have
      expired by their terms, or (ii) May 25, 2007. In addition, he acknowledged
      and
      agreed that all right, title and interest in and to the approximately 1,205
      images he photographed while an employee of SuperStock are the sole and
      exclusive property of the SuperStock. The resignation from our Board of
      Directors did not result from a disagreement with the Company on any matter
      relating to our operations, policies, or practices. The modification of vesting
      and the extension of the exercise period of his vested stock options resulted
      in
      additional fair value of approximately $54,000, which was recognized as
      compensation expense during the three and six months ended June 30,
      2006.





[2]
      Lease
      commitments




As
      described in Notes E and K above, we have capitalized our facility under the
      terms of a sale and leaseback transaction. In June 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
      deferred rent receivable of $553,000 and $541,000 at June 30, 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.


F-29





[3]
      Lease
      Deposit Arrangement





A
      security deposit is required under the capital lease agreement for our facility
      in Florida. On April 27, 2006, as part of the financing transaction (see Note
      J), we also released the $690,000 certificates of deposit (“CDs”), which had
      been pledged by Ahab to secure the letter of credit issued by SuperStock in
      connection with its capital lease.  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
      deposits of $750,000 are shown as restricted cash non-current assets as of
      June
      30, 2006.





[4]
      Settlement:





In
      connection with the July 2006 settlement of certain claims made by a stockholder
      and three of his affiliates against the Company, we issued 450,000 shares of
      a21
      common stock in exchange for a general release of all claims such persons may
      have had against us. We have recognized the related value of such shares of
      $139,000 as settlement expense included in general operating expenses in our
      Statement of Operations for the three and six months ended June 30,
      2006.





[5]
      Legal:





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








**NOTE
      N - SUBSEQUENT EVENTS**





On
      June
      19, 2006, a21’s Board of Directors approved a merger agreement pursuant to
      which, among other things, the Company would merge with and into its wholly
      owned subsidiary, a21,Inc., a Delaware corporation. On June 23, 2006, we
      obtained the approval of the terms of the merger agreement by a majority of
      our
      outstanding shares of common stock. The reincorporation became effective on
      July
      31, 2006.





Our
      reincorporation in Delaware has not resulted in any change to our business
      operations or the location of our principal executive offices. The financial
      condition and results of operations of the surviving corporation immediately
      after the consummation of the merger were identical to the Company’s immediately
      prior to the consummation of the merger. In addition, the board of directors
      of
      the surviving corporation consists of those persons who were the Company’s
      directors immediately prior to the merger and individuals serving as executive
      officers of the Company immediately prior to the merger continue to serve as
      executive officers of the surviving corporation after the merger.





Pursuant
      to the reincorporation, the number of the Company’s authorized shares of common
      stock was increased to 200,000,000 shares.


F-30




**NOTE
      O - RESTATEMENTS**





The
      consolidated financial statements for the period ending June 30, 2006
      contain  restatements to reflect a reduction in selling, general and
      administrative expenses and a decrease to warrant expense. In
      connection with our adoption of SFAS 123(R) during 2006, we previously
      recognized stock compensation expense during the three and six months ended
      June
      30, 2006 as if all options granted were fully vested at grant date rather than
      over the requisite service (vesting) period as proscribed by SFAS 123(R),
      resulting in an over expensing of stock compensation of $277,000 and $658,000
      for the three and six months ended June 30, 2006. Also, during the quarter
      ended
      June 30, 2006, we had erroneously reversed compensation cost totaling $69,000
      previously recognized during the quarter ended March 31, 2006 for restricted
      stock grants that had vested, and recognized no compensation cost for restricted
      stock grants that vested with a value of $18,000 during the quarter ended June
      30, 2006. Finally, during May and June 2006 we modified and accelerated the
      vesting of options to purchase our common stock held by two former executives
      as
      part of their separation agreements with the Company. The fair value of these
      modifications was $70,000 which should have been recognized as additional stock
      based compensation expense during the three and six months ended June 30, 2006.
      These errors resulted in a net over expensing of stock compensation expense
      of
      $120,000 and $501,000 for the three and six months ended June 30,
      2006.





