Exhibit 99.1
 


a21 Announces Fourth Quarter 2007 Results

JACKSONVILLE, Fl. — March 31, 2008 - a21, Inc. ("a21") (OTCBB: ATWO), a leading online digital content marketplace, today reported its financial results for the fourth quarter and year ended December 31, 2007.

Revenue for the fourth quarter of 2007 was $6.1 million compared to $6.3 million for the same prior year period.  Total cost of sales for the fourth quarter of 2007 were $2.7 million, or 44% of revenues, compared $2.6 million, or 41% of revenues, for the same prior year period. Fourth quarter 2007 selling, general, and administrative expenses of $3.3 million were reduced by $1.7 million, or 34%, compared to the same prior year period through a continued focus on expense reduction. Depreciation expense was $617,000 and 762,000 for the 2007 and 2006 fourth quarters, respectively.  In the fourth quarter of 2007, the Company recognized $111,000 in restructuring expenses. In the fourth quarter of 2006, the Company recognized a $1.7 million extraordinary charge due to the impairment of intangible assets.

The net loss for the fourth quarter of 2007 was $1.1 million, or $0.01 per fully diluted share, compared to a net loss of $4.0 million, or $0.05 per fully diluted share, for the same prior year period. At December 31, 2007, the Company’s cash position was $2.1 million and working capital was $1.5 million.

 
Ex. 99.1 Page 1
 

Revenue for the full year of 2007 was $23.3 million compared to $19.6 million for 2006, reflecting a full year contribution of the ArtSelect acquisition, which closed during May 2006.  Total cost of sales for 2007 were $9.5 million, or 41% of revenues, compared to $7.4 million, or 38% of revenues for 2006.   Selling, general, and administrative expenses in 2007 of $13.9 million were reduced by $1.2 million compared to 2006. Depreciation expense was $2.5 million and $3.0 million for 2007 and 2006, respectively.  During 2007, the Company recognized $426,000 in restructuring expenses. In 2006, the Company recognized a $1.7 million extraordinary charge due to the impairment of intangible assets.

The net loss for 2007 was $4.7 million, or $0.05 per fully diluted share, compared to a net loss of $9.1 million, or $0.12 per fully diluted share for 2006.

John Ferguson, Chief Executive Officer of a21, said, “Our strategic initiatives are continuing to help improve operating performance despite a challenging market.”

About a21
a21 (www.a21group.com) is a leading online digital content company. Through SuperStock (www.superstock.com; www.superstock.co.uk; and www.purestockx.com), and ArtSelect (www.artselect.com), a21 delivers high quality images, art framing, and exceptional customer service. a21 and its companies, with offices in Florida, Iowa, New York City, and London, provide valuable and viable choices to key business partners and customers in the stock image, art and wall decor industries.

The statements contained in this press release contain certain forward-looking statements, including statements regarding a21, Inc.'s expectations, intentions, strategies, and beliefs regarding the future. All statements contained herein are based upon information available to a21, Inc.'s management as of the date hereof and actual results may vary based upon future events, both within and without the control of a21, Inc.'s management.



Tables Follow
Ex. 99.1 Page 2

Financial Exhibits

a21, Inc. and Subsidiaries
  
CONSOLIDATED BALANCE SHEETS
  
($ in thousands, except per share amounts)
  
   
             
   
December 31,
    
December 31,
  
   
2007
    
2006
  
ASSETS
            
CURRENT ASSETS
            
Cash and cash equivalents
   $ 2,090     $ 5,455  
Accounts receivable, net allowance for doubtful accounts of $237 and $108, at December 31, 2007 and 2006, respectively
     3,008       2,773  
Inventory
     874       844  
Prepaid expenses and other current assets
     437       441  
Total current assets
     6,409       9,513  
                 
Property, plant and equipment, net
     6,832       7,300  
Goodwill
     8,778       8,648  
Intangible assets, net
     4,921       5,232  
Restricted cash
     750       750  
Other
     2,431       3,171  
Total assets
   $ 30,121     $ 34,614  
                 
LIABILITIES AND STOCKHOLDERS' (CAPITAL DEFICIT) EQUITY
                
CURRENT LIABILITIES
                
Accounts payable and accrued expenses
   $ 2,761     $ 3,200  
Royalties payable
     1,232       1,288  
Wages payable
     278       359  
Deferred revenue
     389       242  
Restructure liability
     138       ---  
Other
     99       124  
Total current liabilities
     4,897       5,213  
                 
LONG-TERM LIABILITIES
                
Senior secured convertible notes payable, net – related party
     15,500       15,500  
Secured notes payable, net – related party (ArtSelect Sellers)
     2,555       2,499  
Loan payable from sale-leaseback of building, less current portion
     7,347       7,403  
Other
     67       112  
Total liabilities
     30,366       30,727  

 
Ex. 99.1 Page 3
 


a21, Inc. and Subsidiaries
  
CONSOLIDATED BALANCE SHEETS (continued)
  
($ in thousands, except per share amounts)
  
   
             
