**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
  
  **FORM
        10-K**
 
 (Mark
        One)
 
 x
              **ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES****EXCHANGE
                  ACT OF 1934**
 
 **For
        The Fiscal Year Ended December 31, 2007**
 
 **OR**
 
 o
              **TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE****SECURITIES
                  EXCHANGE ACT OF 1934**
 
 For
        the
        Transition Period from _______________ to ________________
 
 **Commission
        file number: 000-51983**
 
 **AFFINITY
        MEDIA INTERNATIONAL CORP** .
 (Exact
        name of registrant as specified in its charter)
  **Delaware**
                **20-3315459**(State
                    or other jurisdiction of
                (I.R.S.
                    Employer Identification No.)incorporation
                    or organization)
  **1850
                    Sawtelle Blvd., Suite 470****Los
                    Angeles, Ca**
                **90025**(Address
                    of principal executive offices)
                (Zip
                    Code)
 **(310)
        479-1555**
 (Registrant’s
        telephone number, including area code)
 
 **Securities
        registered pursuant to Section 12(b) of the Act:**
 None
  **Securities
        registered pursuant to Section 12(g) of the Act:**
 
 Units
        consisting of one share of Common Stock, par value $.0001 per share, and
        two
        Warrants
 Common
        Stock, $.0001 par value per share
 Warrants
        to purchase shares of Common Stock
 
 Indicate
        by check mark if the registrant is a well-known seasoned issuer, as defined
        in
        Rule 405 of the Securities Act.
  Yes  o No
x
  Indicate
        by check mark if the registrant is not required to file reports pursuant
        to
        Section 13 or Section 15(d) of the Act.
  Yes  x No
o
  Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
        during the preceding 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  ̈ .
  Indicate
        by check mark if disclosure of delinquent filers pursuant to Item 405 of
        Regulation S-K is not contained herein, and will not be contained, to the
        best
        of registrant’s knowledge, in definitive proxy or information statements
        incorporated by reference in Part III of this Form 10-K or any amendment
        to this
        Form 10-K.  ̈
  Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, a non-accelerated filer or a smaller reporting company.
        See
        definitions of "large accelerated filer”, “accelerated filer” and “smaller
        reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
  Large accelerated filer o
              Accelerated
                  filer o
              Non-accelerated filer o
              Smaller reporting company x
  Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act).Yes x No o
 The
          aggregate market value of the registrant's voting and non-voting common
          stock
          held by non-affiliates of the registrant, based on the closing price of
          the
          registrant’s common stock on the last business day of the registrant’s most
          recently completed second fiscal quarter ($ 5.71), was $11,865,471. Solely
          for
          the purposes of this calculation, shares held by directors and executive
          officers of the registrant have been excluded. Such exclusion should not
          be
          deemed a determination or an admission by the registrant that such individuals
          are, in fact, affiliates of the Registrant.
 The
        number of shares outstanding of each of the issuer's classes of common equity:
        As of March 26, 2008: 4,162,500 shares of common stock, par value $.0001
        per
        share, were issued and outstanding.
 
 Transitional
        Small Business Disclosure Format (check one): Yes  ̈ No x
 
 **DOCUMENTS
        INCORPORATED BY REFERENCE**
  NONE
  
  **AFFINITY
        MEDIA INTERNATIONAL CORP**
 **FORM
        10-K**
 **INDEX**
 
 **PART
                    I**
                
                
                
                **Page
                    No.**Item
                    1.
                
                Description
                    of Business
                
                1Item
                    1A.
                
                Risk
                    Factors
                
                9Item
                    2.
                
                Description
                    of Property
                
                31Item
                    3.
                
                Legal
                    Proceedings
                
                31Item
                    4.
                
                Submission
                    of Matters to a Vote of Security Holders
                
                31**PART
                    II**Item
                    5.
                
                Market
                    for Common Equity and Related Stockholder Matters and Small Business
                    Issuer Purchases of Equity Securities
                
                32Item
                    6.
                
                Selected
                    Financial Data
                
                35Item
                    7.
                
                Management’s
                    Discussion and Analysis or Plan of Operation
                
                35Item
                    7A.
                
                Quantitative
                    and Qualitative Disclosure About Market Risk
                
                40Item
                    8.
                
                Financial
                    Statements
                
                40Item
                    9.
                
                Changes
                    in and Disagreements with Accountants on Accounting and Financial
                    Disclosure
                
                41Item
                    9A(T).
                
                Controls
                    and Procedures
                
                41Item
                    9B.
                
                Other
                    Information
                
                42**PART
                    III**Item
                    10.
                
                Directors,
                    Executive Officers, Promoters, Control Persons and Corporate
                    Governance;
                    Compliance With Section 16 (a) of the Exchange Act
                
                43Item
                    11.
                
                Executive
                    Compensation
                
                47Item
                    12.
                
                Security
                    Ownership of Certain Beneficial Owners and Management and Related
                    Stockholder Matters
                
                48Item
                    13.
                
                Certain
                    Relationships and Related Transactions, and Director
                    Independence
                
                50Item
                    14
                
                Principal
                    Accountant Fees and Services
                
                52**PART
                    IV**Item
                    15.
                
                Exhibits
                
                53Signatures
                
                54Certification
                    of CEO Pursuant to Section 302Certification
                    of Principal Financial and Accounting Officer Pursuant to Section
                    302Certification
                    of CEO Pursuant to Section 906Certification
                    of Principal Financial and Accounting Officer Pursuant to Section
                    906










**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




*This
      Annual Report on Form 10-K includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
      Securities Exchange Act of 1934. These forward-looking statements can be
      identified by the use of forward-looking terminology, including the words
“believes,” “estimates,” “anticipates,” “expects,” “intends,” “plans,” “may,”
“will,” “potential,” “projects,” “predicts,” “continue,” or “should,” or, in
      each case, their negative or other variations or comparable terminology. Such
      statements include, but are not limited to, any statements relating to our
      ability to consummate any acquisition or other business combination and any
      other statements that are not statements of current or historical facts. These
      statements are based on management’s current expectations, but actual results
      may differ materially due to various factors, including, but not limited to,
      our:*




·
            *being
                a development stage enterprise with no operating
                history;*




·
            *dependence
                on key personnel, some of whom may join us following an initial
                transaction;*




·
            *personnel
                allocating their time to other businesses and potentially having
                conflicts
                of interest with our business;*




·
            *potentially
                being unable to obtain additional financing to complete an initial
                transaction;*




·
            *limited
                pool of prospective target
                businesses;*




·
            *securities’
                ownership being concentrated;*




·
            *potential
                change in control if we acquire one or more target businesses for
                stock;*




·
            *risk
                associated with operating in publishing
                industry;*




·
            *financial
                performance following an initial transaction;
                or*




·
            *those
                other risks and uncertainties detailed in the Registrant’s filings with
                the Securities and Exchange
                Commission.*




*By
      their nature, forward-looking statements involve risks and uncertainties because
      they relate to events and depend on circumstances that may or may not occur
      in
      the future. We caution you that forward-looking statements are not guarantees
      of
      future performance and that our actual results of operations, financial
      condition and liquidity, and developments in the industry in which we operate
      may differ materially from those made in or suggested by the forward-looking
      statements contained in this Annual Report on Form 10-K. In addition, even
      if
      our results or operations, financial condition and liquidity, and developments
      in the industry in which we operate are consistent with the forward-looking
      statements contained in this Annual Report on Form 10-K, those results or
      developments may not be indicative of results or developments in subsequent
      periods.*




*These
      forward-looking statements are subject to numerous risks, uncertainties and
      assumptions about us described in our filings with the Securities and Exchange
      Commission. The forward-looking events we discuss in this Annual Report on
      Form
      10-K speak only as of the date of such statement and might not occur in light
      of
      these risks, uncertainties and assumptions. Except as required by applicable
      law, we undertake no obligation and disclaim any obligation to publicly update
      or revise any forward-looking statements, whether as a result of new
      information, future events or otherwise.*




*Unless
      otherwise provided in this Annual Report on Form 10-K, references to “the
      Company,” “the Registrant,” “we,” “us” and “our” refer to Affinity Media
      International Corp* *.*











**PART
      1**





**Item
      1. Description of Business**





**Introduction**





We
      were
      incorporated in Delaware on August 12, 2005, as a blank-check company formed
      specifically as a vehicle to effect a merger, asset acquisition or similar
      business combination with one or more operating businesses in the publishing
      industry whose fair market value is at least equal to 80% of our net assets
      at
      the time of such business combination.





At
      December 31, 2007, we had not yet commenced any operations. All activity through
      December 31, 2007 relates to our formation, completion of our public offering
      and the identification and qualification of suitable business combinations.
      As
      of the date of this filing, we have not acquired any business operations. Should
      a Business Combination not be consummated by June 9, 2008, the Company would
      be
      required to return the funds held in trust to holders of shares issued in the
      Public Offering as a mandatory liquidating distribution, pursuant to a plan
      of
      dissolution and liquidation approved by the stockholders. We have selected
      December 31 as the Company’s end of year.





We
      maintain executive offices at 1850 Sawtelle Blvd., Suite 470, Los Angeles,
      CA
      90025 and our telephone number is (310) 479-1555. We will provide electronic
      or
      paper copies of such materials free of charge upon request.





We
      consummated our initial public offering (“Public Offering”) on June 9, 2006 and
      sold to the public 2,750,000 units (“Units”) at $6.00 per Unit and received net
      proceeds of approximately $14,660,000, after reserving $720,000 for contingent
      underwriting compensation which is included in other current liabilities in
      the
      accompanying consolidated financial statements.





On
      June
      29, 2006, we consummated the funding of the Underwriter’s over-allotment option
      from the Public Offering, and sold an additional 412,500 Units receiving net
      proceeds of approximately $2,277,000, after reserving $123,750 for contingent
      underwriting compensation which is included in other current liabilities in
      the
      accompanying consolidated financial statements.





Each
      Unit
      consists of one share of the Company’s Common Stock and two redeemable common
      stock purchase warrants (“Warrants”). Each Warrant will entitle the holder to
      purchase from us one share of Common Stock at an exercise price of $5.00. Prior
      to the Public Offering, we consummated a private placement (“Private Placement”)
      and received net proceeds of $1,365,000. The registration statement of our
      Public Offering was declared effective on June 5, 2006.





On
      June
      6, 2006, our units commenced trading on the Over-the-Counter Bulletin Board
      (“OTCBB”) under the symbol “AFMIU”. Holders of Affinity units were able to
      separately trade the common stock and warrants included in such units commencing
      July 26, 2006 and the trading in the units continued under the symbol “AFMIU”.
      The common stock and warrants are quoted on the OTCBB under the symbols “AFMI”
and “AFMIW”, respectively.




We
      are
      not currently engaged in, and we will not engage in, any substantive commercial
      business until we consummate a business combination.




1





**Proposed
      Merger**




*General*





On
      July
      24, 2007, as amended on January 14, 2008, Affinity Media International Corp.,
      (“Affinity”) a Delaware corporation and its wholly-owned subsidiary, Affinity
      Acquisition Subsidiary Corp., also a Delaware corporation (“Affinity
      Subsidiary”), entered into an Agreement and Plan of Merger (the “Merger
      Agreement”) with Hotels at Home, Inc., (“Hotels”), a Delaware corporation
      pursuant to which Hotels will merge into Affinity Subsidiary and Hotels will
      become a wholly-owned subsidiary of Affinity.  Following consummation of
      the merger, it is anticipated that Affinity Subsidiary will change its name
      to
      Hotels at Home, Inc.  Because Affinity has no other operating business,
      following the merger, Hotels will effectively become a public
      company.





Pursuant
      to the Merger Agreement, Affinity will acquire Hotels. In exchange for all
      of
      the issued and outstanding capital stock of Hotels, Affinity will issue
      2,456,571 shares of its common stock and remit a cash payment of $16,000,000.
      The sellers of Hotels are eligible to receive an additional 1,500,000 shares
      of
      Affinity common stock subject to the achievement of certain operating earn
      out
      performance criteria (the “Earn-Out”).





Consummation
      of the acquisition is conditioned upon, among other things, the Affinity
      stockholders adopting and approving the Merger Agreement. Affinity stockholders
      owning up to 27.26% of Affinity’s common stock may vote against the acquisition
      and exercise their right to convert their shares of Affinity common stock into
      cash of $6.00 per share and the merger will still be consummated. Consequently,
      up to 862,097 shares of Affinity common stock, representing approximately 27.26%
      of the shares of Affinity common stock issued in Affinity’s initial public
      offering and outstanding immediately before the closing are subject to possible
      conversion in this manner. This would represent an aggregate maximum conversion
      liability of approximately $4,959,226 as of December 31, 2008. Assuming the
      maximum number of shareholders vote no and elect to convert their shares into
      cash, Affinity would have a cash deficit. Pursuant to the Merger Agreement,
      Affinity may complete a private placement or other financing up to a maximum
      amount of $5,000,000 prior to the closing. Affinity believes that it will be
      able to complete such financing. However, there is no assurance that Affinity
      will be able to complete such financing.





The
      approval of the Merger Agreement will require the affirmative vote of a majority
      of the votes cast at the Special Meeting of the shares of common stock issued
      as
      part of Affinity’s IPO and private placement. We issued 3,162,500 shares as part
      of our IPO and 250,000 shares as part of the private placement. In addition,
      not
      more than 27.26% of such shares (862,097 shares) may vote against the Merger
      Agreement and elect to convert their shares into their pro rata portion of
      the
      cash from the trust account, not to exceed $6.00 per share.




Prior
      to
      the record date for the Special Meeting, Affinity, its officers, directors
      or
      affiliates may purchase outstanding shares of Affinity in the open market and/or
      in privately negotiated transactions.  After the record date for the
      Special Meeting, Affinity, its officers, directors or affiliates may purchase
      outstanding shares of Affinity in privately negotiated transactions with
      Affinity’s stockholders. Any such negotiated transaction with an Affinity
      stockholder would include a contractual acknowledgement that such stockholder,
      although still the record holder of Affinity shares of stock,  is no longer
      the beneficial owner thereof and therefore agrees to vote such shares at the
      Special Meeting as directed by Affinity, its officers, directors or affiliates.
      It is the intention of Affinity, its officers, directors or affiliates to vote
      or to direct the vote of any such shares of Affinity so purchased in favor
      of
      the Merger Agreement.





Affinity,
      its officers, directors or affiliates may purchase shares in privately
      negotiated transactions from stockholders who have already cast votes against
      the proposed acquisition and requested conversion of their shares. As part
      of
      the privately negotiated arrangements with Affinity, its officers, directors
      or
      affiliates, such selling stockholders would be required to revoke their prior
      votes against the proposed acquisition and to revoke their prior elections
      to
      convert their shares, and cast new votes in favor of the proposed acquisition.
      The revocation of prior negative votes and substitution therefore of votes
      in
      favor of the proposed acquisition would have the effect of reducing conversions
      and increasing votes in favor of the proposed acquisition. As of the date of
      this annual report, Affinity, its officers, directors and affiliates have not
      entered into any private agreements or arrangements to purchase outstanding
      shares of Affinity.




2





Affinity,
      its officers, directors or affiliates anticipate that they will identify the
      Affinity stockholders with whom Affinity may, and with whom the officers,
      directors or affiliates of Affinity may, enter into privately negotiated
      purchases by either the stockholders contacting directly Affinity or Affinity’s
      investment advisor The Maxim Group LLC, or by Affinity’s receipt of proxy cards
      submitted by stockholders. To the extent that Affinity, its officers, directors
      or affiliates enter into a private purchase, they would identify and contact
      only potential selling stockholders who have expressed their intention to vote,
      or who have already voted, against the Merger Proposal. Pursuant to the terms
      of
      such arrangements, any shares so purchased by Affinity, its officers, directors
      or affiliates would then be voted, or prior votes against would then be changed
      to votes in favor of the Merger Agreement. The terms of such purchases would
      operate to facilitate the consummation of Affinity’s proposed business
      combination by potentially reducing the number of shares voted against the
      Merger Agreement at the Special Meeting to less than 862,098.





Any
      shares purchased from Affinity stockholders by Affinity, its officers, directors
      or affiliates would be purchased at a price to be negotiated between such
      stockholders on the one hand and Affinity, its officers, directors or affiliates
      on the other hand. Such price would depend on a variety of factors including,
      but not limited to, the size of the stockholders’ position in Affinity stock and
      the method and timing of payment from Affinity for such shares. Notwithstanding
      the foregoing, should the officers, directors or affiliates of Affinity enter
      into such privately negotiated purchases, they expect that the per share price
      to be paid by them would be equal to or at a premium over the amount held in
      trust for the shares of common stock.





Although
      Affinity intends to pay cash for the shares so purchased by Affinity, the
      officers, directors or affiliates of Affinity, should they enter into such
      purchase agreements, they may pay for such shares with cash, with founder shares
      or shares and/or warrants purchased in the private placement immediately prior
      to Affinity’s initial public offering, or with some combination of cash, founder
      shares and shares and/or warrants purchased in the private placement. In the
      event that such officers, directors or affiliates pay for all or a portion
      of
      the purchase price of the shares so purchased with founder shares or shares
      and/or warrants purchased in the private placement, any purchase agreement
      would
      include an obligation of such officers, directors or affiliates to assign the
      founder shares or shares and/or warrants purchased in the private placement
      to
      the selling stockholders after the consummation of the Merger, subject to the
      provisions of the escrow and registration rights agreements governing such
      founder shares and shares and warrants purchased in the private
      placement.





Affinity
      may, in order to avoid dilution to Affinity’s stockholders consequent upon
      issuing additional shares, and the officers, directors or affiliates of Affinity
      may, in order to demonstrate confidence in the Merger should the need arise,
      enter into the privately negotiated arrangements discussed above, rather than
      engaging in open market purchases in order to avoid disruption in the
      marketplace due to illiquidity of Affinity stock and in order to avoid the
      potential characterization of such open market purchases as a tender offer
      by
      Affinity, its officers, directors or affiliates.





Upon
      consummation of the Merger, Affinity intends to file a Current Report on Form
      8-K disclosing the material terms of the purchases made by Affinity from
      Affinity stockholders. In the event that the officers, directors or affiliates
      of Affinity enter into any such purchase agreements more than five (5) days
      prior to the date of the Special Meeting, then such officers, directors or
      affiliates will cause Affinity to file with the Securities and Exchange
      Commission a supplement to the proxy statement relating to the Special Meeting
      disclosing the material terms of such agreements. In the event that the
      officers, directors or affiliates of Affinity enter into such agreements
      within five (5) days of the Special Meeting, then upon consummation of the
      Merger, the officers, directors or affiliates of Affinity will cause Affinity
      to
      disseminate a press release and file a Current Report of Form 8-K disclosing
      the
      material terms of such purchases.





The
      Merger will be accounted for as a “reverse merger” and recapitalization since
      the sellers of Hotels will control the combined company immediately following
      the completion of the transaction. Hotels will be deemed to be the accounting
      acquirer in the transaction and, consequently, the transaction is treated as
      a
      recapitalization of Hotels. Accordingly, the assets and liabilities and the
      historical operations that are reflected in the financial statements will be
      those of Hotels and will be recorded at the historical cost basis of Hotels.
      Affinity’s assets, liabilities and results of operations will be consolidated
      with the assets, liabilities and results of operations of Hotels after
      consummation of the acquisition.





3





*Fair
      Market Value of Target Business*




The
      initial target business that we acquire must have a fair market value equal
      to
      at least 80% of our net assets at the time of such acquisition. The fair market
      value of such business will be determined by our board of directors based upon
      standards generally accepted by the financial community, such as actual and
      potential sales, earnings and cash flow and book value, and the price for which
      comparable businesses have recently been sold. In addition, our management
      and
      Board made the Merger Agreement conditional upon obtaining a fairness opinion
      from Ladenburg Thalmann & Co., Inc.




*Probable
      lack of business diversification*




We
      are
      seeking to effect a business combination with just one target business. Our
      initial business combination must be with a target business or target businesses
      which satisfy the minimum valuation standard at the time of such acquisition.
      Therefore, at least initially, the prospects for our success will be entirely
      dependent upon the future performance of a single business. Unlike other
      entities which may have the resources to complete several business combinations
      of entities operating in multiple industries or multiple areas of a single
      industry, it is probable that we will not have the resources to diversify our
      operations or benefit from the possible spreading of risks or offsetting of
      losses. By consummating a business combination with only a limited number of
      entities, our lack of diversification may:




·
              subject
                  us to numerous economic, competitive and regulatory developments,
                  any or
                  all of which may have a substantial adverse impact upon the particular
                  industry in which we may operate subsequent to a business
                  combination;




·
              leave
                  us solely dependent upon the performance of a single business;
                  and




·
              result
                  in our dependency upon the development or market acceptance of
                  a single or
                  limited number of products or
                  services.




*Opportunity
      for stockholder approval of business combination*




Prior
      to
      the completion of a business combination, we will submit the transaction to
      our
      stockholders for approval, even if the nature of the acquisition is such as
      would not ordinarily require stockholder approval under applicable state law.
      In
      connection with seeking stockholder approval of a business combination, we
      will
      furnish our stockholders with proxy solicitation materials prepared in
      accordance with the Securities Exchange Act of 1934, which, among other matters,
      will include a description of the operations of the target business and certain
      required financial information regarding the business.




In
      connection with the vote required for any business combination, all of our
      founding stockholders, including all of our officers and directors, have agreed
      to vote their respective shares of common stock owned by them immediately prior
      to our initial public offering and the private placement in accordance with
      the
      majority of the shares of common stock voted by the public stockholders. Our
      founding stockholders who purchased shares of common stock in connection with
      the private placement or with or after our initial public offering have agreed
      to vote such shares in favor of any proposed business combination. We will
      proceed with the business combination only if a majority of the shares of common
      stock voted by the public stockholders and private placement stockholders and
      cast at the meeting are voted in favor of the business combination, and public
      stockholders owning 27.26% or less of the shares sold in our initial public
      offering exercise their conversion rights; provided, however, that as part
      of
      the negotiations toward a business combination, our board of directors may,
      in
      the exercise of their business judgment, agree to a percentage less than 27.26%
      (but not more than 27.26%). This would be done in order to preserve cash in
      the
      trust fund in order to facilitate a particular business combination, and may
      result in us having a conversion rate lower than 27.26% as part of the agreement
      to consummate such a business combination. Voting against the business
      combination alone will not result in conversion of a stockholder’s shares into a
      pro rata share of the trust fund. Such stockholder must have also exercised
      its
      conversion rights described below.





4




*Conversion
      rights*





At
      the
      time we seek stockholder approval of our initial business combination, we will
      offer each public stockholder (other than our founding stockholders and their
      designees who purchased shares in the private placement before our initial
      public offering) the right to have such stockholder’s shares of common stock
      converted to cash if the stockholder votes against the business combination
      and
      the business combination is approved and completed. The actual per-share
      conversion price will be equal to $6.00. No interest will be payable to public
      stockholders converting in connection with a business combination. An eligible
      stockholder may request conversion at any time after the mailing to our
      stockholders of the proxy statement and prior to the vote taken with respect
      to
      a proposed business combination at a meeting held for that purpose, but the
      request will not be granted unless the stockholder votes against the business
      combination and the business combination is approved and completed. Any request
      for conversion, once made, may be withdrawn at any time up to the date of the
      meeting. It is anticipated that the funds to be distributed to stockholders
      entitled to convert their shares who elect conversion will be distributed
      promptly after completion of a business combination. Public stockholders who
      convert their stock into their share of the trust fund still have the right
      to
      exercise the warrants that they received as part of the units. We will not
      complete our initial business combination if public stockholders, owning more
      than 27.26% of the shares sold in our initial public offering, exercise their
      conversion rights. Even if 27.26% or less of the stockholders, as described
      above, exercise their conversion rights, we may be unable to consummate a
      business combination if such conversion leaves us with funds insufficient to
      meet the 80% net asset threshold required for a business combination, and we
      may
      be forced to either find additional financing to consummate such a business
      combination or dissolve, liquidate and wind up.





Investors
      who choose to remain as stockholders and do not exercise their conversion rights
      will have assumed the entire cost of our initial public offering, including
      the
      underwriters’ discount. The additional cost per share allocable to such
      remaining stockholders would be $0 if none of the shares sold in our initial
      public offering are converted, and approximately $.16 per share if the maximum
      number of shares which may be converted are converted. In recognition of the
      reduction in proceeds available to fund either the business combination or
      our
      future operations which will result from the conversion of shares, and in order
      to partially offset the resulting dilution to non-converting stockholders,
      management has agreed to surrender up to an aggregate of 22,156 of their shares
      to us if the stockholders exercise their conversion rights for the maximum
      amount of shares, or 27.26% of the number of shares sold in our initial public
      offering. In the event the actual number of shares that are converted is less
      than 27.26%, the number of shares to be surrendered by management will be
      proportionally reduced by the actual number of shares converted.




*Dissolution
      and liquidation if no business combination*




Pursuant
      to, among other documents, our amended and restated certificate of incorporation
      and the terms of the trust agreement between us and American Stock Transfer
      and
      Trust Company since we have satisfied the extension criteria, if we do not
      complete a business combination within 24 months of our initial public offering,
      we will dissolve and promptly return and liquidate all funds from our trust
      account only to our public stockholders (not including Mr. Engel, our chief
      executive officer, and two non-affiliated accredited investors with respect
      to
      the 250,000 shares included in the units they purchased in the private
      placement), as part of our plan of dissolution and liquidation and in accordance
      with the applicable provisions of the Delaware General Corporation Law in
      proportion to their respective equity interests, an aggregate sum equal to
      the
      amount in the trust fund, inclusive of any interest not previously released
      to
      us less the amount of taxes paid, if any, on interest earned. In the event
      we
      seek stockholder approval for a plan of dissolution and liquidation and do
      not
      obtain such approval, we will nonetheless continue to pursue stockholder
      approval for our dissolution. Pursuant to the terms of our amended and restated
      certificate of incorporation, our powers following the expiration of the
      permitted time periods for consummating a business combination will
      automatically thereafter be limited to acts and activities relating to
      dissolving and winding up our affairs, including liquidation. The funds held
      in
      our trust account may not be distributed except upon our dissolution and, unless
      and until such approval is obtained from our stockholders, the funds held in
      our
      trust account will not be released. Consequently, holders of a majority of
      our
      outstanding stock must approve our dissolution in order to receive the funds
      held in our trust account and the funds will not be available for any other
      corporate purpose. Immediately upon the approval by our stockholders of our
      plan
      of dissolution and liquidation, we will liquidate our trust account to our
      public stockholders.




5




Concurrently,
      we shall pay, or reserve for payment, from interest released to us from the
      trust account if available, our liabilities and obligations. Our founding
      stockholders have waived their rights to participate in any liquidation of
      our
      trust account or other assets with respect to shares of common stock owned
      by
      them prior to our initial public offering (including any shares they or their
      designees have acquired in the private placement) and to vote their shares
      of
      common stock in favor of any plan of dissolution and liquidation which we will
      submit to a vote of stockholders (including any shares they or their designees
      have acquired in the private placement). In addition, Maxim Group LLC has agreed
      to waive their rights to the $843,750 of contingent underwriting compensation
      and placement fees deposited in the trust account for their benefit. There
      will
      be no liquidation amounts in connection with a dissolution with respect to
      our
      warrants, which will expire worthless. We estimate that our total costs and
      expenses for implementing and completing our stockholder-approved plan of
      dissolution and liquidation will be between $50,000 and $75,000. This amount
      includes all costs and expenses relating to filing our dissolution in the State
      of Delaware, the winding up of our company and the costs of a proxy statement
      and meeting relating to the approval by our stockholders of our plan of
      dissolution and liquidation. We believe that there should be sufficient funds
      available, outside of the trust account as well as from the interest earned
      on
      the trust account and released to us as working capital, to fund the $50,000
      to
      $75,000 in costs and expenses.





If
      we are
      unable to consummate a transaction within 24 months following the consummation
      of the initial public offering our purpose and powers will be limited to
      dissolving, liquidating and winding up. Upon notice from us, the trustee of
      the
      trust account will liquidate the investments constituting the trust account
      and
      will turn over the proceeds to our transfer agent for distribution to our public
      stockholders as part of our plan of dissolution and distribution.




If
      we are
      unable to consummate a business combination and expend all of the net proceeds
      of our initial public offering and the private placement, other than the
      proceeds deposited in the trust account, and without taking into account
      interest, if any, earned on the trust account, the initial per-share liquidation
      price to holders of 3,162,500 shares entitled to participate in the liquidation
      of our trust account would be equal to the $6.00 per unit offering price. The
      proceeds deposited in the trust account could, however, become subject to the
      claims of our creditors which could be prior to the claims of our public
      stockholders. Although we will seek to have all vendors, prospective target
      businesses or other entities we engage execute agreements with us waiving any
      right, title, interest or claim of any kind in or to any monies held in the
      trust account for the benefit of our public stockholders, there is no guarantee
      that they will execute such agreements or even if they execute such agreements
      that they would be prevented from bringing claims against the trust account
      including but not limited to fraudulent inducement, breach of fiduciary
      responsibility or other similar claims, as well as claims challenging the
      enforceability of the waiver, in each case in order to gain an advantage with
      a
      claim against our assets, including the funds held in the trust account. If
      any
      third party refused to execute an agreement waiving such claims to the monies
      held in the trust account, we would perform an analysis of the alternatives
      available to us if we chose not to engage such third party and evaluate if
      such
      engagement would be in the best interest of our stockholders if such third
      party
      refused to waive such claims. Examples of possible instances where we may engage
      a third party that refused to execute a waiver include the engagement of a
      third
      party consultant whose particular expertise or skills are believed by management
      to be significantly superior to those of other consultants that would agree
      to
      execute a waiver or in cases where management is unable to find a provider
      of
      required services willing to provide the waiver. All our executive officers
      have
      agreed pursuant to agreements with us and Maxim Group LLC, if we liquidate
      prior
      to the consummation of a business combination, they will be personally liable
      to
      pay debts and obligations to vendors, prospective target businesses or other
      entities that are owed money by us for services rendered or products sold to
      us
      in excess of the net proceeds of our initial public offering and the private
      placement not held in the trust account at that time to the extent we fail
      to
      obtain valid and enforceable waivers from such entities in order to protect
      the
      amounts held in trust. Based on information we have obtained from such
      individuals, we currently believe that such persons are capable of funding
      a
      shortfall in our trust account even though we have not asked them to reserve
      for
      such an eventuality. We cannot assure you, however, that they would be able
      to
      satisfy those obligations. We believe the likelihood of our executive officers
      having to indemnify the trust account is minimal. However, we cannot assure
      you
      that the actual per-share liquidation price will not be less than $6.00, plus
      interest (net of taxes payable), due to claims of creditors.