In
      connection with our April 2006 $15.5 million financing, we previously recorded
      an increase of $56,000 to Additional Paid-In Capital for the fair value of
      warrants cancelled in exchange for the issuance of notes payable, in error.
      The
      excess of fair value of the warrants returned and cancelled over the value
      of
      the notes issued of $46,000, plus an additional $10,000 decrease in fair value
      of the warrant liability prior to the exchange, totaling $56,000, should have
      been recorded as a reduction of warrant expense for the three and six months
      ended June 30, 2006. Also, during the quarter ended June 30, 2006, we had
      recorded the value of our convertible preferred stock issued as part of the
      price to purchase ArtSelect, Inc. at $4,830,000, based on an erroneous
      preliminary estimate. The actual value was ultimately determined to be
      $3,150,000.





Finally,
      there was an error in our calculation of the weighted average number of common
      shares outstanding, basic and diluted for the six months ended June 30, 2006
      of
      77,569,680 previously reported, which should have been
      74,817,306.


F-31





The
      following table illustrates the effect on net loss and loss per share of the
      corrections of errors to based compensation expense, warrant expense, and
      weighted average shares:





**$
                in thousands, except per share amounts**
            
            **Three
                months ended June 30, 2006**
            
            **Six
                months ended June 30, 2006**Net
                loss, as previously reported
            
            $
            (2,270
            )
            $
            (4,686
            )Stock
                based employee compensation, as previously reported
            
            
            (259
            )
            
            (1,310
            )Stock
                based employee compensation, as restated
            
            
            (139
            )
            
            (809
            )Net
                stock based employee compensation adjustment
            
            
            120
            
            
            501Warrant
                income (expense), as previously reported
            
            
            118
            
            
            (147
            )Warrant
                income (expense), as restated
            
            
            174
            
            
            (91
            )Net
                warrant income adjustment
            
            
            56
            
            
            56Net
                loss, as restated
            
            
            (2,094
            )
            
            (4,129
            )Basic
                and diluted loss per share, as previously reported
            
            $
            (0.03
            )
            $
            (0.06
            )Basic
                and diluted loss per share, as restated
            
            $
            (0.03
            )
            $
            (0.06
            )





The
      following table illustrates the effect on goodwill and convertible preferred
      stock of the correction of the error in the estimated the value of the
      convertible preferred stock issued for the acquisition of ArtSelect, Inc.:





**$
                in thousands**
            
            **As
                of June 30, 2006**Goodwill,
                as previously reported
            
            $
            7,478Goodwill,
                as restated
            
            $
            5,798Convertible
                Preferred Stock, as previously reported
            
            $
            4,830Convertible
                Preferred Stock, as restated
            
            $
            3,150





As
      a
      result of the above error corrections, as of and for the six months ended June
      30, 2006, additional paid-in capital changed from $20.9 million to $20.4
      million, accumulated deficit changed from $(18.9 million) to $(18.3 million),
      net cash used in operating activities changed from $(1.8 million) to $(1.6
      million), and net cash provided by financing activities changed from $13.6
      million to $13.3 million.





F-32


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





**OVERVIEW**




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





**RECENT
      EVENTS**





**Convertible
      Debt Financing**




During
      April 2006, we entered into a securities purchase agreement (“Purchase
      Agreement”) with certain purchasers and Queequeg Partners, LP, as agent
      (“Agent”), whereby we issued $15.5 million of 5% Senior Secured Convertible
      Notes (“Senior Convertible Notes”) in consideration for which we received net
      proceeds of $11.7 million in cash, after the repayment of certain outstanding
      debt of $3.3 million, exchange of Notes totaling $215,000 to retire warrants
      to
      purchase 637,500 shares of a21’s common stock, repayment of total interest due
      of $216,000, and the payment of a finder’s fee of $100,000. Queequeg Partners
      L.P. and Queequeg, Ltd. (each of which are affiliated with Ahab Capital
      Management, Inc., which was a 10% beneficial owner of a21’s common stock prior
      to April 27, 2006) (collectively “Ahab”), and StarVest Partners, LP
      (“StarVest”), which was a 10% beneficial owner of a21’s common stock prior to
      April 27, 2006, purchased a portion of the Notes sold in this transaction.
      As
      part of this transaction, we released $690,000 of certificate of deposits
      (“CDs”), which had been pledged by Ahab to secure the letter of credit issued by
      SuperStock in connection with its capital lease for our facility in
      Jacksonville, Florida and replaced the deposit with new CDs from the net
      proceeds of the financing.




