UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549


                                   FORM 10-QSB


      (Mark One)
                 [ X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 1996

                                       OR

                 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934


                           Commission File No. 0-12193


                          AFFINITY ENTERTAINMENT, INC.
        (Exact name of small business issuer as specified in its charter)


                Delaware                                     22-2473403
    (State or other jurisdiction of                      (I.R.S. Employer)
    incorporation or organization)                       Identification No.)


              15310 Amberly Drive, Suite 370, Tampa, Florida 33647
               (Address of principal executive offices) (Zip Code)


                                 (813) 975-8180
              (Registrant's telephone number, including area code)



         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act 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 .

         Registrant  has  8,284,217  shares of Common  Stock  outstanding  as of
December 31, 1996.


<PAGE>



PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

                  AFFINITY ENTERTAINMENT, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
--------------------------------------------------------------------------------
                      (In thousands, except per share data)
                                                                Quarter Ended
                                                              Dec 31,    Dec 31,
                                                                1996       1995
--------------------------------------------------------------------------------

REVENUE..................................................   $  191      $1,465

COSTS AND EXPENSES
Cost of revenue, exclusive of amortization...............       66         838
General and administrative...............................    1,013         543
Depreciation and amortization............................      136          34
                                                             -----      ------
  Total costs and expenses...............................    1,215       1,415
                                                             -----      ------

  Operating income (loss)................................   (1,024)         50

OTHER INCOME, net........................................       54          86
                                                             -----      ------

Income (loss) before provision for income taxes
  and extraordinary item.................................     (970)        136

Provision for income taxes...............................       --         (36)

Minority Interest in net loss of subsidiary..............       47          --
                                                             -----       ------

Income (loss) before extraordinary item..................     (923)        100

Utilization of net operating loss carryforwards..........       --          36
                                                             -----      ------

Net income (loss)........................................   $ (923)    $   136
                                                              =====     ======



Loss per common share....................................   $ (.11)    $  (.02)
                                                            =======      ======

Weighted average shares outstanding......................    8,284       6,008
                                                           =========     ======




       The accompanying notes are an integral part of these consolidated
       financial statements.


                                       2

<PAGE>



                  AFFINITY ENTERTAINMENT, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
--------------------------------------------------------------------------------
                                 (In thousands)
                                                            Dec 31,     Sep 30,
                                                            1996         1996
--------------------------------------------------------------------------------


                                     ASSETS

CURRENT ASSETS
Cash and cash equivalents.............................. $   338        $ 1,366
Accounts receivable, net...............................     924            133
Programming costs......................................   2,384            990
Other current assets, net..............................     145            188
                                                        -------        -------
  Total current assets.................................   3,791          2,677

PROPERTY AND EQUIPMENT, at cost
Edit equipment    .....................................   1,237          1,237
Other equipment........................................     432            314
                                                        -------        -------
                                                          1,669          1,551
  Less accumulated depreciation........................   1,113          1,072
                                                        -------        -------
                                                            556            479
  Construction in progress.............................      11             64
                                                        -------        -------
    Total property and equipment.......................     567            543

OTHER ASSETS
Loans receivable, net..................................      --            539
Due from officers and employees........................      42             68
Investment in joint venture, net.......................     250            250
Other assets...........................................      30            315
                                                        -------        -------
  Total other assets...................................     322          1,172
                                                        -------        -------
    Total assets....................................... $ 4,680        $ 4,392
                                                        =======        =======






  The accompanying notes are an integral part of these consolidated financial
  statements.


                                       3

<PAGE>

<TABLE>
<CAPTION>


                  AFFINITY ENTERTAINMENT, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
----------------------------------------------------------------------------------------------
                                 (In thousands)
                                                                         Dec 31,      Sep 30,
                                                                         1996          1996
----------------------------------------------------------------------------------------------

                       LIABILITIES AND STOCKHOLDERS EQUITY

<S>                                                                      <C>          <C>    
CURRENT LIABILITIES
Accounts payable...................................................      $  750       $    --
Notes payable......................................................         353            12
Notes payable - related party......................................       1,215            --
Accured interest...................................................         135            --
Accrued liabilities................................................         799           139
Deferred revenue...................................................         181            --
                                                                         ------       --------
  Total current liabilities........................................       3,433           151