6




Under
      the
      Delaware General Corporation Law, stockholders may be held liable for claims
      by
      third parties against a corporation to the extent of distributions received
      by
      them in a dissolution. If the corporation complies with certain procedures
      set
      forth in Section 280 of the Delaware General Corporation Law intended to ensure
      that it makes reasonable provision for all claims against it, including a 60-day
      notice period during which any third-party claims can be brought against the
      corporation, a 90-day period during which the corporation may reject any claims
      brought, and an additional 150-day waiting period before any liquidating
      distributions are made to stockholders, any liability of stockholders with
      respect to a liquidating distribution is limited to the lesser of such
      stockholder’s pro rata share of the claim or the amount distributed to the
      stockholder, and any liability of the stockholder would be barred after the
      third anniversary of the dissolution. Although we will seek stockholder approval
      to liquidate the trust account to our public stockholders as part of our plan
      of
      dissolution and liquidation, we do not intend to comply with those procedures.
      As such, our public stockholders could potentially be liable for any claims
      to
      the extent of distributions received by them in a dissolution and any liability
      of our public stockholders may extend beyond the third anniversary of such
      dissolution. Because we will not be complying with Section 280, we will seek
      stockholder approval to comply with Section 281(b) of the Delaware General
      Corporation Law, requiring us to adopt a plan of dissolution that will provide
      for our payment, based on facts known to us at such time, of (i) all existing
      claims, (ii) all pending claims and (iii) all claims that may be potentially
      brought against us within the subsequent 10 years. However, because we are
      a
      blank check company, rather than an operating company, and our operations will
      be limited to searching for prospective target businesses to acquire, the only
      likely claims to arise would be from our vendors (such as accountants, lawyers,
      investment bankers, etc.) or potential target businesses. As described above,
      we
      intend to have all vendors and prospective target businesses execute agreements
      with us waiving any right, title, interest or claim of any kind in or to any
      monies held in the trust account. As a result, the claims that could be made
      against us are significantly limited and the likelihood that any claim that
      would result in any liability extending to the trust is minimal.




Additionally,
      if we are forced to file a bankruptcy case or an involuntary bankruptcy case
      is
      filed against us which is not dismissed, the funds held in our trust account
      will be subject to applicable bankruptcy law, and may be included in our
      bankruptcy estate and subject to claims of third parties with priority over
      the
      claims of our public stockholders. To the extent bankruptcy claims deplete
      the
      trust account, we cannot assure you we will be able to return to our public
      stockholders the liquidation amounts due them.




Our
      public stockholders will be entitled to receive funds from the trust account
      only in the event of our liquidation or if they seek to convert their respective
      shares into cash upon a business combination which the stockholder voted against
      and which is completed by us. In no other circumstances will a stockholder
      have
      any right or interest of any kind to or in the trust account.




We
      expect
      that all costs associated with the implementation and completion of our plan
      of
      dissolution and liquidation (currently estimated to be between $50,000 and
      $75,000) as well as funds for payments to creditors, if any, will be funded
      by
      the interest earned on the trust account released to us, although we cannot
      give
      you assurances that there will be sufficient funds for such
      purposes.




We
      currently believe that any plan of dissolution and liquidation subsequent to
      the
      expiration of the 24 month deadline would proceed in approximately the following
      manner:




·
            our
                board of directors will, consistent with its obligations described
                in our
                amended and restated certificate of incorporation to dissolve, prior
                to
                the passing of such deadline, convene and adopt a specific plan of
                dissolution and liquidation, which it will then vote to recommend
                to our
                stockholders; at such time it will also cause to be prepared a preliminary
                proxy statement setting out such plan of dissolution and liquidation
                as
                well as the board’s recommendation of such
                plan;




·
            upon
                such deadline, we would file our preliminary proxy statement with
                the
                Securities and Exchange Commission;




7




·
              if
                  the Securities and Exchange Commission does not review the preliminary
                  proxy statement, then, 10 days following the passing of such deadline,
                  we
                  will mail the proxy statements to our stockholders, and 30 days
                  following
                  the passing of such deadline, we will convene a meeting of our
                  stockholders, at which they will either approve or reject our plan
                  of
                  dissolution and liquidation; and




·
            if
                the Securities and Exchange Commission does review the preliminary
                proxy
                statement, we currently estimate that we will receive their comments
                30
                days following the passing of such deadline. We will mail the proxy
                statements to our stockholders following the conclusion of the comment
                and
                review process (the length of which we cannot predict with any certainty,
                and which may be substantial) and we will convene a meeting of our
                stockholders at which they will either approve or reject our plan
                of
                dissolution and liquidation. In the event we seek stockholder approval
                for
                a plan of dissolution and liquidation and do not obtain such approval,
                we
                will nonetheless continue to pursue stockholder approval for our
                dissolution. Pursuant to the terms of our amended and restated certificate
                of incorporation, our powers following the expiration of the permitted
                time periods for consummating a business combination will automatically
                thereafter be limited to acts and activities relating to dissolving
                and
                winding up our affairs, including liquidation. If no proxy statement
                seeking the approval of our stockholders for a business combination
                has
                been filed 30 days prior to the date which is 24 months from the
                date of
                our initial public offering, our board will, prior to such date,
                convene,
                adopt and recommend to our stockholders a plan of dissolution and
                distribution, and on such date file a proxy statement with the Securities
                and Exchange Commission seeking stockholder approval for such plan.
                The
                funds held in our trust account may not be distributed except upon
                our
                dissolution and, unless and until such approval is obtained from
                our
                stockholders, the funds held in our trust account will not be released.
                Consequently, holders of a majority of our outstanding stock must
                approve
                our dissolution in order to receive the funds held in our trust account
                and the funds will not be available for any other corporate
                purpose.




In
      the
      event we seek stockholder approval for a plan of dissolution and distribution
      and do not obtain such approval, we will nonetheless continue to pursue
      stockholder approval for our dissolution. Pursuant to the terms of our amended
      and restated certificate of incorporation, our powers following the expiration
      of the permitted time periods for consummating a business combination will
      automatically thereafter be limited to acts and activities relating to
      dissolving and winding up our affairs, including  liquidation. The funds
      held in our trust account may not be distributed except upon our dissolution
      and, unless and until such approval is obtained from our stockholders, the
      funds
      held in our trust account will not be released.  Consequently, holders of a
      majority of our outstanding stock must approve our dissolution in order to
      receive the funds held in our trust account and the funds will not be available
      for any other corporate purpose. Immediately upon the approval by our
      stockholders of our plan of dissolution and distribution, we will liquidate
      our
      trust account to our public stockholders.





8




**Employees**





We
      have
      three officers, each of whom is also a member of our Board of Directors. These
      individuals are not obligated to contribute any specific number of hours per
      week and intend to devote only as much time as they deem necessary to our
      affairs. We currently have one special advisor. We do not intend to have any
      full time employees prior to the consummation of a business
      combination.




**Available
      Information**




We
      are
      subject to the information requirements of the Exchange Act. Therefore, we
      file
      periodic reports, proxy statements and other information with the SEC. Such
      reports, proxy statements and other information may be obtained by visiting
      the
      Public Reference Room of the SEC at 100 F Street, NW, Washington, DC 20549.
      You
      may obtain information on the operation of the Public Reference Room by calling
      the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site
      (http://www.sec.gov) that contains reports, proxy and information statements
      and
      other information regarding issuers that file electronically.





**Item
      1A. Risk Factors**




An
      investment in our securities involves a high degree of risk. You should consider
      carefully all of the material risks described below, together with the other
      information contained elsewhere in this Annual Report before making a decision
      to invest in our securities. As Affinity’s operations will be those relating to
      Hotel’s upon consummation of the merger, a number of the following risk factors
      relate to such business and operations of hotels.





**RISKS
      RELATING TO** **HOTELS
      BUSINESS**





***Our
      results are dependant on the well being of the hotel and lodging industry and
      we
      are subject to all of the operating risks common in the hotel and lodging
      industry and our results may be adversely impacted if any of these risks
      materialize.***




Assuming
      the Merger is consummated, our results will be significantly affected by
      occupancy rates achieved by the hotel and lodging industry. Unfavorable changes
      in the operations of the hotel and lodging industry, especially those of our
      partners, could limit our ability to market our products. In addition, economic
      factors beyond our control in the U.S. and internationally may create challenges
      for the hotel and lodging industry and us in 2008 and beyond. A downturn in
      economic conditions could impact the demand for hotel rooms and put pressure
      on
      room rates. Possible events that could negatively impact hotel occupancy
      include:




·
            increases
                in transportation and fuel costs, the financial condition of the
                airline
                industry and its impact on air
                travel;




·
            strikes
                or threatened strikes by unions whose members are employed by the
                hotel
                and lodging industry;




·
            terrorism,
                war or the threat of terrorism or
                war;




·
            increases
                in second home or timeshare purchases; and




·
            sustained
                recessionary periods in the U.S. and
                internationally.




The
      occurrence of any of these events could negatively impact hotel occupancy.
      Our
      success will depend on the number of hotel guests who view our in-room catalogs
      and purchase products from them. If there is a decline in hotel occupancy or
      if
      our catalogs are placed in fewer hotel rooms, we will not be able to market
      our
      products to as many potential purchasers and our sales and revenues may decline.





9





***Hotels
      contracts with its hotel partners allow each hotel partner to audit its accounts
      in order to review the allocation of revenue and expenses under the
      contract. A determination that a hotel partner is owed additional profit
      sharing distributions under a contract will negatively impact our cash flows
      and
      net income.***





Hotels
      contracts with its hotel partners provide its hotel partners with the right
      to
      audit their accounts with us to review the allocation of revenue and
      expenses under their contract. Any of our hotel partners may exercise its audit
      rights in order to review its share of the profit sharing distributions derived
      from sales related to that contract. A review of the revenues, expenses or
      other
      matters related to a contract may lead a hotel partner to determine that an
      additional share of profit sharing distributions under a contract is owed to
      it.
      Any payments by us of additional profits as a result of a hotel partner’s audit
      of a contract will have a negative impact on our cash flows and net
      income.




***The
      hotel industry is controlled by a small number of large holding companies and
      our success is largely dependent on our ability to cultivate, maintain and
      grow
      relationships with each of these companies.***




Approximately
      80% of the hotel rooms in the United States are owned or managed by ten hotel
      holding corporations. Hotels currently has hotel partner contracts with one
      or
      more brands owned by six of these ten hotel holding corporations. Its continued
      success is in large part dependent upon its ability to expand its relationship
      with these six customers and to develop relationships with the four remaining
      hotel holding corporations. Conversely, if Hotels lose favor with any one of
      these hotel holding corporations, it could have a significant impact on our
      future financial results and our ability to continue to expand our
      business.




***Because
      Hotels***  ***depend
      on a small number of key clients, non-recurring revenue and contracts terminable
      on short notice, its business could be adversely affected if we fail to retain
      these clients and/or obtain new clients at a level sufficient to support our
      operations and/or broaden our client base.***





Four
      separate and autonomous programs under the umbrella of one hotel management
      partner account for approximately 45% of Hotels revenue. Programs owned by
      three
      other hotel management companies represent approximately 16%, 15% and 13% of
      Hotels total revenue, respectively. If any of these customers suffers
      a significant decline in hotel occupancy rates or decides to create its own
      catalogues or websites to sell its merchandise, it would negatively impact
      our
      financial results. We would experience a decline in revenues if we were not
      able
      to secure a sufficient number of new clients or additional business from
      existing clients.




***Hotels
      ability to market its products to potential purchasers is dependant on hotel
      occupancy rates and the placement of catalogs in occupied hotel
      rooms.***




Hotels
      marketing efforts are dependent on the placement of its catalogs in occupied
      hotel rooms. In addition to general trends that result in declines in hotel
      occupancy, catalogs may not be placed in occupied hotel rooms as a result of
      errors by hotel housekeeping staff or decisions of hotel franchisees. If hotel
      occupancy declines or catalogs are not placed appropriately in occupied hotel
      rooms, our ability to reach potential purchasers will decline and our financial
      results may suffer.




***We
      may not be able to compete successfully against existing or future
      competitors.***




The
      online retailing market is rapidly evolving and intensely competitive. Barriers
      to entry are minimal, and current and new competitors can launch new websites
      at
      a relatively low cost. Furthermore, upon expiration of our contract and
      arrangements, our existing partners may decide to create their own catalogs
      or
      websites to sell their merchandise. Competitive pressures created by any one
      of
      our competitors, or by our competitors collectively, could harm our business,
      prospects, financial condition and results of operations. Increased competition
      may result in reduced operating margins, loss of market share and a
      diminished brand franchise. We cannot assure you that we will be able to compete
      successfully against current and future competitors




10





***Hotels
      rely on its relationships with its suppliers to obtain sufficient quantities
      of
      quality merchandise on acceptable terms. If we fail to maintain such supplier
      relationships on acceptable terms, our sales and profitability could
      suffer.***




Hotels
      contracts or arrangements with its suppliers do not provide for the continuation
      of particular merchandises or pricing practices. Some of the contracts and
      arrangements may be terminated by the suppliers at any time. Shipping
      delays and pricing fluctuations may negatively impact our ability to fulfill
      product orders at a profit or at all. In addition, Hotels current suppliers
      may not continue to sell inventory on current terms or at all, and we
      may not be able to establish new supply relationships. If we are unable to
      develop and maintain relationships with suppliers that will allow us market
      sufficient quantities of merchandise on acceptable commercial terms, such
      inability could harm our business, prospects, results of operation and financial
      condition.




***Hotels
      are partially dependent on third parties to fulfill a number of its fulfillment,
      distribution and other retail functions. If such parties are unwilling or unable
      to continue providing these services, our business could be seriously
      harmed.***




Hotels
      rely on third parties to conduct a number of traditional retail operations
      with
      respect to their respective products that it offers for sale in its catalog,
      including maintaining inventory, preparing merchandise for shipment to
      individual customers and timely distribution of purchased merchandise. We have
      no effective means to ensure that these third parties will continue to
      perform these services to our satisfaction or on commercially reasonable
      terms. In addition, because we do not take possession of these third parties’
products, we are unable to fulfill these traditional retail operations
      ourselves. Our customers could become dissatisfied and cancel their orders
      or
      decline to make future purchases if these third parties are unable to deliver
      products on a timely basis. If our customers become dissatisfied with the
      services provided by these third parties, our reputation and brand could
      suffer.




***Hotels
      has a rapidly evolving business model.***




Our
      business model has evolved and continues to do so. In the past we have added
      additional types of services and product offerings, and in some cases we have
      modified or discontinued those offerings. We may continue to try to offer
      additional types of products or services, and we cannot offer any assurance
      that
      any of them will be successful. From time to time, we have also modified aspects
      of our business model relating to our product mix and the mix of
      direct/fulfillment partner sourcing of the products we offer. We may continue
      to
      modify this aspect of our business as well as other significant aspects of
      our
      business. We cannot offer any assurance that these or any other modifications
      will be successful.




***Hotels
      depends upon third-party delivery services to deliver its products to its
      customers on a timely and consistent basis. Deterioration in the relationship
      with any one of these third parties could decrease our ability to track
      shipments, cause shipment delays, and increase our shipping costs and the number
      of damaged products.***




Hotels
      relies upon multiple third parties for the shipment of its products. We cannot
      be sure that these relationships will continue on terms favorable to us, if
      at
      all. Unexpected increases in shipping costs or delivery times, particularly
      during the holiday season, could harm our business, prospects, financial
      condition and results of operations. If our relationships with these third
      parties are terminated or impaired or if these third parties are unable to
      deliver products for us, whether through labor shortage, slow down or stoppage,
      deteriorating financial or business condition, responses to terrorist attacks
      or
      for any other reason, we would be required to use alternative carriers for
      the
      shipment of products to our customers. In addition, conditions such as adverse
      weather can prevent any carriers from performing their delivery services, which
      can have an adverse effect on our customers’ satisfaction with us. In any of
      these circumstances, we may be unable to engage alternative carriers on a
      timely basis, upon terms favorable to us, or at all. Changing carriers would
      likely have a negative effect on our business, prospects, operating results
      and
      financial condition. Potential adverse consequences include:




11





·
            reduced
                visibility of order status and package
                tracking;




·
            delays
                in order processing and product
                delivery;




·
            increased
                cost of delivery, resulting in reduced gross margins;
                and




·
            reduced
                shipment quality, which may result in damaged products and customer
                dissatisfaction.




***A
      significant number of merchandise returns could harm our business, financial
      condition and results of operations.***




Hotels
      allows its customers to return products. Hotels modifies its policies relating
      to returns from time to time, and any policies intended to reduce the number
      of
      product returns may result in customer dissatisfaction and fewer return
      customers. If merchandise returns are significant, our business, prospects,
      financial condition and results of operations could be harmed.




***If
      the products that we offer do not reflect our customers’ tastes and preferences,
      our sales and profit margins would decrease.***




Our
      success depends in part on our ability to offer products that reflect
      consumers’ tastes and preferences. Consumers’ tastes are subject to frequent,
      significant and sometimes unpredictable changes. Because the products that
      we
      sell typically consist of merchandise in use by hotels and resorts, we have
      limited control over the specific products that we are able to offer for sale.
      If our merchandise fails to satisfy customers’ tastes or respond to changes in
      customer preferences, our sales could suffer and we could be required to mark
      down unsold inventory which would depress our profit margins. In addition,
      any
      failure to offer products in line with customers’ preferences could allow our
      competitors to gain market share. This could have an adverse effect on our
      business, prospects, results of operations and financial condition.




***If
      our inventory is damaged, stolen or becomes obsolete, our success and cash
      flow
      could be reduced.***




Hotels
      directly purchases and/or warehouses some of the merchandise that it sells.
      Hotels assumes the inventory damage, theft and obsolescence risks, as well
      as
      price erosion risks for products that it purchases directly. In addition, Hotels
      does not always receive warranties on the merchandise it purchases or
      warehouses. Further, Hotels accepts returns of unused or defective products
      sold, and it has the risk of reselling the returned products or obtaining a
      refund from the manufacturer, as applicable. To the extent that we rely on
      purchased inventory, our success will depend upon our ability to liquidate
      our
      inventory rapidly, the ability of our buying staff to purchase inventory at
      attractive prices relative to its resale value and our ability to manage
      customer returns and the shrinkage resulting from theft, loss and misrecording
      of inventory. If we are unsuccessful in any of these areas, we may be forced
      to
      sell our inventory at a discount or a loss.




***The
      loss of key personnel or any inability to attract and retain additional
      personnel could affect our ability to successfully grow our
      business.***




Assuming
      the Merger is consummated, our performance is substantially dependent on the
      continued services and on the performance of Hotels senior management and other
      key personnel, including Michael Ware, our President and Chief Executive Officer
      after the Merger, Robin Ware, our Chief Operating Officer after the Merger,
      and
      Raymond Romano, our Chief Financial Officer after the Merger. Our performance
      will also depend on our ability to retain and motivate other officers and key
      employees. The loss of the services of any of our executive officers or other
      key employees for any unforeseen reason, including without limitation, illness,
      could harm our business, prospects, financial condition and results of
      operations. We do not maintain “key person” life insurance policies. As a
      condition to the closing of the Merger, Affinity will enter into employment
      agreements with each of Michael Ware, Robin Ware and Raymond Romano.




12





Our
      future success also depends on our ability to identify, attract, hire, train,
      retain and motivate other highly-skilled technical, managerial, editorial,
      merchandising, marketing and customer service personnel. Competition for such
      personnel is intense, and we cannot assure you that we will be able to
      successfully attract, assimilate or retain sufficiently qualified personnel.
      Our
      failure to retain and attract the necessary technical, managerial, editorial,
      merchandising, marketing and customer service personnel could harm our revenues,
      business, prospects, financial condition and results of operations.




***We
      are expanding our international business, causing our business to become
      increasingly susceptible to numerous international business risks and challenges
      that could affect our profitability.***




We
      have
      begun to expand into international markets, and in the future we may do so
      more aggressively. International sales and transactions are subject to inherent
      risks and challenges that could adversely affect our profitability,
      including:




·
            the
                need to develop new supplier and manufacturer
                relationships;




·
            the
                need to comply with additional laws and regulations to the extent
                applicable;




·
            unexpected
                changes in international regulatory requirements and
                tariffs;




·
            difficulties
                in staffing and managing foreign operations;
                and




·
            price
                controls or other restrictions on foreign
                currency.




To
      the
      extent we generate international sales and transactions in the future, any
      negative impact on our international operations could negatively impact our
      business. In particular, gains and losses on the conversion of foreign payments
      into United States dollars may contribute to fluctuations in our results of
      operations and fluctuating exchange rates could cause reduced gross revenues
      and/or gross margins from non-dollar-denominated international
      sales.




***Our
      operating results substantially depend on our websites, network infrastructure
      and transaction-processing systems. Capacity constraints or system failures
      would harm our business, prospects, results of operations and financial
      condition.***




Any
      system interruptions that result in the unavailability of our websites or
      reduced performance of our transaction systems would reduce our transaction
      volume and the attractiveness of the services that we provide to suppliers
      and
      third parties and would harm our business, prospects, operating results and
      financial condition.




We
      use
      internally developed systems for our websites and certain aspects of transaction
      processing, including customer profiling and order verifications. We have
      experienced periodic systems interruptions due to server failure, which we
      believe will continue to occur from time to time. If the volume of traffic
      on
      our websites or the number of purchases made by customers substantially
      increases, we will need to further expand and upgrade our technology,
      transaction processing systems and network infrastructure. We have experienced
      and expect to continue to experience temporary capacity constraints due to
      sharply increased traffic during sales or other promotions and during the
      holiday shopping season. Capacity constraints can cause unanticipated system
      disruptions, slower response times, and degradation in levels of customer
      service, impaired quality and delays in reporting accurate financial
      information.




13





Our
      transaction processing systems and network infrastructure may be unable to
      accommodate increases in traffic in the future. We may be unable to project
      accurately the rate or timing of traffic increases or successfully upgrade
      our
      systems and infrastructure to accommodate future traffic levels on our websites.
      In addition, we may be unable to upgrade and expand our transaction
      processing systems in an effective and timely manner or to integrate any newly
      developed or purchased functionality with our existing systems. Any difficulties
      with our transaction processing systems or other difficulties upgrading,
      expanding or integrating various aspects of our systems may cause
      unanticipated system disruptions, slower response times, and degradation in
      levels of customer service, additional expense, impaired quality and speed
      of
      order fulfillment or delays in reporting accurate financial
      information.




***If
      the facilities where substantially all of our computer and communications
      hardware is located fail, our business, results of operations and financial
      condition may be harmed.***




Our
      success, and, in particular, our ability to successfully receive and fulfill
      orders and provide high-quality customer service, largely depends on the
      efficient and uninterrupted operation of our computer and communications
      systems. Substantially all of Hotels computer and communications hardware is
      located at its corporate headquarters in Fairfield, New Jersey with a
      partially redundant back-up system located in Las Vegas, Nevada. Although
      we have designed our back-up system in an effort to avoid or minimize service
      interruptions in the event of a failure of our main facility, our systems and
      operations are vulnerable to damage or interruption from fire, flood, power
      loss, telecommunications failure, terrorist attacks, acts of war, break-ins,
      earthquake and similar events. We do not have a formal disaster recovery plan
      and our business interruption insurance may be insufficient to compensate
      us for losses that may occur. Despite the implementation of network
      security measures, our servers are vulnerable to computer viruses, physical
      or
      electronic break-ins and similar disruptions, which could lead to interruptions,
      delays, loss of critical data or the inability to accept and fulfill customer
      orders. The occurrence of any of the foregoing risks could harm our business,
      prospects, financial condition and results of operations.




***If
      we do not respond to rapid technological changes, our services could become
      obsolete and we could lose customers.***




To
      remain
      competitive, we must continue to enhance and improve the functionality and
      features of our e-commerce businesses. We may face material delays in
      introducing new services, products and enhancements. If this happens, our
      customers may forgo the use of our Websites and use those of our
      competitors. The internet and the online commerce industry are rapidly changing.
      If competitors introduce new products and services using new technologies or
      if
      new industry standards and practices emerge, our existing websites and our
      proprietary technology and systems may become obsolete. Our failure to
      respond to technological change or to adequately maintain, upgrade and develop
      our computer network and the systems used to process customers’ orders and
      payments could harm our business, prospects, financial condition and results
      of
      operations.




***We
      may be liable if third parties misappropriate our customers’ personal
      information.***




If
      third
      parties are able to penetrate our network security or otherwise misappropriate
      our customers’ personal information or credit card information, or if we give
      third parties improper access to our customers’ personal information or credit
      card information, we could be subject to liability. This liability could include
      claims for unauthorized purchases with credit card information, impersonation
      or
      other similar fraud claims. This liability could also include claims for other
      misuses of personal information, including unauthorized marketing purposes.
      These claims could result in litigation. Liability for misappropriation of
      this
      information could adversely affect our business. In addition, the Federal Trade
      Commission and state agencies have been investigating various Internet companies
      regarding their use of personal information. We could incur additional expenses
      if new regulations regarding the use of personal information are introduced
      or
      if government agencies investigate our privacy practices. In addition, we could
      lose customer accounts if the information supplied by visitors to our online
      catalogs are misappropriated.




14





We
      rely
      on encryption and authentication technology licensed from third parties to
      provide the security and authentication necessary to effect secure transmission
      of confidential information such as customer credit card numbers. We cannot
      assure you that advances in computer capabilities, new discoveries in the field
      of cryptography or other events or developments will not result in a compromise
      or breach of the algorithms that we use to protect customer transaction data.
      If
      any such compromise of our security were to occur, it could harm our reputation,
      business, prospects, financial condition and results of operations. A party
      who
      is able to circumvent our security measures could misappropriate proprietary
      information or cause interruptions in our operations. We may be required to
      expend significant capital and other resources to protect against such security
      breaches or to alleviate problems caused by such breaches. We cannot assure
      you
      that our security measures will prevent security breaches or that failure to
      prevent such security breaches will not harm our business, prospects, financial
      condition and results of operations.




***Laws
      or regulations relating to privacy and data protection may adversely affect
      the growth of our Internet business.***




We
      are
      subject to increasing regulation at the federal, state and international levels
      relating to privacy and the use of personal user information. For example,
      we
      are subject to various telemarketing laws that regulate the manner in which
      we
      may solicit future suppliers and customers. Such regulations, along with
      increased governmental or private enforcement, may increase the cost of
      growing our business. In addition, many jurisdictions have laws that limit
      the
      uses of personal user information gathered online or offline or require
      companies to establish privacy policies. The Federal Trade Commission has
      adopted regulations regarding the collection and use of personal identifying
      information obtained from children under 13. Proposed legislation in this
      country and existing laws in foreign countries require companies to establish
      procedures to notify users of privacy and security policies, obtain consent
      from
      users for collection and use of personal information, and/or provide users
      with
      the ability to access, correct and delete personal information stored by us.
      Additional legislation regarding data security and privacy has been proposed
      in
      Congress. These data protection regulations may restrict our ability to
      collect demographic and personal.




***We
      may be subject to product liability claims that could be costly and time
      consuming.***




Hotels
      sells products manufactured for it by third parties, some of which may be
      defective. If any product that we sell were to cause physical injury or injury
      to property, the injured party or parties could bring claims against us as
      the
      manufacturer and/or retailer of the product. Our insurance coverage may not
      be adequate to cover every claim that could be asserted. If a successful claim
      were brought against us in excess of our insurance coverage, it could adversely
      affect our business. Even unsuccessful claims could result in the expenditure
      of
      funds and management time and could have a negative impact on our
      business.




***Credit
      card fraud could adversely affect our business.***




We
      do not
      carry insurance against the risk of credit card fraud, so the failure to
      adequately control fraudulent credit card transactions could reduce our net
      revenues and our gross margin. We have implemented technology to help us detect
      the fraudulent use of credit card information. However, we may in the
      future suffer losses as a result of orders placed with fraudulent credit card
      data even though the associated financial institution approved payment of the
      orders. Under current credit card practices, we may be liable for
      fraudulent credit card transactions because we do not obtain a cardholder’s
      signature. If we are unable to detect or control credit card fraud, our
      liability for these transactions could harm our business, results of operation
      or financial condition.




15





***If
      one or more states successfully assert that we should collect sales or other
      taxes on the sale of our merchandise or the merchandise of third parties that
      we
      offer for sale on our Websites, our business could be
      harmed.***




Hotels
      does not currently collect sales or other similar taxes for physical shipments
      of goods into states other than New York and New Jersey. One or more local,
      state or foreign jurisdictions may seek to impose sales tax collection
      obligations on us and other out-of-state companies that engage in online
      commerce. Our business could be adversely affected if one or more states or
      any
      foreign country successfully asserts that we should collect sales or other
      taxes
      on the sale of our merchandise.