5


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.





**Acquisition
      of ArtSelect**




On
      May
      16, 2006, we acquired ArtSelect, Inc. ArtSelect supplies home and office framed
      and unframed wall décor to retailers, catalogers, membership organizations, and
      consumers through both online and traditional retail and wholesale distribution
      channels. In consideration, the stockholders of ArtSelect received $4.5 million
      of cash, $2.35 million in secured notes, and Convertible Preferred Stock valued
      at $3.15 million. The stockholders of ArtSelect also received warrants to
      purchase 750,000 shares of a21’s common stock at $1.00 per share (the
“Warrants”). Final adjustments will be made to the purchase price after
      finalization of ArtSelect's closing balance sheet, which is expected to occur
      by
      December 31, 2006. The Notes bear interest at 6% per year and mature on the
      earlier to occur of a change of control and May 15, 2009. The first year of
      interest on the principal balance of the Notes will be accrued and added to
      the
      principal of the Notes. After the first year, interest will be payable
      quarterly, in arrears. The Notes are secured by substantially all the assets
      of
      ArtSelect (provided that, with respect to up to $3.0 million of the assets
      of
      ArtSelect, the Notes are junior to the previously issued Senior Notes). The
      Warrants expire four years from the closing date of the merger.




Pursuant
      to an exchange agreement entered into with each of the holders of Preferred
      Stock, after a21 increased the number of its authorized shares of common stock
      on July 31, 2006, the Preferred Stock was exchanged for an aggregate of
      4,200,000 a21’s common stock at the minimum price per share of
      $0.75.




Please
      refer to our Current Report on Form 8-K dated May 19, 2006 for additional
      information relating to our ArtSelect acquisition and related
      transactions.





**Other
      Matters**




As
      of May
      25, 2006, the employment of Haim Ariav, our former
      Chief Creative Officer and the Chief Creative Officer and President of
      SuperStock was terminated. On June 12, 2006, Mr. Ariav resigned as a member
      of
      our Board of Directors.




As
      of
      June 19, 2006, the employment of Thomas V. Butta, our former President and
      the
      Chief Executive Officer of SuperStock, was terminated. On June 29, 2006, Mr.
      Butta resigned as a member of our Board of Directors.




On
      June
      19, 2006, we appointed Philip N. Garfinkle as our interim President and Chief
      Operating Officer and SuperStock appointed Mr. Garfinkle its interim President
      and Chief Operating Officer. Mr. Garfinkle is already a member of our Board
      of
      Directors.




On
      July
      31, 2006, we reincorporated, pursuant to which we changed our state of
      incorporation from Texas to Delaware and increased the number of shares of
      our
      authorized capital stock.





6





**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/A.





**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED JUNE 30, 2006 COMPARED TO THREE MONTHS ENDED JUNE 30,
      2005**




REVENUES.
      Revenues were $4.5 million for the three months ended June 30, 2006 compared
      to
      $2.3 million for the same prior year period. Approximately 70% of the increase
      was attributable to the ArtSelect acquisition, which occurred on May 15, 2006,
      approximately 20% 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 $1.7 million for the three months ended June
      30,
      2006 compared to $716,000 the same prior year period. Approximately 70% of
      the
      increase was attributable to the ArtSelect acquisition, approximately 10% of
      the
      increase was attributable to the Ingram acquisition, with the balance of the
      increase attributed to SuperStock.




