**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**** **FORM
      10-QSB**








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


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      Quarterly Period ended: June 30, 2005





OR





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


**SECURITIES
      EXCHANGE ACT OF 1934**





For
      the
      transition period from ________ to ________




Commission
      File No.: 000-51285









**a21,
      INC.**


(Name
      of
      Small Business Issuer in its Charter)






TEXAS
            74-2896910(State
                or Other Jurisdiction ofIncorporation or Organization)
            (I.R.S.
                EmployerIdentification Number)






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


(Principal
      Executive Office)





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





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





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





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





There
      were 48,301,237 shares of the Company's common stock outstanding on September
      12, 2005.





Documents
      incorporated by reference: None.





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










**TABLE
                OF CONTENTS**PagePART
                I - FINANCIAL INFORMATIONITEM
                1. FINANCIAL STATEMENTSCondensed
                Consolidated Balance Sheets at June 30, 2005 (unaudited) and December
                31,
                2004
            
            1Condensed
                Consolidated Statements of Income for the three months and six monthsended
                June 30, 2005 and 2004
            
            3Condensed
                Consolidated Statements of Cash Flows for the six months endedJune
                30, 2005 and 2004
            
            4Condensed
                Consolidated Statements of Changes in Stockholders’ Equity (CapitalDeficit)
                for the six months ended June 30, 2005
            
            6Notes
                to Condensed Consolidated Financial Statements
            
            7ITEM
                2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS
                OF OPERATIONS
            
            19ITEM
                3. CONTROLS AND PROCEDURES
            
            23PART
                II - OTHER INFORMATIONITEM
                1. LEGAL PROCEEDINGS
            
            24ITEM
                2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
                PROCEEDS
            
            24ITEM
                3. DEFAULTS UPON SENIOR SECURITIES
            
            24ITEM
                4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            24ITEM
                5. OTHER INFORMATION
            
            24ITEM
                6. EXHIBITS
            
            24













**a21,
        Inc. and Subsidiaries**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 **($
        in thousands)**


**June
                    30,**
                
                **December
                    31,****2005**
                
                **2004****(Unaudited)**ASSETSCURRENT
                    ASSETSCash
                    and cash equivalents
                
                $
                314
                
                $
                717Accounts
                    receivable, net
                
                
                1,384
                
                
                1,302Inventory
                
                
                35
                
                
                ---Prepaid
                    expenses and other current assets
                
                
                190
                
                
                200Income
                    tax receivable
                
                
                107
                
                
                108Total
                    current assets
                
                
                2,030
                
                
                2,327Land
                    and building, net
                
                
                7,359
                
                
                7,329Photo
                    collection, net
                
                
                1,962
                
                
                2,198Property
                    and equipment, net
                
                
                424
                
                
                547Goodwill
                
                
                1,049
                
                
                1,049Contracts
                    with photographers
                
                
                1,031
                
                
                1,133Long-term
                    accounts receivable
                
                
                427
                
                
                160Long-term
                    notes receivable
                
                
                16
                
                
                18Intangible
                    assets, net
                
                
                77
                
                
                92Other
                    long-term assets
                
                
                110
                
                
                101Restricted
                    cash
                
                
                634
                
                
                600Total
                    assets
                
                $
                15,119
                
                $
                15,554LIABILITIES
                    AND STOCKHOLDERS’ EQUITY (CAPITAL DEFICIT)CURRENT
                    LIABILITIESCurrent
                    portion of promissory note payable
                
                $
                9
                
                $
                ---Accounts
                    payable
                
                
                462
                
                
                872Accrued
                    wages and payroll taxes
                
                
                135
                
                
                147Accrued
                    interest, current
                
                
                236
                
                
                187Accrued
                    purchase price payable
                
                
                201
                
                
                201Current
                    portion of promissory note payable
                
                
                33
                
                
                32Royalties
                    payable
                
                
                1,171
                
                
                979Total
                    current liabilities
                
                
                2,247
                
                
                2,418LONG-TERM
                    LIABILITIESPromissory
                    note payable, long-term portion
                
                
                33
                
                
                67Other
                    long-term liabilities
                
                
                61
                
                
                61Loan
                    payable
                
                
                7,450
                
                
                7,458Senior
                    secured notes payable, net
                
                
                2,273
                
                
                520Unsecured
                    notes payable to others, net
                
                
                1,050
                
                
                1,040Total
                    liabilities
                
                
                13,114
                
                
                11,564
 The
            accompanying notes are an integral part of these Condensed Consolidated
            Financial Statements.
  -
              1
              -




**a21,
        Inc. and Subsidiaries**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS (Cont’)**
 **($
        in thousands)**


**June
                  30,**
              
              **December
                  31,****2005**
              
              **2004****(Unaudited)**COMMITMENTS
                  AND CONTINGENCIESMINORITY
                  INTEREST
              
              
              2,800
              
              
              2,800STOCKHOLDERS’
                  EQUITY (CAPITAL DEFICIT)Preferred
                  stock; $.001 par value; 100,000 shares authorized; no shares
                  issuedand
                  outstanding
              
              
              ---
              
              
              ---Common
                  stock; $.001 par value; 100,000,000 shares authorized; 44,831,012
                  and41,816,012
                  shares issued at June 30, 2005 and December 31, 2004,
                  respectively,and
                  41,151,237 and 38,136,237 shares outstanding at June 30, 2005 andDecember
                  31, 2004, respectively
              
              
              45
              
              
              42Treasury
                  stock (at cost, 3,679,775 shares)
              
              
              ---
              
              
              ---Additional
                  paid-in capital
              
              
              10,731
              
              
              10,599Deferred
                  compensation
              
              
              (249
              )
              
              ---Accumulated
                  deficit
              
              
              (11,378
              )
              
              (9,411
              )Accumulated
                  comprehensive income
              
              
              56
              
              
              (40
              )Total
                  stockholders' equity (capital deficit)
              
              
              (795
              )
              
              1,190Total
                  liabilities and stockholders’ equity (capital deficit)
              
              $
              15,119
              
              $
              15,554


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





-
          2
          -




**a21,
        Inc. and Subsidiaries**
 **CONDENSED
        CONSOLIDATED STATEMENT OF OPERATIONS**
 **(Unaudited)**
 **($
        in thousands)**





**Three
                  Months Ended**
              
              **Six
                  Months Ended****June
                  30,**
              
              **June
                  30,****2005**
              
              **2004**
              
              **2005**
              
              **2004**REVENUE
              
              $
              2,327
              
              $
              2,527
              
              $
              4,639
              
              $
              3,325COST
                  OF REVENUE
              
              
              716
              
              
              775
              
              
              1,428
              
              
              987GROSS
                  PROFIT
              
              
              1,611
              
              
              1,752
              
              
              3,211
              
              
              2,338EXPENSESSelling,
                  general and administrative
              
              
              1,954
              
              
              1,312
              
              
              3,520
              
              
              2,398Depreciation
                  and amortization
              
              
              359
              
              
              325
              
              
              712
              
              
              424TOTAL
                  OPERATING EXPENSES
              
              
              2,313
              
              
              1,637
              
              
              4,232
              
              
              2,822OPERATING
                  (LOSS) / INCOME
              
              
              (702
              )
              
              115
              
              
              (1,021
              )
              
              (484
              )Interest
                  expense, net
              
              
              (332
              )
              
              (379
              )
              
              (729
              )
              
              (519
              )Other
                  income/(expense), net
              
              
              49
              
              
              (48
              )
              
              (217
              )
              
              52NET
                  LOSS
              
              
              (985
              )
              
              (312
              )
              
              (1,967
              )
              
              (951
              )COMPREHENSIVE
                  LOSSForeign
                  currency translation adjustment
              
              
              45
              
              
              18
              
              
              96
              
              
              18TOTAL
                  COMPREHENSIVE LOSS
              
              $
              (940
              )
              $
              (294
              )
              $
              (1,871
              )
              $
              (933
              )NET
                  LOSS PER SHARE, BASIC AND DILUTED
              
              $
              (0.02
              )
              $
              (0.01
              )
              $
              (0.05
              )
              $
              (0.03
              )WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND
                  DILUTED
              
              
              40,112,391
              
              
              38,095,001
              
              
              39,129,773
              
              
              31,910,458
  The
        accompanying notes are an integral part of these Condensed Consolidated
        Financial Statements.