***Existing
      or future government regulation could harm our
      business.***




We
      are
      subject to the same federal, state and local laws as other companies conducting
      business on the Internet. Today there are relatively few laws specifically
      directed towards conducting business on the Internet. However, due to the
      increasing popularity and use of the Internet, many laws and regulations
      relating to the Internet are being debated at the state and federal levels.
      These laws and regulations could cover issues such as user privacy, freedom
      of
      expression, pricing, fraud, quality of products and services, taxation,
      advertising, intellectual property rights and information security.
      Applicability to the Internet of existing laws governing issues such as property
      ownership, copyrights and other intellectual property issues, taxation, libel,
      obscenity and personal privacy could also harm our business. For example, United
      States and foreign laws regulate our ability to use customer information and
      to
      develop, buy and sell mailing lists. The vast majority of these laws was adopted
      prior to the advent of the Internet, and do not contemplate or address the
      unique issues raised thereby. Those laws that do reference the Internet are
      only
      beginning to be interpreted by the courts and their applicability and reach
      are
      therefore uncertain. These current and future laws and regulations could harm
      our business, results of operation and financial condition.




***Hotels
      must effectively manage its inventories and control its product fulfillment
      costs*** .




Hotels
      must manage its inventories to track customer preferences and demand. Hotels
      orders merchandise based on its best projection of consumer tastes and
      anticipated demand in the future, but we cannot guarantee that the projections
      of consumer tastes and the demand for Hotels merchandise will be accurate.
      It is
      critical to Hotels success that they stock their product offerings in
      appropriate quantities. If demand for one or more products outstrips Hotels
      available supply, we may have large backorders and cancellations and lose sales.
      On the other hand, if one or more products do not achieve projected sales
      levels, we may have surplus or un-saleable inventory that would force us to
      take
      significant inventory markdowns, which could reduce our net sales and gross
      margins.




***Hotels
      is dependent on the continued growth of Internet sales and must effectively
      manage its Internet spending.***




Hotels
      derives an increasing portion of its revenue from its websites. E-commerce
      is an
      important part of Hotels business. Factors which could reduce the widespread
      use
      of the Internet include actual or perceived lack of privacy protection, actual
      or perceived lack of security of credit card information, possible disruptions
      or other damage to the Internet or telecommunications infrastructure, increased
      governmental regulation and taxation and decreased use of personal computers.
      Our business would be harmed by any decrease or less than anticipated growth
      in
      Internet usage. While Hotels monitors its spending to maximize its revenues
      and
      returns, there can be no assurances that we will spend the optimal amount on
      Internet search.





16




**RISKS
      PARTICULAR TO THE MERGER**





As
      Affinity’s operations will be those relating to Hotel’s upon consummation of the
      merger, a number of the following risk factors relate to the risks of completing
      the merger and the effects on Affinity’s stockholders upon consummation of the
      merger. Pursuant
      to the Merger Agreement, dated as of July 24, 2007, and amended as of January
      14, 2008, Affinity will, in exchange for all of the outstanding shares of
      capital stock of Hotels, provide total consideration of approximately
      $30,000,000 comprised of the issuance of 2,456,571 shares of common stock and
      the delivery of $16,000,000 in cash to the stockholders of Hotels. Upon
      consummation of the merger, but before effecting the shares that might be issued
      in connection with the earnout and assuming no conversions, there would be
      a
      total of 6,669,153 shares of common stock outstanding after the merger. In
      addition, the stockholders of Hotels may earn up to an additional 500,000 shares
      per year of Affinity common stock, or up to an aggregate of 1,500,000 shares
      of
      Affinity common stock (the “Earn-out Shares”), if Hotels achieves certain
      established net income levels for each of the fiscal years ending December
      31,
      2008, 2009 and 2010. Our stockholders must approve this merger with
      Hotels.




***Failure
      to complete the Merger could negatively impact the market price of Affinity’s
      common stock and result in the disbursement of the trust proceeds, which may
      cause investors to experience a loss on or of their
      investment.***




If
      the
      Merger is not completed for any reason, Affinity may be subject to a number
      of
      material risks, including:




·
            the
                market price of Affinity’s common stock may decline to the extent that the
                current market price of its common stock reflects the market assumption
                that this Merger will be
                consummated;




·
            certain
                costs related to the Merger, such as legal and accounting fees and
                the
                costs of the fairness opinion, must be paid even if the Merger is
                not
                completed; and




·
            charges
                against earnings will be made for transaction-related expenses, which
                could be higher than expected.




Such
      decreased market price and added costs and charges of a failed Merger may
      result, ultimately, in the disbursement of the trust proceeds, causing investors
      to experience a loss on their investment.




***If
      the Merger’s benefits do not meet the expectations of financial or industry
      analysts, the market price of Affinity’s common stock may
      decline.***




Assuming
      the Merger is approved, the market price of Affinity’s common stock may decline
      as a result of the Merger if:




·
            Affinity
                does not achieve the perceived benefits or returns of the business
                of
                Hotels as rapidly as, or to the extent anticipated by, financial
                or
                industry analysts;




·
            the
                business of Hotels fails to meet target financial metrics of industry
                or
                financial analysts; or




·
            the
                effect of the business of Hotels on Affinity’s financial results is not
                consistent with the expectations of financial or industry
                analysts.




Accordingly,
      investors may experience a loss as a result of a decreasing stock price and
      Affinity may not be able to raise future capital, if necessary, in the equity
      markets.




17




***Affinity
      stockholders will experience immediate dilution as a consequence of the issuance
      of shares of Affinity common stock as consideration in the Merger. The existence
      of a large a minority share position may reduce the influence that Affinity’s
      current stockholders have on the management of the combined
      company.***




Following
      the consummation of the Merger, the influence of Affinity’s current
      stockholders, in their capacity as stockholders of the combined company, will
      be
      significantly reduced. Affinity’s current stockholders will hold, in the
      aggregate, approximately 62.4% of the issued and outstanding shares of the
      combined company.




Moreover,
      following the Merger, the stockholders of Hotels will beneficially own
      approximately 36.8% (or 48.4% if all of the Earn-out Shares are issued) in
      the aggregate of the outstanding voting shares of the combined company and,
      therefore, will have the ability to exercise substantial influence over the
      election of directors and other issues submitted to the stockholders of the
      combined company. The concentration of ownership may have the effect of delaying
      or preventing a change in control of the combined company even if such a change
      in control would be in your interest.




***Affinity’s
      dividend policy may reduce the value of your
      investment.***




Following
      the Merger, Affinity does not intend that it will in the foreseeable future
      declare or pay any cash dividend on its shares and anticipates that earnings,
      if
      any, will be used to finance the development and expansion of its business.
      Any
      payment of future dividends and the amounts thereof will be dependent upon
      earnings, financial requirements and other factors deemed relevant by its Board
      of Directors, including its contractual obligations, if any.




***Affinity
      may waive one or more conditions to the Merger without resoliciting stockholder
      approval for the Merger.***




One
      or
      more conditions to Affinity’s ****** obligation
      to complete the Merger may be waived in whole or in part to the extent legally
      allowable either unilaterally or by agreement of Hotels and Affinity. Depending
      upon the condition, the Board of Directors of Affinity will evaluate the
      materiality of any such waiver to determine whether amendment to this proxy
      statement and re-solicitation of proxies as necessary. In the event that the
      Board of Directors of Affinity determines any such waivers are not significant
      enough to require re-solicitation of stockholders, it would have the discretion
      to complete the Merger without seeking further stockholder approval.





**RISKS
      ASSOCIATED WITH OUR BUSINESS**




***Acquisitions
      that we may undertake would involve a number of inherent risks, any of which
      could cause us not to realize the benefits anticipated to
      result.***




It
      is
      possible that, following our initial acquisition, our strategy will include
      expanding our operations and other capabilities through acquisitions of
      businesses and assets. Acquisition transactions involve various inherent risks,
      such as:




·
            uncertainties
                in assessing the value, strengths and potential profitability of,
                and
                identifying the extent of all weaknesses, risks, contingent and other
                liabilities (including environmental liabilities) of, acquisition
                or other
                transaction candidates;




·
            the
                potential loss of key customers, management and employees of an acquired
                business;




·
            the
                ability to achieve identified operating and financial synergies
                anticipated to result from an acquisition or other
                transaction;




·
            problems
                that could arise from the integration of the acquired business;
                and




·
            unanticipated
                changes in business, industry or general economic conditions that
                affect
                the assumptions underlying the acquisition or other transaction
                rationale.





Any
      one
      or more of these factors could cause us not to realize the benefits anticipated
      to result from the acquisition of businesses or assets or could result in
      unexpected liabilities associated with these acquisition
      candidates.




18




***If
      we are forced to dissolve and liquidate before a business combination our
      warrants will expire worthless.***




If
      we are
      unable to complete a business combination and are forced to dissolve, liquidate
      and wind up, there will be no amount payable upon such liquidation with respect
      to our outstanding warrants and, accordingly, the warrants will expire
      worthless. For a more complete discussion of the effects on our stockholders
      if
      we are unable to complete a business combination, see the section above entitled
      “Effecting a business combination — Dissolution and liquidation if no business
      combination.”




***If
      third parties bring claims against us, the proceeds held in trust could be
      reduced and the per-share liquidation price received by stockholders from
      the trust account as part of our stockholder-approved plan of dissolution and
      liquidation will be less than $6.00 per share.***




Our
      placing of funds in trust may not protect those funds from third party claims
      against us. Although we will seek to have all vendors, prospective target
      businesses or other entities with which we execute agreements waive any right,
      title, interest or claim of any kind in or to any monies held in the trust
      account for the benefit of our public stockholders, there is no guarantee that
      they will execute such agreements, or even if they execute such agreements
      that
      they would be prevented from bringing claims against the trust account including
      but not limited to fraudulent inducement, breach of fiduciary responsibility
      and
      other similar claims, as well as claims challenging the enforceability of the
      waiver, in each case in order to gain an advantage with a claim against our
      assets, including the funds held in the trust account. If any third party
      refused to execute an agreement waiving such claims to the monies held in the
      trust account, we would perform an analysis of the alternatives available to
      us
      if we chose not to engage such third party and evaluate if such engagement
      would
      be in the best interest of our stockholders if such third party refused to
      waive
      such claims. Examples of possible instances where we may engage a third party
      that refused to execute a waiver include the engagement of a third party
      consultant whose particular expertise or skills are believed by management
      to be
      significantly superior to those of other consultants that would agree to execute
      a waiver or in cases where management is unable to find a provider of required
      services willing to provide the waiver. In addition, there is no guarantee
      that
      such entities will agree to waive any claims they may have in the future as
      a
      result of, or arising out of, any negotiations, contracts or agreements with
      us
      and not seek recourse against the trust account for any reason.




Accordingly,
      the proceeds held in trust could be subject to claims that could take priority
      over the claims of our public stockholders and the per-share liquidation price
      could be less than the $6.00 per share held in the trust account, plus interest
      (net of any taxes due on such interest, which taxes, if any, shall be paid
      from
      the trust account and net of any amounts released to us as working capital
      or to
      fund costs associated with our plan of dissolution and liquidation if we do
      not
      consummate a business combination), due to claims of such creditors. If we
      are
      unable to complete a business combination and are forced to dissolve and
      liquidate, certain of our executive officers will be personally liable to ensure
      that the proceeds in the trust account are not reduced by the claims of various
      vendors, prospective target businesses or other entities that are owed money
      by
      us for services rendered or products sold to us, to the extent necessary to
      ensure that such claims do not reduce the amount in the trust account in order
      to preserve a $6.00 per-share liquidation price. Based on information we have
      obtained from such individuals, we currently believe that such persons are
      capable of funding a shortfall in our trust account, even though we have not
      asked them to reserve for such an eventuality. However, we cannot assure you
      that our executive officers will be able to satisfy those obligations. We
      believe the likelihood of our executive officers having to indemnify the trust
      account is minimal.




Additionally,
      if we are forced to file a bankruptcy case or an involuntary bankruptcy case
      is
      filed against us which is not dismissed, the funds held in our trust account
      will be subject to applicable bankruptcy law, and may be included in our
      bankruptcy estate and subject to claims of third parties with priority over
      the
      claims of our public stockholders. To the extent bankruptcy claims deplete
      the
      trust account, we cannot assure you we will be able to return to our public
      stockholders the liquidation amounts due them.





19




***Our
      stockholders may be held liable for claims by third parties against us to the
      extent of distributions received by them.***




We
      will
      dissolve and liquidate if we do not complete a business combination within
      24
      months after the consummation of our initial public offering because certain
      extension criteria were satisfied. Under the Delaware General Corporation Law,
      stockholders may be held liable for claims by third parties against a
      corporation to the extent of distributions received by them in a dissolution.
      If
      the corporation complies with certain procedures set forth in Section 280 of
      the
      Delaware General Corporation Law intended to ensure that it makes reasonable
      provision for all claims against it, including a 60-day notice period during
      which any third-party claims can be brought against the corporation, a 90-day
      period during which the corporation may reject any claims brought, and an
      additional 150-day waiting period before any liquidating distributions are
      made
      to stockholders, any liability of stockholders with respect to a liquidating
      distribution is limited to the lesser of such stockholder’s pro rata share of
      the claim or the amount distributed to the stockholder, and any liability of
      the
      stockholder would be barred after the third anniversary of the dissolution.
      Although we will seek stockholder approval to liquidate the trust account to
      our
      public stockholders as part of our plan of dissolution and liquidation, we
      do
      not intend to comply with those procedures. Because we will not be complying
      with Section 280, we will seek stockholder approval to comply with Section
      281(b) of the Delaware General Corporation Law, requiring us to adopt a plan
      of
      dissolution that will provide for our payment, based on facts known to us at
      such time, of (i) all existing claims, (ii) all pending claims and (iii) all
      claims that may be potentially brought against us within the subsequent 10
      years. However, because we are a blank check company, rather than an operating
      company, and our operations will be limited to searching for prospective target
      businesses to acquire, the only likely claims to arise would be from our vendors
      (such as accountants, lawyers, investment bankers, etc.) or potential target
      businesses. As described above, we intend to have all vendors and prospective
      target businesses execute agreements with us waiving any right, title, interest
      or claim of any kind in or to any monies held in the trust account. As a result,
      the claims that could be made against us are significantly limited and the
      likelihood that any claim that would result in any liability extending to the
      trust is minimal. However, because we will not be complying with Section 280,
      our public stockholders could potentially be liable for any claims to the extent
      of distributions received by them in a dissolution and any such liability of
      our
      stockholders will likely extend beyond the third anniversary of such
      dissolution. Accordingly, we cannot assure you that third parties will not
      seek
      to recover from our public stockholders amounts owed to them by us.




***If
      we do not consummate a business combination and dissolve, payments from the
      trust account to our public stockholders may be
      delayed.***




We
      currently believe that any plan of dissolution and liquidation subsequent to
      the
      expiration of the 24 month deadline would proceed in approximately the following
      manner:




·
            our
                board of directors will, consistent with its obligations described
                in our
                amended and restated certificate of incorporation to dissolve, prior
                to
                the passing of the such deadline, convene and adopt a specific plan
                of
                dissolution and liquidation which it will then vote to recommend
                to our
                stockholders; at such time it will also cause to be prepared a preliminary
                proxy statement setting out such plan of dissolution and liquidation
                as
                well as the board’s recommendation of such
                plan;




·
            upon
                such deadline, we would file our preliminary proxy statement with
                the
                Securities and Exchange Commission;




·
            if
                the Securities and Exchange Commission does not review the preliminary
                proxy statement, then, 10 days following the passing of such deadline,
                we
                will mail the proxy statements to our stockholders, and 30 days following
                the passing of such deadline we will convene a meeting of our
                stockholders, at which they will either approve or reject our plan
                of
                dissolution and liquidation; and




20




·
              if
                  the Securities and Exchange Commission does review the preliminary
                  proxy
                  statement, we currently estimate that we will receive their comments
                  30
                  days following the passing of such deadline. We will mail the proxy
                  statements to our stockholders following the conclusion of the
                  comment and
                  review process (the length of which we cannot predict with any
                  certainty,
                  and which may be substantial) and we will convene a meeting of
                  our
                  stockholders at which they will either approve or reject our plan
                  of
                  dissolution and liquidation.




In
      the
      event we seek stockholder approval for a plan of dissolution and liquidation
      and
      do not obtain such approval, we will nonetheless continue to pursue stockholder
      approval for our dissolution.  Pursuant to the terms of our amended and
      restated certificate of incorporation, our powers following the expiration
      of
      the permitted time periods for consummating a business combination will
      automatically thereafter be limited to acts and activities relating to
      dissolving and winding up our affairs, including liquidation. The funds held
      in
      our trust account may not be distributed except upon our dissolution and, unless
      and until such approval is obtained from our stockholders, the funds held in
      our
      trust account will not be released.  Consequently, holders of a majority of
      our outstanding stock must approve our dissolution in order to receive the
      funds
      held in our trust account and the funds will not be available for any other
      corporate purpose.




These
      procedures, or a vote to reject any plan of dissolution and liquidation by
      our
      stockholders, may result in substantial delays in the liquidation of our trust
      account to our public stockholders as part of our plan of dissolution and
      liquidation.





***All
      of our directors own shares of our common stock, and certain of our directors
      own units purchased in the private placement, which will not participate in
      the
      liquidation of the trust account as part of our stockholder-approved plan of
      dissolution and liquidation and therefore they may have a conflict of interest
      in determining whether a particular target business is appropriate for a
      business combination.***




All
      of
      our directors own stock in our company, and Mr. Engel, our chief executive
      officer, and two non-affiliated accredited investors own units purchased in
      a
      private placement consummated prior to our initial public offering, but have
      waived their right to the liquidation of the trust account as part of our
      stockholder-approved plan of dissolution and liquidation with respect to those
      shares (including shares included in the units purchased in the private
      placement) upon the liquidation of the trust account to our public stockholders
      if we are unable to complete a business combination. The shares and warrants
      owned by these persons (including our officers and directors) will be worthless
      if we do not consummate a business combination. Additionally, our management
      will receive warrants to purchase additional shares of our common stock for
      $.10
      per share if certain share price targets are met. The personal and financial
      interests of these directors may influence the motivation in identifying and
      selecting a target business and completing a business combination in a timely
      manner. Consequently, these directors’ discretion in identifying and selecting a
      suitable target business may result in a conflict of interest when determining
      whether the terms, conditions and timing of a particular business combination
      are appropriate and in our stockholders’ best interest.





21




***If
      we are deemed to be an investment company, we may be required to institute
      burdensome compliance requirements and our activities may be restricted, which
      may make it difficult for us to complete a business
      combination.***




We
      may be
      deemed to be an investment company, as defined under Sections 3(a)(1)(A) and
      (C)
      of the Investment Company Act of 1940, as amended, because, after our initial
      public offering and prior to the consummation of a business combination, we
      may
      be viewed as engaging in the business of investing in securities (in this case
      United States government securities as described below) having a value exceeding
      40% of our total assets. If we are deemed to be an investment company under
      the
      Investment Company Act of 1940, our activities may be restricted which, among
      other problems, may make it difficult for us to complete a business combination.
      Such restrictions include:





·
              restrictions
                  on the nature of our investments;
                  and





·
              restrictions
                  on the issuance of
                  securities.




In
      addition, we may have imposed upon us burdensome requirements,
      including:




·
              registration
                  as an investment company;




·
              adoption
                  of a specific form of corporate structure;
                  and




·
              reporting,
                  record keeping, voting, proxy and disclosure requirements and other
                  rules
                  and regulations.




However,
      we do not believe that our anticipated principal activities will subject us
      to
      the Investment Company Act of 1940. To this end, the proceeds held in trust
      may
      only be invested by the trust agent in “government securities” with specific
      maturity dates or in money market funds meeting certain conditions under Rule
      2a-7 promulgated under the Investment Company Act of 1940. By restricting the
      investment of the proceeds to these instruments, we intend to avoid being deemed
      an investment company within the meaning of the Investment Company Act of 1940.
      The trust account and the purchase of government securities for the trust
      account is intended as a holding place for funds pending the earlier to occur
      of
      either: (i) the consummation of our primary business objective, which is a
      business combination, or (ii) absent a business combination, our dissolution
      and
      return of the funds held in this trust account to our public stockholders as
      part of our plan of dissolution and liquidation. Notwithstanding our belief
      that
      we are not required to comply with the requirements of such act, in the event
      that the stockholders do not approve a plan of dissolution and liquidation
      and
      the funds remain in the trust account for an indeterminable amount of time,
      we
      may be considered to be an investment company and thus required to comply with
      such act. If we were deemed to be subject to the act, compliance with these
      additional regulatory burdens would require additional expense that we have
      not
      allotted for.




***Affinity
      stockholders will experience immediate dilution as a consequence of the issuance
      of shares of Affinity common stock as consideration in the Merger. The existence
      of a large minority share position may reduce the influence that Affinity’s
      current stockholders have on the management of the combined
      company.***




Following the consummation of the Merger, the influence of Affinity’s current
      stockholders, in their capacity as stockholders of the combined company, will
      be
      significantly reduced. Affinity’s current stockholders will hold, in the
      aggregate, approximately 62.4% of the issued and outstanding shares of the
      combined company.




Moreover, following the Merger, the stockholders of Hotels will beneficially
      own
      approximately 36.8% (or 48.4% if all of the Earn-out Shares are issued) in
      the
      aggregate of the outstanding voting shares of the combined company and,
      therefore, will have the ability to exercise substantial influence over the
      election of directors and other issues submitted to the stockholders of the
      combined company. The concentration of ownership may have the effect of delaying
      or preventing a change in control of the combined company even if such a change
      in control would be in your interest.





22




***Our
      founding stockholders have rights to receive warrants to purchase common stock
      based upon certain metrics. The exercise of those warrants could reduce our
      earnings per share.***




If,
      at
      any time within five years of the consummation of a business combination, our
      publicly-traded common stock reaches a volume weighted average trading price
      of
      $6.60 per share for each day during any five day period, Messrs. Engel, Cohl
      and
      Dombrowski, our chief executive officer, president and chief operating officer,
      respectively (so long as they are either an officer, director, employee or
      consultant to us) will receive warrants allowing them to purchase an aggregate
      of 200,000 shares of our common stock for $.10 per share. If, at any time within
      five years of the consummation of a business combination, our publicly-traded
      common stock reaches a volume weighted average trading price of $7.20 per share
      for each day during any five day period, these same persons (so long as they
      are
      either an officer, director, employee or consultant to us) will receive warrants
      allowing them to purchase an additional 227,000 shares in the aggregate of
      our
      common stock, also for $.10 per share. All such warrants will be exercisable
      for
      a period of five years from the date on which they are granted. The exercise
      of
      these warrants could be deemed to be an expense of ours and could accordingly
      reduce our earnings per share.





***If
      the Merger’s benefits do not meet the expectations of financial or industry
      analysts, the market price of Affinity’s common stock may
      decline.***




Assuming
      the Merger is approved, the market price of Affinity’s common stock may decline
      as a result of the Merger if:




·
            Affinity
                does not achieve the perceived benefits or returns of the business
                of
                Hotels as rapidly as, or to the extent anticipated by, financial
                or
                industry analysts;




·
            the
                business of Hotels fails to meet target financial metrics of industry
                or
                financial analysts; or




·
            the
                effect of the business of Hotels on Affinity’s financial results is not
                consistent with the expectations of financial or industry
                analysts.




Accordingly,
      investors may experience a loss as a result of a decreasing stock price and
      Affinity may not be able to raise future capital, if necessary, in the equity
      markets .




***We
      are a development stage*** ***enterprise*** ***with
      no operating history and, accordingly, you will not have any basis on which
      to
      evaluate our ability to achieve our business objective. Moreover, our
      consolidated financial statements contain a statement which indicates that
      there
      is substantial doubt as to our ability to continue as a going
      concern.***




We
      are a
      development stage enterprise ** with
      no
      operating results to date. Since we do not have any operations or an operating
      history, you will have no basis upon which to evaluate our ability to achieve
      our business objective, which is to acquire one or more operating businesses
      in
      the media, entertainment or telecommunications industries. To date, although
      we
      continue to search for a potential candidate for a business combination, we
      have
      not entered into any definitive agreements with any target business for a
      business combination. We will not generate any revenues or income, other than
      interest on the trust account funds, until, at the earliest, after the
      consummation of a business combination. The report of our independent registered
      public accountants on our ****** consolidated
      financial statements includes an explanatory paragraph stating that the
      mandatory liquidation provision in our certificate of incorporation raises
      substantial doubt about our ability to continue as a going concern. The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.





23




***You
      will not be entitled to protections normally afforded to investors of blank
      check companies including the ability to receive all interest earned on the
      amount held in trust.***




Since
      the
      net proceeds of our initial public offering are intended to be used to complete
      a business combination with a target business that has not been identified,
      we
      may be deemed to be a “blank check” company under the United States securities
      laws. However, since we have net tangible assets in excess of $5,000,000 we
      are
      exempt from rules promulgated by the SEC to protect investors of blank check
      companies such as Rule 419. Accordingly, our stockholders will not be afforded
      the benefits or protections of those rules, such as entitlement to all the
      interest earned on the funds deposited into the trust fund. Because we are
      not
      subject to Rule 419, most of the interest earned on the funds deposited in
      the
      trust fund will be released to us to fund our working capital and will not
      be
      available at all to those public stockholders converting in connection with
      a
      business combination and our units will be immediately tradable.




***We
      will dissolve and liquidate if we do not consummate a business
      combination***




Pursuant
      to, among other documents, our amended and restated certificate of
      incorporation, if we do not complete a business combination within 24 months
      after the consummation of our initial public offering if the extension criteria
      described below have been satisfied our purpose and powers will be limited
      to
      dissolving, liquidating and winding up. We view this obligation to dissolve
      and
      liquidate as an obligation to our public stockholders and neither we nor our
      board of directors will take any action to amend or waive any provision of
      our
      certificate of incorporation to allow us to survive for a longer period of
      time
      if it does not appear we will be able to consummate a business combination
      within the foregoing time periods. Upon dissolution, we will distribute to
      all
      of our public stockholders, in proportion to their respective equity interest,
      an aggregate sum equal to the amount in the trust account (net of taxes payable
      and that portion of the interest earned previously released to us). Our initial
      stockholders have waived their rights to participate in any liquidation
      distribution with respect to their initial shares and have agreed to vote in
      favor of any plan of dissolution and liquidation which we will present to our
      stockholders for vote. There will be no distribution from the trust account
      with
      respect to our warrants which will expire worthless. We will pay the costs
      of
      our dissolution and liquidation of the trust account from our remaining assets
      outside of the trust fund, and we estimate such costs to be between $50,000
      and
      $75,000. Upon notice from us, the trustee of the trust account will liquidate
      the investments constituting the trust account and will turn over the proceeds
      to our transfer agent for distribution to our public stockholders as part of
      our
      stockholder-approved plan of dissolution and liquidation. Concurrently, we
      shall
      pay, or reserve for payment, from interest released to us from the trust account
      if available, our liabilities and obligations, although we cannot give you
      assurances that there will be sufficient funds for such purpose. The amounts
      held in the trust account may be subject to claims by third parties, such as
      vendors, prospective target business or other entities, if we do not obtain
      waivers in advance from such third parties prior to such parties providing
      us
      with services or entering into arrangements with them.




Because
      we entered into either a letter of intent, an agreement in principle or a
      definitive agreement to complete a business combination prior to the expiration
      of 18 months after the consummation of the initial public offering, but were
      unable to complete the business combination within the 18-month period, we
      will
      have an additional six months in which to complete the business combination
      contemplated by the letter of intent, agreement in principle or definitive
      agreement. If we are unable to consummate a transaction within 24 months
      following the consummation of the initial public offering our purpose and powers
      will be limited to dissolving, liquidating and winding up. Upon notice from
      us,
      the trustee of the trust account will liquidate the investments constituting
      the
      trust account and will turn over the proceeds to our transfer agent for
      distribution to our public stockholders as part of our plan of dissolution
      and
      distribution. Concurrently, we shall pay, or reserve for payment, from funds
      not
      held in trust, our liabilities and obligations, although we cannot assure you
      that there will be sufficient funds for such purpose. In addition, our Chairman
      and certain of our officers have agreed to indemnify us for all claims of
      creditors to the extent that we fail to obtain valid and enforceable waivers
      from such entities in order to protect the amounts held in trust.





24




Under
      the
      Delaware General Corporation Law, stockholders may be held liable for claims
      by
      third parties against a corporation to the extent of distributions received
      by
      them in a dissolution. If the corporation complies with certain procedures
      set
      forth in Section 280 of the Delaware General Corporation Law intended to ensure
      that it makes reasonable provision for all claims against it, including a 60-day
      notice period during which any third-party claims can be brought against the
      corporation, a 90-day period during which the corporation may reject any claims
      brought, and an additional 150-day waiting period before any liquidating
      distributions are made to stockholders, any liability of stockholders with
      respect to a liquidating distribution is limited to the lesser of such
      stockholder’s pro rata share of the claim or the amount distributed to the
      stockholder, and any liability of the stockholder would be barred after the
      third anniversary of the dissolution. However, as stated above, we will make
      liquidating distributions to our public stockholders as soon as reasonably
      possible as part of our plan of dissolution and distribution and, therefore,
      we
      do not intend to comply with those procedures. As such, our stockholders could
      potentially be liable for any claims to the extent of distributions received
      by
      them in a dissolution and any such liability of our stockholders will likely
      extend beyond the third anniversary of such dissolution. Because we will not
      be
      complying with Section 280, we will seek stockholder approval to comply with
      Section 281(b) of the Delaware General Corporation Law, requiring us to adopt
      a
      plan of dissolution that will provide for our payment, based on facts known
      to
      us at such time, of (i) all existing claims, (ii) all pending claims and (iii)
      all claims that may be potentially brought against us within the subsequent
      10
      years. However, because we are a blank check company, rather than an operating
      company, and our operations will be limited to searching for prospective target
      businesses to acquire, the only likely claims to arise would be from our vendors
      (such as accountants, lawyers, investment bankers, etc.) or potential target
      businesses. As described above, we intend to have all vendors and prospective
      target businesses execute agreements with us waiving any right, title, interest
      or claim of any kind in or to any monies held in the trust account. Our Chairman
      and certain of our executive officers have agreed to indemnify us, to the extent
      we do not obtain valid and enforceable waivers from vendors, prospective target
      businesses or other entities,  for all creditor claims in order to protect
      the amounts held in the trust account. In the event that the board recommends
      and our stockholders approve a plan of dissolution and distribution where it
      is
      subsequently determined that the reserve for claims and liabilities is
      insufficient, stockholders who received a return of funds from the liquidation
      of our trust account could be liable for claims made by creditors.