As
      a
      percentage of revenues, cost of sales was 38% and 31% for the three months
      ended
      June 30, 2006 and 2005, respectively. The increase in cost of sales percentage
      reflects the weighted impact of higher variable cost for ArtSelect’s
      r aw
      materials including prints, mats, frames, molding, and packaging material as
      well as shipping and handling costs. Cost of
      sales as a percentage of revenues may also vary in any period depending on
      SuperStock’s relative mix of stock photography distributed that is either
      licensed from third parties or owned by us.




SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were $3.8 million for the
      three months ended June 30, 2006 compared to $2.0 million for the same prior
      year period.




Approximately
      45% of the increase was attributable to the ArtSelect acquisition, approximately
      15% of the increase was attributable to the Ingram acquisition, approximately
      7%
      of the increase was attributable to the adoption of SFAS 123(R), with the
      balance of the increase attributed to higher corporate costs including legal
      and
      audit incurred to support our corporate governance and regulatory compliance
      requirements.




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 June 30, 2006 was $139,000. In
      accordance with the modified prospective transition method, our condensed
      consolidated statement of operations for the three months ended June 30, 2005
      have not been restated to reflect, and do not include, the impact of SFAS
      123(R).




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $830,000 for the three
      months ended June 30, 2006 compared to $359,000 for the same prior year period.
      The increase was primarily attributable to incremental depreciation and
      amortization expense during the three months ended June 30, 2006 resulting
      from
      the ArtSelect and Ingram acquisitions.




7


INTEREST
      EXPENSE. Interest expense was was $447,000 for the three months ended June
      30,
      2006 compared to $332,000 for the same prior year period reflecting higher
      outstanding debt during the three months ended June 30, 2006 compared to the
      same prior year period.




WARRANT
      INCOME. 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. The decrease in valuation, net
      of
      amounts related to the warrants canceled as part of the $15.5 million financing,
      was $174,000 for the three months ended June 30, 2006 and was recorded as
      non-operating warrant income.




OTHER
      INCOME, NET. Other income, net was $18,000 for the three months ended June
      30,
      2006 compared to other income, net of $49,000 for the same prior year
      period.




NET
      LOSS
      ATTRIBUTED TO COMMON STOCKHOLDERS. Net loss attributed to common stockholders
      was $2.1 million or $0.03 per share, for the three months ended June 30, 2006
      compared to net loss of $985,000, or $0.02 per share, for the same prior year
      period.




**SIX
      MONTHS ENDED JUNE 30, 2006 COMPARED TO SIX MONTHS ENDED JUNE 30,
      2005**




REVENUES.
      Revenues were $7.4 million for the six months ended June 30, 2006 compared
      to
      $4.6 million for the same prior year period. Approximately 55% of the increase
      was attributable to the ArtSelect acquisition, approximately 35% of the increase
      was attributable to the Ingram acquisition, with the balance of the increase
      attributed to SuperStock.




COST
      OF
      REVENUES. Cost of revenues was $2.6 million for the six months ended June 30,
      2006 compared to $1.4 million for the same prior year period. Approximately
      60%
      of the increase was attributable to the ArtSelect acquisition, approximately
      20%
      of the increase was attributable to the Ingram acquisition, with the balance
      of
      the increase attributed to SuperStock.




As
      a
      percentage of revenues, cost of sales was 35% and 31% for the six months ended
      June 30, 2006 and 2005, respectively. The increase in cost of sales percentage
      reflects the weighted impact of higher variable cost for ArtSelect’s
      r aw
      materials and shipping costs.




SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses were $6.6 million for the
      six months ended June 30, 2006 compared to $3.5 million for the same prior
      year
      period.




Approximately
      23% of the increase was attributable to the adoption of SFAS 123(R),
      approximately 25% of the increase was attributable to the ArtSelect acquisition,
      approximately 15% of the increase was attributable to the Ingram acquisition,
      with the balance of the increase attributed to higher corporate costs including
      legal and audit.




