Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On November 15, 2006, a21 Inc. (“the Company”) concluded that the consolidated financial statements of a21, Inc. (the “Company”) for the quarters ended March 31, 2006 and June 30, 2006 should not be relied upon due to certain errors in the financial statements relating to the recognition of non-cash expense attributable to the grant of stock options.

In connection with our adoption of SFAS 123(R) during 2006, we previously recognized stock compensation expense during the three months ended March 31, 2006 and June 30, 2006 as if all option grants were fully vested at grant date rather than over the requisite service (vesting) period as proscribed by SFAS 123(R).

The following table illustrates the effect on net loss and loss per share of recognizing stock based compensation expense over the vesting period:

$ in thousands, except per share amounts
  
Three months
ended
March 31, 2006
  
Three months
ended
June 30, 2006
  
Six months
ended
June 30, 2006
  
Net loss, as previously reported
  
$
(2,573
)
$
(2,270
)
$
(4,843
)
Stock based employee compensation, as previously reported
    
(1,051
)
  
(259
)
  
(1,310
)
Stock based employee compensation, as restated
    
(621
)
  
(158
)
  
(779
)
Net stock based employee compensation adjustment
    
   
   
 
Net loss, as restated
    
(2,143
)
  
(2,169
)
  
(4,312
)
Basic and diluted loss per share, as previously reported
  
$
(0.04
)
$
(0.03
)
$
(0.06
)
Basic and diluted loss per share, as restated
  
$
(0.03
)
$
(0.03
)
$
(0.06
)
 
 
 
The Company will restate its financial statements for the quarters ended March 31, 2006 and June 30, 2006 for the stock based compensation corrections described in the table above, as soon as practicable.
 
The Company’s Audit Committee has discussed the matters described above with the Company's independent public registered accounting firm.
 



 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

 
a21, INC.

 
By: /s/ Thomas Costanza 
       Thomas Costanza
   Chief Financial Officer
 
Dated: November 20, 2006