Our
      public stockholders will be entitled to receive funds from the trust account
      only in the event of our dissolution and liquidation or if they seek to convert
      their respective shares into cash upon a business combination which the
      stockholder voted against and which is completed by us. In no other
      circumstances will a stockholder have any right or interest of any kind to
      or in
      the trust account.




***The
      ability of our stockholders to exercise their conversion rights may not allow
      us
      to effectuate the most desirable business combination or optimize our capital
      structure.***




When
      we
      seek stockholder approval of any business combination, we will offer each public
      stockholder the right to have his, her or its shares of common stock converted
      to cash if the stockholder votes against the business combination and the
      business combination is approved and completed. Accordingly, if our business
      combination requires us to use substantially all of our cash to pay the purchase
      price, because we will not know how many stockholders may exercise such
      conversion rights, we may either need to reserve part of the trust account
      for
      possible payment upon such conversion, or we may need to arrange third party
      financing to help fund our business combination in case a larger percentage
      of
      stockholders exercise their conversion rights than we expect. Therefore, we
      may
      not be able to consummate a business combination that requires us to use all
      of
      the funds held in the trust account as part of the purchase price, or we may
      end
      up having a leverage ratio that is not optimal for our business combination.
      This may limit our ability to effectuate the most attractive business
      combination available to us.





25




***We
      may issue shares of our capital stock or debt securities to complete a business
      combination, which would reduce the equity interest of our stockholders and
      likely cause a change in control of our ownership.***




Our
      certificate of incorporation authorizes the issuance of up to 15,000,000 shares
      of common stock, par value $.0001 per share, and 1,000,000 shares of preferred
      stock, par value $.0001 per share. As of the date of this Annual Report, there
      are 4,012,500 authorized but unissued shares of our common stock available
      for
      issuance (after appropriate reservation for the issuance of shares upon full
      exercise of our outstanding warrants) and all of the 1,000,000 shares of
      preferred stock available for issuance. Pursuant to the Merger Agreement with
      Hotels, the Hotels stockholders will receive 2,456,571 shares of Affinity common
      stock at the closing of the merger and up to an aggregate of 1,500,000 earn-out
      shares of Affinity common stock in the fiscal years ended December 31, 2008,
      2009 and 2010. The issuance of additional shares of our common stock or any
      number of shares of our preferred stock:




·
            may
                significantly reduce the equity interest of investors in our initial
                public offering;




·
            will
                likely cause a change in control if a substantial number of our shares
                of
                common stock are issued, which may affect, among other things, our
                ability
                to use our net operating loss carry forwards, if any, and most likely
                also
                result in the resignation or removal of our present officers and
                directors; and


·
            may
                adversely affect prevailing market prices for our common
                stock.




Additionally,
      the publishing industry is capital intensive, traditionally using substantial
      amounts of indebtedness to finance acquisitions and working capital needs.
      If we
      finance the purchase of assets or operations through the issuance of debt
      securities, it could result in:




·
            default
                and foreclosure on our assets if our operating revenues after a business
                combination were insufficient to pay our debt
                obligations;




·
            acceleration
                of our obligations to repay the indebtedness even if we have made
                all
                principal and interest payments when due if the debt security contained
                covenants that required the maintenance of certain financial ratios
                or
                reserves and any such covenant were breached without a waiver or
                renegotiation of that covenant;




·
            our
                immediate payment of all principal and accrued interest, if any,
                if the
                debt security was payable on demand;
                and




·
            our
                inability to obtain additional financing, if necessary, if the debt
                security contained covenants restricting our ability to obtain additional
                financing while such security was
                outstanding.




For
      a
      more complete discussion of the possible structure of a business combination,
      see the section above entitled “Effecting a business combination—Selection of a
      target business and structuring of a business combination.”





26




***We
      may have insufficient resources to cover our operating expenses and the expenses
      of consummating a business combination.***




We
      reserved approximately $150,000 (not including any interest we may earn on
      money
      in the trust account, all of which we are entitled to in order to cover our
      operating expenses and our costs associated with a stockholder-approved plan
      of
      dissolution and liquidation if we do not consummate a business combination)
      from
      the proceeds of our initial public offering and the private placement to cover
      our operating expenses for the 24 months subsequent to our initial public
      offering and to cover the expenses incurred in connection with a business
      combination. This amount is based on management’s estimates of the costs needed
      to fund our operations for the 24 months subsequent to our initial public
      offering and consummate a business combination. Those estimates may prove
      inaccurate, especially if a portion of the available proceeds is used to make
      a
      down payment or pay exclusivity or similar fees in connection with a business
      combination or if we expend a significant portion of the available proceeds
      in
      pursuit of a business combination that is not consummated.  If we do not
      have sufficient proceeds available to fund our expenses, we may be forced to
      obtain additional financing, either from our management or our founding
      stockholders or from third parties. We may not be able to obtain additional
      financing and our founding stockholders and management are not obligated to
      provide any additional financing. If we do not have sufficient proceeds and
      cannot find additional financing, we may be forced to dissolve and liquidate
      as
      part of our stockholder-approved plan of dissolution and liquidation prior
      to
      consummating a business combination.




***Our
      ability to effect a business combination and to execute any potential business
      plan afterwards will be totally dependent upon the efforts of our key personnel,
      some of whom may join us following a business combination and whom we would
      have
      only a limited ability to evaluate.***





Our
      ability to effect a business combination will be totally dependent upon the
      efforts of our key personnel. The future role of our key personnel following
      a
      business combination, however, cannot presently be fully ascertained. Although
      we expect our President and Chief Executive Officer to remain associated with
      us
      following a business combination, we may employ other personnel following the
      business combination. While we intend to closely scrutinize any additional
      individuals we engage after a business combination, we cannot assure you that
      our assessment of these individuals will prove to be correct.





***None
      of our officers or directors has ever been associated with a blank check company
      which could adversely affect our ability to consummate a business
      combination.***





None
      of
      our officers or directors has ever been associated with a blank check company.
      Our management’s lack of experience in operating a blank check company could
      adversely affect our ability to consummate a business combination and force
      us
      to dissolve and liquidate the trust account to our public stockholders as part
      of our stockholder-approved plan of dissolution and liquidation .




***Our
      officers and directors may allocate their time to other businesses thereby
      causing conflicts of interest in their determination as to how much time to
      devote to our affairs. This could have a negative impact on our ability to
      consummate a business combination.***




Our
      officers and directors are not required to commit their full time to our
      affairs, which may result in a conflict of interest in allocating their time
      between our operations and other businesses. We do not intend to have any full
      time employees prior to the consummation of a business combination. Each of
      our
      officers are engaged in several other business endeavors and are not obligated
      to contribute any specific number of hours per week to our affairs. If our
      officers’ other business affairs require them to devote more substantial amounts
      of time to such affairs, it could limit their ability to devote time to our
      affairs and could have a negative impact on our ability to consummate a business
      combination.




27




***Our
      founding stockholders will not receive reimbursement for any out-of-pocket
      expenses incurred by them to the extent that such expenses exceed the amount
      available outside the trust fund unless the business combination is consummated
      and therefore they may have a conflict of interest.***




Our
      founding stockholders will not receive reimbursement for any out-of-pocket
      expenses incurred by them to the extent that such expenses exceed the amount
      available outside the trust fund, unless the business combination is
      consummated. The amount of available proceeds is based on management estimates
      of the capital needed to fund our operations and to consummate a business
      combination. Those estimates may prove to be inaccurate, especially if a portion
      of the available proceeds is used to make a down payment or pay exclusivity
      or
      similar fees in connection with a business combination or if we expend a
      significant portion in pursuit of an acquisition that is not consummated. The
      financial interest of such persons could influence their motivation in selecting
      a target business and thus, there may be a conflict of interest when determining
      whether a particular business combination is in the stockholders’ best
      interest.




***If
      our common stock becomes subject to the SEC’s penny stock rules, broker-dealers
      may experience difficulty in completing customer transactions and trading
      activity in our securities may be adversely affected.***




If
      at any
      time we have net tangible assets of less than $5,000,000 and our common stock
      has a market price per share of less than $5.00, transactions in our common
      stock may be subject to the “penny stock” rules promulgated under the Securities
      Exchange Act of 1934, as amended. Under these rules, broker-dealers who
      recommend such securities to persons other than institutional accredited
      investors must:




·
            make
                a special written suitability determination for the
                purchaser;




·
            receive
                the purchaser’s written agreement to a transaction prior to
                sale;




·
            provide
                the purchaser with risk disclosure documents which identify certain
                risks
                associated with investing in “penny stocks” and which describe the market
                for these “penny stocks” as well as a purchaser’s legal remedies;
                and




·
            obtain
                a signed and dated acknowledgment from the purchaser demonstrating
                that
                the purchaser has actually received the required risk disclosure
                document
                before a transaction in a “penny stock” can be
                completed.




If
      our
      common stock becomes subject to these rules, broker-dealers may find it
      difficult to effectuate customer transactions and trading activity in our
      securities may be adversely affected. As a result, the market price of our
      securities may be depressed, and you may find it more difficult to sell our
      securities.




***Our
      initial business combination will be with a single target business, which may
      cause us to be solely dependent on a single business and a limited number of
      products or services. Additionally, we may face obstacles to completing
      simultaneous acquisitions.***




Our
      initial business combination must be with a business or businesses with a
      collective fair market value of at least 80% of our net assets at the time
      of
      such acquisition. We will not be able to acquire more than one target business
      because we have passed the 18 month period during which we may enter into a
      second agreement with a target company. Consequently, we will have the ability
      to complete only the initial business combination with the proceeds of our
      initial public offering. Accordingly, the prospects for our success may
      be:




·
            solely
                dependent upon the performance of a single business;
                or




·
            dependent
                upon the development or market acceptance of a single or limited
                number of
                products or services.




In
      this
      case, we will not be able to diversify our operations or benefit from the
      possible spreading of risks or offsetting of losses, unlike other entities
      which
      may have the resources to complete several business combinations in different
      industries or different areas of a single industry.




28




***We
      may be unable to obtain additional financing, if required, to complete a
      business combination or to fund the operations and growth of the target
      business, which could compel us to restructure the transaction or abandon a
      particular business combination.***





Although
      we believe that the net proceeds of our initial public offering and the private
      placement will be sufficient to allow us to consummate a business combination,
      if it proves to be insufficient because we become obligated to convert into
      cash
      a significant number of shares from dissenting stockholders, we will be required
      to seek additional financing. We cannot assure you that such financing would
      be
      available on acceptable terms, if at all. To the extent that additional
      financing proves to be unavailable when needed to consummate the business
      combination, we would be compelled to restructure the transaction or abandon
      that particular business combination. In addition, if we consummate the business
      combination, we may require additional financing to fund the operations or
      growth of the target business. The failure to secure additional financing could
      have a material adverse effect on the continued development or growth of the
      target business. None of our officers, directors or stockholders is required
      to
      provide any financing to us in connection with or after a business
      combination.





***Our
      founding stockholders, including our officers and directors, control a
      substantial interest in us and thus may influence certain actions requiring
      stockholder vote.***





Our
      founding stockholders (including all of our officers and directors) collectively
      own 20% of our issued and outstanding shares of common stock. None of our
      founding stockholders, officers and directors has indicated to us that they
      intend to purchase units or warrants on the open market subsequent to our
      initial public offering. For a more complete discussion, please see the section
      of this Annual Report entitled “Principal Stockholders.”





Our
      board
      of directors is divided into two classes, each of which will generally serve
      for
      a term of two years with only one class of directors being elected in each
      year.
      It is unlikely that there will be an annual meeting of stockholders to elect
      new
      directors prior to the consummation of a business combination, in which case
      all
      of the current directors will continue in office at least until the consummation
      of the business combination. If there is an annual meeting, as a consequence
      of
      our “staggered” board of directors, initially only a minority of the board of
      directors will be considered for election and our founding stockholders, because
      of their ownership position, will have considerable influence regarding the
      outcome. Accordingly, our founding stockholders will continue to exert control
      at least until the consummation of a business combination. In addition, our
      founding stockholders and their affiliates and relatives are not prohibited
      from
      purchasing units, common stock or warrants or in the open market. If they do,
      we
      cannot assure you that our initial stockholders will not have considerable
      influence upon the vote in connection with a business combination.




***Our
      outstanding warrants may have an adverse effect on the market price of common
      stock and make it more difficult to effect a business
      combination.***




In
      connection with our initial public offering and the private placement, as part
      of the units, we issued warrants to purchase 6,825,000 shares of common stock.
      In addition, we sold to Maxim Group LLC and Legend Merchant Group, Inc. an
      option to purchase up to 192,500 units and agreed to issue to our initial
      stockholders warrants to purchase up to 427,000 shares of our common stock
      for
      $.10 per share upon meeting certain share price targets. To the extent we issue
      shares of common stock to effect a business combination, the potential for
      the
      issuance of substantial numbers of additional shares upon exercise of these
      warrants could make us a less attractive acquisition vehicle in the eyes of
      a
      target business as such securities, when exercised, will increase the number
      of
      issued and outstanding shares of our common stock and reduce the value of the
      shares issued to complete the business combination. Accordingly, our warrants
      may make it more difficult to effectuate a business combination or increase
      the
      cost of the target business. Additionally, the sale, or even the possibility
      of
      sale, of the shares underlying the warrants could have an adverse effect on
      the
      market price for our securities or on our ability to obtain future public
      financing. If and to the extent these warrants are exercised, you may experience
      dilution to your holdings.




29




***If
      our initial stockholders (including stockholders who have purchased units in
      the
      private placement) exercise their registration rights, it may have an adverse
      effect on the market price our common stock and the existence of these rights
      may make it more difficult to effect a business
      combination.***





Our
      initial stockholders, including stockholders who have purchased units in the
      private placement, are entitled to require us to register the resale of their
      750,000 shares of common stock at any time after the date on which their shares
      are released from escrow, which, except in limited circumstances, will not
      be
      before three years from the date of our initial public offering. Mr. Engel,
      our
      chief executive officer, and two non-affiliated accredited investors are
      entitled to require us to register the 250,000 shares of common stock and
      500,000 shares of common stock issuable upon the exercise of warrants sold
      to
      them in a private placement. They may exercise such registration rights at
      any
      time commencing on the date we consummate a business combination. If such
      stockholders exercise their registration rights with respect to all of their
      shares of common stock (including those 250,000 shares and 500,000 shares
      issuable upon exercise of warrants convertible into shares of common stock
      issued in the private placement, and up to 427,000 warrants that may be issued
      to our founding stockholders upon meeting certain price targets for our common
      stock), then there will be an additional 1,927,000 shares of common stock
      eligible for trading in the public market and we will bear the costs of
      registering such securities. The presence of this additional number of shares
      of
      common stock eligible for trading in the public market may have an adverse
      effect on the market price of our common stock. In addition, the existence
      of
      these rights may make it more difficult to effectuate a business combination
      or
      increase the cost of the target business, as the stockholders of the target
      business may be discouraged from entering into a business combination with
      us or
      will request a higher price for their securities as a result of these
      registration rights and the potential future effect their exercise may have
      on
      the trading market for our common stock.





***Our
      securities are quoted on the OTC Bulletin Board, which limits the liquidity
      and
      price of our securities more than if our securities were quoted or listed on
      the
      Nasdaq Stock Market or a national exchange.***




Our
      securities are traded on the OTC Bulletin Board, an NASD-sponsored and operated
      inter-dealer automated quotation system for equity securities not included
      in
      the Nasdaq Stock Market. Quotation of our securities on the OTC Bulletin Board
      limits the liquidity and price of our securities more than if our securities
      were quoted or listed on The Nasdaq Stock Market or a national exchange. Lack
      of
      liquidity will limit the price at which you may be able to sell our securities
      or your ability to sell our securities at all.




***Our
      directors may not be considered “independent” under the policies of the North
      American Securities Administrators Association, Inc. and, therefore, may take
      actions or incur expenses that are not deemed to be independently approved
      or
      independently determined to be in our best interest.***




All
      of
      our officers or directors own shares of our common stock. Additionally, no
      salary or other compensation will be paid to our officers or directors for
      services rendered by them on our behalf prior to or in connection with a
      business combination. We believe that two members of our board of directors
      are
      currently “independent” as that term is commonly used. However, under the
      policies of the North American Securities Administrators Association, Inc.,
      because our directors may receive reimbursement for out-of-pocket expenses
      incurred by them in connection with activities on our behalf such as identifying
      potential target businesses and performing due diligence on suitable business
      combinations, state securities administrators could take the position that
      such
      individual is not “independent.”  If this were the case, they would take
      the position that we would not have the benefit of independent directors
      examining the propriety of expenses incurred on our behalf and subject to
      reimbursement. Additionally, there is no limit on the amount of out-of-pocket
      expenses that could be incurred and there will be no review of the
      reasonableness of the expenses by anyone other than our board of directors,
      which would include persons who may seek reimbursement, or a court of competent
      jurisdiction if such reimbursement is challenged. If actions are taken, or
      expenses are incurred that are actually not in our best interests, it could
      have
      a material adverse effect on our business and operations and the price of our
      stock held by the public stockholders.




30




***We
      could be liable for up to the amount of the purchase price of the private
      placement units, plus interest, to the purchasers in the private placement
      conducted concurrently with our initial public
      offering.***





We
      sold,
      in a private placement concurrent with our initial public offering, 250,000
      units to Mr. Engel, our chief executive officer, and two non-affiliated
      accredited investors. This concurrent private placement of $1,500,000 in units
      was made in reliance on an exemption from registration under the Securities
      Act.
      This exemption requires that there be no general solicitation of investors
      with
      respect to the sale of the private placement units. If our initial public
      offering were deemed to be a general solicitation with respect to the units
      sold
      in the private placement, the offer and sale of such units would not be exempt
      from registration and the purchasers of those units could have a right to
      rescind their purchases. Rescinding purchasers could seek to recover the
      purchase price paid, with interest, or if they no longer own the securities,
      to
      receive damages. The agreement entered into for the private placement contains
      provisions under which the purchasers have waived any and all rights to assert
      present or future claims, including the right of rescission, against us with
      respect to their purchase of the private placement units, and have agreed to
      indemnify us against such claims. The possibility exists that the private
      placement could be reversed, that the waiver of rescission may be voidable
      by
      the purchasers in the private placement and the consideration received by us
      in
      connection therewith may have to be repaid. In such an event, we would be
      adversely affected and we may have an obligation to fund this
      rescission.




**Item
      2. Description of Property**




We
      maintain executive offices at 1850 Sawtelle Blvd., Suite 470, Los Angeles,
      CA
      90025. The cost for this space is included in the $7,500 per-month fee
      Silverback Books charges us for general and administrative services, including
      but not limited to receptionist, secretarial and general office services,
      pursuant to a letter agreement between us and Silverback Books, an affiliate
      of
      Messrs. Engel, Cohl and Dombrowski (our chief executive officer, president
      and chief operating officer, respectively), $4,500 of such amount is payable
      from the interest earned on the trust account. This agreement commenced on
      the
      date of our initial public offering and shall continue until the earlier of
      the
      consummation of a business combination or upon our dissolution and liquidation.
      We believe, based on rents and fees for similar services in the Los Angeles
      metropolitan area, that the fee charged by Silverback Books is at least as
      favorable as we could have obtained from an unaffiliated person.




We
      consider our current office space adequate for our current
      operations.





**Item
      3. Legal Proceedings**




We
      are
      not party to any litigation, and we are not aware of any threatened litigation
      that would have a material adverse effect on us or our business.




**Item
      4. Submission of Matters to a Vote of Security Holders**




No
      matters were submitted to a vote of security holders during the fourth quarter
      of the fiscal year ending December 31, 2007.




31





**PART
      II**




**Item
      5. Market for Common Equity and Related Stockholder Matters and Small Business
      Issuer Purchases of Equity Securities**





Our
      units
      have traded on the Over-the-Counter Bulletin Board (the “OTCBB”) under the
      symbol “AFMIU” since June 6, 2006, the date of the initial public offering of
      our securities. On July 26, 2006, the common stock and warrants included in
      the
      units commenced separate trading under the symbols “AFMI” and “AFMIW.” The high
      and low bid prices of our units, common stock and warrants as reported
      by the OTCBB, for the quarter indicated are as follows. Such inter-dealer
      quotations reflect inter-dealer prices and do not necessarily represent actual
      transactions and do not reflect retail mark-ups, mark-downs or
      commissions:





Units
              (AFMIU)
            
            Common
                Stock (AFMI)
            
            Warrants
              (AFMIW)High
            
            Low
            
            High
            
            Low
            
            High
            
            Low2006:Second
                Quarter
              (from
                Inception,June
                6, 2006)
            
            $
            6.25
            
            $
            6.00
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -Third
                Quarter
            
            $
            6.15
            
            $
            5.90
            
            $
            5.60
            
            $
            5.25
            
            $
            0.39
            
            $
            0.30Fourth
                Quarter
            
            $
            6.30
            
            $
            5.90
            
            $
            5.60
            
            $
            5.28
            
            $
            0.37
            
            $
            0.252007:First
                Quarter
            
            $
            6.50
            
            $
            6.20
            
            $
            5.69
            
            $
            5.54
            
            $
            0.44
            
            $
            0.36Second
                Quarter
            
            $
            6.82
            
            $
            6.50
            
            $
            5.72
            
            $
            5.65
            
            $
            0.56
            
            $
            0.40Third
                Quarter
            
            $
            7.00
            
            $
            6.50
            
            $
            5.92
            
            $
            5.70
            
            $
            0.60
            
            $
            0.33Fourth
                Quarter
            
            $
            7.00
            
            $
            6.45
            
            $
            5.94
            
            $
            5.65
            
            $
            0.56
            
            $
            0.31





The
      trading of our securities, especially our warrants, is limited, and, therefore,
      there may not be deemed to be an established public trading market under
      guidelines set forth by the Securities and Exchange Commission. As of March
      26,
      2008, there were 7 stockholders of record of our common stock, 1 holder of
      record of our warrants and 4 holder of record of our units. Such numbers do
      not
      include beneficial owners holding shares or warrants through nominee
      names.




We
      have
      never declared or paid any dividends on our common stock, nor do we anticipate
      paying cash dividends in the foreseeable future.





32





**Securities
      Authorized for Issuance under Equity Compensation Plans**




Although
      we currently maintain no equity compensation plans for the benefit of our
      officers, directors, senior advisors, or any of their respective affiliates,
      our
      officers, directors and senior advisors have beneficial ownership of equity
      securities of the Company, which securities were issued to them prior to the
      consummation of our initial public offering.




**Recent
      Sales of Unregistered Securities**




**** Since
      inception at August 12, 2005, we sold the following shares of common stock
      pursuant to the exception from registration contained in Section 4(2) under
      the
      Securities Act:




In
      August
      2005, we issued 625,000 shares of our common stock to the individuals set forth
      below for an aggregate amount of $25,000 in cash, at an average purchase price
      of approximately $0.04 per share, as follows:




**Name**
            
            **Number
                of Shares**
            
            **Relationship
                to Us**Peter H. Engel
            
            331,251
            
            Chairman,
                chief executive officer and treasurerHoward
                Cohl
            
            221,875
            
            President,
                secretary and directorPeter
                Dombrowski
            
            37,500
            
            Chief
                operating officer and directorMichael
                Arthur
            
            11,458
            
            DirectorMarc
                E. Jaffe
            
            11,458
            
            DirectorF
                Fred Tarter
            
            11,458
            
            Special
                advisor




On
      February 13, 2006, our Board of Directors authorized a stock dividend of 0.2
      shares of common stock for each outstanding share of common stock, effectively
      lowering the initial purchase price to approximately $.033 per share. Following
      the stock dividend, there are 750,000 shares of common stock outstanding as
      reflected in Item 11 “Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholders.”




The
      holders of the majority of these shares will be entitled to require us, on
      up to
      two occasions, to register these shares. The holders of the majority of these
      shares may elect to exercise these registration rights at any time after the
      date on which these shares of common stock are released from escrow, which,
      except in limited circumstances, is not before three years from the date of
      our
      initial public offering. In addition, these stockholders have certain
“piggy-back” registration rights on registration statements filed subsequent to
      the date on which these shares of common stock are released from escrow. We
      will
      bear the expenses incurred in connection with the filing of any such
      registration statements. We are required to use our best efforts to cause the
      registration of such securities to become effective and to maintain such
      effectiveness. However, the agreement does not provide for liquidated damages
      in
      the event that we are unable to cause or maintain such
      effectiveness.





33




Mr. Engel,
      our chief executive officer, and two non-affiliated accredited investors
      purchased 250,000 units from us at a purchase price of $6.00 per unit in a
      private placement prior to our initial public offering. We have granted the
      holders of such units demand and “piggy-back” registration rights with respect
      to the 250,000 shares, the 500,000 warrants and the 500,000 shares underlying
      the warrants at any time commencing on the date we consummate a business
      combination. The demand registration may be exercised by the holders of a
      majority of such units. We will bear the expenses incurred in connection with
      the filing of any such registration statements. We are required to use our
      best
      efforts to cause the registration of such securities to become effective and
      to
      maintain such effectiveness. However, the agreement does not provide for
      liquidated damages in the event that we are unable to cause or maintain such
      effectiveness.




If,
      at
      any time within five years of the consummation of a business combination, our
      publicly-traded common stock reaches a volume weighted average trading price
      of
      $6.60 per share for each day during any five day period, Messrs. Engel, Cohl
      and
      Dombrowski, our chief executive officer, president and chief operating officer,
      respectively (so long as they are either an officer, director, employee or
      consultant to us) will receive warrants allowing them to purchase an aggregate
      of 200,000 shares of our common stock for $.10 per share. If, at any time within
      five years of the consummation of a business combination, our publicly-traded
      common stock reaches a volume weighted average trading price of $7.20 per share
      for each day during any five day period, these same persons (so long as they
      are
      either an officer, director, employee or consultant to us) will receive warrants
      allowing them to purchase an additional 227,000 shares in the aggregate of
      our
      common stock, also for $.10 per share. All such warrants will be exercisable
      for
      a period of five years from the date on which they are granted.





If
      such
      shares are issued upon the exercise of these warrants, the holders will have
      demand and “piggy-back” registration rights with respect to these 427,000 shares
      at any time after we consummate a business combination. The demand registration
      may be exercised by the holders of a majority of such shares. We will bear
      the
      expenses incurred in connection with the filing of any such registration
      statements. We are required to use our best efforts to cause the registration
      of
      such securities to become effective and to maintain such effectiveness. However,
      the agreement does not provide for liquidated damages in the event that we
      are
      unable to cause or maintain such effectiveness.





**Use
      of Proceeds from our Initial Public Offering**





The
      effective date of our registration statement, which was filed on Form S-1 under
      the Securities Act of 1933 (File No. 333-128707), and which related to the
      initial public offering of our units, was June 5, 2006. Each unit consisted
      of
      one share of common stock, $0.0001 par value per share, and two warrants to
      purchase one share of common stock. A total of 2,750,000 units were registered
      at a proposed maximum aggregate offering price of $16,500,000.





The
      offering was consummated on June 9, 2006. The underwriters of the offering
      were
      Maxim Group LLC and Legend Merchant Capital Group. A total of 2,750,000 units
      were sold in the offering for an aggregate offering price of $16,500,000. On
      June 29, 2006, we consummated the closing of 412,500 additional units subject
      to
      the underwriters' over-allotment option generating total gross proceeds from
      the
      offering and the over-allotment of $18,975,000. Of this amount, $18,900,750
      was
      placed in trust. Each of our units commenced trading its component share of
      common stock and warrants separately on July 26, 2006.





34





At
      December 31, 2007, approximately $19,064,000 is currently being held in trust
      and the remaining funds of $44,000 are being held outside of the trust. The
      remaining proceeds including interest earned on the funds held in trust are
      available to be used by us to provide for business, legal and accounting due
      diligence on prospective acquisitions and continuing general and administrative
      expenses. We will use substantially all of the net proceeds of the initial
      public offering to acquire a target business, including identifying and
      evaluating prospective acquisition candidates, selecting the target business,
      and structuring, negotiating and consummating the business combination. To
      the
      extent that our capital stock is used in whole or in part as consideration
      to
      effect a business combination, the proceeds held in the trust fund, after
      payment of contingent underwriting fees, as well as any other net proceeds
      not
      expended, will be used to finance the operations of the target business. We
      believe we will have sufficient available funds outside of the trust fund to
      operate through June 2008, assuming that a business combination is not
      consummated during that time. We do not believe we will need to raise additional
      funds in order to meet the expenditures required for operating our business.
      However, we may need to raise additional funds through a private or public
      offering of debt or equity securities if such funds are required to consummate
      the merger with Hotels. We would only consummate such a financing simultaneously
      with the consummation of the merger with Hotels.





No
      expenses of the offering were paid to any of our officers and directors or
      any
      of their respective affiliates. All the funds held in the trust account have
      been invested in either Treasury Bills or Money Market Accounts.





**Repurchases
      of Equity Securities.**





None





**Item
      6. Selected Financial Data**





We
      are a
“smaller reporting company” as defined by Regulation S-K and as such, are not
      providing the information contained in this item pursuant to Regulation
      S-K.





**Item
      7. Management’s Discussion and Analysis or Plan of Operation**





Please
      read the following discussion together with the financial statements and related
      notes appearing elsewhere in this Report. This Item 6 contains forward-looking
      statements that involve risks and uncertainties. Readers are cautioned not
      to
      place undue reliance on these forward-looking statements, which speak only
      as of
      the date of this Report. Actual results may differ materially from those
      included in such forward-looking statements. Factors which could cause actual
      results to differ materially include those set forth at the end of this Item
      6
      of Part II under the heading "Cautionary Statement for Forward Looking
      Statements", as well as others, such as Risk Factors, discussed elsewhere in
      this Report.