Share-based
      compensation expense recognized under SFAS 123(R) for the six months ended
      June
      30, 2006 was $809,000. In accordance with the modified prospective transition
      method, our condensed consolidated statement of operations for the six months
      ended June 30, 2005 have not been restated to reflect, and do not include,
      the
      impact of SFAS 123(R).




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $1.4 million for the six
      months ended June 30, 2006 compared to $712,000 for the same prior year period.
      The increase was primarily attributable to incremental depreciation and
      amortization expense (primarily of intangible assets) during the six months
      ended June 30, 2006 resulting from the ArtSelect and Ingram
      acquisitions.




8


INTEREST
      EXPENSE. Interest expense was $800,000 for the six months ended June 30, 2006
      compared to $729,000 for the same prior year period. Interest expense for the
      six months ended June 30, 2006 reflects higher outstanding debt during the
      three
      months ended June 30, 2006 compared to the same prior year period. Interest
      expense for the six months ended June 30, 2005 included incremental amortization
      of finance costs.




WARRANT
      EXPENSE. Pursuant to the provisions of EITF 00-19, we recorded the value of
      certain warrants as a current liability, with subsequent changes in fair value
      to be reflected in the consolidated statement of operations. The classification
      of the warrants was determined based upon the terms of the warrants relative
      to
      respective registration rights agreement. As of June 30, 2006 and December
      31,
      2005, the warrants were valued at $63,000 and $187,000, respectively. The change
      in valuation for the six months ended June 30, 2006 was an expense of $137,000.
      This expense was offset by the $46,000 of income resulting from the cancellation
      of warrants valued at $261,000 exchanged for Senior Convertible Notes of
      $215,000, as described above, resulting in non-operating warrant expense of
      $91,000 for the six months ended June 30, 2006.




OTHER
      EXPENSE, NET. Other expense, net was $23,000 for the six months ended June
      30,
      2006 compared to other expense, net of $217,000 for the same prior year period.
      The other expense, net for the six months ended June 30, 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. 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 $4.3 million or $0.06 per share, for the six months ended June 30, 2006
      compared to net loss of $2.0 million, or $0.05 per share, for the same prior
      year period.




**LIQUIDITY
      AND CAPITAL RESOURCES**




As
      of
      June 30, 2006, we had $7.0 million of cash and cash equivalents and working
      capital of $6.4 million, 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 net proceeds from Convertible Debt Financing offset
      by the cash used to acquire ArtSelect and cash used in operations during the
      six
      months ended June 30, 2006.




Net
      cash
      used in operating activities for the six months ended June 30, 2006 was $1.6
      million, compared to net cash used in operating activities of $1.2 million
      for
      six months ended June 30, 2005. The net cash used in operating activities during
      the six months ended June 30, 2006 was due primarily to the net loss of $4.1
      million adjusted for $809,000 of stock compensation, $1.4 million for
      depreciation and amortization, and an increase in accounts payable and accrued
      expenses of $852,000 offset by an increase of accounts receivable of $418,000
      and increase in prepaid expenses and other current assets of $483,000. Net
      cash
      used in operating activities in the six months ended June 30, 2005 was due
      primarily to the net loss of $2.0 million and the increase of accounts
      receivable of $349,000 adjusted for $712,000 of depreciation and amortization,
      $371,000 for loss on extinguishment of debt and $369,000 compensation for the
      issuance of restricted stock.




9


Net
      cash
      used in investing activities for the six months ended June 30, 2006 was $5.9
      million, compared to net cash used in investing activities the six months ended
      June 30, 2005 of $270,000. Net cash used in investing activities for the six
      months ended June 30, 2006 was primarily due to $4.5 million used as partial
      consideration of the ArtSelect acquisition and $750,000 used to secure a lease
      security deposit. Net cash used in investing activities in the six months ended
      June 30, 2005 was primarily due to investments in building, property, and
      equipment.