   
December 31,
    
December 31,
  
   
2007
    
2006
  
COMMITMENTS AND CONTINGENCIES
            
             
MINORITY INTEREST
     1,071       2,254  
                 
STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
                
Common stock; $.001 par value; 200,000,000 shares authorized; 90,740,851 and 87,191,575 shares issued and 87,061,076 and 83,511,800 shares outstanding at December 31, 2007 and 2006, respectively
     91       87  
Treasury stock (at cost, 3,679,775 shares)
     ---       ---  
Additional paid-in capital
     26,121       24,341  
Accumulated deficit
     (27,961 )     (23,286 )
Accumulated other comprehensive income
     433       491  
Total stockholders' (capital deficit) equity
     (1,316 )     1,633  
                 
Total liabilities and stockholders' (capital deficit) equity
   $ 30,121     $ 34,614  
                 
                 
   


 
Ex. 99.1 Page 4
 


a21, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands except per share amounts)
 
       
   
For the Years Ended
   
December 31,
   
2007
    
2006
REVENUE
          
Licensing revenue
   $ 11,907     $ 11,976  
Product revenue
     11,399       7,657  
TOTAL REVENUE
     23,306       19,633  
                 
COSTS AND EXPENSES
                
Cost of licensing revenue (excludes related amortization of $1.1 million and $1.6 million for years ended December 31, 2007 and 2006, respectively)
     3,768       3,835  
Cost of product revenue (excludes related amortization of $176 and $512 for years ended December 31, 2007 and 2006, respectively)
     5,730       3,596  
Selling, general and administrative
     13,879       15,040  
Restructure costs, including severance
     426       ---  
Depreciation and amortization
     2,508       2,984  
Impairment of intangible assets
     ---       1,658  
TOTAL OPERATING EXPENSES
     26,311       27,113  
                 
OPERATING LOSS
     (3,005 )     (7,480 )
                 
Interest expense
     (1,783 )     (1,691 )
Warrant income expense
     (1 )     (47 )
Other income, net
     211       265  
NET LOSS BEFORE INCOME TAX EXPENSE
     (4,578 )     (8,953 )
                 
Income tax expense
     (97 )     (148 )
NET LOSS
     (4,675 )     (9,101 )
                 
Disproportionate deemed dividends
     ---       (157 )
Deemed dividend on convertible preferred stock
     ---       (336 )
NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS
   $ (4,675 )   $ (9,594 )
                 
NET LOSS ATTRIBUTED TO COMMON STOCKHOLDERS PER SHARE, BASIC AND DILUTED
   $ (0.05 )   $ (0.12 )
                 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED
     86,953,066       78,740,959  
 


 
Ex. 99.1 Page 5



a21, Inc. and Subsidiaries
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
  
($ in thousands)
  
   
   
FOR THE YEARS ENDED DECEMBER 31,
  
2007
    
2006
  
             
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net loss
   $ (4,675 )   $ (9,101 )
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation and amortization
     2,508       2,984  
Impairment of intangible assets
     ---       1,658  
Share-based compensation
     554       1,302  
Other
     137       562  
                 
Changes in assets and liabilities:
                
Accounts receivable
     (235 )     (449 )
Prepaid expenses and other current assets
     163       (272 )
Inventory
     (30 )     (54 )
Accounts payable and accrued expenses
     (332 )     1,086  
Deferred revenue
     147       92  
Other
     (35 )     (607 )
NET CASH USED IN OPERATING ACTIVITIES
     (1,798 )     (2,799 )
           
CASH FLOWS FROM INVESTING ACTIVITIES:
          
Acquisition of ArtSelect, net of cash acquired of $231
     ---       (4,521 )
Investment in property, plant and equipment
     (145 )     (248 )
Investment in technology
     (765 )     (281 )
SuperStock acquisition earn-out
     (285 )     (206 )
Investment in photo collection
     (349 )     (333 )
Restricted cash for lease deposit
     ---       (750 )
Other
     (8 )     (32 )
NET CASH USED IN INVESTING ACTIVITIES
     (1,552 )     (6,371 )
                 



 
Ex. 99.1 Page 6
 

 


a21, Inc. and Subsidiaries
  
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
  
($ in thousands)
  
   
   
FOR THE YEARS ENDED DECEMBER 31,
  
2007
  
2006
  
CASH FLOWS FROM FINANCING ACTIVITIES:
            
Proceeds from senior secured convertible notes payable – related party, net
     ---       15,285  
Payment of senior secured notes payable – related party
     ---       (2,250 )
Payment of unsecured notes payable
     ---       (1,050 )
Net proceeds from the exercise of stock options
     29       111  
Net proceeds from the exercise of stock warrants
     19       1,200  
Payment of SuperStock seller promissory note payable
     (33 )     (33 )
Other
     11       126  
NET CASH PROVIDED BY FINANCING ACTIVITIES
     26       13,389  
                 
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
     (41 )     42  
NET (DECREASE) INCREASE IN CASH
     (3,365 )     4,261  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
     5,455       1,194  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
   $ 2,090     $ 5,455  
                 


 
Ex. 99.1 Page 7