-
          3
          -
 
  **a21,
          Inc. and Subsidiaries**
 **CONDENSED
          CONSOLIDATED STATEMENTS OF CASH FLOW**
 **(Unaudited)**
 **($
          in thousands)**


**Six
                Months Ended****June
                30,****2005**
            
            **2004**CASH
                FLOWS FROM OPERATING ACTIVITIES:Net
                loss
            
            $
            (1,967
            )
            $
            (951
            )Adjustments
                to reconcile net loss to net cash used in operating
                activities:Depreciation
                and amortization
            
            
            712
            
            
            424Amortization
                of finance costs
            
            
            24
            
            
            163Loss
                on disposal of property and equipment
            
            
            16
            
            
            ---Compensation
                from the prior issuance of variable options
            
            
            ---
            
            
            127Compensation
                from the issuance of options
            
            
            ---
            
            
            48Compensation
                from the issuance of restricted stock
            
            
            369
            
            
            ---Amortization
                of debt discount related to unsecured notes payable to
                others
            
            
            10
            
            
            ---Amortization
                of debt discount related to convertible subordinated notes
                payable
            
            
            96
            
            
            208Loss
                on extinguishment of debt
            
            
            371
            
            
            ---Deferred
                compensation
            
            
            (249
            )
            
            ---Deferred
                income taxes, net
            
            
            ---
            
            
            (62
            )Other
                changes in long-term assets and liabilities
            
            
            20
            
            
            ---Changes
                in:Accounts
                receivable
            
            
            (349
            )
            
            (207
            )Inventory
            
            
            (35
            )
            
            ---Prepaid
                expenses and other current assets
            
            
            (2
            )
            
            (47
            )Other
                assets
            
            
            ---
            
            
            (18
            )Accounts
                payable and accrued expenses
            
            
            (230
            )
            
            121Accrued
                interest and other current liabilities
            
            
            49
            
            
            33Restricted
                cash
            
            
            (34
            )
            
            ---NET
                CASH USED IN OPERATING ACTIVITIES
            
            
            (1,199
            )
            
            (161
            )CASH
                FLOWS FROM INVESTING ACTIVITIES:Acquisition
                of SuperStock, net of cash balance of $1,151 of SuperStock at
                dateof
                acquisition
            
            
            ---
            
            
            (1,417
            )Addition
                to leasehold improvements
            
            
            (232
            )
            
            ---Investment
                in photo collection
            
            
            (9
            )
            
            ---Purchase
                of fixed assets
            
            
            (29
            )
            
            (101
            )Long-term
                deposits, net
            
            
            ---
            
            
            (384
            )NET
                CASH USED IN INVESTING ACTIVITIES
            
            
            (270
            )
            
            (1,902
            )CASH
                FLOWS FROM FINANCING ACTIVITIES:Proceeds
                from sale of land and building accounted for as loan
                payable
            
            
            ---
            
            
            7,516Lease
                payments accounted for as repayment of loan payable
            
            
            3
            
            
            ---Net
                proceeds from senior secured notes payable
            
            
            2,250
            
            
            ---Net
                proceeds from sale of common stock and warrants
            
            
            ---
            
            
            2,790Proceeds
                from issuance of unsecured notes payable and warrants
            
            
            ---
            
            
            1,050Proceeds
                from issuance of convertible subordinated notes payable and
                warrants
            
            
            ---
            
            
            1,250Payment
                of convertible subordinated notes payable
            
            
            (1,250
            )
            
            ---Payment
                of revolving credit line
            
            
            ---
            
            
            (1,700
            )Payment
                of unsecured notes payable to affiliates
            
            
            ---
            
            
            (160
            )Payment
                of seller note payable
            
            
            ---
            
            
            (1,576
            )Payment
                of promissory note payable
            
            
            (33
            )
            
            ---Payment
                of note payable to bank
            
            
            ---
            
            
            (4,554
            )NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            970
            
            
            4,616







-
          4
          -




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


**Six
                  Months Ended****June
                  30,****2005**
              
              **2004**NET
                  EFFECT OF CUMULATIVE TRANSLATION ADJUSTMENTS
              
              $
              96
              
              $
              (18
              )NET
                  INCREASE (DECREASE) IN CASH
              
              
              (403
              )
              
              2,535CASH
                  AT BEGINNING OF PERIOD
              
              
              717
              
              
              1CASH
                  AT END OF PERIOD
              
              $
              314
              
              $
              2,536SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Income
                  taxes paid
              
              $
              ---
              
              $
              ---Interest
                  paid
              
              
              405
              
              
              63SUPPLEMENTAL
                  DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:Issuance
                  of equity for payment of notes payable to affiliates
              
              
              ---
              
              
              424Issuance
                  of common stock for accrued interest on notes payable to
                  affiliates
              
              
              ---
              
              
              51Issuance
                  of common stock for accrued compensation
              
              
              ---
              
              
              136Issuance
                  of common stock for placement costs in connection with the sale
                  of common
                  stock
              
              
              ---
              
              
              13Issuance
                  of common stock to sellers as part of acquisition cost of
                  SuperStock
              
              
              ---
              
              
              137Deferred
                  compensation
              
              
              369
              
              
              ---Debt
                  discount recorded for the issuance of warrants in connection with
                  unsecured note payable and convertible subordinated notes
                  payable
              
              
              10
              
              
              390Debt
                  discount recorded for the beneficial conversion feature of convertible
                  subordinated notes payable
              
              
              ---
              
              
              1,105Issuance
                  of warrants as part of acquisition cost of SuperStock
              
              
              ---
              
              
              83Note
                  payable to sellers on acquisition of SuperStock
              
              
              ---
              
              
              1,576Accrued
                  purchase price payable
              
              
              ---
              
              
              300Minority
                  interest
              
              
              ---
              
              
              2,800Acquisition
                  of SuperStock (See Note C)
              
              
              ---
              
              
              7,477


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




-
          5
          -




**a21,
        Inc. and Subsidiaries**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Capital
        Deficit)**
 **(Unaudited)**
 **($
        in thousands)**





COMMON
                  STOCK
              
              TREASURY
                  STOCKACCUMULATEDNUMBER
              
              
              
              NUMBER
              
              
              
              ADDITIONAL
              
              
              
              
              
              OTHEROF
              
              
              
              OF
              
              
              
              PAID-IN
              
              DEFERRED
              
              ACCUMULATED
              
              COMPREHENSIVESHARES
              
              AMOUNT
              
              SHARES
              
              AMOUNT
              
              CAPITAL
              
              COMPENSATION
              
              DEFICIT
              
              INCOME
              
              TOTALBalance
                  atDecember
                  31, 2004
              
              
              41,816
              
              $
              42
              
              
              (3,680
              )
              $
              ---
              
              $
              10,599
              
              $
              ---
              
              $
              (9,411
              )
              $
              (40
              )
              $
              1,190Issuance
                  of warrants to theholders
                  of senior securednotes
                  payable
              
              
              ---
              
              
              ---
              
              
              
              
              
              
              
              
              10
              
              
              
              
              
              
              
              
              
              
              
              10Issuance
                  of warrants to theholders
                  of unsecured notespayable
              
              
              ---
              
              
              ---
              
              
              
              
              
              
              
              
              19
              
              
              
              
              
              
              
              
              
              
              
              19Beneficial
                  conversionfeature
                  of convertiblesubordinated
                  notes payable
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (263
              )
              
              
              
              
              
              
              
              
              
              
              (263
              )Compensation
                  from theissuance
                  of restricted stock
              
              
              3,015
              
              
              3
              
              
              
              
              
              
              
              
              366
              
              
              (369
              )
              
              
              
              
              
              
              
              ---Amortization
                  of deferredcompensation
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              120
              
              
              
              
              
              
              
              
              120Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,967
              )
              
              
              
              
              (1,967
              )Other
                  comprehensive loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              96
              
              
              96Balance
                  at June 30, 2005
              
              
              44,831
              
              $
              45
              
              
              (3,680
              )
              $
              ---
              
              $
              10,731
              
              $
              (249
              )
              $
              (11,378
              )
              $
              56
              
              $
              (795
              )
 The
          accompanying notes are an integral part of these Condensed Consolidated
          Financial Statements.
  -
            6
            -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005




**NOTE
      A - FINANCIAL STATEMENT PRESENTATION**





The
      unaudited condensed consolidated financial statements of a21, Inc., a Texas
      corporation (“a21” or the “Company”) 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, 2005 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
      the Company’s audited financial statements included in the Company’s amended
      annual report on Form 10-KSB/A for the year ended December 31, 2004 filed with
      the Securities and Exchange Commission.





Through
      February 29, 2004, the Company was considered a development stage enterprise
      in
      accordance with Statement of Financial Accounting Standards (“SFAS”) No. 7,
“Accounting and Reporting by Development Stage Enterprises.” As a result of its
      acquisition of SuperStock, Inc. and subsidiaries (“SuperStock”) on February 29,
      2004, the Company commenced planned principal operations and as such, it is
      no
      longer considered to be a development stage enterprise in accordance with SFAS
      No. 7.





In
      February 2004, the Company completed its acquisition of SuperStock (see Note
      C)
      and in June 2004, sold SuperStock’s land and building for approximately $7.7
      million and leased it back (see Note K). The unaudited condensed consolidated
      financial statements of the Company include the accounts of SuperStock from
      the
      acquisition date of February 29, 2004. The minority interest in the condensed
      consolidated balance sheet at June 30, 2005, represents the interest of the
      holders of preferred shares of SuperStock, which are exchangeable into common
      shares of a21, Inc. The minority interest was valued at the estimated market
      value of the a21, Inc. shares at the acquisition date as if exchanged on such
      date.