**Overview**





We
      were
      formed as a blank check company on August 12, 2005 for the purpose of acquiring,
      merging with, engaging in a capital stock exchange with, purchasing all or
      substantially all of the assets of, or engaging in any other similar business
      combination with a single operating entity, or one or more related or unrelated
      operating entities in the publishing industry located in the United States.




**Planned
      Merger**




On
      July
      24, 2007 as amended on January 14, 2008, we entered into an agreement and plan
      of merger with Hotels At Home, Inc. (“Hotels”), an industry leading publisher of
      in-room retail catalogs and hotel-branded e-commerce Web sites for luxury hotels
      and resorts worldwide. Hotels’ catalogs and Web sites allow hotel guests to
      purchase items they have enjoyed during their stays, such as pillows, linens,
      robes, beds, and more. Hotels is a privately held company, headquartered in
      Fairfield, New Jersey with subsidiaries located in Fairfield, New Jersey and
      Paris, France. A more complete description of the transactions described above,
      including exhibits related thereto such as the Merger Agreement, is included
      in
      a Form 8-K filed on July 20, 2007, a Form 8K/A filed on July 27, 2007 and a
      Form
      8K/A filed January 14, 2008.




35




**Results
      of Operations**




For
      the
      year ended December 31, 2007 and 2006, we had net income of $37,219, and $94,294
      respectively. The net income for the year ended December 31, 2007 is
      attributable primarily to interest income of $987,226, offset by marketing,
      general and administrative expenses of $926,850. The net income for the year
      ended December 31, 2006 was attributable primarily to interest income of
      $551,090, offset by marketing, general and administrative expenses of $412,170.





**Liquidity
      and Capital Resources**





For
      the
      year ended December 31, 2007, our net cash provided by operating activities
      was
      $126,612, attributable primarily to net income of $37,219 and an increase in
      accounts payable and accrued expenses of $78,053. Our net cash used in investing
      activities was $171,834 and consisted of payments for deferred acquisition
      costs
      of $199,392, interest earned on trust assets of $992,442, less transfers of
      trust assets of $1,020,000 to cash. For the year ended December 31, 2006, net
      cash provided by operating activities was $22,815, and consisted of net income
      of $94,294 and an increase of $84,609 in interest receivable.





For
      the
      year ended December 31, 2006, our net cash used in investing activities was
      $19,091,545 attributable to the investment of the proceeds from the sale of
      units to the public and private placement. For the year ended December 31,
      2006
      our net cash provided by financing activities was $19,051,966 and is
      attributable to the sale of units to the public and the private placement.
      On
      June 9, 2006, we sold to the public 2,750,000 units (“Units”) at $6.00 per Unit,
      for a total of $16,500,000 and net proceeds of approximately $14,660,000, after
      reserving $720,000 for contingent underwriting compensation in a public offering
      in which Maxim Group LLC acted as managing underwriter. We also sold to Maxim
      LLC and Legend Merchant Group, Inc. for a total of $100, an option to purchase,
      in the aggregate, 192,500 units, with an option exercise price of $6.60 per
      Unit. On June 29, 2006, an additional 412,500 Units were sold upon exercise
      of
      the underwriters’ over-allotment option and we received net proceeds of
      approximately $2,227,000, after reserving $123,750 for contingent underwriting
      compensation. Each Unit consists of one share of the Company’s Common Stock and
      two Redeemable Common Stock Purchase Warrants (“Warrants”). Each Warrant will
      entitle the holder to purchase from the Company one share of Common Stock at
      an
      exercise price of $5.00.





Prior
      to
      the Public Offering, we consummated a private placement (“Private Placement”)
      and received net proceeds of $1,365,000.





Of
      the
      gross proceeds of the initial public offering $18,900,750 of the offering and
      the private placement were placed in a trust account at Lehman Brothers Inc.
      maintained by American Stock Transfer & Trust Company, New York, New York,
      as trustee. Of this amount, up to $843,750 will be paid to Maxim Group LLC
      as
      contingent fees in connection with our initial public offering and the private
      placement, if and only if a business combination is consummated, leaving us
      with
      $18,057,000 with which to consummate a business combination. Other than interest
      income which may be released to us, the proceeds held in trust will not be
      released from the trust account until the earlier of the completion of a
      business combination or our dissolution and liquidation to our public
      stockholders of our trust account as part of our stockholder-approved plan
      of
      dissolution and liquidation, net of any taxes paid. The proceeds held in the
      trust fund (exclusive of any funds held for the benefit of the underwriters
      or
      used to pay public stockholders who have exercised their conversion rights
      described elsewhere) may be used as consideration to pay the sellers of a target
      business with which we ultimately complete a business combination or, if there
      is insufficient funds not held in trust, to pay other expenses relating to
      such
      transaction such as reimbursement to insiders for out-of-pocket expenses, third
      party due diligence expenses or potential finders fees, in each case only upon
      the consummation of a business combination. Any amounts not paid as
      consideration to the sellers of the target business may be used to finance
      operations of the target business or to effect other acquisitions, as determined
      by our board of directors at that time.




36





The
      Company’s Founding Stockholders and stockholders who have purchased units in the
      private placement, are entitled to require the Company to register the resale
      of
      their shares of common stock at any time after the date on which their shares
      are released from escrow, which, except in limited circumstances, will not
      be
      before three years from the date of the public offering. If such existing
      stockholders exercise their registration rights with respect to all of their
      shares of common stock (including those 250,000 shares and 500,000 shares
      issuable upon exercise of warrants convertible into shares of common stock
      issued in the private placement, and up to 427,000 warrants that may be issued
      to Founding Stockholders upon meeting certain price targets for our common
      stock), then there will be an additional 1,927,000 shares of common stock
      eligible for trading in the public market and the Company will bear the costs
      of
      registering such securities. The presence of this additional number of shares
      of
      common stock eligible for trading in the public market may have an adverse
      effect on the market price of the Company’s common stock. In addition, the
      existence of these rights may make it more difficult to effectuate a business
      combination or increase the cost of the target business, as the stockholders
      or
      the target business may be discouraged from entering into a business combination
      with the Company or will request a higher price for their securities as a result
      of these registration rights and the potential future effect their exercise
      may
      have on the trading market for our common stock.




In
      evaluating a prospective target business, the Company has consolidated, among
      other factors, the financial condition and results of operation; growth
      potential; experience and skill of management; availability of additional
      personnel; capital requirements; competitive position; barriers to entry into
      other industries; stage of development of the products, processes or services;
      degree of current or potential market acceptance of the products, processes
      or
      services; proprietary features and degree of intellectual property or other
      protection of the products, processes or services; regulatory environment of
      the
      industry; and costs associated with effecting the business combination. There
      are no assurances the Company will be able to successfully effect the business
      combination.





Prior
      to
      the closing of a business combination, we have agreed to obtain key man life
      insurance in the amount of $2,000,000 in the aggregate on the lives of
      Messrs. Engel and Cohl for a three year period. Based on current estimates,
      the premium for such life insurance policies, of which we will be the sole
      beneficiary, is expected to be approximately $30,000 per year, and will be
      funded from the interest earned on the proceeds held in the trust
      account.





We
      have
      estimated that the costs to identify and research prospective target businesses
      and the costs related to the business combination, including legal and
      accounting expenses to structure the transaction, prepare the transaction
      documents and file the related proxy statement, will be approximately $600,000.
      Only $78,000 of the net proceeds were initially allocated at the time of the
      initial public offering for such purposes and we intend to fund the balance
      ($522,000), as well as amounts that may exceed our current estimates, from
      the
      interest earned on the proceeds being held in the trust account, less interest
      earned on the trust account held back in the trust account to ensure a $6.00
      per
      share liquidation price to public stockholders (if applicable). We expect that
      due diligence of prospective target businesses will be performed by some or
      all
      of our officers and directors, and may include engaging market research firms
      and/or third party consultants. Our officers and directors will not receive
      any
      compensation for their due diligence of prospective target businesses, but
      will
      be reimbursed for any out-of-pocket expenses (such as travel expenses) incurred
      in connection with such due diligence activities.





There
      can
      be no assurance that the business combination with Hotels will be consummated.
      Should the business combination not be consummated by June 9, 2008, we would
      be
      required to return the funds held in trust to holders of shares issued in the
      Initial Public Offering as a mandatory liquidating distribution, pursuant to
      a
      plan of dissolution and liquidation. Any such plan of dissolution, if required,
      would have to first be submitted to stockholders for approval. These conditions
      raise a substantial doubt about our ability to continue as a going concern.





37





We
      intend
      to use a portion of the net proceeds and a portion of the interest earned on
      the
      funds in the trust account which is released to us and allocated to working
      capital for director and officer liability insurance premiums. We intend to
      fund
      our working capital needs as well as amounts that may exceed our current
      estimates, from the interest earned on the proceeds being held in the trust
      account with the balance being held for reimbursement of any out-of-pocket
      expenses incurred by our founding stockholders in connection with activities
      on
      our behalf. The interest earned on the trust account in excess of the amount
      necessary to have a $6.00 per share liquidation price to the public stockholders
      will be released to us to fund our working capital and costs associated with
      our
      stockholder-approved plan of dissolution and liquidation including reserves,
      if
      any, if we do not consummate a business combination. No interest will be payable
      to public stockholders converting in connection with a business
      combination.





**Contractual
      Obligations and Commitments**





Commencing
      on June 9, 2006 and ending upon the acquisition of a target business, we
      have
      agreed to pay a monthly fee of $7,500 to Silverback Books, an affiliate of
      Messrs. Engel, Cohl and Dombrowski (our chief executive officer, president
      and chief operating officer, respectively), for general and administrative
      services, including but not limited to receptionist, secretarial and general
      office services, provided that $4,500 of such amount shall be payable only
      from
      the interest earned on the trust account.





On
      January 3, 2007, as amended on January 9, 2008, the Company signed an agreement
      with Maxim Group LLC to provide merger and acquisition advisory services to
      the
      Company. This agreement will terminate upon the consummation of a merger or
      acquisition transaction as described within the agreement (the “Close”), unless
      earlier terminated or extended to another date mutually agreed to in writing.
      In
      consideration of its performance of these advisory services, the Company shall
      pay at the Close a cash fee equal to $100,000 (the “Fee”) and the equivalent of
      $100,000 in shares of common stock of the Company based on the 10-day volume
      weighted average price of such common stock prior to the date of the Close
      (the
“Financial Advisor Common Stock”). Should the Close not occur, Maxim Group LLC
      shall not be entitled to receive the Fee or the Financial Advisor Common Stock.
      The Company recognizes that the fees contemplated by this agreement are separate
      from the Company’s obligations to Maxim Group LLC under the underwriting
      agreement dated June 5, 2006 between Maxim Group LLC and the Company.





On
      June
      29, 2007 we signed an agreement with Brainerd Communicators, Inc. to provide
      financial public relations services for a fee of $7,500 per month. The term
      of
      the agreement is for the period commencing July 12, 2007, expiring 30 days
      after
      the completion of the first acquisition and may be terminated by either party
      upon 30 days notice.





On
      July
      2, 2007 we signed an agreement with PFK Development Group (“PFK”) acknowledging
      and re-confirming an oral agreement made on or about April 5, 2007. PFK, who,
      as
      a non-exclusive independent consultant has agreed to assist the Company with
      identifying potential acquisition candidates. The PFK agreement has a term
      of
      one year and may be terminated in writing without notice or cause by either
      party at any time. PFK will be entitled to a success fee for candidates
      introduced to the Company prior to the end of the engagement if during the
      term
      of the agreement or within one year after the expiration or termination of
      the
      agreement the Company consummates a business combination transaction with the
      candidate. The success fee is 5% of that portion of the purchase price up to
      $1,000,000 plus 4% of that portion of the purchase price between $1,000,001
      and
      $2,000,000, plus 3% of that portion of the purchase price between $2,000,001
      and
      $3,000,000, plus 2% of that portion of the purchase price between $3,000,001
      and
      $4,000,000, plus 1% of that portion of the purchase price exceeding $4,000,000. Upon
      the
      consummation of the proposed merger with Hotels, we will be obligated to pay
      a
      success fee in cash and stock valued at $400,000 to PFK Development
      Group.





On
      July
      9, 2007, the Company signed an agreement with Ladenburg Thalmann & Co. Inc.
      (“Ladenburg”) engaging them to prepare a fairness opinion regarding the
      potential acquisition of Hotels (See below).  The
      Ladenburg fee is $75,000 of which $25,000 was paid on July 11, 2007 and $50,000
      was paid on October 29, 2007. On January 10, 2008, the Company engaged Ladenburg
      to prepare an updated fairness opinion to reflect the amendment to the Merger
      Agreement, at a cost of $37,500, of which $18,750 was paid upon the execution
      of
      the agreement and the remainder will be paid upon issuance of the
      opinion.




38





**Critical
      Accounting Policies**





We
      adopted the Financial Accounting Standards Board’s (“FASB”) Interpretation No.
      48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB
      Statement No. 109 (“FIN 48”) effective January 1, 2007 and we also changed the
      method of accounting following the guidance of the FASB’s staff position
      provided in Emerging Issues Task Force (“EITF”) 00-19-2 (“FSP EITF 00-19-2”) as
      further described in Note 3 to our consolidated financial
      statements.





**Recent
      Accounting Pronouncements**





In
      September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
      No. 157”).  This Statement defines fair value, establishes a framework for
      measuring fair value and expands disclosure of fair value measurements. 
SFAS No. 157 applies under other accounting pronouncements that require or
      permit fair value measurements and accordingly, does not require any new fair
      value measurements.  SFAS No. 157 is effective for financial statements
      issued for fiscal years beginning after November 15, 2007.  We do not
      expect the adoption of SFAS No. 157 to have a material impact on our financial
      position, results of operations or cash flows.




In
      December 2006, the FASB issued FASB Staff Position (“FSP”) EITF 00-19-2
“Accounting for Registration Payment Arrangements” (“FSP EITF 00-19-2”) which
      specifies that the contingent obligation to make future payments or otherwise
      transfer consideration under a registration payment arrangement should be
      separately recognized and measured in accordance with SFAS No. 5,
“Accounting for Contingencies.”  Adoption of FSP EITF 00-19-02 is required
      for fiscal years beginning after December 15, 2006. Adoption of EITF
      00-19-2 did not have a material impact on our financial position, results of
      operations or cash flows.





In
      February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115” (“SFAS No. 159”), which permits entities to choose to measure many
      financial instruments and certain other items at fair value. The fair value
      option established by this Statement permits all entities to choose to measure
      eligible items at fair value at specified election dates. A business entity
      shall report unrealized gains and losses on items for which the fair value
      option has been elected in earnings at each subsequent reporting date. Adoption
      is required for fiscal years beginning after November 15, 2007.  Early
      adoption is permitted as of the beginning of a fiscal year that begins on or
      before November 15, 2007, provided the entity also elects to apply the
      provisions of SFAS No. 157, Fair Value Measurements. We do not expect the
      adoption of SFAS No. 159 to have a material impact on our financial position,
      results of operations or cash flows.





In
      December 2007, the FASB issued SFAS No. 141R (“SFAS 141R”),
      “Business Combinations”, which establishes principles and requirements for how
      the acquirer recognizes and measures in its financial statements the
      identifiable assets acquired, the liabilities assumed, and any noncontrolling
      interest in the acquiree, goodwill acquired in the business combination or
      a
      gain from a bargain purchase. SFAS 141R
      is
      effective for business combinations with an acquisition date on or after the
      beginning of the first annual reporting period beginning on or after December
      15, 2008. The Company expects SFAS 141R
      to
      have an impact on the accounting for any future business acquisitions as of
      the
      effective date.





39





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”).
      SFAS 160 establishes accounting and reporting standards for the noncontrolling
      interest (minority interest) in a subsidiary and for the deconsolidation of
      a
      subsidiary. SFAS 160 requires a) the ownership interest in the subsidiary held
      by parties other than the parent to be clearly identified and presented in
      the
      consolidated balance sheet within equity, but separate from the parent’s equity,
      b) the amount of consolidated net income attributable to the parent and to
      the
      noncontrolling interest to be clearly identified and presented on the face
      of
      the consolidated statement of operations and c) changes in a parent’s ownership
      interest while the parent retains its controlling financial interest in its
      subsidiary to be accounted for consistently. Entities must provide sufficient
      disclosures that clearly identify and distinguish between the interests of
      the
      parent and the interests of the noncontrolling owners. SFAS 160 is effective
      for
      financial statements issued for fiscal years beginning on or after December
      15,
      2008, and interim periods within those fiscal years. SFAS 160 would have an
      impact on the presentation and disclosure of the non-controlling interests
      of
      any non wholly-owned business acquired in the future.





**Off-Balance
      Sheet Arrangements**




As
      of
      December 31, 2007, there were no off-balance sheet arrangements as defined
      in
      Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of
      1934.





**Item
      7A. Quantitative and Qualitative Disclosure About Market Risk**





We
      are a
“smaller reporting company” as defined by Regulation S-K and as such, are not
      providing the information contained in this item pursuant to Regulation
      S-K.





**Item
      8. Financial Statements**




Our
      consolidated financial statements and the related notes to the consolidated
      financial statements are on pages F-1 through F-20 comprising a portion of
      this annual report on Form 10-K.




40


Affinity
                    Media International Corp. and Subsidiary(A
                    Development Stage Enterprise)Consolidated
                    Financial StatementsFor
                    the Years Ended December 31, 2007 and 2006 andFor
                    the Period from August 12, 2005 (Inception) Through December
                    31,
                    2007
 Index
                    to Consolidated Financial
                    Statements
  Page
                    Nos.Report
                    of Independent Registered Public Accounting Firm
                
                F-2Consolidated
                    Financial StatementsBalance
                    Sheets
                
                F-3Statements
                    of Operations
                
                F-4Statements
                    of Changes in Stockholders' Equity (Deficit)
                
                F-5Statements
                    of Cash Flows
                
                F-6,F-7Notes
                    to Consolidated Financial Statements
                
                F-8
  F-1
 REPORT
            OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To
            the
            Board of Directors and Stockholders
 of
            Affinity Media International Corp.
  We
            have
            audited the accompanying consolidated balance sheets of Affinity Media
            International Corp. and Subsidiary (a development stage enterprise) (the
            “Company”) as of December 31, 2007 and 2006, and the related consolidated
            statements of operations, changes in stockholders’ equity (deficit) and cash
            flows for the years ended December 31, 2007 and 2006, and for the period
            from
            August 12, 2005 (inception) through December 31, 2007. These financial
            statements are the responsibility of the Company's management. Our
            responsibility is to express an opinion on these financial statements
            based on
            our audits.
 
 We
            conducted our audits in accordance with the standards of the Public Company
            Accounting Oversight Board (United States). Those standards require that
            we plan
            and perform the audit to obtain reasonable assurance about whether the
            financial
            statements are free of material misstatement. The Company is not required
            to
            have, nor were we engaged to perform, an audit of its internal control
            over
            financial reporting. Our audit included consideration of internal control
            over
            financial reporting as a basis for designing audit procedures that are
            appropriate in the circumstances, but not for the purpose of expressing
            an
            opinion on the effectiveness of the Company’s internal control over financial
            reporting. Accordingly, we express no such opinion. An audit also includes
            examining, on a test basis, evidence supporting the amounts and disclosures
            in
            the financial statements, assessing the accounting principles used and
            significant estimates made by management, and evaluating the overall
            financial
            statement presentation. We believe that our audits provide a reasonable
            basis
            for our opinion.
  In
            our
            opinion, the consolidated financial statements referred to above present
            fairly,
            in all material respects, the consolidated financial position of Affinity
            Media
            International Corp. and Subsidiary (a development stage enterprise) as
            of
            December 31, 2007 and 2006 and the consolidated results of their operations
            and
            their cash flows for the years ended December 31, 2007 and 2006, and
            for the
            period from August 12, 2005 (inception) through December 31, 2007 in
            conformity
            with United States generally accepted accounting principles.
 
 The
            accompanying consolidated financial statements have been prepared assuming
            that
            the Company will continue as a going concern. As discussed in Note 1
            to the
            consolidated financial statements, the Company’s certificate of incorporation
            provides for mandatory liquidation of the Company in the event that the
            Company
            does not consummate a business combination prior to June 9, 2008. These
            conditions raise substantial doubt about its ability to continue as a
            going
            concern. Management’s plans regarding those matters are described in Note 2. The
            consolidated financial statements do not include any adjustments that
            might
            result from the outcome of this uncertainty.
 
 
 /s/
            Marcum & Kliegman LLP
 New
            York, New York
 March
            28,
            2008
  F-2
 **Affinity
                    Media International Corp. and Subsidiary****(A
                    Development Stage Enterprise)****CONSOLIDATED
                    BALANCE SHEETS**
 **As
                    of December****2007**
                
                **2006**ASSETSCURRENT
                    ASSETSCash
                    and cash equivalents
                
                $
                43,655
                
                $
                88,877Cash
                    and cash equivalents held in trust
                
                
                88,987
                
                
                116,545Interest
                    receivable
                
                
                78,862
                
                
                84,609Prepaid
                    expenses
                
                
                13,393
                
                
                18,986Total
                    Current Assets
                
                
                224,897
                
                
                309,017Cash
                    and cash equivalents held in trust
                
                
                18,131,250
                
                
                18,131,250Cash
                    and cash equivalents held in trust - restricted
                
                
                843,750
                
                
                843,750Deferred
                    acquisition costs
                
                
                426,598
                
                
                -Total
                    Assets
                
                $
                19,626,495
                
                $
                19,284,017LIABILITIES
                    AND STOCKHOLDERS’ EQUITYCURRENT
                    LIABILITIESAccounts
                    payable and accrued expenses
                
                $
                351,727
                
                $
                46,468Total
                    Current Liabilities
                
                
                351,727
                
                
                46,468Other
                    liabilities
                
                
                843,750
                
                
                843,750Total
                    Liabilities
                
                
                1,195,477
                
                
                890,218Common
                      stock subject to possible conversion, 862,097shares at conversion
                      value
                
                
                4,959,226
                
                
                4,959,226COMMITMENTSSTOCKHOLDERS'
                    EQUITYPreferred
                    stock - $0.0001 par value; 1,000,000 shares authorized;
                    none issued or outstanding
                
                
                -
                
                
                -Common
                    stock - $0.0001 par value; 15,000,000 shares authorized; 4,162,500
                    shares
                    issued and outstanding, (which includes 862,097 shares subject to
                    possible conversion)
                
                
                330
                
                
                330Additional
                    paid-in capital
                
                
                13,367,304
                
                
                13,367,304Earnings
                    accumulated during the development stage
                
                
                104,158
                
                
                66,939Total
                    Stockholders’ Equity
                
                
                13,471,792
                
                
                13,434,573Total
                    Liabilities and Stockholders’ Equity
                
                $
                19,626,495
                
                $
                19,284,017
  The
          accompanying notes are an integral part of
          these consolidated financial statements.
  F-3
  **Affinity
                    Media International Corp. and Subsidiary****(A
                    Development Stage Enterprise)****CONSOLIDATED
                    STATEMENTS OF OPERATIONS**
 **For
                      the Year Ended December 31, 2007**
                  
                  **For
                      the Year Ended December 31, 2006**
                  
                  **For
                      the period from August 12, 2005 (Inception) through December
                      31,
                      2007**OPERATING
                      EXPENSESAdministrative
                      cost allowance - related party
                  
                  $
                  90,000
                  
                  $
                  52,500
                  
                  $
                  142,500Marketing,
                      general and administrative expenses
                  
                  
                  836,850
                  
                  
                  359,670
                  
                  
                  1,223,875Total
                      operating expenses
                  
                  
                  926,850
                  
                  
                  412,170
                  
                  
                  1,366,375OTHER
                      INCOMEInterest
                      income
                  
                  
                  987,226
                  
                  
                  551,090
                  
                  
                  1,538,316Total
                      other income
                  
                  
                  987,226
                  
                  
                  551,090
                  
                  
                  1,538,316Income
                      before income taxes
                  
                  
                  60,376
                  
                  
                  138,920
                  
                  
                  171,941Provision
                      for income taxes
                  
                  
                  23,157
                  
                  
                  44,626
                  
                  
                  67,783NET
                      INCOME
                  
                  $
                  37,219
                  
                  $
                  94,294
                  
                  $
                  104,158Earnings
                      per share:Basic
                      and Diluted
                  
                  $
                  0.01
                  
                  $
                  0.04Weighted
                      average shares outstanding:Basic
                      and Diluted
                  
                  
                  3,300,403
                  
                  
                  2,187,181
                  (1)
  
 (1)
            Share
            amounts have been restated to reflect a stock dividend, effected on February
            13,
            2006, of 0.2 shares of common stock for each share of common stock outstanding
            at December 31, 2005.
  *The
          accompanying notes are an integral part of these consolidated financial
          statements.*
 F-4
 **Affinity
                      Media International Corp. and Subsidiary****(A
                      Development Stage Enterprise)****CONSOLIDATED
                      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
                      (DEFICIT)****For
                      the Period From August 12, 2005 (Inception) Through December
                      31,
                      2007**
 **Earnings****(deficit)****accumulated**
                    
                    **Stockholders'****Common
                        stock**
                    
                    **Additional**
                    
                    **during
                        the**
                    
                    **Equity****Shares**
                    
                    **Amount**
                    
                    ****Paid-In**Capital**
                    
                    ****Development**Stage**
                    
                    **(Deficit**)****Common
                        stock issued onAugust
                        12, 2005 at $0.033 per share (1)
                    
                    
                    750,000
                    
                    $
                    75
                    
                    $
                    24,925
                    
                    $
                    -
                    
                    $
                    25,000Net
                        loss for the period August 12, 2005(Inception)
                        to December 31, 2005
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    (27,355
                    )
                    
                    (27,355
                    )Balance
                        at December 31, 2005
                    
                    
                    750,000
                    
                    
                    75
                    
                    
                    24,925
                    
                    
                    (27,355
                    )
                    
                    (2,355
                    )Sale
                        of 250,000 units, net ofunderwriters’
                        discount, onMay
                        9, 2006 at $6.00 per share
                    
                    
                    250,000
                    
                    
                    25
                    
                    
                    1,364,975
                    
                    
                    -
                    
                    
                    1,365,000Sale
                        of 2,750,000 units, net ofunderwriters’
                        discount and offeringexpenses
                        (includes 749,650 sharessubject
                        to conversion) onJune
                        9, 2006 at $6.00 per share
                    
                    
                    2,750,000
                    
                    
                    275
                    
                    
                    14,659,485
                    
                    
                    -
                    
                    
                    14,659,760Proceeds
                        subject to possibleconversion
                        of 749,650 sharesat
                        $5.76 per share
                    
                    
                    (749,650
                    )
                    
                    (75
                    )
                    
                    (4,318,197
                    )
                    
                    -
                    
                    
                    (4,318,272
                    )Proceeds
                        from issuance of option
                    
                    
                    -
                    
                    
                    -
                    
                    
                    100
                    
                    
                    -
                    
                    
                    100Sale
                        of 412,500 units, net ofunderwriters’
                        discount and offeringexpenses
                        (includes 112,447 sharessubject
                        to conversion) onJune
                        29, 2006 at $6.00 per share
                    
                    
                    412,500
                    
                    
                    41
                    
                    
                    2,276,959
                    
                    
                    -
                    
                    
                    2,277,000Proceeds
                        subject to possibleconversion
                        of 112,447 sharesat
                        $5.70 per share
                    
                    
                    (112,447
                    )
                    
                    (11
                    )
                    
                    (640,943
                    )
                    
                    -
                    
                    
                    (640,954
                    )Net
                        income for the year endedDecember
                        31, 2006
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    94,294
                    
                    
                    94,294Balance
                        at December 31, 2006
                    
                    
                    3,300,403
                    
                    $
                    330
                    
                    $
                    13,367,304
                    
                    $
                    66,939
                    
                    $
                    13,434,573Net
                        income for the year endedDecember
                        31, 2007
                    
                    
                    -
                    
                    
                    -
                    
                    
                    -
                    
                    
                    37,219
                    
                    
                    37,219Balance
                        at December 31, 2007
                    
                    
                    3,300,403
                    
                    
                    330
                    
                    
                    13,367,304
                    
                    
                    104,158
                    
                    
                    13,471,792
  (1)
                          Share amounts have been restated to reflect a stock dividend,
                          effected on
                          February 13, 2006, of 0.2 shares of
                          common stock for each outstanding share of common stock
                          at December 31,
                          2005.
  The
          accompanying notes are an integral part of
          these consolidated financial statements
  F-5
  **Affinity
                  Media International Corp. and Subsidiary****(A
                  Development Stage Enterprise)****CONSOLIDATED
                  STATEMENTS OF CASH FLOWS**
 **For
                    the Year Ended December 31, 2007**
                
                **For
                    the Year Ended December 31, 2006**
                
                **For
                    the period from August 12, 2005 (Inception) through December
                    31,
                    2007**Cash
                    Flows From Operating ActivitiesNet
                    income
                
                $
                37,219
                
                $
                94,294
                
                $
                104,158Changes
                    in operating assets and liabilities:Prepaid
                    expenses
                
                
                5,593
                
                
                (18,986
                )
                
                (13,393
                )Interest
                    receivable
                
                
                5,747
                
                
                (84,609
                )
                
                (78,862
                )Accounts
                    payable and accrued expenses
                
                
                78,053
                
                
                32,116
                
                
                124,521Net
                    cash provided by (used in) operating activities
                
                
                126,612
                
                
                22,815
                
                
                136,424Cash
                    Flows From Investing ActivitiesPayments
                    for deferred acquisition costs
                
                
                (199,392
                )
                
                -
                
                
                (199,392
                )Cash
                    and cash equivalents held in trust fund
                
                
                27,558
                
                
                (18,247,795
                )
                
                (18,220,237
                )Cash
                      and cash equivalents held in trust fund -
                      restricted
                
                
                -
                
                
                (843,750
                )
                
                (843,750
                )Net
                    cash used in investing activities
                
                
                (171,834
                )
                
                (19,091,545
                )
                
                (19,263,379
                )Cash
                    Flows From Financing ActivitiesProceeds
                    from the sale of common stock
                
                
                -
                
                
                -
                
                
                25,000Proceeds
                    from notes payable-related party
                
                
                -
                
                
                -
                
                
                235,000Net
                    proceeds of private offering
                
                
                -
                
                
                1,365,000
                
                
                1,365,000Gross
                    proceeds of public offering
                
                
                -
                
                
                18,975,000
                
                
                18,975,000Payments
                      of costs of public and private offering and deferred offering
                      costs
                
                
                -
                
                
                (1,053,134
                )
                
                (1,134,490
                )Repayment
                      of advance from foundingstockholder
                
                
                -
                
                
                -
                
                
                (60,000
                )Repayment
                    of notes payable - related party
                
                
                -
                
                
                (235,000
                )
                
                (235,000
                )Proceeds
                    from issuance of option
                
                
                -
                
                
                100
                
                
                100Net
                    cash provided by financing activities
                
                
                -
                
                
                19,051,966
                
                
                19,170,610Net
                    Increase (Decrease) in Cash and Cash Equivalents
                
                
                (45,222
                )
                
                (16,764
                )
                
                43,655Cash
                    and Cash Equivalents - Beginning of the Period
                
                
                88,877
                
                
                105,641
                
                
                -Cash
                    and Cash Equivalents - End of the Period
                
                $
                43,655
                
                $
                88,877
                
                $
                43,655
  The
          accompanying notes are an integral part of
          these consolidated financial statements
  F-6
  **Affinity
                      Media International Corp. and Subsidiary****(A
                      Development Stage Enterprise)****CONSOLIDATED
                      STATEMENTS OF CASH FLOWS,
                      continued**
 **For
                    the Year Ended December 31, 2007**
                
                **For
                    the Year Ended December 31, 2006**
                
                **For
                    the period from August 12, 2005 (Inception) through December
                    31,
                    2007****SUPPLEMENTAL
                    DISCLOSURE OF CASH FLOW INFORMATION**Cash
                    paid during the period for:Interest
                
                $
                -
                
                $
                -
                
                $
                -Income
                    taxes
                
                $
                49,489
                
                $
                -
                
                $
                49,489Non-Cash
                    Financing Activities:Deferred
                    offering cost advanced from foundingstockholders
                
                $
                -
                
                $
                -
                
                $
                60,000Accrual
                    of other current liability for offering costs
                
                $
                -
                
                $
                843,750
                
                $
                843,750Deferred
                    acquisition costs accrued and deferred
                
                $
                227,206
                
                $
                -
                
                $
                227,206
  The
          accompanying notes are an integral part
          of these consolidated financial statements
  F-7


Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        1 - Organization, Business and Operations**
 
 Affinity
        Media International Corp. (a development stage enterprise) (“Affinity”) was
        incorporated in Delaware on August 12, 2005 as a blank check company whose
        objective is to acquire an operating business or businesses in the publishing
        industry located in the United States.
 