MINORITY INTEREST..................................................         207            --

STOCKHOLDERS' EQUITY
Convertible  preferred  stock,  $1 par value,  $10 stated value,  
  500,000 shares authorized, 48,734 shares issued and 
  outstanding......................................................         487           487
Convertible preferred stock, $.0001 par value, $50 stated
  value, 100,000 shares authorized, no shares issued and
  outstanding......................................................          --            --
Common stock, $.01 par value, 25,000,000 shares
  authorized, 8,284,217 shares issued and
  outstanding......................................................          83           829
Additional paid-in capital.........................................      13,040        14,686
Additional paid-in capital - stock options.........................         394           394
Deficit............................................................      (6,817)       (5,894)
                                                                          ------       -------
                                                                          7,187        10,502
Less:
Stock subscriptions receivable.....................................       5,742         5,829
Unearned compensation..............................................         405           432
                                                                        -------       -------
  Total stockholders' equity.......................................       1,040         4,241
                                                                        -------       -------
    Total liabilities and stockholders' equity.....................     $ 4,680       $ 4,392
                                                                         =======      =======
</TABLE>




The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


                                       4

<PAGE>

<TABLE>
<CAPTION>


                  AFFINITY ENTERTAINMENT, INC. AND SUBSIDIARIES
      CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)

                                                              (In thousands)

                              Convertible      Convertible                                 Additional
                                Preferred       Preferred       Common                       Paid-In
                                  Stock           Stock          Stock       Additional      Capital                        Stock   
                               $50 Stated      $10 Stated      $.10 Par        Paid-In        Stock                     Subscription
                                  Value           Value          Value         Capital       Options       Deficit       Receivable 
------------------------------------------------------------------------------------------------------------------------------------

<S>                           <C>                <C>           <C>          <C>             <C>           <C>            <C>
Balance on October 1,
1996.......................   $      --          $ 487          $ 829        $14,686         $ 394        $(5,894)        $(5,829)  

Cash received on
 subscription receivable...          --             --             --             --            --            --               87   

Amortization of unearned
 compensation..............          --             --             --             --            --            --               --   

Change in par value of
 common stock..............          --             --          (746)            746            --            --               --   

Purchase of Subsidiary.....          --             --            --          (2,392)           --            --               --

Net loss for the quarter
 ended December 31, 1966...          --             --             --             --            --           (923)             --   
                                  -----          -----          -----          -----         -----         ------           -----   

Balance on December 31,
  1996.....................       $  --          $ 487          $  83        $13,040        $  394        $(6,817)        $(5,742)  
                                  =====          =====          =====        =======        ======        =======         =======   


</TABLE>                             
                              
                              Unearned
                             Compensation        Total
---------------------------------------------------------

Balance on October 1,
1996.......................    $ (432)        $ 4,241

Cash received on
 subscription receivable...         --             87

Amortization of unearned
 compensation..............         27             27

Change in par value of
 common stock..............         --             --

Purchase of Subsidiary.....         --         (2,392)

Net loss for the quarter
 ended December 31, 1966...         --           (923)

                                 -----          ------

Balance on December 31,
  1996.....................     $ (405)       $ 1,040
                                ======         ======


  The accompanying notes are an integral part of these consolidated financial
  statements.


                                       5

<PAGE>

<TABLE>
<CAPTION>


                  AFFINITY ENTERTAINMENT, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
-------------------------------------------------------------------------------------------
                                       (In thousands)
                                                                         Quarter Ended
                                                                   Dec 31,           Dec 31,
                                                                    1996               1995
-------------------------------------------------------------------------------------------

<S>                                                                <C>               <C>    
Cash Flows - Operating Activities:
Net income (loss)...............................................   $  (923)          $  136
Adjustments to reconcile net loss to net cash
  used in operating activities:
  Depreciation and amortization.................................       136               34
  Assets acquired in purchase of subsidiaries...................        66               --
  Minority interest in subsidiary...............................       207               --
  Provision for losses on accounts receivable...................         9               --
  Other assets..................................................        --               --
  Amortization of unearned compensation related to grant
    of stock options to executives..............................        27               --
  Changes in current assets and liabilities:
    (Increase) decrease in accounts receivable..................        27             (495)
    (Increase) decrease in programming costs....................       (37)             (79)
    (Increase) decrease in current assets.......................        43             (111)
    Increase (decrease) in accrued liabilities..................       (63)              49
    Increase (decrease) in deferred revenue.....................        --             (206)
                                                                   -------           ------
      Net cash used in operating activities.....................      (508)            (672)