The
      accompanying consolidated financial statements have been prepared assuming
      that
      the Company will continue as a going concern. The Company has sustained
      recurring losses and at June 30, 2005 had an accumulated deficit of $11,378,000
      and a working capital deficit of $217,000. The Company has funded operations
      by
      raising capital through the private placement of common stock, convertible
      debt
      and other debt and through the sale of assets. In February, 2005, the Company
      completed a debt financing that yielded $1,000,000, net of retirement of prior
      debt. In June 2005, the Company amended and restated its unsecured notes
      payable, resulting in the aggregate amount outstanding remaining at $1,050,000
      (Note J [2]).





The
      Company intends to raise additional capital through financings by the issuance
      of debt, equity or other potential transactions to support the Company’s
      business plan for internal growth and growth by acquisitions. During the period
      subsequent to June 30, 2005, the Company raised in excess of $1,050,000 of
      additional capital through the sale of its common stock.  While the
      Company
      believes that the amount of its current capital will be sufficient for the
      next
      twelve months based on its current internal growth plan, the Company will need
      to raise additional capital to conclude any potential growth by acquisitions.
       Because the assumptions (upon which its business plan was based) are
      subject to change, there can be no guarantee that the Company will have
      sufficient capital or will be able to obtain sufficient capital to execute
      its
      business plan.  Additionally, if the Company needs to secure additional
      capital to fund its business plan, there can be no guarantee that the Company
      will be successful in closing any debt, equity or other potential transactions
      on terms favorable to the Company, if at all.





**NOTE
      B - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





[1]
      Nature of Business:





The
      Company licenses and acquires stock photography for worldwide distribution
      to
      advertisers and publishers through sublicense and license
      agreements.




-
          7
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  [2]
      Principles of consolidation:




The
      consolidated financial statements include the accounts of the Company and its
      subsidiaries, including the accounts of SuperStock from the acquisition date
      of
      February 29, 2004. The minority interest in the consolidated balance sheet
      at
      June 30, 2005 represents the interest of the holders of preferred shares of
      SuperStock, which are exchangeable into common shares of a21. The minority
      interest was valued at the estimated market value of the shares of a21’s common
      stock at the acquisition date as if exchanged on such date. All significant
      intercompany balances and transactions have been eliminated.





[3]
      Revenue recognition:





The
      license fees earned by the Company from reproductions are affected by the manner
      in which they are used by clients. Revenue is recognized when the following
      criteria are met: evidence of an arrangement exists, the price is fixed or
      determinable, collectibility is reasonably assured and delivery has occurred
      or
      services have been rendered. Revenue is recorded at invoiced amounts except
      in
      the case of licensing rights through distributors, where revenue is recorded
      at
      the Company’s share of invoiced amounts. Distributors typically earn and retain
      a percentage of the license fee according to their contract, and the Company
      recognizes the remaining percentage as revenue.





[4]
      Cost
      of revenue:





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





[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 these estimates. The
      recoverability of the carrying values of long-lived assets is subject to the
      continuation of certain supplier relationships and estimates of recorded
      goodwill value.





[6]
      Fair
      value of financial instruments:





Financial
      instruments consist primarily of cash, 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 the Company. The fair
      value
      of the Company's notes payable to an affiliated company cannot be reasonably
      determined due to the related party nature of the transactions.





**** [7]
      Cash
      and cash equivalents:





The
      Company considers all highly liquid debt instruments purchased with an original
      maturity of three months or less to be cash equivalents. At June 30, 2005,
      the
      Company had no investments with maturities greater than three months. Cash
      excludes funds to secure a letter of credit in the amount of $634,000 as of
      June
      30, 2005, which the Company is required to maintain in accordance with its
      lease
      agreement for the SuperStock facility (see Note M).





[8]
      Inventory:





Inventories
      are valued at the lower of cost or market. The costs of the compact disk
      products are determined on the first-in, first-out (FIFO) basis. Physical counts
      of inventories are taken at least annually. The need for a provision for
      estimated losses from obsolete, excess or slow-moving inventories is reviewed
      periodically.





-
          8
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  [9]
      Foreign Currency Translation:




The
      Company’s U.K. and Canada operations use the U.S. dollar as the functional
      currency. As such, its monetary assets and liabilities are translated into
      U.S.
      dollars at current exchange rates.





[10]
      Land
      and Building:





The
      land
      and building were sold and leased back in a transaction accounted for as a
      financing (see Note K). The building is being depreciated over the twenty-year
      term of the related lease.





[11]
      Property and equipment:





Property
      and equipment are recorded at cost. Expenditures for major additions and
      betterments are capitalized. Maintenance and repairs are charged to operations
      as incurred. Depreciation of property and equipment is computed using the
      straight-line method over the assets' estimated lives ranging from three to
      seven years. 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.





[12]
      Photo collection:





In
      connection with the acquisition of SuperStock, $2,607,000 of the purchase price
      was allocated to the photo collection. Expenditures for additions and
      betterments to the 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. At June
      30,
      2005, the net book value of the entire photo collection was $1,962,000, and
      included fine art and vintage images of $692,000 and contemporary images of
      $1,270,000.




[13]
      Goodwill:





The
      Company has adopted Statement of Financial Accounting Standards (SFAS) No.
      142,
“Goodwill and Other Intangible Assets”. The Company tests the goodwill balance
      for impairment annually and between annual tests in certain circumstances.
      When
      assessing impairment, the Company must estimate the implied fair value of the
      goodwill. The Company estimated the implied fair value based on a discounted
      cash flow model that 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. As circumstances change, it is reasonably possible
      that future goodwill impairment tests could result in a loss on impairment
      of
      assets, which could be included in the determination of net income/ (loss).
      The
      Company also amortizes intangible assets with finite lives over their estimated
      useful life and reviews for impairment in accordance with SFAS 144. Intangible
      assets with finite lives are amortized using the straight line method over
      their
      expected useful life of four years.





[14]
      Long-lived assets:





The
      Company evaluates its long-lived assets in accordance with Statement of
      Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment
      or Disposal of Long-Lived Assets," pursuant to which an impairment loss is
      recognized if the carrying amount of a long-lived asset is not recoverable
      and
      exceeds its fair value. The Company estimated the implied fair value based
      on a
      discounted cash flow model that 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.





-
          9
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  [15]
      Income taxes:




The
      Company recognizes 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
      tax
      loss and tax credit carryforwards (if any). Deferred
      tax assets are reduced, if necessary, by a valuation allowance if it is more
      likely than not that some portion or all of the deferred tax assets will not
      be
      realized.





[16]
      Net
      loss per share:





The
      Company calculates net loss 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 statements
      of
      operations. Basic income (loss) per share is computed by dividing the net income
      (loss) by the weighted average number of shares of common stock outstanding
      during each period. Diluted income (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 six months ended June 30, 2005 and 2004, the basic and diluted
      net loss per share is the same since the effect from the potential exercise
      of
      37,625,294 and 32,180,090 outstanding stock options and warrants as of June
      30,
      2005 and 2004, respectively, would have been anti-dilutive. In addition,
      5,000,151 shares of common stock issuable upon the exchange of the seller’s
      non-voting participating preferred stock (see Note C) have been excluded for
      the
      six months ended June 30, 2005.





[17]
      Stock-based compensation:





The
      Company accounts for stock-based employee compensation under Accounting
      Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
      Employees," and related interpretations. The Company has adopted the
      disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based
      Compensation," and SFAS No. 148, "Accounting for Stock-Based Compensation -
      Transition and Disclosure." The following table illustrates the effect on net
      loss and loss per share for the three and six months ended June 30, 2005 and
      2004 if the fair value based method had been applied to all awards.








**$
                in thousands, except per share amounts**
            
            **For
                the Three MonthsEnded June 30,**
            
            **For
                the Six MonthsEnded June 30,****2005**
            
            **2004**
            
            **2005**
            
            **2004**Reported
                net loss
            
            $
            (985
            )
            $
            (312
            )
            $
            (1,967
            )
            $
            (951
            )Stock
                based employee compensation included in net loss, net of tax
                effect
            
            
            75
            
            
            (110
            )
            
            75
            
            
            79Stock-based
                employee compensation determined under the fair value based method,
                net of
                tax effect
            
            
            (67
            )
            
            (11
            )
            
            (67
            )
            
            (11
            )Pro
                forma net loss
            
            $
            (977
            )
            $
            (433
            )
            $
            (1,959
            )
            $
            (883
            )Loss
                per share - basic and dilutedAs
                reported
            
            $
            (0.02
            )
            $
            (0.01
            )
            $
            (0.05
            )
            $
            (0.03
            )Pro
                forma
            
            $
            (0.02
            )
            $
            (0.01
            )
            $
            (0.05
            )
            $
            (0.02
            )





The
      fair
      value of each option is measured at the grant date using the Black-Scholes
      option-pricing model with the following weighted average assumptions used for
      stock options granted during the three and six months ended June 30, 2005 and
      2004: annual dividends of $0.00; expected volatility of 80%; risk free interest
      rate of 3.00%, and an expected life of five years. Compensation expense of
      $120,400 and $127,000 was recorded in the consolidated statements of operations
      for the six months ended June 30, 2005 and 2004, respectively, pursuant to
      variable accounting for certain options.