 On
        July
        23, 2007, Affinity formed Affinity Acquisition Subsidiary Corp. (“Affinity
        Subsidiary”), a Delaware Corporation, for the purpose of effecting a business
        combination with Hotels at Home, Inc. Affinity and Affinity Subsidiary are
        collectively referred to as the “Company”. See Note 9 - Merger Agreement for a
        discussion of a definitive agreement and plan of merger entered into on July
        24,
        2007 and amended on January 14, 2008.
  At
        December 31, 2007, the Company had not yet commenced any operations. All
        activity through December 31, 2007 relates to the Company’s formation,
        completion of the Public Offering described below and the identification
        and
        qualification of a suitable Business Combination, as defined below. Affinity
        has
        selected December 31 as its year end.
  The
        registration statement of the Company’s initial public offering (“Public
        Offering”) was declared effective on June 5, 2006. The Company consummated its
        Public Offering on June 9, 2006 and received net proceeds of approximately
        $14,660,000, after reserving $720,000 for contingent underwriting compensation
        which is included in other liabilities. Prior to the Public Offering, the
        Company consummated a private placement (“Private Placement”) and received net
        proceeds of $1,365,000. Both the Public Offering and the Private Placement
        are
        discussed in Note 4. On June 29, 2006, the Company consummated the funding
        of
        the Underwriter’s over-allotment option from the Public Offering, receiving net
        proceeds of approximately $2,277,000, after reserving $123,750 for contingent
        underwriting compensation which is included in other liabilities.
 
 Substantially
        all of the net proceeds of the Public Offering and the Private Placement
        are
        intended to be applied toward consummating a business combination with an
        operating business or businesses in the publishing industry (“Business
        Combination”). Pursuant to the Company’s amended and restated Certificate of
        Incorporation, the Company’s initial Business Combination must be with a
        business or businesses having a collective fair market value, as determined
        by
        the board of directors of the Company, equal to at least 80% of the Company’s
        net assets at the time of such acquisition. Furthermore, there is no assurance
        that the Company will be able to successfully affect a Business Combination.
        An
        amount of $18,900,750 of the net proceeds from the initial Public Offering
        and
        Private Placement, was placed in a trust account (“Trust Account”) and invested
        in government securities or certain money market funds until the earlier
        of the
        consummation of the Company’s first Business Combination or the Company’s
        dissolution and liquidation of the Trust Account to the Company’s Public
        Stockholders (as defined below) as part of any plan of dissolution and
        liquidation approved by a majority of the Company’s stockholders. The placing of
        funds in the Trust Fund may not protect those funds from third party claims
        against the Company. Although the Company will seek to have all vendors,
        prospective target businesses or other entities it engages, execute agreements
        with the Company waiving any right, title, interest or claim of any kind
        in or
        to any monies held in the Trust Fund, there is no guarantee that they will
        execute such agreements. The Company's Chairman and certain of its officers
        have
        severally agreed that they will be personally liable to ensure that the proceeds
        in the Trust Fund are not reduced by the claims of target businesses or vendors
        or other entities that are owed money by the Company for services rendered
        or
        contracted for or products sold to the Company. However, there can be no
        assurance that the Chairman and certain of the Company’s officers will be able
        to satisfy those obligations. The remaining proceeds, not held in trust,
        may be
        used to pay for business, legal and accounting expenses, expenses which may
        be
        incurred related to the investigation and selection of a target business,
        the
        negotiation of an agreement to acquire a target business, and for continuing
        general and administrative expenses.
  F-8
  Affinity
        Media International Corp. and Subsidiary
 (A
        Development Stage Enterprise)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        1 - Organization, Business and Operations, continued**
 
 The
        Company, after signing a definitive agreement for the acquisition of a target
        business or businesses, will submit such transaction for stockholder approval.
        All of the Company’s stockholders prior to the Public Offering and the Private
        Placement, including all of the officers and directors of the Company (“Founding
        Stockholders”), have agreed to vote their founding shares of Common Stock, par
        value $.0001 (“Common Stock”) consisting of 750,000 shares owned at December 31,
        2007, in accordance with the vote of the majority interest of the Public
        Stockholders (see below) of the Company with respect to any Business
        Combination. One of the Founding Stockholders and two non-affiliated accredited
        investors have agreed that the shares of Common Stock they acquired through
        the
        Private Placement prior to the Public Offering, consisting of 250,000 shares
        of
        Common Stock and any other shares acquired in the aftermarket, will be voted
        in
        favor of a Business Combination approved by the Board. The Company will proceed
        with a Business Combination only if a majority of the shares of Common Stock
        included in the units sold in the Public Offering and the Private Placement
        and
        cast at the meeting are voted in favor of the Business Combination, and Public
        Stockholders (see below) owning 27.26% or a lesser amount of the shares issued
        in the Public Offering exercise their conversion rights, as described below,
        and
        provided further, that the board of directors and officers of the Company
        may,
        in the exercise of their business judgment, stipulate any percentage lower
        than
        27.26% as a condition to the closing of a Business Combination. After
        consummation of a Business Combination, these voting safeguards will no longer
        be applicable.
 
 The
        holders of the Company’s shares of Common Stock issued in connection with the
        Public Offering or acquired in the aftermarket, excluding shares held by
        the
        Company’s officers and directors, their nominees or designees, shares held by
        the two non-affiliated accredited investors, all of which were acquired in
        the
        Private Placement and also excluding the shares acquired prior to the Public
        Offering and the Private Placement, represent the shares held by the public
        stockholders (“Public Stockholders”). Pursuant to the Company’s amended and
        restated Certificate of Incorporation, with respect to a Business Combination
        which is approved and consummated, any Public Stockholder who voted against
        the
        Business Combination may demand that the Company convert his or her shares
        into
        cash. The per share conversion price is $6.00, which is equal to the original
        purchase price of the Units issued in the Public Offering. Accordingly, Public
        Stockholders holding up to 27.26% of the number of shares owned by all Public
        Stockholders may seek conversion of their shares in the event of a Business
        Combination.
  The
        Company’s amended and restated certificate of incorporation (“Certificate of
        Incorporation”) filed on May 23, 2006 provides for mandatory liquidation of the
        Trust Account to the Company’s Public Stockholders in connection with a
        dissolution approved by a majority of the Company’s stockholders in the event
        that the Company does not consummate a Business Combination within 18 months
        from the date of the consummation of the Public Offering, or 24 months from
        the
        consummation of the Public Offering upon the satisfaction of certain extension
        criteria (which has been satisfied). This condition raises substantial doubt
        as
        to the Company’s ability to continue as a going concern (See Note 2 for
        managements plans). All of the Company’s Founding Stockholders and the
        stockholders who acquired shares of Common Stock in the Private Placement
        have
        agreed if the Company does not consummate a business combination to vote
        such
        shares and any shares of Common Stock acquired in the Public Offering or
        in the
        aftermarket in favor of a plan of dissolution and liquidation. In the event
        of
        the liquidation of the Trust Account in connection with the Company’s
        dissolution approved by a majority of the Company’s stockholders, the per share
        value of the residual assets remaining available for distribution (including
        Trust Fund assets) is expected to be equal to the initial public offering
        price
        of the units in the Public Offering (assuming no value is attributed to the
        Warrants contained in the Units offered in the Public Offering discussed
        in
        Note 4).
  F-9
 
 Affinity
        Media International Corp. and Subsidiary
 (A
        Development Stage Enterprise)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        1 - Organization, Business and Operations, continued**
 
 Commencing
        July 26, 2006, the Company was informed by the Underwriter of the Public
        Offering that the holders of the Company’s Units can separately trade the common
        stock and Warrants included in such units and that trading in the units will
        continue. The common stock, Warrants and Units are quoted on the
        Over-The-Counter Bulletin Board under the symbols AFMI, AFMIW and AFMIU,
        respectively.
 
 **NOTE
        2 - Going Concerns and Management Plans**
 
 The
        Company’s Certificate of Incorporation provides for mandatory liquidation of the
        Company in the event that the Company does not consummate a Business Combination
        within 18 months from the date of the consummation of the Public Offering
        (June
        9, 2006), or 24 months from the consummation of the Offering upon the
        satisfaction of certain extension criteria (which have been satisfied). This
        condition raises substantial doubt as to the Company’s ability to continue as a
        going concern.
 
 There
        can
        be no assurance that the Business Combination described in Note 9 will be
        consummated. Should this Business Combination not be consummated by June
        9,
        2008, the Company would be required to return the funds held in trust to
        holders
        of shares issued in the Public Offering described in Note 4, as a mandatory
        liquidating distribution, pursuant to a plan of dissolution and liquidation
        approved by the stockholders. See Note 9 for a discussion of the Company’s
        Agreement and Plan of Merger with Hotels.
 
 **NOTE
        3 - Summary of Significant Accounting Policies**
 
 ***Concentrations
        of Credit Risk - Cash and Cash Equivalents***
  The
        Company maintains its cash and cash equivalents with various financial
        institutions, which may exceed insured limits throughout the period. At December
        31, 2007 the Company had cash balances in excess of the maximum amount insured.
        The Company mitigates its risk by depositing its cash and cash equivalents
        with
        major financial institutions.
 
 ***Income
        Taxes***
 
 The
        Company recorded a provision for income taxes of $23,157 and $44,626 for
        the
        years ended December 31, 2007 and 2006, respectively. Accrued income taxes
        of
        $18,294 have been included in accounts payable and accrued expenses at December
        31, 2007 in the accompanying financial statements.
 
 Deferred
        income taxes are provided for the differences between the bases of assets
        and
        liabilities for financial reporting and income tax purposes. A valuation
        allowance is established when necessary to reduce deferred tax assets to
        the
        amount expected to be realized.
  F-10
  Affinity
        Media International Corp. and Subsidiary
 (A
        Development Stage Enterprise)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        3 - Summary of Significant Accounting Policies, continued**
 
 ***Income
        Taxes, continued***
 
 The
        provision for income taxes using the statutory federal tax rate as compared
        to
        the Company’s effective tax rate is summarized as
        follows:
  **December
                  31,****2007**
              
              
              **2006**Tax
                  (benefit) at federal statutory rate
              
              
              34.0
              %
              
              34.0
              %State
                  income taxes net of federal benefit
              
              
              5.8
              
              
              6.0Decrease
                  in valuation allowance
              
              
              -
              
              
              (7.9
              )Benefit
                  of graduated tax rates
              
              
              (6.6
              )
              
              -Permanent
                  differences
              
              
              2.2
              
              
              -Other
              
              
              3.0
              
              
              -Effective
                  income tax rate
              
              
              38.4
              %
              
              32.1
              %
  A
        deferred tax asset of approximately $11,000 resulting from net operating
        loss
        (“NOL”) carryforwards was recorded at December 31, 2005. The Company recorded a
        full valuation allowance against its deferred tax asset at December 31, 2005.
        In
        2006, the Company utilized all of its NOL carryforwards. Accordingly, no
        deferred tax asset has been recorded at December 31, 2006 and the related
        valuation allowance was reduced by $11,000.
 
 The
        effective tax rate at December 31, 2007 differs from the statutory rate of
        34%
        due primarily to the affects of California state income taxes, which has
        an
        effective rate of 5.8%, the benefit of the effect of graduated tax rates
        (6.6)%,
        permanent differences of 2.2% and other differences of 3.0% . The effective
        rate
        at December 31, 2006 differs from the statutory rate of 34% due primarily
        to the
        effects of California state income taxes and the decrease in the valuation
        allowance.
 
 Effective
        January 1, 2007, the Company adopted the provisions of Financial Accounting
        Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
        clarifies the accounting for uncertainty in income taxes recognized in the
        Company’s financial statements in accordance with FASB Statement 109,
“Accounting for Income Taxes”, and prescribes a recognition threshold and
        measurement process for financial statement recognition and measurement of
        a tax
        position taken or expected to be taken in a tax return. FIN 48 also provides
        guidance on derecognition, classification, interest and penalties, accounting
        in
        interim periods, disclosure and transition.
 
 Management
        has evaluated and concluded that there are no significant uncertain tax
        positions requiring recognition in the Company’s financial statements as of
        January 1, 2007. The evaluation was performed for the tax period August 12
        (inception) to December 31, 2005 and for the year ended December 31, 2006,
        the
        tax years which remain subject to examination for Federal and California
        State
        purposes as of December 31, 2007. The Company believes that its income tax
        positions and deductions would be sustained on audit and does not anticipate
        any
        adjustments that would result in a material change to its financial
        position.
  F-11
  Affinity
        Media International Corp. and Subsidiary
 (A
        Development Stage Enterprise)
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        3 - Summary of Significant Accounting Policies, continued**
  ***Income
        Taxes, continued***
 
 The
        Company’s policy is to classify assessments, if any, for tax related interest as
        interest expenses and penalties as general and administrative expenses. For
        the
        years 2007 and 2006, the Company incurred penalties of $3,298 and $0
        respectively. For the years 2007 and 2006, the Company incurred tax related
        interest of $369 and $0 respectively. Management is currently unaware of
        any
        issues under review that could result in significant payments, accruals or
        material deviations from its position.
 
 ***Deferred
        Acquisition Costs***
 
 In
        accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141 -
        Business Combinations (“SFAS 141”), the Company records costs incurred for
        accounting, legal, investigations and appraisals related to the acquisitions
        of
        targeted businesses as deferred acquisition costs. The disposition of these
        costs will be determined upon consummation of the related acquisition. Through
        December 31, 2007 the Company has recorded $426,598 of such deferred acquisition
        costs in connection with the proposed business combination described more
        fully
        in Note 9.
 
 ***Earnings
        (Loss) Per Share***
 
 The
        Company follows the provisions of SFAS No. 128, “Earnings Per Share” (“SFAS No.
        128”). In accordance with SFAS No. 128, earnings per common share amounts
        (“Basic EPS”) are computed by dividing earnings (loss) available to common
        shareholders by the weighted average number of common shares outstanding
        for the
        period. Earnings per common share amounts, assuming dilution (“Diluted EPS”),
        gives effect to dilutive options, warrants, and other potential common stock
        outstanding during the period. SFAS No. 128 requires the presentation of
        both
        Basic EPS and Diluted EPS on the face of the statements of operations. The
        exercise of 6,825,000 outstanding Warrants issued in connection with the
        Public
        Offering and the Private Placement described in Note 4 are contingent upon
        the occurrence of future events, and therefore, are not included in the
        calculation of diluted earnings per share in accordance with SFAS No. 128.
        The effect of the 427,000 Incentive Warrants (not yet issued), as described
        in
        Note 4 has not been considered in the diluted earnings per share calculation
        since they too are contingently issuable. The effect of the 192,500 shares
        of
        common stock and 385,000 Warrants in connection with the Unit Purchase Option
        as
        described in Note 4 has not been considered in the diluted earnings per
        share calculation since the Unit Purchase Option is contingently exercisable.
 
 ***Use
        of Estimates***
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of expenses during the
        reporting period. Actual results could differ from those estimates.
 
 ***Principles
        of Consolidation***
  The
        consolidated financial statements of the Company include the accounts of
        Affinity and its wholly owned subsidiary, Affinity
        Subsidiary. All
        material intercompany accounts and transactions are eliminated in consolidation.
  F-12
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 **NOTE
        3 - Summary of Significant Accounting Policies, continued**
 
 ***Recently
        Issued Accounting Pronouncements***
  In
        September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS
        No. 157”).  This Statement defines fair value, establishes a framework for
        measuring fair value and expands disclosure of fair value measurements. 
SFAS No. 157 applies under other accounting pronouncements that require or
        permit fair value measurements and accordingly, does not require any new
        fair
        value measurements.  SFAS No. 157 is effective for financial statements
        issued for fiscal years beginning after November 15, 2007.  The
        Company does not expect the adoption of SFAS No. 157 to have a material impact
        on the Company's financial position, results of operations or cash
        flows.
  In
        December 2006, the FASB issued FASB Staff Position (“FSP”) EITF 00-19-2
“Accounting for Registration Payment Arrangements” (“FSP EITF 00-19-2”) which
        specifies that the contingent obligation to make future payments or otherwise
        transfer consideration under a registration payment arrangement should be
        separately recognized and measured in accordance with SFAS No. 5,
“Accounting for Contingencies.”    Adoption of FSP EITF 00-19-02
        is required for fiscal years beginning after December 15, 2006. Adoption of
        FSP EITF 00-19-2 did not have a material impact on the Company's financial
        position, results of operations or cash flows.
 
 In
        February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial
        Assets and Financial Liabilities - Including an amendment of FASB Statement
        No.
        115” (“SFAS No. 159”), which permits entities to choose to measure many
        financial instruments and certain other items at fair value. The fair value
        option established by this Statement permits all entities to choose to measure
        eligible items at fair value at specified election dates. A business entity
        shall report unrealized gains and losses on items for which the fair value
        option has been elected in earnings at each subsequent reporting date. Adoption
        is required for fiscal years beginning after November 15, 2007.  Early
        adoption is permitted as of the beginning of a fiscal year that begins on
        or
        before November 15, 2007, provided the entity also elects to apply the
        provisions of SFAS No. 157, Fair Value Measurements. The Company does not
        expect
        the adoption of SFAS No. 159 to have a material impact on the Company's
        financial position, results of operations or cash flows.
 
 In
        December 2007, the FASB issued SFAS No. 141R (“SFAS 141R”),
        “Business Combinations”, which establishes principles and requirements for how
        the acquirer recognizes and measures in its financial statements the
        identifiable assets acquired, the liabilities assumed, and any noncontrolling
        interest in the acquiree, goodwill acquired in the business combination or
        a
        gain from a bargain purchase. SFAS 141R
        is
        effective for business combinations with an acquisition date on or after
        the
        beginning of the first annual reporting period beginning on or after December
        15, 2008. The Company expects SFAS 141R
        to
        have an impact on the accounting for any future business acquisitions as
        of the
        effective date.
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
        Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”).
        SFAS 160 establishes accounting and reporting standards for the noncontrolling
        interest (minority interest) in a subsidiary and for the deconsolidation
        of a
        subsidiary. SFAS 160 requires a) the ownership interest in the subsidiary
        held
        by parties other than the parent to be clearly identified and presented in
        the
        consolidated balance sheet within equity, but separate from the parent’s equity,
        b) the amount of consolidated net income attributable to the parent and to
        the
        noncontrolling interest to be clearly identified and presented on the face
        of
        the consolidated statement of operations and c) changes in a parent’s ownership
        interest while the parent retains its controlling financial interest in its
        subsidiary to be accounted for consistently. Entities must provide sufficient
        disclosures that clearly identify and distinguish between the interests of
        the
        parent and the interests of the noncontrolling owners. SFAS 160 is effective
        for
        financial statements issued for fiscal years beginning on or after December
        15,
        2008, and interim periods within those fiscal years. SFAS 160 would have
        an
        impact on the presentation and disclosure of the non-controlling interests
        of
        any non wholly-owned business acquired in the future.
  F-13
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 **NOTE
        3 - Summary of Significant Accounting Policies, continued**
 
 ***Cash
        and Cash Equivalents***
 
 The
        Company considers all highly liquid debt instruments with an initial maturity
        of
        three months or less to be cash equivalents.
 
 ***Reclassifications***
 
 Certain
        reclassifications have been made to the prior year’s financial statements to
        conform to the current year presentation. The Company reclassified amounts
        held
        in trust from current assets to long term assets with the exception of amounts
        held in trust that are available for current operations of the
        Company.
 
 **NOTE
        4 - Public Offering and Private Placement**
  On
        June
        9, 2006, the Company sold to the public 2,750,000 units (“Units”) at $6.00 per
        Unit, for a total of $16,500,000. On June 29, 2006, 412,500 Units were sold
        pursuant to the underwriters’ over-allotment option at $6.00 per unit for a
        total of $2,475,000. Each Unit consisted of one share of the Company’s Common
        Stock and two Redeemable Common Stock Purchase Warrants (“Warrants”). Each
        Warrant will entitle the holder to purchase from the Company one share of
        Common
        Stock at an exercise price of $5.00. Each Warrant shall become exercisable
        commencing upon the later of the completion of a Business Combination with
        a
        target business or one year from the effective date of the Public Offering
        and
        shall expire four years from the effective date of the Public Offering. The
        Warrants will be redeemable at the Company’s option, in whole and not in part,
        at a price of $.01 per Warrant upon thirty (30) days prior written notice
        at any
        time after the Warrants become exercisable, only in the event that the average
        closing sales price of the Common Stock equals or exceeds $8.50 per share
        for
        any twenty (20) trading days within a
        thirty
        (30) trading day period ending three business days prior to the date on which
        notice of redemption is given.
 
 Should
        the Company be unable to deliver shares of its Common Stock underlying the
        exercise of the Warrants included in the Units and shares of its Common Stock
        underlying the exercise of the Unit Purchase Option (see below) as a result
        of
        an absence of an effective registration statement with respect to these
        securities, then the Warrants and Unit Purchase Option would not be exercisable
        and the Company will have no obligation to pay holders of the Warrants and
        the
        Unit Purchase Option any cash or otherwise “net cash settle” the Warrant or the
        Unit Purchase Option. In this event, the Warrants and the Unit Purchase Option
        may expire worthless.
 
 Prior
        to
        the Public Offering, one of the Founding Stockholders and two non-affiliated
        accredited investors purchased from the Company in the Private Placement,
        an
        aggregate of 250,000 Units at $6.00 per Unit, for a total of $1,500,000.
        These
        Units consist of the same Common Stock and Warrants as offered by the Company
        in
        the Public Offering. The shares and Warrants comprising the Private Placement
        units may not be sold, assigned or transferred until after the Company
        consummates a Business Combination. Thereafter, under certain conditions,
        the
        shares held by the Founding Stockholders, including the shares acquired through
        the Private Placement by one of the Founding Stockholders and two non-affiliated
        accredited investors, include certain piggyback and other registration rights
        that may be demanded by those stockholders. The Company is required to use
        its
        best efforts to cause the registration of the 250,000 shares of Common Stock
        underlying these Units and the 500,000 shares of Common Stock underlying
        the
        Warrants included in these Units to be effective and to maintain such
        effectiveness. However, the agreement does not provide for liquidating damages
        in the event that the Company is unable to cause or maintain such
        effectiveness.
  F-14
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 **NOTE
        4 - Public Offering and Private Placement, continued**
 
 Pursuant
        to an agreement with the Company, if at any time within five years of a Business
        Combination, the Company’s publicly-traded Common Stock reaches a volume
        weighted average trading price of $6.60 per share for each day during any
        five
        (5) day period, the Company’s Chief Executive Officer, President and Chief
        Operating Officer, so long as they are either an officer, employee or consultant
        to the Company, will be granted warrants (“Incentive Warrants”) allowing them to
        purchase 200,000 shares, in the aggregate, of the Company’s Common Stock at an
        exercise price of $.10 per share.  If, at any time within five years of a
        Business Combination, the Company’s publicly-traded Common Stock reaches a
        volume weighted average trading price of $7.20 per share for each day during
        any
        five day period these same officers, so long as they are either an officer,
        employee or consultant to the Company, will be granted Incentive Warrants
        allowing them to purchase an additional 227,000 shares, in the aggregate,
        of the
        Company’s Common Stock at an exercise price of $.10 per share.  All such
        Incentive Warrants will be exercisable for a period of five years from the
        date
        on which they are granted. If
        such
        shares are issued upon the exercise of these Incentive Warrants, the holders
        will have demand and “piggy-back” registration rights with respect to these
        427,000 shares at any time after the Company consummates a business combination.
        The demand registration may be exercised by the holders of a majority of
        such
        shares. The Company is required to use its best efforts to cause the
        registration of 427,000 shares of Common Stock underlying these Incentive
        Warrants to be effective and to maintain such effectiveness. However, the
        agreement does not provide for liquidating damages in the event that the
        Company
        is unable to cause or maintain such effectiveness.
 
 The
        Company has also issued on June 9, 2006, to Maxim Group LLC and Legend Merchant
        Group, Inc., in the aggregate, for $100, an option to purchase up to a total
        of
        192,500 Units at $6.60 per Unit (the “Unit Purchase Option”). The Units issuable
        upon the exercise of this option are identical to those offered in the Public
        Offering except that the exercise price of the Units underlying such purchase
        option is $6.60 per Unit. The Unit Purchase Option is exercisable on the
        later of the consummation of a Business Combination or one year after the
        effective date of the Public Offering. The Company has accounted for the
        fair
        value of the Unit Purchase Option, inclusive of the receipt of the $100 cash
        payment, as a cost of the Public Offering resulting in a charge directly
        to
        stockholders’ equity. The Company estimated that the fair value of this Unit
        Purchase Option was approximately $686,920 ($3.57 per Unit), as of June 9,
        2006,
        using a Black-Scholes option-pricing model. The fair value of the Unit Purchase
        Option was estimated as of the date of grant using the following assumptions:
        (1) expected volatility of 69.44%, (2) risk-free interest rate of 4.95%,
        (3) a
        dividend rate of 0% and (4) expected life of 5 years.
 
 Deferred
        offering costs consisted principally of underwriting fees, legal registration
        and Blue Sky fees incurred through June 9, 2006 that were related to the
        Public
        Offering and Private Placement. These costs were charged to additional paid-in
        capital upon the consummation of the Public Offering on June 9,
        2006.
  The
        Company had notes payable aggregating $235,000 from American Consulting Corp.,
        an affiliate of one of the Founding Stockholders, and from another of the
        Founding Stockholders, both of whom are also officers of the Company. Such
        parties agreed that such loans were non-interest bearing. The Company repaid
        these notes in full on June 9, 2006.
  F-15
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        5 - Common Stock**
  The
        Company was originally authorized to issue 50,000,000 shares of Common Stock.
        On
        March 30, 2006, the Company’s Board of Directors reduced to 15,000,000 the
        number of shares of Common Stock that the Company is authorized to issue.
        On
        August 12, 2005, the Company issued 750,000 shares (as restated for the stock
        dividend during February 2006) for $25,000 in cash, or $0.03 per share. The
        holders of the majority of these shares will be entitled to require the Company,
        on up to two occasions, to register these shares. The holders of the majority
        of
        these shares may elect to exercise these registration rights at any time
        after
        the date on which these shares of common stock are released from escrow,
        which
        is not before June 9, 2009, and have certain “piggy-back” registration rights on
        registration statements filed subsequent to the date on which these shares
        of
        common stock are released from escrow. The Company is required to use its
        best
        efforts to cause the registration of such shares to be effective and to maintain
        such effectiveness. However, the agreements do not provide for liquidating
        damages in the event that the Company is unable to cause or maintain such
        effectiveness.
 