Cash Flows - Investing Activities:
Capital expenditures............................................       (34)             (51)
Investments in notes receivable.................................        26               --
Investments in loans receivable.................................      (844)              --
Investments in joint venture....................................        --             (315)
                                                                   -------           ------
      Net cash used in investing activities.....................      (852)            (366)

Cash Flows - Financing Activities:
Proceeds from sale of common stock..............................        87            1,459
Proceeds from notes payable.....................................        --               30
Principal payments on notes payable.............................        (4)            (476)
                                                                   -------           ------
      Net cash provided by financing activities.................        83            1,013
                                                                   -------           ------


Increase in cash and cash equivalents...........................    (1,277)             (25)
Cash and cash equivalents at beginning of period................     1,366              147
                                                                   -------           ------
Cash and cash equivalents at end of period......................   $    89           $  121
                                                                   =======           ======

</TABLE>

Supplemental Schedule of Non-cash Investing and Financing Activities:

During the quarter ended December 31, 1996, the Company  reclassified a $600,000
loan  receivable to an investment in subsidiary as a part of the  acquisition of
Century Technologies, Inc.





   The accompanying notes are an integral part of these consolidated financial
   statements


                                       6

<PAGE>



                  AFFINITY ENTERTAINMENT, INC. AND SUBSIDIARIES
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note A - History and Organization

         Affinity  Entertainment,   Inc.  (the  "Company"),   formerly  Affinity
Teleproductions,  Inc.,  a Delaware  corporation  is engaged  in  producing  and
selling feature films, television programs, commercials, infomercials and videos
for the home and  industrial  markets in the United States and  internationally.
The Company  entered into this  business  following a February  1994 merger with
CBNI  Development,  Inc.  ("CBNI").  CBNI has been engaged in a shopping service
business.

         On  August  31,  1994,  the  Company  acquired   Broadcast  Edit,  Inc.
("Broadcast  Edit"), a California  corporation for 50,000 shares of common stock
in a transaction accounted for a pooling of interests. Broadcast Edit is a video
production   and   post-production   company.   It  provides  a  full  range  of
communication  services to corporations  and advertising  agencies,  and it also
produces, directs and edits television programs and videos for the entertainment
industry.

         The Company is engaged in the production of feature  films,  television
programs,  commercials,  documentaries  and videos for all media  worldwide.  In
addition,  the Company,  through its  wholly-owned  subsidiary,  Broadcast Edit,
Inc.,  produces and performs  post-production  editing  services for programming
produced internally by the Company and externally by outside parties.

         The  Company  has  formed  a  new  wholly-owned  subsidiary,   Affinity
Entertainment  Group,  Inc.,  April 4, 1995,  to  intensify  its  efforts on the
feature film portion of its business.

         On October 31,  1996,  the Company  purchased a 76% interest in Century
Technologies, Inc., a publicly-held Colorado corporation that is in the business
of distributing film and television products to worldwide markets.

         On December 9, 1996, the Company formed a new wholly-owned  subsidiary,
Tradewinds Television, Inc., for the purposes of operating a domestic television
syndication company.

Note B - Basis of Presentation

         The  accompanying  Condensed  Consolidated  Balance Sheet  includes the
accounts of the Company,  its wholly-owned  subsidiaries and its 76% interest in
Century Technologies, Inc. ("Century"). The Statement of Operations includes the
accounts of the Company and one of its wholly-owned subsidiaries for the quarter
ended  December 31, 1996 and the activity from the date of  acquisition  through
December  31,  1996 for  Century  and its  other  wholly-owned  subsidiary.  All
significant   intercompany   accounts,   transactions   and  profits  have  been
eliminated.

         The  Condensed  Consolidated  Financial  Statements  are  unaudited and
should be read in conjunction with the audited Consolidated Financial Statements
and notes thereto for the fiscal year ended September 30, 1996.

         In the opinion of  management,  all  adjustments  necessary  for a fair
presentation  of such  Condensed  Consolidated  Financial  Statements  have been
included.  Such  adjustments  consist only of normal  recurring  items.  Interim
results are not necessarily indicative of results for a full year. The Condensed
Consolidated Financial Statements and notes hereto are presented as permitted by
the  Securities  Exchange  Commission  and do not  contain  certain  information
included in the Company's  annual  Consolidated  Financial  Statements and notes
hereto as discussed above.



