More importantly, the comparison between the 2nd and 3rd quarters of 2006 reflect improved managerial efficiency resulting in positive EBITDA (earnings before interest, taxes, depreciation and amortization; a reflection of the operating profit from the company's core business activities) for the first time.   Total revenue from 2Q06 to 3Q06 grew by 31% from $4.4MM to $5.9MM.  Revenue for the 3rd quarter came about 50% from image licensing and 50% from the consumer product business.  While the gross profit margin for the business overall remained steady at about 38%, Selling, General and Administrative expenses dropped dramatically as a percentage of Gross Revenue from 84% in 2Q06 to 59% in 3Q06.  The company still showed a loss for the period, but a narrower one having lost $2.2MM in the second quarter and $1MM in the third.

"The third quarter was a period of progress in the transition of the Company's business and leadership," said Phil Garfinkle, Executive Chairman of a21. "This past quarter we solidified our new leadership team, completing a transition for a21 that included raising capital to support our growth initiatives and expanding our business through a major acquisition. Now, with both the leadership and resources to support our growth in place, our energy will increasingly be focused on leveraging our strong brands and industry experience to capitalize on the growth opportunities throughout the online digital media marketplace."

"I am extremely pleased to see our organic growth in the double digits," said John Ferguson, Chief Executive Officer of a21. "Considering the management transition, the operating teams remained focused on our customers."

The improved operating performance kept the company's cash position strong, as well.  At September 30, 2006, the Company's cash position was $6.2 million and working capital $6.5 million. Cash used in operations for the third quarter of 2006 was down significantly on a sequential basis from cash used in operations during the second quarter of 2006.

Thomas Costanza, Vice President and Chief Financial Officer of a21, stated, "With the capital raised during 2006 and the contributions being realized from our combined businesses, we are in good position to drive further operating improvements through revenue growth and operating leverage. In the third quarter, we reduced cash used in operations. We aim to further strengthen our financial position and operational results to create significant value for our shareholders."

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