Net
      cash
      provided by financing activities for the six months ended June 30, 2006 was
      $13.3 million, compared to net cash provided by financing activities of $970,000
      for the same prior year period. Net cash provided by financing activities for
      the six months ended June 30, 2006 resulted substantially from the $15.3 million
      Senior Convertible debt financing offset by repayments of $3.3 million of
      outstanding debt. In addition, we realized proceeds of $1.2 million during
      the
      six months ended June 30, 2006 upon the exercise of stock warrants. Net cash
      provided by financing activities in the six months ended June 30, 2005 was
      mainly due to the new $2.3 million senior secured notes payable offset by the
      retirement of the $1.3 million convertible subordinated notes
      payable.


We
      have
      sustained significant recurring losses and at June 30, 2006 had an accumulated
      deficit of $18.3 million 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 that we need to fund
      operations in 2006, we will need to raise cash from equity and debt financings
      to fund any additional acquisitions. If we are unable to secure the required
      funding, we may not be able to implement our business plan and may not be able
      to conduct business as a going concern.




During
      April 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
      net proceeds of $11.7 million in cash, after the repayment of certain
      outstanding debt of $3.3 million, exchange of Notes totaling $215,000 to retire
      warrants to purchase 637,500 shares of a21’s common stock, repayment of total
      interest due of $216,000, and the payment of a finder’s fee of $100,000.
      Queequeg Partners L.P. and Queequeg, Ltd. (each of which are affiliated with
      Ahab Capital Management, Inc., which was a 10% beneficial owner of a21’s common
      stock prior to April 27, 2006) , and StarVest Partners, LP , 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 CDs, which had been pledged by Ahab to secure the letter
      of
      credit issued by SuperStock in connection with its capital lease for our
      facility in Jacksonville, Florida and replaced the deposit with new CDs from
      the
      net proceeds of the financing.




On
      May
      16, 2006, we acquired ArtSelect, Inc. The stockholders of ArtSelect received
      consideration including $4.5 million of cash and $2.35 million in secured notes.
      The Notes bear interest at 6% per year and mature on the earlier to occur of
      a
      change of control and May 15, 2009. The first year of interest on the principal
      balance of the Notes will be accrued and added to the principal of the Notes.
      After the first year, interest will be payable quarterly, in arrears.




**OFF
      BALANCE SHEET ARRANGEMENTS**





We
      have
      not entered into any off balance sheet arrangements as of June 30,
      2006.


10




**ITEM
      3. CONTROLS AND PROCEDURES**





**EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES**





Under
      the
      supervision and with the participation of our management, including our
      principal executive officer and the principal financial officer, we conducted
      an
      evaluation of the effectiveness of the design and operation of our disclosure
      controls and procedures as of the end of the period covered by this report
      (the
“Evaluation Date”). Based on this evaluation, our principal executive officer
      and principal financial officer concluded as of the Evaluation Date that our
      disclosure controls and procedures were not effective at ensuring that the
      material information required to be disclosed in the Exchange Act reports is
      recorded, processed, summarized and reported as required in applicable SEC
      rules
      and forms, because of the deficiencies in internal controls over financial
      reporting which constitute material weaknesses 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 weaknesses identified
      pertain specifically to the recording of stock based compensation and the
      recording of the deemed dividend related to warrant repricing.




Because
      of the ArtSelect acquisition, we have assumed the respective integration of
      financial controls and reporting requirements of that subsidiary. We have
      further enhanced our internal resources and processes around our internal
      control over financial reporting by adding key staff and documenting financial
      close and reporting plan process during the period ending June 30,
      2006.





There
      were no other changes in our internal control over financial reporting
      identified in connection with management’s evaluation of the effectiveness of
      our internal control over the financial reporting that have materially affected,
      or are reasonably likely to materially affect, our internal control over
      financial reporting.





11




**PART
      II - OTHER INFORMATION ITEM**





**ITEM
      1. LEGAL PROCEEDINGS**





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





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





On
      June
      19, 2006 a21 issued options to purchase 400,000 shares of common stock to Philip
      N. Garfinkle, an officer and director of a21 in consideration for services
      to be
      rendered by Mr. Garfinkle to a21. No fees were paid to any party in connection
      with the issuance of such securities. We issued the foregoing securities in
      reliance on Section 4(2) of the Securities Act, based on the identity and number
      of investors.