                                       7




<PAGE>



Note C - Significant Events


Authorization of Preferred Stock

         On October 31, 1996, the Company  authorized the creation of two shares
of  Series D  Preferred  Stock  with a par  value of $1 in  connection  with the
acquisition of Century Technologies, Inc.

Acquisition of Century Technologies, Inc.

         On October 31,  1996,  the Company  purchased a 76% interest in Century
Technologies,  Inc. ("Century"), a publicly-held Colorado corporation that is in
the business of distributing film and television  products to worldwide markets.
Under the terms of the Stock  Acquisition  Agreement  between the  parties,  the
Company  purchased  37,500,000  Units of Century  for $0.08 per unit.  Each Unit
consists of one (1) share of Century Common Stock at $.0001 par value  ("Century
Common  Stock") and one (1) Common  Stock  purchase  warrant to purchase one (1)
share of Century  Common Stock at $2.00 per share ( the  "Warrants").  The Units
are immediately  separable into their component parts. In consideration  for the
transfer of the Units,  the Company paid Three Million  Dollars  ($3,000,000) to
Century  consisting  of (i) the  conversion  to equity of Four Hundred  Thousand
Dollars ($400,000) cash previously advanced by the Company to Century,  (ii) Two
Hundred  Thousand  Dollars  ($200,000)  cash,  and (iii) a  negotiable  one-year
promissory  note  payable by the Company to Century in the amount of Two Million
Four  Hundred  Thousand  Dollars  ($2,400,000)(the  "Promissory  Note") which is
secured by the Company's Series D Preferred Stock.

         The Promissory  Note bears interest at a rate of eight percent (8%) per
annum  and is  secured  by two (2)  shares of  Series D  Preferred  Stock of the
Company, par value $1.00 (the "Series D Preferred Stock").  Each share of Series
D Preferred  Stock shall be  convertible  into 750,000  shares of the  Company's
Common Stock only in the event of default by the Company on the Promissory Note.
The Series D Preferred Stock is not entitled to any voting or dividend rights of
any kind.  Notwithstanding  the  foregoing,  the Company shall have the right to
provide such substitute collateral as the Company and Century may mutually agree
upon in  writing.  The  Series  D  Preferred  Stock  will be held in  escrow  by
Century's counsel (the "Escrow Agent") until such time as the Promissory Note is
paid in full or substitute  collateral  is provided by the Company.  The Company
believes  that the  acquisition  of Century will enable the Company to implement
its  business  plan  of  becoming   heavily  vested  in  the  U.S.  and  foreign
distribution of both feature films and television programming.

Acquisition of the Assets of Tradewinds Television, LLC

         On September 13, 1996,  the Company and Tradewinds  Television,  LLC, a
California  Limited  Liability Company  ("Tradewinds"),  entered into an Interim
Financing and Security  Agreement (the "Security  Agreement")  pursuant to which
Tradewinds  granted the Company,  as security for the repayment by Tradewinds of
certain loans to be made by the Company,  a first priority lien on substantially
all  of  Tradewinds'   assets  (the  "Assets").   The  Assets  include  accounts
receivable,  the  name and  mark  "Tradewinds  Television,"  the  rights  to the
syndicated television series "Bounty Hunters" and distribution rights to certain
other  television  products.  As  of  November  19,  1996,  the  Company  loaned
Tradewinds an aggregate of approximately  $823,000 (the "Loans") pursuant to the
Security Agreement.

         Concurrently, with the execution of the Security Agreement, the Company
and  Tradewinds  engaged in  negotiations  pursuant to which the  Company  would
purchase  substantially  all of the Assets.  The parties  entered  into an Asset
Purchase  Agreement,  dated  October 3, 1996,  as  amended,  to provide for such
acquisition.  The sale of the assets was contingent upon the resolution to which
satisfaction  of the  Company  of various  bankruptcy  issues  concerning  other
companies affiliated with Royeric Pack, the owner of Tradewinds.