 On
        May 9
        and June 9, 2006, the Company issued 250,000 and 2,750,000 shares of Common
        Stock in connection with a Private Placement and a Public Offering, respectively
        (See Note 4). On June 29, 2006 the Company issued an additional 412,500 shares
        of Common Stock as part of the units issued pursuant to the exercise of the
        Underwriters’ over-allotment option.
 
 On
        November 12, 2007 the Company’s Board of Directors approved an increase in the
        number of shares of common stock that the Company is authorized to issue
        from
        15,000,000 to 29,000,000 shares, subject to shareholder approval.
  **NOTE
        6 - Preferred Stock**
  The
        Company is authorized to issue 1,000,000 shares of preferred stock with such
        designations, voting and other rights and preferences as may be determined
        from
        time to time by the Board of Directors.
  **NOTE
        7- Commitments and Related Party Transactions**
  The
        Company presently occupies office space provided by an affiliate of a Founding
        Stockholder. Such affiliate has agreed that, until the acquisition of a target
        business by the Company, it will make such office space, as well as certain
        office and secretarial services, available to the Company, as may be required
        by
        the Company from time to time. The Company has agreed to pay such affiliate
        $7,500 per month for such services commencing on June 9, 2006 the closing
        of the
        Public Offering. Upon completion of a Business Combination or the distribution
        of the trust account to the Public Stockholders, the Company will no longer
        be
        required to pay this monthly fee.
  F-16
  Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 **NOTE
        7- Commitments and Related Party Transactions,
        continued**
 
 The
        Company has engaged Maxim Group LLC, the representative of the underwriters,
        on
        a non-exclusive basis, as the agent for the solicitation of the exercise
        of the
        warrants. To the extent not inconsistent with the guidelines of the NASD
        and the
        rules and regulations of the SEC, the Company has agreed to pay the
        representative for bona fide services rendered a commission equal to 3% of
        the
        exercise price for each warrant exercised more than one year after the date
        of
        this prospectus if the exercise was solicited by the underwriters. In addition
        to soliciting, either orally or in writing, the exercise of the warrants,
        the
        representative’s services may also include disseminating information, either
        orally or in writing, to warrant holders about the Company or the market
        for our
        securities, and assisting in the processing of the exercise of the warrants.
        No
        compensation will be paid to the representative upon the exercise of the
        warrants if:
 
 ·
              The
                  market price of the underlying shares of common stock is lower
                  than the
                  exercise price;
 
 ·
              The
                  holder of the warrants has not confirmed in writing that the underwriters
                  solicited the
                exercise;·
              The
                  warrants are held in a discretionary account;·
              The
                  warrants are exercised in an unsolicited transaction;
                  or·
              The
                  arrangement to pay the commission is not disclosed in the prospectus
                  provided to warrant holders at the time of
                  exercise.
 
 The
        Company’s Founding Stockholders and stockholders who have purchased units in the
        Private Placement, are entitled to require the Company to register the resale
        of
        their shares of common stock at any time after the date on which their shares
        are released from escrow, which, except in limited circumstances, will not
        be
        before three years from the date of this prospectus. If such existing
        stockholders exercise their registration rights with respect to all of their
        shares of common stock (including those 250,000 shares and 500,000 shares
        issuable upon exercise of warrants convertible into shares of common stock
        issued in the private placement, and up to 427,000 warrants that may be issued
        to Founding Stockholders upon meeting certain price targets for our common
        stock
        ), then there will be an additional 1,927,000 shares of common stock eligible
        for trading in the public market and the Company will bear the costs of
        registering such securities.
 
 On
        January 3, 2007, as amended on January 9, 2008, the Company signed an agreement
        with Maxim Group LLC to provide merger and acquisition advisory services
        to the
        Company. This agreement will terminate upon the consummation of a merger
        or
        acquisition transaction as described within the agreement (the “Close”), unless
        earlier terminated or extended to another date mutually agreed to in writing.
        In
        consideration of its performance of these advisory services, the Company
        shall
        pay at the Close a cash fee equal to $100,000 (the “Fee”) and the equivalent of
        $100,000 in shares of common stock of the Company based on the 10-day volume
        weighted average price of such common stock prior to the date of the Close
        (the
“Financial Advisor Common Stock”). Should the Close not occur, Maxim Group LLC
        shall not be entitled to receive the Fee or the Financial Advisor Common
        Stock.
        The Company recognizes that the fees contemplated by this agreement are separate
        from the Company’s obligations to Maxim Group LLC under the underwriting
        agreement dated June 5, 2006 between Maxim Group LLC and the Company.
  F-17
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 
 **NOTE
        7- Commitments and Related Party Transactions, continued**
 
 On
        June
        29, 2007 the Company signed an agreement with Brainerd Communicators, Inc.
        to
        provide financial public relations services for a fee of $7,500 per month.
        The
        term of the agreement is for the period commencing July 12, 2007, expiring
        30
        days after the completion of the first acquisition and may be terminated
        by
        either party upon 30 days notice.
 
 On
        July
        2, 2007 the Company signed an agreement with PFK Development Group (“PFK”)
        acknowledging and re-confirming an oral agreement made on or about April
        5,
        2007. PFK, who, as a non-exclusive independent consultant has agreed to assist
        the Company with identifying potential acquisition candidates. The PFK agreement
        has a term of one year and may be terminated in writing without notice or
        cause
        by either party at any time. PFK will be entitled to a success fee for
        candidates introduced to the Company prior to the end of the engagement if
        during the term of the agreement or within one year after the expiration
        or
        termination of the agreement the Company consummates a business combination
        transaction with the candidate. The success fee is 5% of that portion of
        the
        purchase price up to $1,000,000 plus 4% of that portion of the purchase price
        between $1,000,001 and $2,000,000, plus 3% of that portion of the purchase
        price
        between $2,000,001 and $3,000,000, plus 2% of that portion of the purchase
        price
        between $3,000,001 and $4,000,000, plus 1% of that portion of the purchase
        price
        exceeding $4,000,000 (See Note 10).
 
 On
        July
        9, 2007, the Company signed an agreement with Ladenburg Thalmann & Co. Inc.
        (“Ladenburg”) engaging them to prepare a fairness opinion regarding the
        potential acquisition of Hotels (See Note 10 - Merger Agreement). The Ladenburg
        fee in connection with this engagement was $75,000 of which $25,000 was paid
        on
        July 11, 2007 and $50,000 was paid on October 29, 2007. On January 10, 2008,
        the
        Company engaged Ladenburg to prepare an updated fairness opinion to reflect
        the
        amendment to the Merger Agreement, at a cost of $37,500, of which $18,750
        was
        paid upon the execution of the agreement and the remainder will be paid upon
        issuance of the opinion.
 
 On
        July
        24, 2007, the Company entered into an Agreement and Plan of Merger with Hotels
        at Home, Inc. On January 14, 2008, the Company entered into an Amendment
        to the
        Agreement and Plan of Merger with Hotels at Home, Inc (See Note 9).
 
 **NOTE
        8 - Stock Dividend**
  Effective
        February 13, 2006, the Company’s Board of Directors authorized a stock dividend
        of 0.2 shares of Common Stock for each outstanding share of Common Stock
        as of
        December 31, 2005. All references in the accompanying financial statements
        to
        the number of shares of Common Stock have been retroactively restated to
        reflect
        the stock dividend.
  F-18
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
          9 - Merger Agreement**
  On
        July
        24, 2007, as amended on January 14, 2008, the Company entered into an Agreement
        and Plan of Merger (the “Merger Agreement”) with Hotels at Home, Inc., a
        Delaware corporation (“Hotels”), pursuant to which Hotels will merge into
        Affinity Subsidiary and Hotels will become a wholly-owned subsidiary of the
        Company.  Following consummation of the merger, it is anticipated that
        Affinity Subsidiary will change its name to Hotels at Home, Inc.  Hotels is
        headquartered in Fairfield, New Jersey, with
        subsidiaries located in Fairfield, New Jersey and Paris, France.
 
 The
        original Merger Agreement provided that by virtue of the merger, and subject
        to
        certain adjustments, Hotels stockholders would receive: (a) an aggregate
        of
        3,509,203 shares of Affinity Common Stock and (b) $16,000,000 in cash in
        exchange for all of the issued and outstanding capital stock of Hotels.
  On
        January 14, 2008, Affinity, Affinity Subsidiary, Hotels and the Hotels
        Stockholders entered into an amendment to the Merger Agreement (the
“Amendment”). Pursuant to the Amendment, the shares of Affinity common stock to
        be issued to the Hotels Stockholders at the closing of the Merger were reduced
        from 3,509,203 shares of Affinity common stock to 2,456,571 shares of Affinity
        common stock. In addition, the parties agreed to an earn-out provision whereby
        if Hotels satisfies certain established net income levels for each of the
        fiscal
        years ending December 31, 2008, 2009 and 2010, the hotels Stockholders will
        earn
        up to 1,500,000 shares of Affinity common stock. Notwithstanding the foregoing,
        in the event that the Hotels Stockholders do not earn, in the aggregate,
        1,000,000 earn-out Shares, then Affinity shall cause the founding stockholders
        of Affinity to transfer to the Hotels stockholders an aggregate of 500,000
        shares of their Affinity common stock, on a pro-rata basis.
 
 Up
        to
        27.26% of investors holding shares from the Company’s IPO who elect to vote
        against the Merger and convert such shares will be entitled to $6.00 per
        share,
        but only in the event that the merger is consummated. Pursuant to the terms
        of
        the Company’s amended and restated certificate of incorporation, the Company has
        until June 9, 2008 to complete this business combination.
 
 The
        Merger Agreement is subject to customary representations and warranties by
        both
        the Company and Hotels.
 
 The
        Merger Agreement provides that as a condition to the Company's obligation
        to consummate the Merger certain officers of Hotels will enter into employment
        agreements with the Company which will be effective upon the consummation
        of the
        Merger.
 
 Hotels
        Stockholders have agreed to an eighteen month lockup of the shares of common
        stock issuable to them in the merger. The Company has agreed to register
        the
        shares issuable to Hotels following the closing pursuant to the terms of
        a
        registration rights agreement. The Company has agreed to file a registration
        statement to provide for the resale of such shares within 90 days after the
        effective date of the merger (the “Effective Date”) and has agreed to grant
        certain demand and piggyback registration rights. In the event the Company
        is
        unable to register and/or maintain the registration of these shares of common
        stock, the Agreement and Plan of Merger does not require penalties or liquidated
        damages.
 
 The
        Merger Agreement provides that at the time of the merger, the Company shall
        designate two members, Hotels shall designate two members, and together the
        Company and Hotels shall designate one independent member to the Company’s board
        of directors.
  F-19
 
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        9 - Merger Agreement, continued**
 
 Pursuant
        to the merger agreement the Company has agreed to seek approval of its
        stockholders to establish a new incentive plan (the “Stock Option Plan”) to
        provide for, among other things, the reservation of 1,400,000 **** of
        the
        Company’s shares of common stock to allow for the grant of stock options and
        other stock based awards under the Stock Option Plan. In addition, Hotels
        has a
        deferred compensation plan in place which Hotels and the Company intend to
        maintain for a period of time after the Effective Date.
 
 Pursuant
        to the terms of the Merger Agreement, the Company may undertake and consummate
        one or more private placements of its equity and/or debt securities prior
        to the
        effective date of the merger upon terms acceptable to it, after consultation
        with Hotels; provided, however, that: (a) the gross proceeds of such private
        placement do not exceed the lesser of the amount paid in conversion payments
        and
        $5,000,000, (b) The Company shall use commercially reasonable efforts to
        ensure
        that the per share consideration received for any equity securities offered
        or
        sold in such private placement is not less than a discount of more than 20%
        of
        the average closing price of the Company’s Common Stock for the 10 days prior to
        the closing of the private placement and (c) the net proceeds of such private
        placement are used solely to: (i) pay a portion of the Cash Consideration
        and
        (ii) provide working capital to the Affinity Subsidiary, which will be renamed
        Hotels at Home, Inc., after the merger.
  Pursuant
        to the terms of the Merger Agreement, the Merger Agreement may be terminated
        at
        any time prior to the closing, as follows: (a) by mutual written consent
        of the
        Company and Hotels; (b) by either the Company or Hotels if (a) a permanent
        injunction or other order prohibiting the merger shall have become final
        and
        non-appealable or (b) if the Merger shall not have been consummated on or
        before
        June 9, 2008; (c) by Hotels, if (i) prior to the Closing Date there shall
        have been a material breach of any representation, warranty, covenant or
        agreement on the part of the Company contained in the Merger Agreement or
        any
        representation or warranty of the Company shall have become untrue after
        the
        date of the Merger Agreement, which breach or untrue representation or warranty
        would, individually or in the aggregate with all other such breaches and
        untrue
        representations and warranties, give rise to the failure of a condition and
        is
        incapable of being cured prior to the Closing Date by the Company or is not
        cured within thirty (30) days of notice of such breach, (ii) any of the
        conditions to closing shall have become incapable of fulfillment; (iii) the
        Company has not filed its preliminary proxy statement with the SEC within
        a
        reasonable time of the Company’s receipt of audited financial statements of
        Hotels (the “New Financial Statements”), or such proxy statement has not been
        approved by the SEC by June 9, 2008; (iv) the Company has not held its
        stockholders meeting to approve the Merger within forty-five (45) days of
        approval of the proxy statement by the SEC; (v) the Company’s board of directors
        has withdrawn or changed its recommendation to its stockholders regarding
        the
        Merger; or (vi) the Merger Agreement and the transactions contemplated thereby
        shall fail to be approved and adopted by the affirmative vote of the holders
        of
        the Company’s Common Stock under the Company’s certificate of incorporation, as
        amended, or more than 27.26% of the holders of the shares issued in the IPO
        (the
“IPO Shares”) entitled to vote on the Merger elect to convert their IPO Shares
        into cash from the Trust Fund. (d) By the Company, if (i) prior to the
        Closing Date there shall have been a material breach of any representation,
        warranty, covenant or agreement on the part of Hotels contained in the Merger
        Agreement or any representation or warranty of Hotels shall have become untrue
        after the date of the Merger Agreement, which breach or untrue representation
        or
        warranty (A) would, individually or in the aggregate with all other such
        breaches and untrue representations and warranties, give rise to the failure
        of
        a condition and (B) is incapable of being cured prior to the Closing Date
        by
        Hotels or is not cured within thirty (30) days of notice of such breach;
        or
        (ii) any of the closing conditions shall have become incapable of
        fulfillment; (e) In the event that the New Financial Statements reflect a
        material adverse change in the financial condition of Hotels when compared
        to
        the audited financial statements of Hotels previously delivered to the Company
        for the fiscal year ended December 31, 2006, then the Company shall have
        the
        right to terminate the Merger Agreement upon 10 days prior notice.  If
        the Company terminates the Merger Agreement pursuant to this provision, the
        Company shall be responsible for the costs and expenses of such New Financial
        Statements.
  F-20
 
 Affinity
          Media International Corp. and Subsidiary
 (A
          Development Stage Enterprise)
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
  **NOTE
        9 - Merger Agreement, continued**
 
 Upon
        the
        consummation of the proposed merger with Hotels, the Company is obligated
        to pay
        a success fee in cash and stock in the amount of $400,000 to PFK Development
        Group and a fee in the amount of $200,000 to Maxim (see Note 7).
 
 F-21




**Item
      9. Changes in and Disagreements with Accounts on Accounting and Financial
      Disclosure**




None.




**Item 9A(T).
      Controls and Procedures**





*Disclosure
      Controls and Procedures*





Disclosure
      controls and procedures (as defined in Rule 13(a) -15(e)) are controls and
      other
      procedures that are designed to ensure that information required to be disclosed
      by a public company in the reports that it files or submits under the Exchange
      Act is recorded, processed, summarized and reported within the time periods
      specified in the SEC’s rules and forms. Disclosure controls and procedures
      include, without limitation, controls and procedures designed to ensure that
      information required to be disclosed by a public company in the reports that
      it
      files or submits under the Exchange Act is accumulated and communicated to
      the
      company’s management, including its principal executive and principal financial
      officers, or persons performing similar functions, as appropriate to allow
      timely decisions regarding required disclosure. Disclosure controls and
      procedures include many aspects of internal control over financial reporting.





Management’s
      Report on Internal Control over Financial Reporting




Our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting as defined in Rule 13a-15(f) under the Exchange
      Act. Internal control over financial reporting refers to a process designed
      by,
      or under the supervision of, our Chief Executive Officer and President and
      effected by our Board to provide reasonable assurance regarding the reliability
      of financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles, including
      those policies and procedures that:





·
            pertain
                to the maintenance of records that, in reasonable detail, accurately
                and
                fairly reflect the transactions and dispositions of our assets;





·
            provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with generally
                accepted
                accounting principles, and that our receipts and expenditures are
                being
                made only in accordance with authorizations of our management and
                directors; and





·
            provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of our assets that could
                have
                a material effect on our consolidated financial statements.





Because
      of its inherent limitations, internal control over financial reporting cannot
      provide absolute assurance of the prevention or detection of misstatements.
      In
      addition, projections of any evaluation of effectiveness to future periods
      are
      subject to the risk that controls may become inadequate because of changes
      in
      conditions, or that the degree of compliance with the policies or procedures
      may
      deteriorate.





In
      connection with the preparation of this Annual Report on Form 10-K for the
      year
      ended December 31, 2007, our Chief Executive Officer and President, have
      evaluated the effectiveness of our disclosure controls and procedures and
      internal controls over financial reporting, pursuant to Rule 13a-15 under the
      Exchange Act.





In
      their
      evaluation, our Chief Executive Officer and President have identified the
      following matters that would constitute a material weakness (as that term is
      defined under the Public Company Accounting Oversight Board Auditing Standard
      No. 5): lack of the necessary corporate accounting resources, a lack of
      segregation of financial responsibilities and the need for additional qualified
      financial accounting personnel. On August 12, 2005, the Company began as a
      shell
      company, as defined in Rule 12b-2 of the Exchange Act. On June 9, 2006 the
      company completed its initial public offering, and currently, is seeking to
      acquire a suitable company as specified in its charter. Currently, the Company
      is being operated solely by the Company’s Chief Executive Officer and its
      President.




41




To
      address these issues, we have taken the following remediation measures: which
      have either been implemented, are in process of being implemented or are planned
      for the 2008 fiscal year:




·
            The
                Company employs a financial consultant who works closely with the
                Company’s Chief Executive Officer and its President to gather the required
                information and to prepare the periodic financial statements and
                public
                filings.





·
            Upon
                the successful consummation of a business combination and becoming
                an
                operating company, and as resources permit, the Company believes
                it will
                then have or will hire such additional financial resources as will
                be
                necessary to assist in the segregation of duties with respect to
                financial
                reporting and compliance with Sarbanes-Oxley Section 404.





As
      a
      result of the material weaknesses identified above, our Chief Executive Officer
      and President have concluded that the design and operation of our disclosure
      controls and procedures and our internal controls and procedures are not
      effective as of December 31, 2007.




There
        were no significant changes in our internal controls over financial reporting
        that occurred during the quarter ended December 31, 2007.




This
      Annual Report on Form 10-K does not include an attestation report of our
      registered public accounting firm regarding our internal controls over financial
      reporting. The disclosure contained under this Item 9A(T) was not subject to
      attestation by our registered public accounting firm pursuant to temporary
      rules
      of the SEC that permit us to provide only the disclosure under this Item 9A(T)
      in this Report.




**Item 9B.
      Other Information**




Not
      applicable





42





**PART
      III**




**Item
      10. Directors and Executive Officers**




Our
      current directors and executive officers are listed below. There are no family
      relationships among such persons. None of such persons are, or have been,
      involved with any other blank check companies.





**Name**
            ****
            **Age**
            ****
            **Position**Peter
                H. Engel
            
            73
            
            Chairman,
                chief executive officer and treasurerHoward
                Cohl
            
            45
            
            President,
                secretary and directorPeter
                Dombrowski
            
            68
            
            Chief
                operating officer and directorMichael
                Arthur
            
            68
            
            DirectorMarc
                E. Jaffe
            
            55
            
            Director




***Peter
      Engel.*** Mr. Engel has been our chairman, chief executive officer and treasurer
      since inception in August 2005. Mr. Engel has been involved with the
      publishing industry since his first book, *The
      Overachievers,* was
      published by St. Martins Press in 1976. Since 1998, Mr. Engel has
      concentrated on building entrepreneurial enterprises, some of them in the
      publishing arena. Currently, Mr. Engel serves as chairman of Dollar Days
      International, LLC, an Internet-based general merchandiser wholesaler serving
      independent re-sellers. From 1998 to 2000 he was the president of the audio
      book
      division of NewStar Media, Inc. (formerly a Nasdaq company). From 1992 to 1998
      he was the president and CEO of Affinity Communications Corp., a West Coast
      publishing and book concept developer whose books were published by many major
      publishers including Crown, Harper Collins, Little Brown, McGraw Hill, Penguin,
      Pocket, Putnam, Random House, Regnery, St. Martins Press, Simon & Schuster
      and Viking. In 1980, Mr. Engel founded and became the president and CEO of
      The American Consulting Corporation (“ACC”), a marketing services firm. ACC’s
      clients included Campbell Soup, Carter-Wallace, Coors, Citicorp, Clorox, Dunkin’
Donuts, Frito-Lay, Gillette, Johnson and Johnson, Kraft, Mattel, Nestle, Nike,
      Ocean Spray, PepsiCo, Quaker, and Seagram as well as over forty other companies.
      Mr. Engel took ACC public in 1987 and sold it in 1988. From 1971 to 1980,
      Mr. Engel was a senior executive at Colgate-Palmolive, where he was Vice
      President Latin America and Canada, and Vice President of Marketing Services,
      eventually rising to Group Vice President, Cosmetics and Beauty Accessories
      Division and President and CEO of Helena Rubinstein. From 1968 to 1970, he
      was
      CEO of Candy Corporation of America (“CCA”) and its public parent, Lehigh Coal
      and Navigation. At CCA, he led the roll up of several candy companies (including
      such brands as Bonomo’s Turkish Taffy, Mason Mints, Mason Dots, and Cella’s
      Cherries) to form an integrated candy group. From 1966 to 1968, Mr. Engel
      was General Manager, General Products Division, Philip Morris, where he was
      responsible for non-tobacco products including: Personal razor blades, an
      industrial blades business, Burma Shave, Clark Chewing Gum, and the launch
      of
      Kit-Kat candy bars. Mr. Engel began his career in 1956 at Procter &
Gamble, rising to Tide brand manager in Canada. He was then promoted to become
      one of the team of executives that opened P&G Germany. In 1964,
      Mr. Engel was moved to P&G’s Cincinnati headquarters. Mr. Engel is
      a former Associate Professor at the University of Southern California
      entrepreneurial program. Under his own name, he is the author of three novels
      ( *High
      Gloss, A Controlling Interest,* and *Tender
      Offers* ), five
      business books ( *The
      Overachievers, What’s Your Exit Strategy, The Exceptional Individual,
      Scam,* and *The
      SOHO Desk Reference, a Practical Guide for Entrepreneurs, ed.* ), and
      several gift books. In addition, he has ghost-written a number of books on
      alternative health and other issues. Mr. Engel has also been granted
      patents covering cosmetics, health related products, promotional concepts,
      and
      an Internet concept. He holds a B.Com from McGill University in Montreal, and
      has completed the course work, but not the dissertation, for a PhD in history
      at
      New York’s Columbia University.




43




***Howard
      Cohl.*** Mr. Cohl has been our president, secretary and a director since inception
      in August 2005. He has over 15 years experience in lifestyle marketing,
      publishing, and licensing. Mr. Cohl is the former president of Silverback
      Books, Inc., a San Francisco and Los Angeles-based cookbook publisher founded
      in
      1999. Mr. Cohl led Silverback Book’s expansion into more branded publishing
      programs with the likes of Betty Crocker, HEB, ZonePerfect, Nestle and others.
      Prior to joining Silverback Books, Mr. Cohl founded Cohl Media (formerly
      Mi-5), a boutique marketing company and consultancy that developed publishing,
      licensing, sponsorship and distribution programs with Seagram’s, Twentieth
      Century Fox, Broadway Television Network, Clark Retail, and others. From 1998
      until 2000, Mr. Cohl was the executive vice president of publishing and
      internet services at NewStar Media Inc. (formerly a Nasdaq-listed company),
      where he oversaw the marketing and sales of Newstar’s audio book business. From
      1993 until 1998, Mr. Cohl was the senior vice president of Affinity
      Communications Corp., a West Coast book publishing concept developer whose
      books
      were published by many major publishers including Crown, Harper Collins, Little
      Brown, McGraw Hill, Penguin, Pocket, Putnam, Random House, Regnery, St. Martins
      Press, Simon & Schuster and Viking. Corporate brands with whom publishing
      projects were developed included Burger King, Seagrams, Playskool, Office Depot,
      Van Heusen, *Business
      Week* ,
      Freeman Cosmetics, Toys R Us, and the  Friars Club. The company also
      developed a variety of alternative health information properties, including *The
      Arthritis Cure* which
      became a New York Times #1 non-fiction bestseller. From 1992 until 1993,
      Mr. Cohl was an associate and then partner at Crossroads Marketing Group, a
      Mountain View, California entertainment and sports marketing consultancy.
      Mr. Cohl began his career in 1987 as a practicing lawyer with Coblentz,
      Cahen, McCabe & Breyer in San Francisco. He received his B.A. in Political
      Science from the University of Wisconsin-Madison, and his J.D. with Honors
      from
      the University of San Francisco School of Law. Mr. Cohl is a member of the
      State Bar of California, the author of three published books, and a former
      part-time lecturer at the University of Southern California Marshall School
      of
      Business.




***Peter
      Dombrowski.*** Mr. Dombrowski has been our chief operating officer and a director since
      inception in August 2005. He is the publisher and CEO of Silverback Books,
      Inc.,
      a San Francisco and Los Angeles-based cookbook publisher he founded in 1999.
      From 1996 to 1999, Mr. Dombrowski was the general manager of Bristol
      Publishing, a publisher of cookbooks based in northern California. From 1993
      to
      1996, Mr. Dombrowski was the Vice President of Sales for Affinity
      Communications Corp. From 1983 to 1993, Mr. Dombrowski was president and
      chief executive officer of Neal’s Plant Exchange. Prior to 1983,
      Mr. Dombrowski held a number of senior level positions overseas with major
      multinational corporations including: From 1975 to 1983, he served as President
      Directeur General (Chairman of the Board and President) of DAGBAR S.A, a French
      subsidiary of Lawry’s Foods; managing director of Lawry’s Foods Europe from 1975
      to 1983; and assistant vice president of marketing for the consumer products
      group of W.R. Grace & Co. headquartered in Paris from 1965 to 1975.
      Mr. Dombrowski holds an MBA in Foreign Trade from Thunderbird, the Graduate
      School of International Management and a BA in Economics from San Francisco
      State University.




***Michael
      Arthur*** **.** Mr. Arthur has been one of our directors since inception in August 2005.
      Since 1990 Mr. Arthur has headed Michael Arthur & Associates, a consulting
      and interim management firm specializing in restructurings, business
      development, strategic, branding and financial planning. Assignments have
      included: California Federal Bank where Mr. Arthur served as interim CEO
      and Board Member; Long John Silver’s Restaurants and Sizzler Restaurants in
      bankruptcy; and restructuring a national sales promotion and fulfillment firm
      whose clients included Sam’s Club and K-Mart. Prior to 1990, Mr. Arthur
      served as Executive Vice President and Chief Financial Officer for Sizzler
      Restaurants and Pinkerton Security; Vice President of Marketing for Mattel
      Toys;
      and in various other marketing management roles in advertising agencies and
      at
      Procter and Gamble. Mr. Arthur currently serves as a Board Member for
      Einstein Noah Restaurant Group, Inc. (BAGL), the parent company of three popular
      bagel chains (Einstein Bros. Bagels, Noah’s New York Bagels and Manhattan
      Bagel). Mr. Arthur attended Johns Hopkins University and the Wharton
      Graduate School of Business.




44




***Marc
      E. Jaffe.*** Mr. Jaffe has been one of our directors since inception in August 2005. He
      has more than 24 years of general management experience in publishing, both
      in
      traditional print media, and in all forms of contemporary electronic formats.
      From May 2006 to the present, Mr. Jaffe has been the Chief Executive Officer
      of
      PixFusion, LLC, a leader in personalized entertainment. Under Kideo, its
      consumer facing brand, the company is the leading publisher of
      photo-personalized children’s DVDs incorporating high profile brands such as
      Dora the Explorer and Spider-Man. PixFusion’s patented technology allows the
      company to automate the production of photo-personalized video across all
      formats and technologies. From April 2004 to May 2006, he had served as an
      adviser and consultant to a range of media and technology companies, among
      them
      Waterfront Media Inc., Pixfusion LLC, Mikoh Corp. and Red Jam Media, Inc. From
      January 2001 through March 2004, he was the senior vice president and a member
      of the executive management committee of Rodale Inc., a leading privately-held
      publisher of books and magazines on healthy, active lifestyles. At Rodale,
      he
      was responsible for, among other matters, its domestic trade book business
      as
      well as its licensing business. He oversaw one of its editorial groups as well
      as certain publishing joint ventures and Rodale’s first film deal.
      Mr. Jaffe also has international publishing experience. Upon joining Rodale
      in January 2001, he launched its international trade book publishing effort
      and
      was also elected to the board of directors of Men’s Health Italy, Rodale’s
      international magazine joint venture with Mondadori, one of Italy’s leading book
      and magazine publishers. As a publisher across many media, Mr. Jaffe was
      responsible for publishing the South Beach Diet books, Pete Rose’s My Prison
      Without Bars and a long list of other titles including software and video
      products with well-known brands such as Star Trek, JK Lasser, The Silver Palate,
      and Hugh Johnson. From 1998 through March 2001, Mr. Jaffe served as the
      non-executive chairman of Vizacom, a Nasdaq-listed Internet software publishing
      company. From 1991 to 2000, Mr. Jaffe founded and was president of
      Electronic Licensing Organization (“ELO”), a licensing agency dedicated to
      bringing together various forms of intellectual property with new media and
      interactive technologies. ELO’s client base included the book publisher, Bantam
      Doubleday Dell, as well as IBM and others. Earlier in his career, Mr. Jaffe
      served as executive vice-president of Franklin Electronic Publishers, Inc.,
      an
      e-book publisher, and as president of the Software and Video Division of Simon
      & Schuster, then a Paramount company. Mr. Jaffe is a graduate of
      Columbia Law School and Columbia College.