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.





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





**Change
      in State of Organization from Texas to Delaware**


On
      June
      19, 2006, a21’s Board of Directors approved a merger agreement pursuant to
      which, among other things, the Company would merge with and into its wholly
      owned subsidiary, a21,Inc., a Delaware corporation. On June 23, 2006, we
      obtained the approval of the terms of the merger agreement by the unanimous
      written consent of the holders of 40,658,362 shares (or 52.38%) of our
      outstanding common stock and the reincorporation became effective on July 31,
      2006.





Our
      reincorporation in Delaware has not resulted in any change to our business
      operations or the location of our principal executive offices. The financial
      condition and results of operations of the surviving corporation immediately
      after the consummation of the merger were identical to the Company’s immediately
      prior to the consummation of the merger. In addition, the board of directors
      of
      the surviving corporation consists of those persons who were the Company’s
      directors immediately prior to the merger and individuals serving as executive
      officers of the Company immediately prior to the merger continue to serve as
      executive officers of the surviving corporation after the merger.





**Corporate
      Name and Trading Symbol**


Following
      the merger, we have retained our corporate name “a21, Inc.” Accordingly, our
      shares continue to trade on the OTC Bulletin Board under the symbol “ATWO”.





**Increase
      in Authorized Capitalization**


The
      Board
      of Directors has determined that it was in the best interests of the Company
      and
      its stockholders to increase the Company’s authorized capitalization.
      Accordingly, the certificate of incorporation of the surviving corporation
      provides for an authorized capitalization of 200,000,000 shares of common stock
      and 100,000 shares of preferred stock.




**ITEM
      5. OTHER INFORMATION**




None.




12





**ITEM
      6. EXHIBITS**





The
      following exhibits are filed as part of this report:





**EXHIBIT**NUMBER
            DESCRIPTION4.1
                (1)
            Form
                of Secured Convertible Term Note dated April 27, 2006 by and among
                a21,
                SuperStock and each of the persons listed on the Appendix to the
                Exhibits4.2
                (1)
            Registration
                Rights Agreement dated April 27, 2006 between a21 and Queequeg Partners,
                LP, as agent4.3
                (2)
            Form
                of Promissory Note dated May 15, 2006 by and among a21, ASI and each
                of
                the persons listed on Exhibit I to the Merger Agreement4.4
                (2)
            Form
                of Warrant dated May 15, 2006 between a21 and each of the persons
                listed
                on Exhibit I to the Merger Agreement10.1
                (1)
            Securities
                Purchase Agreement dated April 27, 2006 by and among a21, SuperStock,
                Queequeg Partners, LP and the purchasers named therein10.2
                (1)
            Master
                Security Agreement dated April 27, 2006 by and among a21, SuperStock
                and
                Queequeg Partners, LP, as agent10.3
                (2)
            Merger
                Agreement dated May 15, 2006, by and among a21, Inc., AE Acquisition
                Corp., ArtSelect, Inc., and the common and preferred stockholders
                of
                ArtSelect listed on Schedule I thereto and Udi Toledano as stockholder
                representative10.4
                (2)
            Guaranty
                of a21 in favor of the holders of the Promissory Notes dated May
                15,
                200610.5
                (3)
            Employment
                Agreement between a21, Inc. and Philip N. Garfinkle, dated June 27,
                200631.1
            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


(1)
      Incorporated by reference to our Annual Report on Form 8-K dated April 27,
      2006.


(2)
      Incorporated by reference to our Annual Report on Form 8-K dated May 15,
      2006.


(3)
      Incorporated by reference to our Annual Report on Form 8-K dated June 27,
      2006.





13




**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:
                December 12, 2006
            By:
                /s/ JOHN Z. FERGUSONJohn
                Z. Ferguson
              Chief
                Executive Officer
              (Principal
                Executive Officer)Date:
                December 12, 2006
            By:
                /s/ THOMAS COSTANZAThomas
                Costanza
              Vice
                President and Chief Financial Officer
              (Principal
                Financial Officer)





14