-
          10
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  [18]
      Advertising:




Advertising
      expenses were $354,000 and $247,000 for the six months ended June 30, 2005
      and
      2004, respectively. Advertising costs are charged to expense as
      incurred.





**NOTE
      C - ACQUISITION OF SUPERSTOCK, INC.**





In
      February 2004, the Company completed the acquisition of all of the voting common
      stock, representing 83% of the outstanding equity, of SuperStock, a licensor
      of
      stock images to the advertising, media and publishing industries. SuperStock's
      primary assets included a collection of images that it either owned or licensed
      from third parties, an approximately 73,000 square foot facility in
      Jacksonville, Florida (which the Company, through our SuperStock subsidiary,
      sold and leased back from the buyer), receivables from its customers and cash.





In
      consideration for the sale and purchase of the shares of common stock of
      SuperStock, the sellers received 1,666,717 shares of non-voting participating
      preferred stock (the “Seller Preferred”) of SuperStock which is exchangeable
      into 5,000,151 shares of the Company’s common stock, $2.6 million in cash and a
      14 month secured note in the amount of $1.6 million that initially paid an
      interest rate of LIBOR plus 1.9% per annum. In addition, the Company granted
      warrants to the sellers to purchase 160,000 shares of our common stock at $0.56
      per share and issued to the sellers and their advisors 573,589 shares of the
      Company’s common stock for $150,000 consideration. Final adjustments were made
      to the purchase price upon finalization of SuperStock's closing balance sheet
      pursuant to which the Company agreed to pay $100,000 to the sellers in three
      installments. The first installment was paid upon the signing of the final
      agreement, the second installment is due on March 1, 2006 and the third
      installment is due on March 1, 2007. The deferred payments due March 1, 2006
      and
      March 1, 2007 in the form of a promissory note shall bear interest at the rate
      of 5% per annum commencing on March 1, 2005 until paid in full. As part of
      the
      original purchase agreement, the sellers may also receive up to $1.5 million
      should SuperStock achieve certain revenue milestones during the four year period
      after closing; the payment for the first year (March 1, 2004 through February
      28, 2005) was $201,000, and was accrued as a cost of the acquisition.





In
      addition, the Company repaid a $1.7 million credit facility of SuperStock and
      paid down $500,000 of a note secured by a first mortgage on the SuperStock
      Facility. This reduced the principal balance on the note secured by a first
      mortgage to $4.0 million at an interest rate of LIBOR plus 1.9% payable monthly
      plus principal ("First Mortgage").





The
      aggregate purchase price was approximately $7,477,000. The following summarizes
      the fair values of the assets acquired and liabilities assumed at the date
      of
      acquisition.





**($
                in thousands)**Current
                assets
            
            $
            2,473Land
                and building
            
            
            7,572Photo
                collection
            
            
            2,607Property
                and equipment
            
            
            469Goodwill
            
            
            1,350Contracts
                with photographers
            
            
            1,304Other
                intangible assets
            
            
            116Other
                long-term assets
            
            
            342Note
                payable to bank - current
            
            
            (4,554
            )Other
                current liabilities
            
            
            (3,171
            )Deferred
                income taxes
            
            
            (1,031
            )$
            7,477





Results
      of operations of SuperStock are included in the accompanying financial
      statements from February 29, 2004, the date of acquisition.





-
          11
          -


a21,
      Inc.
      and Subsidiaries (Unaudited)


Notes
      to
      Condensed Consolidated Financial Statements


June
      30,
      2005




NOTE
      D --
      PROPERTY AND EQUIPMENT




Property
      and equipment is stated at cost, less accumulated depreciation and amortization,
      and at June 30, 2005 and December 31, 2004, is summarized as
      follows:




**($
                in thousands)**
            
            **June
                30,2005**
            
            **December
                31,2004**Furniture,
                fixtures & office equipment
            
            $
            293
            
            $
            412Photo/Computer
                equipment
            
            
            433
            
            
            407Software
            
            
            138
            
            
            138Less:
                Accumulated Depreciation
            
            
            (440
            )
            
            (410
            )Total
                property & equipment, net
            
            $
            424
            
            $
            547








Depreciation
      and amortization in the amount of $712,000 and $424,000 are included in expenses
      for the six months ended June 30, 2005 and 2004, respectively, in the
      consolidated statements of operations and include depreciation and amortization
      for land and building, the photo collection and the contracts with
      photographers.





**NOTE
      E -- LONG-TERM NOTES RECEIVABLE**





In
      2003,
      SuperStock sold its operations in Chile to a third party and accepted a note
      receivable from the buyer for $80,000. The timing and amount of the payments
      against this note were determined to be insufficient to support the note’s book
      value. Using present value analysis, the value of the note at December 31,
      2004
      was calculated to be $18,000; the Company wrote the note receivable down by
      $49,000 at the end of 2004 to reflect this value. The balance of this note
      is
      $16,000 at June 30, 2005.





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





Goodwill
      of $1,049,000 represents the excess of the purchase price over the fair value
      of
      tangible and identifiable intangible assets associated with the acquisition
      of
      SuperStock, Inc. described in detail in Note C. Goodwill has been reduced by
      $301,000 to reflect the utilization of SuperStock’s net operating loss
      carryforward on the sale of the land and building.





Identifiable
      intangible assets with finite lives are shown net of amortization and are
      principally comprised of covenants not to compete, which are amortized over
      four
      years.





**NOTE
      G - CONTRACTS WITH PHOTOGRAPHERS**





Contracts
      with photographers ($1,031,000, net of amortization as of June 30, 2005) are
      attributable to the acquisition of SuperStock, Inc. These contracts have an
      average life of five years and are automatically renewable. Amortization of
      the
      photographer’s contracts is based on projected revenues expected to be generated
      over the estimated ten year life of the underlying images.





**NOTE
      H -- MINORITY INTEREST**





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





-
          12
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  The
      minority interest was recorded as if it were exchanged into a21 common stock
      at
      the closing price on the day of the acquisition.




**NOTE
      I -- OPERATING SEGMENTS**





The
      Company began operating domestically and internationally beginning February
      29,
      2004. The following table presents information about the Company’s domestic and
      international activity, including minority interest.





**($
                in thousands)****Domestic**
            
            **International**
            
            **Total**Three
                months ended June 30, 2005:Revenue
            
            $
            1,977
            
            $
            350
            
            $
            2,327Segment
                Loss
            
            
            (948
            )
            
            (37
            )
            
            (985
            )Segment
                Assets at June 30, 2005
            
            
            15,925
            
            
            428
            
            
            16,353Three
                months ended June 30, 2004:Revenue
            
            $
            2,142
            
            $
            385
            
            $
            2,527Segment
                Loss
            
            
            (263
            )
            
            (49
            )
            
            (312
            )Segment
                Assets at June 30, 2004
            
            
            18,263
            
            
            480
            
            
            18,743Six
                months ended June 30, 2005:Revenue
            
            $
            3,944
            
            $
            695
            
            $
            4,639Segment
                Loss
            
            
            (1,923
            )
            
            (44
            )
            
            (1,967
            )Segment
                Assets at June 30, 2005
            
            
            15,925
            
            
            428
            
            
            16,353Six
                months ended June 30, 2004:Revenue
            
            $
            2,825
            
            $
            500
            
            $
            3,325Segment
                Loss
            
            
            (889
            )
            
            (62
            )
            
            (951
            )Segment
                Assets at June 30, 2004
            
            
            18,263
            
            
            480
            
            
            18,743





Domestic
      segment information includes $417,000 and $419,000 of revenue and $292,000
      and
      $361,000 of account receivables, respectively, for the three months ended June
      30, 2005 and 2004, attributable to foreign agents utilized by a domestic
      subsidiary. Domestic segment information includes $900,000 and $831,000 of
      revenue and $292,000 and $361,000 of account receivables, respectively, for
      the
      six months ended June 30, 2005 and 2004, attributable to foreign agents utilized
      by a domestic subsidiary. International segment information reflects the
      operation of foreign subsidiaries. Those amounts are not based on the geographic
      origin of customers which is not readily determinable.





**NOTE
      J - DEBT FINANCINGS**





[1]
      Convertible Subordinated Notes Payable:





In
      February 2004, the Company received $1,250,000 in connection with the issuance
      of two-year convertible subordinated notes (due February 29, 2006) which accrued
      interest at 12% for the first six months of the term thereof, 13.5% for the
      next
      twelve months of the term thereof, and 15% for the last six months of ther
      term
      thereof and were convertible into the Company’s common stock along with 937,500
      callable warrants exercisable at prices between $0.45 and $1.35 per share.
      The
      notes were convertible at a price based on a 30% discount to a twenty day
      average market price of the Company’s common stock, subject to a ceiling of
      $2.00 and, beginning in the thirteenth month after the closing of the
      acquisition of SuperStock, a floor of $0.90.





