PRO FORMA FINANCIAL STATEMENTS


EXHIBIT 99.3

UNAUDITED CONDENSED PRO FORMA CONSOLIDATED INCOME STATEMENTS AND BALANCE SHEETS

YEAR ENDED DECEMBER 31, 2005 AND THREE MONTHS ENDED MARCH 31, 2006
The following unaudited condensed pro forma income statements and balance sheets for the year ended December 31, 2005 and the three months ended March 31, 2006, respectively, are derived from a21’s audited historical consolidated financial statements for the year ended December 31, 2005 and unaudited historical consolidated financial statements for the three months ended March 31, 2006, and ArtSelect’s audited historical financial statements for the year ended December 31, 2005 and unaudited historical financial statements for the three months ended March 31, 2006, after giving effect to the pro forma adjustments described in the notes to the Pro Forma Consolidated Financial Information. Such adjustments have been determined as if the acquisition of ArtSelect took place on January 1, 2005 and January 1, 2006, respectively, the first day of the financial periods presented in the Pro Forma Consolidated Financial Information.



PRO FORMA FINANCIAL STATEMENTS


INCOME STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2005
(thousands, except share amounts)
              
Consolidated
  
   
a21
 
ArtSelect
 
Adjustments
  
Proforma
  
                   
Revenue, net
  
$
9,563
  
$
11,739
  
$
-
  
$
21,302
  
Cost of Revenue
    
3,090
   
5,213
   
-
   
8,303
 
Selling, general and administrative
    
7,401
   
6,025
   
-
   
13,426
 
Depreciation and amortization
    
1,683
   
353
   
1,200
   
3,236
 
TOTAL OPERATING EXPENSES
    
12,174
   
11,591
   
1,200
   
24,965
 
OPERATING (LOSS) INCOME
    
(2,611
)
  
148
   
(1,200
)
  
(3,663
)
                           
Interest expense, net
    
(1,380
)
  
(603
)
  
217
    
(1,766
)
Other income, net
    
(678
)
  
3
   
-
   
(675
)
NET LOSS BEFORE TAXES
    
(4,669
)
  
(452
)
  
(983
)
  
(6,104
)
Income tax
    
(105
)
  
-
   
-
   
(105
)
Deemed dividends
    
(219
)
  
-
         
(219
)
NET LOSS
    
($4,993
)
  
($452
)
  
($983
)
  
($6,428
)
                           
NET LOSS PER SHARE, BASIC AND DILUTED
    
(0.10
)
              
(0.12
)
                           
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED
    
47,723,202
         
4,950,000
   
52,673,202
 

See accompanying notes to the Unaudited Condensed Pro Forma Consolidated Financial Information



PRO FORMA FINANCIAL STATEMENTS

BALANCE SHEETS AS OF DECEMBER 31, 2005
(thousands, except share amounts)
              
Consolidated
  
   
a21
 
ArtSelect
 
Adjustments
  
Proforma
  
ASSETS
                  
Cash and cash equivalents
  
$
1,194
  
$
284
  
$
-
    
1,478
  
Accounts receivable, net
    
1,840
    
653
    
-
    
2,493
  
Inventory
    
156
    
646
    
-
    
802
  
Other
    
277
    
32
    
80
    
389
  
Total current assets
    
3,467
    
1,615
    
80
    
5,162
  
                           
Property and equipment, net
    
7,602
    
250
    
-
    
7,852
  
Software, net
    
-
    
404
    
-
    
404
  
Goodwill
    
2,263
    
-
    
3,147
    
5,410
  
Intangible assets, net
    
3,882
    
-
    
4,800
    
8,682
  
Other
    
3,300
    
7
    
-
    
3,307
  
Total assets
  
$
20,514
  
$
2,276
  
$
8,027
  
$
30,817
  
                           
LIABILITIES AND STOCKHOLDERS EQUITY
                          
Accounts payable
  
$
1,351
  
$
730
    
-
  
$
2,081
  
Notes payable - current portion
    
1,050
    
28
    
-
    
1,078
  
Other
    
2,012
    
252
    
-
    
2,264
  
Total current liabilities
    
4,413
    
1,010
    
-
    
5,423
  
                           
Notes Payable
    
2,442
    
-
    
6,850
    
9,292
  
Loan Payable from sale leaseback of building
    
7,438
    
-
    
-
    
7,438
  
Preferred Stock
    
-
    
9,371
    
(9,371
)
  
-
  
Minority interest
    
2,800
    
-
          
2,800
  
                           
Stockholders Equity
    
3,421
    
(8,105
)
  
10,548
   
5,864
  
Total Liabilities and Stockholders Equity
  
$
20,514
  
$
2,276
  
$
8,027
  
$
30,817
  

See accompanying notes to the Unaudited Condensed Pro Forma Consolidated Financial Information



PRO FORMA FINANCIAL STATEMENTS

INCOME STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2006
(thousands, except share amounts)
              
Consolidated
  
 
  
a21
 
ArtSelect
 
Adjustments
  
Proforma
  
                   
Revenue, net
  
$
2,935
  
$
3,106
  
$
-
  
$
6,041
  
Cost of Revenue
    
903
   
1,386
   
-
    
2,289
 
Selling, general and administrative
    
3,186
   
1,518
   
-
    
4,704
 
Depreciation and amortization
    
603
   
84
   
300
    
987
 
TOTAL OPERATING EXPENSES
    
4,692
   
2,988
   
300
   
7,980
 
OPERATING (LOSS) INCOME
    
(1,757
)
  
118
   
(300
)
  
(1,939
)
                           
Interest expense, net
    
(353
)
  
(154
)
  
202
    
(305
)
Other income, net
    
(279
)
  