         On November  14,  1996,  the Company  filed a complaint  in Los Angeles
Superior Court  asserting that  Tradewinds had defaulted under the Loans and the
Security Agreement,  and seeking judicial foreclosure on the 

                                       8



<PAGE>


Assets,  among  other  claims.  On  December  6,  1996,  Tradewinds  in  lieu of
foreclosure  on the Assets by the Company,  agreed to transfer and assign to the
Company  the  Assets,  subject  to certain  payables  associated  therewith,  in
consideration  of Affinity  forgiving the  indebtedness  evidenced by the Loans.
Such  indebtedness,  including  interest  and related  costs and  expenses,  was
approximately $1,000,000.  Also on December 6, 1996, the Company entered into an
Executive  Producer  Agreement  with Mr.  Pack,  providing  executive  producing
services  in  connection  with the  "Bounty  Hunters"  series.  Pursuant to such
agreement, Mr. Pack received a $75,000 payment on December 6, 1996 for the first
production  season,  and is entitled in the second production season to a fee of
$3,000 per episode, payable upon airing of each such episode.

         On December  17,  1996,  the Company  agreed with the Trustee of Action
Media Group,  Inc., a company  affiliated with Mr. Pack and which is the subject
of a bankruptcy court proceeding ("AMG"), to pay $275,000 to the Trustee of AMG,
and to secure in  exchange a release of certain  claims by the  Trustee  and AMG
against  Tradewinds  and  the  Company  with  regard  to  indebtedness  owed  by
Tradewinds  to AMG and the  assignment of Assets by Tradewinds to the Company in
lieu of foreclosure,  as described above. On December 18, 1996, the Court having
jurisdiction  over the AMG bankruptcy  proceeding  approved the $275,000 payment
and release among AMG,  Tradewinds and the Company. An order to this effect (the
"Settlement  Order") was entered on January 14, 1997.  The Trustee  subsequently
filed a motion  seeking  to amend  the  Settlement  Order to carve  out from the
release  certain  unspecified  liabilities  owed by  Tradewinds to third parties
including AMG. The Company is contesting this motion.

         Upon receipt of the Assets by the Company, the Assets were deposited in
the Company's wholly owned subsidiary, Tradewinds Television, Inc.

Loan Agreement

         In October 1996,  the Company  reached an agreement in principal with a
European entity in which the entity agreed to lend $48.4 million to the Company.
The loan will bear  interest at a rate of 9% per annum over a five year  period.
The Company will pledge as  collateral  for the loan one hundred (100) shares of
Series C Convertible  Preferred  Stock, to be created upon closing,  that can be
converted  by the  lender  into  Common  Stock  of  the  Company  under  certain
conditions  of  repayment  of the loan,  but in no instance at a price less than
$10.00 per common  share.  Upon  conversion  of the Series C Preferred  Stock to
Common Stock,  the holder of the Series C Preferred  Stock shall also receive an
additional  number of shares equal to 10% of the number of shares as  calculated
above. In no event is greater than 40% of the outstanding  principal of the loan
to be converted  to equity in any twelve (12) month  period.  Any common  shares
and/or preferred shares issued upon conversion of the loan to equity will not be
sold,  transferred  or  assigned  in the  absence of an  effective  registration
statement under the Securities Act of 1933, as amended,  or pursuant to Rule 144
promulgated thereunder. The loan is contingent upon the issuance of an insurance
policy to the lender guaranteeing the value of the loan. The lender has informed
the Company that its has incurred  "unexpected  delays" in processing  the loan.
More  specifically,  the insurance  company with which the lender is negotiating
the insurance  guarantee has placed  limitations on the criteria to complete the
loan which the lender believes to be onerous. The lender is currently attempting
to meet the criteria  established  by the insurance  company.  As a result,  the
lender has informed the Company that it cannot place a time limit on  completion
of the loan. In light of these circumstances, the Company believes that there is
substantial doubt as to whether the insurance  guarantee will be issued on terms
acceptable to both the lender and the Company, or at all. Therefore, the Company
has decided to pursue additional financing opportunities.

Note D -   Income Taxes

         The Company  provides for the tax effects of  transactions  reported in
the Condensed Consolidated Financial Statements. The provision, if any, consists
of taxes  currently due plus deferred  taxes  related  primarily to  differences
between  the basis of assets  and  liabilities  for  financial  and  income  tax
reporting. The deferred tax assets and liabilities, if any, represent the future
tax return  consequences of those  differences,  which will either be taxable or
deductible  when the assets and  liabilities  are  recovered  or settled.  As of
December 31, 1996, the Company had no material  current tax liability,  deferred
tax assets or liabilities.