-
          13
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  The
      Company allocated the proceeds received to the principal amount of the note
      and
      the warrants based upon the relative fair value method. The fair value of the
      warrants was determined using the Black Scholes pricing model. Of the proceeds,
      $145,000 was allocated to the warrants and was recorded as debt discount and
      additional paid-in capital and $1,105,000 was allocated to the notes. Based
      on
      the market value of the common shares issuable upon conversion, as compared
      to
      the proceeds allocated to the notes, further debt discount and additional
      paid-in capital of $1,105,000 was recorded for the beneficial conversion
      feature. The aggregate discount was being amortized over the two-year term
      of
      the note, and the carrying amount of the notes of $520,000 at December 31,
      2004
      is presented net of the unamortized debt discount. In February 2005, the Company
      repaid the notes and accrued interest (see item [3] below).




[2]
      Unsecured Notes Payable:





On
      February 29, 2004, the Company received $1,050,000 in connection with the
      issuance of unsecured debt in the form of promissory notes (the “Original
      Notes”), which accrued interest at 12% for up to twelve months along with
      630,000 callable warrants at $0.45 per share (the “Original Warrants”). In
      addition, the Company issued 63,000 warrants exercisable at $0.45 per share
      to
      an investment-banking firm in connection with the placement of the unsecured
      debt. The Original Notes matured on August 29, 2004, but provided for an
      automatic extension, if not paid, of six months and monthly extensions
      thereafter. The fair value of the warrants, which amounted to $245,000, was
      determined using the Black Scholes pricing model and was recorded as debt
      discount and additional paid-in capital. Since the notes were still outstanding
      as of August 29, 2004, the number of shares subject to warrants was increased
      by
      50% (315,000 callable warrants) at $0.45 per share. The fair value of the
      warrants issued for the six-month extension, which amounted to $31,000, was
      determined using the Black Scholes pricing model and was recorded as debt
      discount and additional paid-in capital. The discount was amortized over the
      six-month term of the promissory notes.





For
      every
      month thereafter until the Original Notes were amended, the Note holders were
      entitled to receive bonus warrants to purchase an additional 105,000 shares
      in
      the aggregate of the Company’s common stock at $0.45 per share (equivalent to
      one-ninth of the then total shares underlying the Original Warrants). During
      the
      four months ended May 2005, a total of 420,000 bonus warrants were issued.
      The
      fair value of the 420,000 bonus warrants, which amounted to $19,000, was
      determined using the Black Scholes pricing model and recorded as expense and
      additional paid-in capital. Upon the amendment and restatement of the Original
      Notes and issuing Restated Warrants, (as defined below), the holders surrendered
      their Original Notes and Original Warrants and all monthly bonus
      warrants.





On
      June
      24, 2005, the Company amended and restated these unsecured notes (the “Restated
      Notes”). The aggregate amount outstanding under the Restated Notes remains at
      $1,050,000. The Restated Notes mature on July 15, 2006 (the “Maturity Date”) and
      bear interest due quarterly commencing on September 30, 2005 at a rate of 12%
      per annum, which increases to 18% per annum after the Maturity Date. The initial
      interest payment due September 30, 2005 will include interest accrued from
      the
      February 29, 2004 date of issuance, and is estimated to be approximately
      $200,000. The Restated Notes include customary events of default, including
      the
      Company’s failure to pay any principal or interest when due, the Company’s
      insolvency or bankruptcy, or sale of substantially all of the Company’s assets.
      Upon the occurrence of an event of default, a Restated Note becomes due and
      payable at the written demand of the holder thereof.





In
      connection with the issuance of the Restated Notes, the note holders received
      amended and restated warrants that expire February 28, 2009 (the “Restated
      Warrants”). An aggregate of 945,000 shares of the Company’s common stock (the
“Restated Warrant Shares”) may be purchased with the Restated Warrants at $0.225
      per share (subject to adjustment from time to time), 630,000 of which shares
      were previously registered under the Securities Act pursuant to the Company’s
      registration statement on Form SB-2 (333-117929). Upon any prepayment of the
      Restated Notes, a pro rata portion of the Restated Warrants will be cancelled.
      The aggregate number of Restated Warrant Shares shall not increase unless the
      Restated Notes remain outstanding after the Maturity Date, in which case bonus
      warrants will be issued each month to the holders of the Restated Warrants
      to
      purchase an aggregate of 39,375 of the Restated Warrant Shares until the
      Restated Notes are repaid in full. The exercise price of these bonus warrants
      shall be the lower of $0.225 per share or 50% of the average closing price
      of
      the Company’s common stock for the twenty trading days prior to and including
      July 15, 2006.




-
          14
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  [3]
      Senior Secured Notes Payable




On
      February 22, 2005, a21, Inc. consummated a $2,250,000 financing (the
      "Financing") in the form of two-year interest only senior (non-convertible)
      secured notes and retired $1,250,000 of its two-year convertible subordinated
      notes issued in conjunction with a21's acquisition of its SuperStock subsidiary
      in February 2004.The investors in the Financing were existing investors of
      a21
      and were also holders of the Subordinated Notes (as defined below). In the
      Financing, SuperStock issued new 12% senior secured notes due in February 2007
      in the principal amount of $2,250,000 (the "Senior Notes") and retired all
      of
      its outstanding 13% convertible subordinated notes due February 28, 2006 (the
      "Subordinated Notes").





Five
      year
      warrants to purchase 937,500 shares of a21 common stock originally issued to
      the
      holders of the Subordinated Notes were amended and restated whereby, inclusive
      of the right to purchase an additional 125,000 shares of a21 common stock,
      the
      holders of the Senior Notes received two year warrants to purchase an aggregate
      of 500,000 shares of a21 common stock at $0.225 per share and an aggregate
      of
      562,500 shares of a21 common stock at $0.45 per share (together, the
      "Warrants"). The Senior Notes may be prepaid without penalty at any time. They
      also have a provision which adds 4% per year to their principal balance, due
      at
      maturity. In connection with the issuance of the Senior Notes, SuperStock
      entered into a security agreement, dated as of February 22, 2005 (the "Security
      Agreement"), pursuant to which it granted a first priority security interest
      in
      substantially all of the Company’s current and future assets.





During
      the first quarter of 2005, a21, Inc. recorded a new debt discount of $39,000
      for
      the excess of the fair value of the warrants to purchase 1,062,000 shares of
      a21
      common stock on the date of issuance over the fair value of the warrants to
      purchase 937,500 shares of a21 common stock calculated at the time of amendment
      (reflecting the remaining term and the stock price on that date). The debt
      discount is being recognized as a financing expense over the term of the Senior
      Notes. The effective interest rate is 17%.





In
      connection with the Financing, SuperStock repaid in their entirety $1.25 million
      of the Subordinated Notes as of February 22, 2005 which had a carrying amount
      of
      $617,000, net of debt discount. In connection with repaying the Subordinated
      Notes, SuperStock also terminated the Exchange Agreements which it had entered
      into with the holders of the Subordinated Notes and which set forth the terms
      pursuant to which the Subordinated Notes could have been converted into shares
      of a21 common stock. The Company reduced additional paid-in capital by $263,000,
      representing the intrinsic value of the beneficial conversion feature when
      the
      debt was repaid and recognized a loss on extinguishment of debt of
      $371,000.





**NOTE
      K -- LOAN PAYABLE - SALE OF SUPERSTOCK LAND AND BUILDING**





On
      June
      30, 2004, the Company completed the sale and leaseback of the land and
      approximately 73,000 square foot building in which the Company’s headquarters
      are located in Jacksonville, Florida. The facility was sold for $7.7 million
      and
      resulted in net proceeds of $7,477,000, of which $4,554,000 was used to repay
      a
      bank note that was secured by a first mortgage on the facility and $1,576,000
      was used to repay other indebtedness to the selling shareholders of SuperStock.
      The building was leased back for a term of twenty years. The lease provides
      the
      Company with two five-year renewal options at specified payments.





The
      Company has entered into an agreement to sublease a significant portion of
      its
      facility, which provides payments to the Company aggregating $3.5 million over
      a
      six-year period.





-
          15
          -


a21,
        Inc.
        and Subsidiaries (Unaudited)
 Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  Based
      on
      the terms of the subleasing 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 10.14% based on the payment
      terms of the lease. The land and building are included in property and equipment
      and are being depreciated on a straight-line basis over the twenty-year term
      of
      the lease.




The
      following table summarizes the Company’s annual maturities under the loan
      payable as of June 30, 2005:




**Year
                    EndingJune 30,****($
                    in thousands)**2006
                $
                92007
                
                262008
                
                472009
                
                702010
                
                101Thereafter
                
                7,2067,459Less:
                    Current Portion
                
                (9
                )Long
                    Term Portion
                $
                7,450




**NOTE
      L -- STOCKHOLDERS’ EQUITY (CAPITAL DEFICIT)**





[1]
      Preferred stock:





The
      Company exchanged all of its pre-acquisition preferred stock (1,500,000
      pre-adjusted shares) as part of its exchange agreement with Saratoga on April
      30, 2002. The Company is authorized to issue 100,000 shares of its $.001 par
      value preferred stock.