-
   
-
    
(279
)
NET LOSS BEFORE TAXES
    
(2,389
)
  
(36
)
  
(98
)
  
(2,523
)
Income tax
    
(27
)
  
-
   
-
   
(27
)
Deemed dividends
    
(157
)
  
-
   
-
    
(157
)
NET LOSS
    
(2,573
)
  
(36
)
  
(98
)
  
(2,707
)
                           
NET LOSS PER SHARE, BASIC AND DILUTED
  
$
(0.04
)
            
$
(0.04
)
                           
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED
    
72,142,537
         
4,950,000
   
77,092,537
 

See accompanying notes to the Unaudited Condensed Pro Forma Consolidated Financial Information


PRO FORMA FINANCIAL STATEMENTS

BALANCE SHEETS AS OF MARCH 31, 2006

(thousands, except share amounts)
 
   
a21
 
ArtSelect
 
Adjustments
  
Consolidated Proforma
  
ASSETS
                  
Cash and cash equivalents
  
$
1,442
  
$
304
  
$
-
  
$
1,746
  
Accounts receivable, net
    
2,085
    
572
    
-
    
2,657
  
Inventory
    
156
    
692
    
-
    
848
  
Other
    
317
    
50
    
94
    
461
  
Total current assets
    
4,000
    
1,618
    
94
    
5,712
  
                           
Property and equipment, net
    
7,527
    
224
    
-
    
7,751
  
Software, net
    
-
    
398
    
-
    
398
  
Goodwill
    
2,340
    
-
    
3,027
    
5,367
  
Intangible assets, net
    
3,631
    
-
    
5,700
    
9,331
  
Other
    
3,234
    
7
    
-
    
3,241
  
Total assets
  
$
20,732
  
$
2,247
  
$
8,821
  
$
31,800
  
                           
LIABILITIES AND STOCKHOLDERS EQUITY
                          
Accounts payable
  
$
1,086
  
$
698
    
-
  
$
1,784
  
Notes payable - current portion
    
1,050
    
15
    
-
    
1,065
  
Other
    
2,700
    
148
    
-
    
2,848
  
Total current liabilities
    
4,836
    
861
    
-
    
5,697
  

Notes payable
    
2,341
    
-
    
6,850
    
9,191
  
Loan payable from sale leaseback of building
    
7,431
    
-
    
-
    
7,431
  
Preferred stock
    
-
    
9,527
    
(9,527
)
  
-
  
Minority interest     
2,800
    
-
    
-
    
2,800
  
                           
Stockholders equity
    
3,324
    
(8,141
)
  
11,498
   
6,681
  
Total liabilities and stockholders equity
  
$
20,732
  
$
2,247
  
$
8,821
  
$
31,800
  

See accompanying notes to the Unaudited Condensed Pro Forma Consolidated Financial Information


PRO FORMA FINANCIAL STATEMENTS

1. PRO FORMA ADJUSTMENTS

(a) ADDITIONAL FINANCE COSTS RELATING TO DEBT

   
YEAR ENDED
  
THREE MONTHS ENDED
  
   
DECEMBER 31, 2005
  
MARCH 31, 2006
  
   
 (in Thousands)
  
(in Thousands)
  
Interest on $4.5 million convertible
          
  debt at 5% per annum
  
$
225
  
$
57
  
Interest on $2.35 million convertible
              
  debt at 6% per annum
    
141
    
35
  
 
  
$
366
  
$
92
  
 
Additionally, certain allocable capitalized finance costs have been identified at acquisition and are to be included in the ongoing purchase price allocation exercise. The estimated deferred finance costs of $100,000 at December 31, 2005 and March 31, 2006. Related amortization expense is estimated to be $20,000 and $6,000 for the year ended December 31, 2005 and three months ended March 31, 2006, respectively.

(b) EXCESS OF PURCHASE PRICE OVER FAIR VALUE OF NET ASSETS ACQUIRED
(IN THOUSANDS)
 
Cash consideration paid to selling stockholders of ArtSelect
  
$
4,500
  
Seller note payable
    
2,350
  
Preliminary value of preferred shares issued as consideration to selling stockholders of ArtSelect
    
2,700
  
Preliminary value of warrants issued as consideration to selling stockholders of ArtSelect
    
375
  
Estimated transaction expenses
    
500
  
Total purchase price
    
10,425
  
Estimated fair value of net assets of ArtSelect
    
1,400
  
Excess of purchase price over fair value of net assets acquired *
  
$
9,025
  
*Amount allocated to goodwill and identifiable intangible assets
        

The allocation of purchase price is based upon a preliminary fair value assessment. A formalized fair valuation project is ongoing and is expected to be completed by September 30, 2006. Certain intangible assets have been identified at acquisition and are to be included in the ongoing purchase price allocation exercise. The estimated intangible assets, at cost, are $6.0 million at December 31, 2005 and March 31, 2006. Related amortization expense is estimated to be $1.2 million and $300,000 for the year ended December 31, 2005 and three months ended March 31, 2006, respectively. Goodwill is estimated to be $3.1 million and $3.0 million at December 31, 2005 and March 31, 2006, respectively.

(c) INTERCOMPANY TRADING
Intercompany revenue and cost of sales are not considered material and therefore have not been eliminated for the purpose of the pro forma financial information.
 

PRO FORMA FINANCIAL STATEMENTS

(d) EARNINGS PER SHARE
The average number of shares used in the calculation of pro forma consolidated earnings per share has for the year ended December 31, 2005 and three months ended March 31, 2006 has been increased to take into account 4,200,000 shares issuable upon the conversion of preferred stock and 750,000 shares issuable upon the exercise of warrants, each of which was issued in connection with a21’s acquisition of ArtSelect.