Note E - Loss Per Common Share

         The loss per share of common stock is  calculated  by dividing net loss
by the weighted  average  shares of common  stock and common  stock  equivalents
outstanding during the period. Common stock equivalents include

                                       9


<PAGE>



shares issuable upon conversion of the Company's convertible preferred stock and
exercise  of the  Company's  outstanding  warrants  and stock  options.  For the
quarter ended December 31, 1996, common stock equivalents were anti-dilutive and
were  not  included  in  the  calculation  of  weighted  average  common  shares
outstanding.

Note F - Reclassifications

         Reclassifications  to the December 31, 1995 consolidated  statements of
operations   and  cash  flows  were  made  to  conform  to  December   31,  1996
presentation.




















                                       10

<PAGE>



Item 2.  Management's Discussion and Analysis

         The Company produces feature films,  television programs,  commercials,
documentaries and videos for all media worldwide.


A.  RESULTS OF OPERATIONS

         The following table summarizes the changes in selected items, including
absolute dollar changes,  percentage  changes and percent of net revenue for the
quarter ended December 31, 1996 compared to the quarter ended December 31, 1995:

<TABLE>
<CAPTION>

                                               Quarter Ended                                Line Item          % of Net
                                           Dec 31,       Dec 31,         $ Change           % Change           Revenue
                                            1996         1995          Fav./(Unfav.)       Fav./(Unfav.)    1996      1995
                                            ----         ----          -------------       -------------    ----      ----
                                                                            (In Thousands, except %)

<S>                                         <C>           <C>              <C>              <C>            <C>       <C> 
Net Revenue.........................       $  191         $1,465           $(1,247)           (87)%           100%    100%
  Cost of revenue...................           66            838               772             92              34      58
  General and administrative........        1,013            543              (470)           (87)            530      37
  Depreciation and
    amortization....................          136             34              (102)          (300)             71       2
                                            -----         ------           -------                         ------     ---
Operating loss......................       (1,024)            50            (1,074)        (2,148)           (535)      3
Other income, net...................           54             86               (32)           (37)             28       6
                                            -----         ------           -------                         ------     ---
Income (loss) before provision
  for income taxes and
  extraordinary item................        $(970)        $  136           $(1,106)          (813)           (507)      9
Provision before income taxes.......           --            (36)               36            100              --      (2)
Minority Interest in
  net loss of subsidiary............           47             --               (47)            --              24      --
                                            -----         ------           -------                         ------      ---
Income (loss) before
  extraordinary item................         (923)           100            (1,023)        (1,023)           (483)      7
Utilization of net operating
  loss carryforwards................           --             36               (36)          (100)             --       2
                                            -----         ------            ------                         ------   ------
Net income (loss)...................        $(923)        $  136           $(1,059)          (779)           (483)      9
                                             =====        ======             ======                        ======   ======
</TABLE>



Net Revenue

         For the quarter  ended  December 31, 1996,  the decrease in revenues is
primarily  due to the  Company  ceasing  the airing of its  television  project,
"EdenQuest",  and  all  of  its  ancillary  sources  of  income,  and  its  "The
Contemporary Collectibles Show" series. For the quarter ended December 31, 1995,
the Company produced three original  episodes,  and a compilation ("best of") of
its popular  "EdenQuest"  television  series. As of December 31, 1996, the third
and fourth episodes have not been telecast on free television or basic cable, as
the Company plans to syndicate these episodes through its subsidiary, Tradewinds
Television,  Inc.,  for airing in the summer of 1997.  The  decrease  in revenue
described  above was  offset in part by the  revenues  generated  by  Tradewinds
Television,  Inc. derived mainly from the syndicated  television  series "Bounty
Hunters" and "Ghostwriter."

Cost of Revenue

         For the quarter ended  December 31, 1996, the  significant  decrease in
cost of revenue can be  attributed  to several  factors.  For the quarter  ended
December 31, 1995, television distributors  commissions were paid by the Company
based  on  total  cumulative  sales of  "EdenQuest".  As  sales  in  "EdenQuest"
increased, so did commission percentages.  In addition, the Company canceled the
launch of the second season of "The


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<PAGE>



Contemporary  Collectibles  Show",  due to a variety of factors,  including  the
uncertainty  regarding the  availability of its satellite air time. As a result,
the Company took a one time charge of  approximately  $125,000 to operations for
expenses incurred in connection with the Lifetime Channel.