At
      June
      30, 2005 and 2004, there are no shares of a21, Inc. preferred stock issued
      or
      outstanding.





[2]
      Common stock:





The
      Company is authorized to issue 100,000,000 shares of its $.001 par value common
      stock.





In
      February 2004, the Company received aggregate gross proceeds of $5.9 million
      in
      equity and debt financings. The Company received proceeds of $3.0 million (net
      proceeds of $2.8 million), and $600,000 of liabilities owed by the Company
      were
      exchanged, in connection with the issuance of 18,000,000 shares of common stock
      along with 5,508,000 warrants exercisable at $0.20 per share and 19,828,800
      callable warrants exercisable at prices between $0.225 and $1.35 per share.
      In
      addition, the Company issued 450,000 shares of common stock to an
      investment-banking firm in connection with the placement of the equity. The
      liabilities that were exchanged included $475,000 of notes payable to affiliates
      and $125,000 of accrued compensation due to the Company’s Chairman and
      President.





During
      the year ended December 31, 2004, the Company issued 490,000 shares of its
      common stock for services and payment of equity placement costs and 670,000
      shares of its common stock for services in settlement of accrued compensation
      and compensation expense of $147,000 to officers and consultants. During the
      three months ended June 30, 2005, the Company issued 605,000 shares of its
      restricted common stock to its five non-employee directors as compensation
      for
      their services of which 225,000 are subject to repurchase by the Company at
      $.01
      per share as of June 30, 2005, and the Company issued 2,410,000 shares of its
      restricted common stock to three officers of the Company pursuant to the terms
      of their employment agreements of which 1,790,000 are subject to repurchase
      by
      the Company at $.01 per share as of June 30, 2005. The stock grants for the
      three month period ended June 30, 2005 resulted in deferred compensation of
      $249,000 and compensation expense of $120,000 recorded at June 30,
      2005.





-
          16
          -


a21,
      Inc.
      and Subsidiaries (Unaudited) Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  [3]
      Stock
      options and warrants:




Options
      and warrants have been granted to officers, directors and employees based upon
      employment agreements and other agreements with investors at the discretion
      of
      the Board of Directors.





In
      March
      2005, the Company’s Board of Directors approved the 2005 Stock Incentive Plan
      (the “2005 Plan”) and, subject to shareholder approval, the issuance of up to
      6,000,000 shares of which up to 2,000,000 are in the form of options to the
      employees of SuperStock as agreed per the Amended and Restated Stock Purchase
      and Recapitalization Agreement by and among a21, SuperStock and its stockholders
      dated February 29, 2004. The 2005 Plan authorizes the Company’s board of
      directors to award Incentive Stock Options, Nonstatutory Stock Options, stock
      appreciation rights, performance shares, restricted stock or unrestricted stock
      to the employees and independent contractors, including consultants, directors,
      advisors and other service providers of the Company. Certain options and
      warrants to be granted under the 2005 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 2005 Plan
      will be nonqualified options or warrants which are not intended to qualify
      as
      ISOs. A committee selected by the Company's 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 2005 Plan expire after a five-year
      period and are subject to acceleration upon the occurrence of certain events.
      As
      of June 30, 2005, 4,092,704 options were granted to employees under this plan
      and 1,907,296 options remained available for grant under the 2005 Plan. On
      their
      respective grant dates, the exercise price of the options were all at or above
      the market price of the Company’s common shares.





Pursuant
      to the Company’s 2002 Directors, Officers And Consultants Stock Option, Stock
      Warrant And Stock Award Plan, as amended (the "2002 Plan"), 3,000,000 shares
      of
      the Company's common stock are reserved for issuance. The 2002 Plan authorizes
      the Company’s board of directors to issue warrants, options, restricted or
      unrestricted common stock and other awards to the employees, consultants and
      directors of the Company and its 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 the Company's 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, 2005 there were 496,264 options available for grant under the 2002
      Plan.




**NOTE
      M -- COMMITMENTS AND OTHER MATTERS**





[1]
      Consulting and advisory services agreements:





In
      September 2002, the Company entered into a three-year agreement with a
      consultant to act as the Company's Chairman of the Board. The agreement calls
      for initial payments of $15,000 per month, to be adjusted for certain events,
      as
      defined. Compensation may be payable in common shares of the Company at the
      individual's option in the event that the Company does not make above payments
      in cash at the end of each month. The rate at which common shares were issued
      was 150% of cash compensation due or restricted common shares at 200% of the
      cash compensation due. During 2003 the Company issued 1,013,005 shares of common
      stock as consideration for $105,000 of accrued compensation. In addition, in
      January 2004, the Company awarded the consultant an option to purchase 1,505,514
      common shares at $0.30. In May 2004, the consultant agreed to serve as Chief
      Executive Officer. The consulting agreement is for a term of three years, but
      may be terminated by the consultant’s 90 days' notice or by the Company upon 180
      days notice; provided, however that in the event of termination without cause
      (as defined in the consulting agreement), the consultant will be entitled to
      continue to receive his annual base compensation for the term of any
      non-competition agreement which he may enter into with the Company. This
      consulting agreement has been terminated and the Company and executive officer
      have entered into a new employment agreement.





-
          17
          -


a21,
      Inc.
      and Subsidiaries (Unaudited) Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  Pursuant
      to a consulting agreement dated July 1, 2002 between the Company and one of
      its
      shareholders, the stockholder agreed to serve as a consultant to the Company
      and
      to provide marketing and consulting services. As compensation for his services,
      the Company issued the stockholder a warrant to purchase 50,000 shares of common
      stock at an exercise price of $0.25 per share and issued 30,000 shares of common
      stock in 2002 and 30,000 shares in 2003. The agreement with the Company has
      expired and the Company entered into an employment contract with this executive
      officer, who currently serves as Vice Chairman, President and Chief Financial
      Officer of a21 and Chief Executive Officer of SuperStock. Prior to these
      positions, he served as Chief Strategic Officer from June 2004 to December
      2004
      and from February 2001 to May 2004, he served as an advisor.




In
      September 2002, the Company entered into a two-year agreement with an employee
      to act as the Company's President. The agreement called for initial payments
      of
      $15,000 per month, to be adjusted for certain events, as defined. Compensation
      was payable in common shares of the Company at the option of the individual
      in
      the event that the Company does not make above payments in cash at the end
      of
      each month. The rate at which common shares were issued was 150% of cash
      compensation due or restricted common shares at 200% of the cash compensation
      due. During 2003 the Company issued 1,138,005 shares of common stock as
      consideration for $120,000 of accrued compensation. The employee was also
      provided with options to purchase up to 400,000 common shares of the Company
      with 160,000 options exercisable at $0.50, 120,000 exercisable at $1.00 and
      120,000 exercisable at $1.50. Such options will expire May 1, 2007. In addition,
      in January 2004, the Company awarded the employee an option to purchase 577,941
      common shares at $0.30. The agreement with the Company has expired and the
      Company entered into a new employment contract with this executive officer,
      who
      currently serves as Chief creative Officer of a21, and President and Chief
      Creative Officer of SuperStock.





[2]
      Lease
      commitments:




The
      capital lease agreement for the Company’s headquarters facility (see Note K)
      includes a requirement to maintain a security deposit, funded as a letter of
      credit in the amount of $634,000, which is reflected as restricted cash in
      the
      balance sheet as of June 30, 2005. The lease agreement also requires the Company
      to fund additional $30,000 deposits on the first day of each July, October,
      January, and April beginning July 1, 2005 up to and including July 1, 2006,
      for
      a total of $750,000. The first additional funding of $30,000 was made on April
      21, 2005.





In
      a
      lease agreement for SuperStock Limited in the UK, the Company has 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, SuperStock Limited would
      be liable for £51,000 per year under the covenants in the lease in the event the
      company who has sublet the facility is unable to perform under such
      terms.





[3]
      Litigation and settlement of claims:





The
      Company has been involved in various claims and lawsuits, primarily with former
      officers and employees, both for and against the Company. Management believes
      that there are no such matters outstanding that would have a material adverse
      effect on the Company's results of operations and financial position.





[4]
      Other:





In
      April
      2003, the Company was contacted by an attorney representing a holder of certain
      Nonexchanged Shares claiming that such shares are exchangeable into shares
      of
      the Company's common stock. The Company believes that the shares are not
      exchangeable since the exchange agreement has expired. However, the Company
      cannot currently determine the ultimate outcome regarding the Nonexchanged
      Shares. The Company has not been contacted since the initial contact in April
      2003.