Our
      board
      of directors is divided into two classes with only one class of directors being
      elected in each year and each class serving a two-year term. The term of office
      of the first class of directors, consisting of Messrs. Arthur and Jaffe,
      will expire at our first annual meeting of stockholders. The term of office
      of
      the second class of directors, consisting of Messrs. Engel, Cohl and
      Dombrowski, will expire at the second annual meeting.




**Board
      Committees**





We
      currently do not have any committees that have been established by the Board.
      Our entire Board performs the functions that will likely be delegated
      to an audit committee, compensation committee and nominating committee in the
      future. Because we have not yet established an audit committee, we do not have
      an audit committee financial expert. We anticipate identifying an appropriate
      director candidate who may fill this position in the future.




**Code
      of Conduct**




We
      have
      adopted a code of conduct and ethics applicable to our directors, officers
      and
      employees in accordance with applicable federal securities laws.





45




**Special
      Advisor**




***Fred
      Tarter.*** Mr. Tarter is our special advisor. He has had an active career in the
      fields of finance, communications, publishing, media and barter. Since 2001,
      Mr. Tarter’s focus has been on developing several financial structures
      utilizing insurance and annuity products and the capital markets. He has done
      this through his newest company, Epic Associates, LLC. He is the holder of
      two
      patents on his work.Mr. Tarter is chairman and principle shareholder of
      PreSchool Funding LLC. The preeminent financing facility making private
      preschool education affordable. Additionally, Mr. Tarter is a current
      member of the board of Asset Marketing Systems, LLC, a private company, which
      is
      a direct distributor of fixed and equity-indexed annuities. In 1993
      Mr. Tarter began The Pharmacy Fund, Inc. (“PFI”), a securitized,
      asset-backed healthcare financing company of which he was the founder, chairman
      and chief executive officer. PFI, using its own proprietary network and patented
      processing system, intercepted third-party pharmacy claims which were
      credit-evaluated in real time and “purchased” receivables from both independent
      and chain store pharmacies throughout the U.S. The purchased receivables were
      used to back pharmacy securitized-asset debentures. In 1996, PFI was recognized
      as one of the top 100 privately held companies in the U.S. by *Inc.
      Magazine.* PFI was
      acquired in 1998. In May 2002, Mr. Tarter was elected chairman of the Radio
      Free Europe/Radio Liberty Foundation, a position that he still holds. Radio
      Free
      Europe, founded in 1945, today broadcasts in 32 languages across 13 time zones
      to countries in Europe, Asia, the former Soviet Union, and the Middle East.
      Since 1984 Mr. Tarter has been a director of Caribbean News Services, Inc.,
      owner and operator of *EL
      VOCERO* , a
      newspaper serving Puerto Rico. Currently in its thirtieth year of publication, *EL
      VOCERO* circulation approaches 200,000 per day. In the 1980s and 1990s Mr. Tarter
      served as executive producer of several made-for-television movies.
      Mr. Tarter was the Chairman of Screenvision Cinema Network from 1979 to
      2000. Screenvision was sold to Technicolor Inc., a subsidiary of Carlton
      Communications. From 1974 to 1992, Mr. Tarter headed Deerfield
      Communications. In 1988, Deerfield Communications was recognized as one of
      the
      top 100 privately held companies in the U.S. by *Inc.
      Magazine* , and
      was subsequently sold to Integrated Barter Corporation.




We
      may
      consult from time-to-time with our special advisor with respect to evaluating
      potential target businesses and other matters related to our operations. We
      have
      identified Mr. Tarter as our special advisor based on his experience in the
      financial and publishing-related sectors. Our special advisor has no formal
      rights or duties, is not considered a consultant or member of our management
      or
      board of directors and therefore owes no fiduciary duty to us or our
      stockholders.




**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities Exchange Act of 1934, as amended, requires our officers,
      directors and persons who beneficially own more than ten percent of our common
      stock to file reports of ownership and changes in ownership with the SEC. These
      reporting persons are also required to furnish us with copies of all Section
      16(a) forms they file.  All of these reports were filed in a timely
      manner .




46





**Item
      11. Executive Compensation**




No
      executive officer has received any cash compensation for services rendered.
      No
      compensation of any kind, including finder’s and consulting fees, will be paid
      to any of our founding stockholders, including our officers and directors,
      or
      any of their respective affiliates, for services rendered prior to or in
      connection with a business combination. However, these individuals will be
      reimbursed for any out-of-pocket expenses incurred in connection with activities
      on our behalf such as identifying potential target businesses and performing
      due
      diligence on suitable business combinations. There is no limit on the amount
      of
      these out-of-pocket expenses and there will be no review of the reasonableness
      of the expenses by anyone other than our board of directors, which includes
      persons who may seek reimbursement, or a court of competent jurisdiction if
      such
      reimbursement is challenged. If all of our directors are not deemed
“independent,” we will not have the benefit of independent directors examining
      the propriety of expenses incurred on our behalf and subject to
      reimbursement.




The
      following Summary Compensation Table sets forth, for the years indicated, all
      cash compensation paid, distributed or accrued for services, including salary
      and bonus amounts, rendered in all capacities by our chief executive officer
      and
      all other executive officers who received or are entitled to receive
      remuneration in excess of $100,000 during the stated periods.




**Summary
      Compensation Table**




**Name
                and Principal Position**
            
            **Year**
            
            **Salary**
              **$**
            
            **Bonus**
              **$**
            
            **Stock
                Awards**
              **$**
            
            **Option
                Awards**
              **$**
            
            **All
                Other**
              **Compensation**
              **$**
            
            **Total**
              **$**Peter
                H. Engel
              Chairman,
                Chief Executive
              Officer
                and Treasurer
            
            2007
              2006
            
            ß----------------------------------------NONE--------------------------------------------à
              ß----------------------------------------NONE--------------------------------------------àPeter
                H. Engel
              Chairman,
                Chief Executive
              Officer
                and Treasurer
            
            2007
              2006
            
            ß----------------------------------------NONE--------------------------------------------à
              ß----------------------------------------NONE--------------------------------------------à





**Outstanding
      Equity Awards at Year End**





Option
                Awards
            
            Stock
                AwardsName
            
            Number
                of Securities Underlying Unexercised Options
              (#)
              Exercisable
            
            Number
                of
              Securities
              Underlying
                Unexercised
              Options(1)
              (#)
              Unexercisable
            
            Equity
                Incentive Plan Awards: Number of Securities Underlying Unexercised
                Unearned
              Options
              (#)
            
            Option
                Exercise Price
              ($)
            
            Option
                Expiration
              Date
            
            Number
                of Shares that have not vested
              (#)
            
            Market
                value of shares that have not vested
              ($)
            
            Equity
                Incentive Plan Awards: Number of Unearned Shares that have not
                vested
              (#)
            
            Equity
                Incentive Plan Awards: Market value of Unearned shares that have
                not
                vested
              ($)ß-----------------------------------------------------NONE-------------------------------------------------------------à




**Director
      Compensation Table**




Name
            
            Fees
                Earned or
              Paid
                in Cash
              ($)
            
            Option
                Awards
              ($)
            
            All
                Other
              Compensation
                ($)
            
            Total
                ($)ß------------------------------------NONE-----------------------------------à




47




**Employment
      Agreements**




As
      of
      December 31, 2007, the Company was not a party to any employment
      agreements.


******


**Fiscal
      Year 2007 Stock Option Awards**


**


The
      Company did not award any stock options in 2007 and 2006.




**Compensation
      Actions in 2007**




The
      Company has not made any bonus or salary awards for performance during 2007
      and
      2006, nor has it approved any stock option awards for 2007 and 2006
      performance.





**Director
      Compensation Policy**




The
      Company does not currently pay any fees to our directors, nor do we pay
      directors’ expenses in attending board meetings.





**Item
      12. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder**


**Matters**




The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of March 26, 2008, based on information obtained from the
      persons named below, with respect to the beneficial ownership of shares of
      our
      common stock by:




·
            each
                person known by us to be the beneficial owner of more than 5% of
                our
                outstanding shares of common stock;


·
            each
                of our officers and directors; and


·
            all
                our officers and directors as a
                group.




Unless
      otherwise indicated, we believe that all persons named in the table have sole
      voting and investment power with respect to all shares of common stock
      beneficially owned by them.




**Name
                  and Address of Beneficial Owner (1)**
              
              **Amount and Nature
                  of Beneficial Ownership**
              
              **Percentage
                  of Class (3)**Peter
                  H. Engel (2), (10)
              
              
              480,834
              
              
              11.6
              %Howard
                  Cohl (2)
              
              
              266,250
              
              
              6.4
              %Peter
                  Dombrowski (2)
              
              
              45,000
              
              
              1.1
              %Michael
                  Arthur (2)
              
              
              13,750
              
              
              *Marc
                  E. Jaffe (2)
              
              
              13,750
              
              
              *Baupost
                  Group LLC (4)
              
              
              402,000
              
              
              9.7
              %Millenco
                  LLC (5)
              
              
              339,350
              
              
              8.2
              %JMG
                  Triton Offshore Fund, Ltd (6)
              
              
              258,700
              
              
              6.2
              %Hummingbird
                  Management, LLC (7)
              
              
              488,000
              
              
              11.7
              %Hudson
                  Bay Capital Management, LP (8)
              
              
              222,000
              
              
              5.3
              %All
                  current directors and executive officers as a group 5 persons
                  (9)
              
              
              819,584
              
              
              19.7
              %




*
      Represents beneficial ownership of less than 1%





(1)
      Unless otherwise indicated, the business address of each of the individuals
      is
      1850 Sawtelle Blvd., Suite 470, Los Angeles, CA 90025.




48




(2)
      Our
      officers and directors have agreed to surrender to us for cancellation up to
      an
      aggregate of 22,156 shares in the event, and to the extent, stockholders
      exercise their right to redeem their shares for cash upon a business
      combination. The share amounts do not reflect any surrender of
      shares.




(3)
      Based
      upon 4,162,500 shares of common stock issued and outstanding.





(4)
      Based
      on information contained in a Statement on Schedule 13G filed by Baupost Group,
      LLC on February 13, 2007. The Baupost Group, L.L.C. (“Baupost”) is a registered
      investment adviser. SAK Corporation is the Manager of Baupost. Seth A. Klarman,
      as the sole Director of SAK Corporation and a controlling person of Baupost,
      may
      be deemed to have beneficial ownership under Section 13(d) of the securities
      beneficially owned by Baupost.





(5)
      Based
      on information contained in a Statement on Schedule 13G/A filed by Millenco
      LLC., Millennium Management, L.L.C., (“Millennium Management”), is the manager
      of Millenco, and consequently may be deemed to have voting control and
      investment discretion over securities owned by Millenco. Israel A. Englander
      (“Mr. Englander”) is the managing member of Millennium Management. As a result,
      Mr. Englander may be deemed to be the beneficial owner of any shares deemed
      to
      be beneficially owned by Millennium Management.





(6) Based
      on information contained in a Statement on Schedule 13G filed by Pacific Assets
      Management, LLC (“PAM”) on February 14, 2008. PAM is the investment advisor to
      JMG Triton Offshore Fund, Ltd. (the “Fund”) and consequently may be deemed to
      have voting control and investment discretion over securities owned by the
      Fund.
      Pacific Capital Management, Inc. “(PCM”) is a member of PAM. Jonathan M. Glaser,
      Daniel Albert David and Roger Richter are control persons of PCM and PAM. As
      a
      result, Messrs. Glaser, David and Richter may be deemed to be beneficial owners
      of any shares deemed to be beneficially owned by PCM and PAM.





(7)
      Based
      on information contained in a Statement on Schedule 13D filed by Hummingbird
      Management LLC. (“Hummingbird”). Hummingbird acts as investment manager to the
      Hummingbird Value fund, L.P. (“HVF”) and to the Hummingbird Microcap Value Fund,
      LP (“Microcap”) and has the sole investment discretion and voting authority with
      respect to the securities owned of record by each. The managing member of
      Hummingbird is Paul Sonkin. Mr. Sonkin is also the managing member of
      Hummingbird Capital, LLC, the general partner of each of HVF and Microcap and
      consequently may be deemed to have voting control and investment discretion
      over
      securities owned by each.





(8) Based
      on
      information contained in a statement on Schedule 13G filed by Hudson Bay Capital
      Management, L.P. Includes 84,360 shares of common stock beneficially held by
      Hudson Bay Fund, L.P., 137,640 shares of common stock beneficially held by
      Hudson Bay Overseas Fund, Ltd. and 222,000 shares of common stock beneficially
      held by Hudson Capital Management, L.P. Hudson Capital Management, L.P. (the
      “Investment Manager”) is the investment manager for each of Hudson Bay Fund,
      L.P. and Hudson Bay Overseas Fund, Ltd. Sander Gerber, Yoav Roth and John Doscas
      are control persons of the Investment Manager and may be deemed to be beneficial
      owners of shares deemed to be beneficially owned by the Investment
      Manager.





(9)
      Does
      not include the issuance of up to 427,000 shares of our common stock upon
      exercise of warrants which may be awarded upon the achievement of certain price
      targets.





(10)
      Mr
      Engel also holds warrants to purchase 166,668 shares of our common stock at
      an
      exercise price of $5.00 per share.





Except
      for the shares issued as part of the units in the private placement (which
      may
      not be sold, assigned or transferred until we consummate a business
      combination), all of the shares of our common stock outstanding prior to the
      date of our initial public offering were placed in escrow with American Stock
      Transfer & Trust Company, as escrow agent, until the earliest
      of:




·
              three
                  years following the date of our initial public offering;
                  or




·
            the
                consummation of a liquidation, merger, stock exchange or other similar
                transaction which results in all of our stockholders having the right
                to
                exchange their shares of common stock for cash, securities or other
                property subsequent to our consummating a business combination with
                a
                target business.





49




During
      the escrow period, the holders of these shares will not be able to sell or
      transfer their securities except to their spouses and children or trusts
      established for their benefit, but will retain all other rights as our
      stockholders including, without limitation, the right to vote their shares
      of
      common stock and the right to receive cash dividends, if declared. If dividends
      are declared and payable in shares of common stock, such dividends will also
      be
      placed in escrow. If we are unable to effect a business combination and
      liquidate, none of our founding stockholders will receive any portion of the
      liquidation proceeds with respect to common stock owned by them prior to the
      date of our initial public offering or purchased in the private
      placement.




If,
      at
      any time within five years of the consummation of a business combination, our
      publicly-traded common stock reaches a volume weighted average trading price
      of
      $6.60 per share for each day during any five day period, Messrs. Engel, Cohl
      and
      Dombrowski, our chief executive officer, president and chief operating officer,
      respectively (so long as they are either an officer, director, employee or
      consultant to us) will receive warrants allowing them to purchase an aggregate
      of 200,000 shares of our common stock for $.10 per share. If, at any time within
      five years of the consummation of a business combination, our publicly-traded
      common stock reaches a volume weighted average trading price of $7.20 per share
      for each day during any five day period, these same persons (so long as they
      are
      either an officer, director, employee or consultant to us) will receive warrants
      allowing them to purchase an additional 227,000 shares in the aggregate of
      our
      common stock, also for $.10 per share. All such warrants will be exercisable
      for
      a period of five years from the date on which they are granted.




Messrs.
      Engel, Cohl and Dombrowski each will be deemed to be our “parents” and
“promoters” as these terms are defined under the Federal securities
      laws.





**Item
      13. Certain Relationships and Related Transactions, and Director
      Independence**




In
      August
      2005, we issued 625,000 shares of our common stock to the individuals set forth
      below for an aggregate amount of $25,000 in cash, at an average purchase price
      of approximately $0.04 per share, as follows:




**Name**
            
            **Number
                of Shares**
            
            **Relationship
                to Us**Peter H. Engel
            
            331,251
            
            Chairman,
                chief executive officer and treasurerHoward
                Cohl
            
            221,875
            
            President,
                secretary and directorPeter
                Dombrowski
            
            37,500
            
            Chief
                operating officer and directorMichael
                Arthur
            
            11,458
            
            DirectorMarc
                E. Jaffe
            
            11,458
            
            DirectorF
                Fred Tarter
            
            11,458
            
            Special
                advisor




On
      February 13, 2006, our Board of Directors authorized a stock dividend of 0.2
      shares of common stock for each outstanding share of common stock, effectively
      lowering the initial purchase price to approximately $.033 per share. Following
      the stock dividend, there are 750,000 shares of common stock outstanding as
      reflected in Item 11 “Security Ownership of Certain Beneficial Owners and
      Management and Related Stockholders.”




The
      holders of the majority of these shares will be entitled to require us, on
      up to
      two occasions, to register these shares. The holders of the majority of these
      shares may elect to exercise these registration rights at any time after the
      date on which these shares of common stock are released from escrow, which,
      except in limited circumstances, is not before three years from the date of
      our
      initial public offering. In addition, these stockholders have certain
“piggy-back” registration rights on registration statements filed subsequent to
      the date on which these shares of common stock are released from escrow. We
      will
      bear the expenses incurred in connection with the filing of any such
      registration statements.




Mr. Engel,
      our chief executive officer, and two non-affiliated accredited investors
      purchased 250,000 units from us at a purchase price of $6.00 per unit in a
      private placement prior to our initial public offering. We have granted the
      holders of such units demand and “piggy-back” registration rights with respect
      to the 250,000 shares, the 500,000 warrants and the 500,000 shares underlying
      the warrants at any time commencing on the date we consummate a business
      combination. The demand registration may be exercised by the holders of a
      majority of such units. We will bear the expenses incurred in connection with
      the filing of any such registration statements.





50




If,
      at
      any time within five years of the consummation of a business combination, our
      publicly-traded common stock reaches a volume weighted average trading price
      of
      $6.60 per share for each day during any five day period, Messrs. Engel, Cohl
      and
      Dombrowski, our chief executive officer, president and chief operating officer,
      respectively (so long as they are either an officer, director, employee or
      consultant to us) will receive warrants allowing them to purchase an aggregate
      of 200,000 shares of our common stock for $.10 per share. If, at any time within
      five years of the consummation of a business combination, our publicly-traded
      common stock reaches a volume weighted average trading price of $7.20 per share
      for each day during any five day period, these same persons (so long as they
      are
      either an officer, director, employee or consultant to us) will receive warrants
      allowing them to purchase an additional 227,000 shares in the aggregate of
      our
      common stock, also for $.10 per share. All such warrants will be exercisable
      for
      a period of five years from the date on which they are granted.




If
      such
      shares are issued, the holders will have demand and “piggy-back” registration
      rights with respect to these 427,000 shares at any time after we consummate
      a
      business combination. The demand registration may be exercised by the holders
      of
      a majority of such shares. We will bear the expenses incurred in connection
      with
      the filing of any such registration statements.




Howard
      Cohl, our president, and affiliates of Peter Engel, our chief executive officer,
      loaned us a total of $235,000, which was used to pay a portion of the expenses
      of our initial public offering, such as SEC registration fees, NASD registration
      fees, blue sky fees and certain legal and accounting fees and expenses. These
      loans were repaid out of the net proceeds of our initial public offering not
      being placed in trust. In addition, prior to our formation, affiliates of Peter
      Engel paid for certain legal and other expenses on our behalf aggregating
      $60,000, which we have recorded as deferred offering costs. During the period
      ending December 31, 2005, we have repaid Peter Engel’s affiliates in full for
      the $60,000 amount.




We
      maintain executive offices at 1850 Sawtelle Blvd., Suite 470, Los Angeles,
      CA
      90025. The costs for this space is included in the $7,500 per-month fee
      Silverback Books charges us for general and administrative services, including
      but not limited to receptionist, secretarial and general office services,
      pursuant to a letter agreement between us and Silverback Books, an affiliate
      of
      Messrs. Engel, Cohl and Dombrowski (our chief executive officer, president
      and chief operating officer, respectively and the chairman, president and chief
      executive officer of Silverback Books, respectively), provided that $4,500
      of
      such amount shall only be payable from the interest earned on the trust account.
      This agreement commenced on the date of our initial public offering and shall
      continue until the earlier of the consummation of a business combination or
      our
      dissolution and liquidation of our trust account. We believe, based on rents
      and
      fees for similar services in the Los Angeles metropolitan area, that the fee
      charged by Silverback Books is at least as favorable as we could have obtained
      from an unaffiliated person.




We
      will
      reimburse our officers and directors for any reasonable out-of-pocket business
      expenses incurred by them in connection with certain activities on our behalf
      such as identifying and investigating possible target businesses and business
      combinations. There is no limit on the amount of accountable out-of-pocket
      expenses reimbursable by us, which will be reviewed only by our board or a
      court
      of competent jurisdiction if such reimbursement is challenged.




Other
      than the reimbursable out-of-pocket expenses payable to our officers and
      directors, no compensation or fees of any kind, including finders and consulting
      fees, will be paid to any of our founding stockholders, officers or directors
      who owned our common stock prior to our initial public offering, or to any
      of
      their respective affiliates for services rendered to us prior to or with respect
      to the business combination.




Our
      founding stockholders, will not receive reimbursement for any out-of- pocket
      expenses incurred by them to the extent that such expenses exceed the amount
      in
      the trust fund unless the business combination is consummated and there are
      sufficient funds available for reimbursement after such consummation. The
      financial interest of such persons could influence their motivation in selecting
      a target business and thus, there may be a conflict of interest when determining
      whether a particular business combination is in the stockholders’ best
      interest.




After
      the
      consummation of a business combination, if any, to the extent our management
      remains as officers of the resulting business, we anticipate that our officers
      and directors may enter into employment or consulting agreements, the terms
      of
      which shall be negotiated and which we expect to be comparable to employment
      or
      consulting agreements with other similarly-situated companies in the publishing
      industry. Further, after the consummation of a business combination, if any,
      to
      the extent our directors remain as directors of the resulting business, we
      anticipate that they will receive compensation comparable to directors at other
      similarly-situated companies in the publishing industry.




51




All
      ongoing and future transactions between us and any of our officers and directors
      or their respective affiliates, including loans by our officers and directors,
      will be on terms believed by us to be no less favorable than are available
      from
      unaffiliated third parties and such transactions or loans, including any
      forgiveness of loans, will require prior approval in each instance by a majority
      of our uninterested “independent” directors (to the extent we have any) or the
      members of our board who do not have an interest in the transaction, in either
      case who had access, at our expense, to our attorneys or independent legal
      counsel.




**Director
      Independence**




Our
      board
      of directors has determined that Messrs. Arthur and Jaffe are currently
“independent directors” as defined in Rule 10A-3 of the Exchange Act.





**Item
      14. Principal Accountant Fees and Services**




The
      firm
      of Marcum & Kleigman LLP acts as our principal accountant. The following is
      a summary of fees paid to our principal accountant for services
      rendered.





**Audit
      Fees**





During
      the years ended December 31, 2007 and 2006 the fees for our principal accountant
      were $130,973 and $92,500, respectively, in connection with our initial public
      offering, our audits (financial statements included in the Form 10KSB and
      Current Reports on Form 8-K filed with the Securities and Exchange Commission
      and the reviews of our Quarterly Report on Form 10-QSB for the quarters ended
      March 31, 2007, June 30, 2007 and September 30, 2007 and the Proxy Statement
      Pursuant to Section 14(a) of the Securities Exchange Act of 1934 filed as of
      November 13, 2007.





**Audit
      Related Fees**





During
      the years ended December 31, 2007 and 2006 our principal accountant did not
      render assurance and related services reasonably related to the performance
      of
      the audit or review of financial statements.





**Tax
      Fees**





During
      the years ended December 31, 2007 and 2006 our principal accountant rendered
      services to us for tax compliance, tax advice and tax planning of $3,624.00
      and
      $3,500.00 respectively.





**All
      Other Fees**





During
      the years ended December 31, 2007 and 2006 there were no fees billed for
      products and services provided by the principal accountant other than those
      set
      forth above.





**Audit
      Committee Approval**





We
      currently do not have an audit committee. Our Board of Directors approved the
      engagement of Marcum & Kleigman LLP as our independent registered public
      accounting firm.




52





**PART
      III**




**Item
      15. Exhibits**





**Exhibit
                No.**
            
            **Description**1.1
            
            Form
                of Underwriting Agreement (2)3.1
            
            Certificate
                of Incorporation (1)3.2
            
            Amended
                and Restated Certificate of Incorporation, as amended
                (2)3.3
            
            Amended
                and Restated Certificate of Incorporation, as amended.
                (3)3.4
            
            Amended
                and Restated Certificate of Incorporation (5)3.5
            
            By-laws.
                (1)4.1
            
            Specimen
                Unit Certificate.(1)4.2
            
            Specimen
                Common Stock Certificate. (1)4.3
            
            Specimen
                Warrant Certificate.(1)4.4
            
            Form
                of Warrant Agreement between American Stock Transfer & Trust Company
                and the Registrant. (2)10.1.1
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Peter H. Engel.
                (5)10.1.2
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Howard Cohl.
                (5)10.1.3
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Peter Dombrowski.(5)10.1.4
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Michael Arthur.
                (5)10.1.5
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Marc E. Jaffe.
                (5)10.1.6
            
            Form
                of Letter Agreement among the Registrant, Maxim Group LLC and Fred
                Tarter.
                (5)10.2
            
            Form
                of Investment Management Trust Agreement between American Stock
                Transfer & Trust Company and the Registrant.
                 (6)10.3
            
            Form
                of Stock Escrow Agreement between the Registrant, American Stock
                Transfer & Trust Company and the Initial Stockholders. (2)10.4
            
            Form
                of Registration Rights Agreement among the Registrant and the Initial
                Stockholders.(1)10.5
            
            Lease/Office
                Services Agreement dated August 12, 2005 by and among the Registrant
                and
                Silverback Books, Inc., as amended.(2)10.6.1
            
            Promissory
                Note, dated August 12, 2005, issued to Howard Cohl in the amount
                of
                $15,000, as amended. (2)10.6.2
            
            Promissory
                Note, dated August 12, 2005, issued to American Consulting Corp.
                in the
                amount of $220,000, as amended. (2)10.7
            
            Form
                of Unit Option Purchase Agreement between the Registrant and Maxim
                Group
                LLC.(2)10.8
            
            Placement
                Unit Agreement among the Registrant, Maxim Group LLC and certain
                stockholders.(2)10.9
            
            Form
                of Additional Warrant Issuance Side Letter between the Registrant
                and the
                Initial Stockholders.(2)10.10
            
            Agreement
                    and Plan of Merger by and among Affinity Media International
                    Corp.,
                    Affinity Acquisition Subsidiary Corp. and Hotels at Home, Inc.
                    dated July
                    24, 2007 (7)10.11
            
            Amendment
                to theAgreement
                and Plan of Merger by and among Affinity Media International Corp.,
                Affinity Acquisition Subsidiary Corp. and Hotels at Home, Inc. dated
                January 14, 2008 (8)14
            
            Code
                of Ethics (2)31.1
            
            Rule
                13a-14(a)/15d-14(a) Certification *31.2
            
            Rule
                13a-14(a)/15d-14(a) Certification *32.1
            
            Section
                1350 Certification *32.2
            
            Section
                1350 Certification *




**(1)** Incorporated by reference to Registrant's Registration Statement on S-1 (File
      No. 333-128707) filed
      with the Securities and Exchange Commission on September 30, 2005.




**(2)** Incorporated
      by reference to Registrant's Registration Statement on S-1 (File No. 333-128707) filed
      with the Securities and Exchange Commission on February 24, 2006.




**(3)** Incorporated
      by reference to Registrant's Registration Statement on S-1 (File No. 333-128707) filed
      with the Securities and Exchange Commission on April 6, 2006.




**(4)** Incorporated
      by reference to Registrant's Registration Statement on S-1 (File No. 333-128707) filed
      with the Securities and Exchange Commission on May 8, 2006.




**(5)** Incorporated
      by reference to Registrant's Registration Statement on S-1 (File No. 333-128707) filed
      with the Securities and Exchange Commission on May 23, 2006.




**(6)** Incorporated
      by reference to Registrant's Registration Statement on S-1 (File No. 333-128707) filed
      with the Securities and Exchange Commission on May 30, 2006.




**(7)**
        Incorporated by reference to Registrant’s Current Report on Form 8-K filed with
        the Securities and Exchange Commission on July 25, 2007
  **(8)**
        Incorporated by reference to Registrant’s Current Report on Form 8-K filed with
        the Securities and Exchange Commission on January 14, 2008


*Filed
      herewith




53





**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.




Dated:
                March 31, 2008
            Affinity
                Media International Corp.By:
            /s/
                Peter H. EngelPeter
                H. Engel
              Chairman,
                Chief Executive Officer and Treasurer
              (principal
                executive officer)




In
      accordance with the Exchange Act, this report has been signed by the following
      persons on behalf of the registrant and in the capacities and on the dates
      indicated.




**Name**
            
            **Position**
            
            **Date**/s/
                Peter H. Engel
            
            Chairman,
                chief executive officer and treasurer
              (Principal
                Executive Officer)
            
            March
                31, 2008Peter
                H. Engel/s/
                Howard Cohl
            
            President,
                secretary and director
              (Principal
                Financial & Accounting Officer)
            
            March
                  31, 2008Howard
                Cohl/s/
                Peter Dombrowski
            
            Chief
                operating officer and director
            
            March
                  31, 2008Peter
                Dombrowski/S/
                Michael Arthur
            
            Director
            
            March
                  31, 2008Michael
                Arthur/s/
                Marc E. Jaffe
            
            Director
            
            March
                  31, 2008Marc
                E. Jaffe




54