General and Administrative

         For the quarter  ended  December 31, 1996,  the increase in general and
administrative  expenses is primarily due to higher professional expenses as the
Company seeks to position itself to make  acquisitions and expand its operations
into feature films and distribution. Further, the Company hired additional staff
to  better  implement  it  business  plan  and  increased  salaries  of some key
personnel to levels  commensurate to their job descriptions.  Additionally,  the
general and administrative expenses also increased due to the acquisition of its
two new  subsidiaries.  The  Company  is in the  process  of  consolidating  its
California operations to reduce costs.

Depreciation and amortization

         For the quarter ended  December 31, 1996, the  significant  increase in
depreciation  and  amortization  expense  is  primarily  due to the  accelerated
amortization of Edenquest and Adventure Quest.


B.       FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

         The Company expects to meet its cash  requirements for fiscal year 1997
with funds  generated from  operations,  the exercise of employee stock options,
sales of restricted  common stock via private  placements and loans. The Company
believes  that these  sources  will be adequate to meet the  Company's  expected
needs for fiscal year 1997, although there can be no assurance that this will be
the case.

         The  Company  has not  formalized  its plan for paying  the  $2,400,000
Promissory Note payable to Century  Technologies,  Inc. on October 31, 1997. The
Company expects that this  Promissory Note will be repaid with some  combination
of the assets  and  receivables  of  Tradewinds  Television,  Inc.  

         In October 1996,  the Company  reached an agreement in principal with a
European  entity in which the entity  has  agreed to lend  $48.4  million to the
Company.  The loan will bear interest at a rate of 9% per annum over a five year
period.  The Company will pledge as  collateral  for the loan one hundred  (100)
shares of Series C Convertible Preferred Stock, to be created upon closing, that
can be converted by the lender into Common  Stock of the Company  under  certain
conditions  of  repayment  of the loan,  but in no instance at a price less than
$10.00 per common  share.  Upon  conversion  of the Series C Preferred  Stock to
Common Stock,  the holder of the Series C Preferred  Stock shall also receive an
additional  number of shares equal to 10% of the number of shares as  calculated
above. In no event is greater than 40% of the outstanding  principal of the loan
to be converted  to equity in any twelve (12) month  period.  Any common  shares
and/or preferred shares issued upon conversion of the loan to equity will not be
sold,  transferred  or  assigned  in the  absence of an  effective  registration
statement under the Securities Act of 1933, as amended,  or pursuant to Rule 144
promulgated thereunder. The loan is contingent upon the issuance of an insurance
policy to the lender guaranteeing the value of the loan. The lender has informed
the Company that it has incurred  "unexpected  delays" in  processing  the loan.
More  specifically,  the insurance  company with which the lender is negotiating
the insurance  guarantee has placed  limitations on the criteria to complete the
loan which the lender believes to be onerous. The lender is currently attempting
to meet the criteria  established  by the insurance  company.  As a result,  the
lender has informed the Company that it cannot place a time limit on  completion
of the loan. In light of these circumstances, the Company believes that there is
substantial doubt as to whether the insurance  guarantee will be issued on terms
acceptable to both the lender and the Company, or at all. Therefore, the Company
has decided to pursue additional financing opportunities.


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<PAGE>


         For the quarter ended  December 31, 1996,  the  predominate  sources of
operating funds were editing services.

         Other  than  discussed  above,  the  Company  is not aware of any known
trends or  uncertainties  that have or are reasonably  likely to have a material
effect on the Company's financial position,  liquidity or capital resources. Any
other projects not contemplated herein will be funded by joint ventures or other
outside capital.

PART II - OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K.

         (a)      Exhibits

                  27.01  Financial Data Schedule



         (b)      Reports on Form 8-K

                    1.   Current  Report of Form 8-K  dated  November  14,  1996
                         regarding  the  acquisition  of  Century  Technologies,
                         Inc.,  the  termination  of  the  Offshore   Securities
                         Subscription  Agreement with Baron Banker Limited,  and
                         the Access America Lawsuit.

                    2.   Current  Report of Form 8-K  dated  December  24,  1996
                         regarding the  acquisition  of all assets of Tradewinds
                         Television, LLC.
         





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<PAGE>


                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized on February 21, 1997.


                          AFFINITY ENTERTAINMENT, INC.



                                       /s/WILLIAM J. BOSSO
                                       -----------------------------------------
                                       William J. Bosso
                                       Chairman, President, Secretary, Director


                                       /s/  TAYRA AN COX
                                       -----------------------------------------
                                       Tayra An Cox
                                       Controller (Principal Accounting Officer)




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