-
          18
          -


a21,
      Inc.
      and Subsidiaries (Unaudited) Notes
        to
        Condensed Consolidated Financial Statements
 June
        30,
        2005
  [5]
      Employment Agreements:




On
      May
      13, 2005, a21 executed an employment agreement with its Chairman and Chief
      Executive Officer. On May 13, 2005, a21 and SuperStock executed an employment
      agreement with a21’s Vice Chairman, President and Chief Financial Officer, who
      is also the Chief Executive Officer of SuperStock, and a21’s Chief Creative
      Officer, who is also the President and Chief Creative Officer of SuperStock.
      Each of these employment agreements is for a term of three years and includes
      a
      confidentiality covenant, a non-competition covenant and a prohibition on the
      solicitation of the employees, suppliers, vendors and customers of a21 and
      SuperStock.





In
      connection with executing the employment agreements with three of its executive
      officers on May 13, 2005, effective as of May 1, 2005, the Company issued
      2,410,000 shares of its restricted common stock to these executive officers
      of
      which 1,790,000 are subject to repurchase by the Company at $.01 per share
      as of
      June 30, 2005, and granted five-year stock options to purchase 2,000,000 shares
      of common stock, which options are exercisable at $0.30 per share and which
      fully vest by February 28, 2007. As of May 1, 2005, the Company issued to its
      non-employee directors 510,000 shares of its restricted common stock of which
      135,000 are subject to repurchase by the Company at $.01 per share as of June
      30, 2005, and granted to these directors five-year stock options to purchase
      510,000 shares of common stock, which options are exercisable at $0.30 per
      share
      and which fully vest by December 1, 2005. As of June 13, 2005, the Company
      issued to a new non-employee director 95,000 shares of its restricted common
      stock of which 90,000 are subject to repurchase by the Company at $.01 per
      share
      as of June 30, 2005, and granted to this director a five-year stock option
      to
      purchase 95,000 shares of common stock, which options are exercisable at $0.30
      per share and which fully vest by December 1, 2006. The above restricted stock
      grants resulted in deferred compensation of $249,000 and compensation expense
      of
      $120,000 recorded at June 30, 2005.





**NOTE
      N - SUBSEQUENT EVENTS**




In
      August
      2005, the Company (i) issued 150,000 shares of its restricted common stock
      to an
      investor relations consultant, (ii) appointed Thomas V. Butta its Chief
      Financial Officer (in addition to his roles as Vice Chairman and President),
      after accepting the resignation of its then Chief Financial Officer, William
      E.
      Murphy, IV, and (iii) terminated Eisner LLP and engaged BDO Seidman, LLP as
      its
      principal independent accountant. In September 2005, the Company (i) issued
      7,000,000 shares of its restricted common stock with piggyback registration
      rights to accredited investors for $1,050,000 in cash; (ii) concluded that
      its
      Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004 and
      Quarterly Report of Form 10-QSB for the period ended March 31, 2005 needed
      to be
      amended and the financial statements therein could no longer be relied upon,
      and
      (iii) filed an amended Annual Report on Form 10-KSB for the fiscal year ended
      December 31, 2004 and amended Quarterly Report on Form 10-QSB for the period
      ended March 31, 2005.




**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 financial statements of 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, 2004.*




-
          19
          -


PRELIMINARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS




The
      statements contained in this Form 10-QSB that are not purely historical are
      forward-looking statements within the meaning of Section 27A of the Securities
      Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
      1934,
      as amended. These include statements about our expectations, beliefs, intentions
      or strategies for the future, which are indicated by words or phrases such
      as
“anticipate,”“expect,”“intend,”“plan,”“will,”“we believe,”“management believes”
      and similar words or phrases. The forward-looking statements are based on our
      current expectations and are subject to certain risks, uncertainties and
      assumptions. The Company’s 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**





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. Through our subsidiary, SuperStock, we aggregate visual content from
      photographers, photography agencies, archives, libraries and private collections
      and license the visual content to our customers. Our customer base consists
      of
      four major groups: creative (advertising and design agencies), editorial
      (publishing and media entities), corporate (in-house communications departments
      and outside corporate communications firms) and consumers (the general public).
      Our products are sold directly and through a global network of distributors
      in
      approximately 100 countries. We are headquartered in Jacksonville, Florida
      operate a Company-owned office in the United Kingdom and conduct operations
      in
      Canada.





**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. The preparation
      of financial statements in conformity with accounting principles generally
      accepted in the United States of America 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
      condensed consolidated financial statements included in this Form
      10QSB.





**RESULTS
      OF OPERATIONS**





**THREE
      MONTHS ENDED JUNE 30, 2005 COMPARED TO THREE MONTHS ENDED JUNE 30,
      2004**





REVENUES.
      Revenues were $2,327,000 in the three months ended June 30, 2005 compared to
      $2,527,000 in the three months ended June 30, 2004. The decrease in revenues
      in
      the three months ended June 30, 2005 is attributable to a decrease in domestic
      U.S. sales. Sales in the three months ended June 30, 2005 resulting from both
      international locations and attributable to foreign agents remained constant
      with the three months ended June 30, 2004. The Company increased marketing
      efforts and costs in the three months ended June 30, 2005 in an effort to
      increase revenues in both domestic and international locations, as well as
      through foreign agents.





GROSS
      PROFIT. Gross profit was $1,611,000 in the three months ended June 30, 2005
      compared to $1,752,000 in the three months ended June 30, 2004. As a percentage
      of revenues, gross profit was 69% for each in the three months ended June 30,
      2005 and 2004, respectively. Gross profit may vary in any period depending
      on
      the relative mix of stock photography distributed that is either licensed from
      third parties or owned by the Company.





-
          20
          -


SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative
      expenses (“S,G&A” ) were $1,954,000 in the three months ended June 30, 2005
      compared to $1,312,000 in the three months ended June 30, 2004. This increase
      was primarily attributable to an increase in personnel related costs (primarily
      new hires and full time consultants), and marketing expenses related to existing
      and newly created product lines.




DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $359,000 in the three months
      ended June 30, 2005 as compared to $325,000 in the three months ended June
      30,
      2004. This increase was primarily attributable to the reclassification of assets
      recorded in connection with the acquisition of SuperStock, resulting in an
      increase in amortization expense that was recognized in the three month period
      ended June 30, 2005





NET
      INTEREST EXPENSE. Interest expense was $332,000 in the three months ended June
      30, 2005 as compared to $379,000 in the three months ended June 30, 2004. This
      decrease is primarily attributable to the Company (i) no longer amortizing
      the
      debt discount attributable to the Company’s convertible subordinated notes which
      were repaid in February 2005, (ii) no longer having interest attributable to
      notes due to the sellers of SuperStock which were repaid in June 2004, and
      (iii)
      no longer having interest attributable to the note which was secured by the
      Company’s facility and was repaid in June 2004 which (i,ii and iii) collectively
      more than offset interest attributable to the lease of the SuperStock facility
      and the increase in interest due to the senior notes.





NET
      LOSS.
      Net loss was $985,000 or $0.02 per share in the three months ended June 30,
      2005
      as compared to net loss of $312,000 or $0.01 per share in the three month period
      ended June 30, 2004. The increase in net loss is principally due to the decrease
      in domestic U.S. revenues and increase in S,G & A expenses, primarily
      attributable to an increase in personnel related costs (primarily new hires
      and
      full time consultants) and marketing expenses related to existing and newly
      created product lines and a loss on extinguishment of debt of
      $371,000 .





**SIX
      MONTHS ENDED JUNE 30, 2005 COMPARED TO SIX MONTHS ENDED JUNE 30,
      2004**





Prior
      to
      the acquisition of SuperStock in February 2004, the Company was a development
      stage enterprise. All financial information presented for the six months ended
      June 30, 2004 includes the accounts of SuperStock from the acquisition date
      of
      February 29, 2004 through June 30, 2004.





REVENUES.
      Revenues were $4,639,000 in the six months ended June 30, 2005 compared to
      $3,325,000 in the six months ended June 30, 2004. The increase in revenues
      in
      the six months ended June 30, 2005 is attributable to SuperStock’s revenue
      generation for the full six months ended June 30, 2005 as compared to the period
      from February 29, 2004 through June 30, 2004 for the six months ended June
      30,
      2004.





GROSS
      PROFIT. Gross profit was $3,211,000 in the six months ended June 30, 2005
      compared to $2,338,000 in the six months ended March 31, 2004. As a percentage
      of revenues, gross profit was 69% and 70% in the six months ended June 30,
      2005
      and 2004, respectively. Gross profit as a percentage of revenues may vary in
      any
      period depending on the relative mix of stock photography distributed that
      is
      either licensed from third parties or owned by the Company.





SELLING,
      GENERAL AND ADMINISTRATIVE EXPENSES. S,G & A expenses were $3,520,000 in the
      six months ended June 30, 2005 compared to $2,398,000 in the six months ended
      June 30, 2004. This increase was primarily attributable to the increase in
      personnel related costs and marketing expenses, in addition to the SuperStock
      total S,G & A expenses for the full six months ended June 30, 2005 compared
      to the period from February 29, 2004 through June 30, 2004 for the six months
      ended June 30, 2004.





DEPRECIATION
      AND AMORTIZATION. Depreciation and amortization was $712,000 in the six months
      ended June 30, 2005 as compared to $424,000 in the six months ended June 30,
      2004. This increase was primarily attributable to depreciation and amortization
      expenses for the full six months ended June 30, 2005 as compared to the period
      from February 29, 2004 through June 30, 2004 for the six months ended June
      30,
      2004.





-
          21
          -


NET
      INTEREST EXPENSE. Interest expense was $729,000 in the six months ended June
      30,
      2005 as compared to $519,000 in the six months ended June 30, 2004. This
      increase is primarily attributable to the amortization of debt discount and
      additional interest due on unsecured notes payable, convertible subordinated
      notes payable, senior secured notes payable, and recorded interest on the loan
      payable resulting from the Company’s sale and lease of the SuperStock
      facility.




OTHER
        EXPENSE, NET. Other expense, net was $217,000 for the six months ended June
        30,
        2005 as compared to other income, net of $52,000 in the six months ended
        June
        30, 2004. The increase in expense reflects in a $371,000 loss on the
        extinguishment of the convertible subordinated notes payable.





NET
      LOSS.
      Net loss was $1,967,000 or $0.05 per share in the six months ended June 30,
      2005
      as compared to net loss of $951,000 or $0.03 per share in the six month period
      ended June 30, 2004. The increase in net loss is principally due to an increase
      in selling, general and administrative expenses without a corresponding relative
      increase in revenues, a decrease in U.S. domestic revenues in the three months
      ended June 30, 2005 as compared to the comparable period last year an increase
      in interest expense and a loss upon extinguishment of debt of
      $371,000.




**LIQUIDITY
      AND CAPITAL RESOURCES**





As
      of
      June 30, 2005, the Company had $314,000 of cash and cash equivalents and working
      capital deficit of $217,000 as compared to $717,000 in cash and a working
      capital deficit of $91,000 at December 31, 2004.





Net
      cash
      used in operating activities for the six months ended June 30, 2005 was
      $1,199,000 as compared to net cash used in operating activities of $161,000
      for
      the six months ended June 30, 2004. The increase in net cash used in operating
      activities in the six months ended June 30, 2005 was due primarily to the net
      loss of $1,807,000 adjusted for $712,000 of depreciation and amortization and
      a
      $371,000 loss on extinguishment of debt, in addition to a decrease in accounts
      payable and accrued expenses of $230,000 and an increase in accounts receivable
      of $349,000. The increase in receivables was primarily due to an increase in
      revenues in the three months ended June 30, 2005 compared to revenues in the
      three months ended December 31, 2004, in addition to an increase in long-term
      accounts receivable. Net cash used in operating activities in the six months
      ended June 30, 2004 was principally due to a net loss of $951,000 adjusted
      for
      $424,000 of depreciation and amortization, in addition to an increase in
      accounts receivable of $207,000 and an increase in prepaid expenses and other
      current assets of $47,000, partially offset by an increase in accounts payable
      and accrued expenses of $121,000.





Net
      cash
      used in investing activities for the six months ended June 30, 2005 was $270,000
      as compared to net cash used in investing activities for the six months ended
      June 30, 2004 of $1,902,000. Net cash used in investing activities in the six
      months ended June 30, 2005 was primarily due to the purchase of leasehold
      improvements. Net cash used in investing activities in the six months ended
      June
      30, 2004 was primarily from the net cash investment in the acquisition of
      SuperStock, in the amount of $1,417,000, receipt of the long-term deposit from
      the building tenant of $384,000 and the purchase of property and equipment
      of
      $101,000.





Net
      cash
      provided by financing activities for the six months ended June 30, 2005 was
      $970,000, as compared to net cash provided by financing activities of $4,616,000
      for the six months ended June 30, 2004. Net cash provided by financing
      activities in the six months ended June 30, 2005 was mainly due to the new
      $2,250,000 senior secured notes payable and the retirement of the $1,250,000
      convertible subordinated notes payable (see Note J). Net cash provided by
      financing activities in the six months ended June 30, 2004 was primarily from
      net proceeds of $7,516,000 from the sale of the land and building, and net
      proceeds of $2,790,000 in connection with the issuance of common stock and
      warrants, proceeds of $2,300,000 from the issuance of notes payable and
      warrants, which was partially offset by the repayment of the building mortgage
      of $4,554,000, repayment of the revolving credit line of $1,700,000 and the
      repayment of $1,736,000 of debt.





-
          22
          -


The
      Company intends to raise additional capital through financings by the issuance
      of debt, equity or other potential transactions to support the Company’s
      business plan for internal growth and growth by acquisitions. During the period
      subsequent to June 30, 2005, the Company raised in excess of $1,050,000 of
      additional capital through the sale of its common stock.  While the
      Company
      believes that the amount of its current capital will be sufficient for the
      next
      twelve months based on its current internal growth plan, the Company will need
      to raise additional capital to conclude any potential growth by acquisitions.
       Because the assumptions (upon which its business plan was based) are
      subject to change, there can be no guarantee that the Company will have
      sufficient capital or will be able to obtain sufficient capital to execute
      its
      business plan. Additionally, if the Company needs to secure additional
      capital to fund its business plan, there can be no guarantee that the Company
      will be successful in closing any debt, equity or other potential transactions
      on terms favorable to the Company, if at all.





**OFF-BALANCE
      SHEET ARRANGEMENTS**





Not
      applicable.




**RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS**





None




**ITEM
      3. CONTROLS AND PROCEDURES**





**EVALUATION
      OF DISCLOSURE CONTROLS AND PROCEDURES**





The
      Company maintains disclosure controls and procedures, as defined in Rules
      13a-15(e) and 14d-15(e) of the Securities Exchange Act of 1934 (the “Exchange
      Act”), that are designed to ensure that information required to be disclosed in
      its Exchange Act reports is recorded, processed, summarized and reported within
      the time periods specified in the Securities and Exchange Commission’s rules and
      forms, and that such information is accumulated and communicated to the
      Company’s management, including its principal executive officer and principal
      financial officer, as appropriate, to allow timely decisions regarding required
      disclosure.





Under
      the
      supervision and with the participation of the Company's management, including
      its principal executive officer and the principal financial officer, the Company
      conducted an evaluation of the effectiveness of the design and operation of
      its
      disclosure controls and procedures as of the end of the period covered by this
      report (the “Evaluation Date”). Based on this evaluation, the Company's
      principal executive officer and principal financial officer concluded as of
      the
      Evaluation Date that the Company's disclosure controls and procedures were
      not
      effective at ensuring that the material information required to be disclosed
      in
      the Company’s Exchange Act reports is recorded, processed, summarized and
      reported as required in applicable SEC rules and forms because of the
      deficiencies in internal controls over financial reporting described
      below.





The
      Company has identified a material weakness in the design or operation of
      internal controls that could adversely affect its ability to record, process,
      summarize and report interim financial data. The material weakness identified
      pertains specifically to the recording of convertible debt instruments and
      deferred tax assets.





There
      were no changes in the Company's internal controls over financial reporting
      during the quarter ended June 30, 2005 that materially affected or are likely
      to
      affect the Company’s internal control over financial reporting.




-
          23
          -


**PART
      II - OTHER INFORMATION ITEM**





**ITEM
      1. LEGAL PROCEEDINGS**





We
      are
      involved from time to time in litigation that arises in the ordinary course
      of
      our business. We believe that any potential adverse determination in any pending
      action will not have a material adverse effect on our business, financial
      condition or results of operations.





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





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None





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





None





**ITEM
      5. OTHER INFORMATION**





None





**ITEM
      6. EXHIBITS**





The
      following exhibits are filed as part of this report:





**EXHIBIT****NUMBER**
              **DESCRIPTION**10.21
              Employment
                  Agreement between a21, Inc. and Albert H. Pleus. (1)10.22
              Employment
                  Agreement between a21, Inc., SuperStock, Inc. and Thomas V. Butta
                  (1)10.23
              Employment
                  Agreement between a21, Inc., SuperStock, Inc. and Haim Ariav
                  (1)10.24
              Form
                  of Amended and Restated Non-negotiable 12% Promissory Note
                  (2)10.25
              Form
                  of Amended and Restated Common Stock Purchase Warrant
                  (2)31.1*
              Certification
                  of Principal Executive Officer Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.31.2*
              Certification
                  of Principal Financial Officer Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.32.1*
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of
                  2002.
 *
          Filed
          herewith (1)
            Incorporated herein by reference to the Registrant’s Current Report on form 8-K
            filed with the SEC on May 13, 2005. (2)
              Incorporated herein by reference to the Registrant’s Current Report on form 8-K
              filed with the SEC on June 30, 2005.
  -
            24
            -


**SIGNATURES**




In
      accordance with 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:
                September 19, 2005
            By:
                /s/ ALBERT H. PLEUSAlbert
                H. Pleus
              Chairman
                and Chief Executive Officer
              (Principal
                Executive Officer)Date:
                September 19, 2005
            By:
                /s/ THOMAS V. BUTTAThomas
                V. Butta
              Vice
                Chairman, President and Chief Financial Officer
              (Principal
                Financial Officer)