**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**







**FORM
      10-KSB**




**x**
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**




**For
      The Fiscal Year Ended December 31, 2006**




**OR**




** ̈**
            **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 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-KSB or any amendment
      to
      this Form 10-KSB.  ̈




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
      issuer's revenues for the year ended December 31, 2006: none





The
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of March
      30,
      2007($ 5.69 per share) was $13,049,968 .




The
      number of shares outstanding of each of the issuer's classes of common equity:
      As of March 30, 2007: 4,162,500 shares of common stock, par value $.0001 per
      share, were outstanding.





Transitional
      Small Business Disclosure Format (check one): Yes oNo x





**DOCUMENTS
      INCORPORATED BY REFERENCE**




NONE








**AFFINITY
      MEDIA INTERNATIONAL CORP**


**FORM
      10-KSB**


**INDEX**





**Page
                No.****PART
                I**Item
                1.
            Description
                of Business
            
            1Item
                2.
            Description
                of PropertyItem
                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.
            Management’s
                Discussion and Analysis or Plan of Operation
            
            35Item
                7.
            Financial
                Statements
            
            38Item
                8.
            Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure
            
            39Item
                8A.
            Controls
                and Procedures
            
            39Item
                8B.
            Other
                Information
            
            39**PART
                III**Item
                9.
            Directors,
                Executive Officers, Promoters, Control Persons and Corporate Governance;
                Compliance With Section 16 (a) of the Exchange Act
            
            40Item
                10.
            Executive
                Compensation
            
            43Item
                11.
            Security
                Ownership of Certain Beneficial Owners and Management And Related
                Stockholder Matters
            
            46Item
                12.
            Certain
                Relationships and Related Transactions, and Director
                Independence
            
            48Item
                13
            Exhibits
            
            51Item
                14.
            Principal
                Accountant Fees and Services
            
            53ExhibitsSignatures
            
            
            54





**CAUTIONARY
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**




*This
      Annual Report on Form 10-KSB 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 company 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-KSB. 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-KSB, 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-KSB 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-KSB, references to “the
      Company,” “the Registrant,” “we,” “us” and “our” refer to Affinity Media
      International Corp* *.*









**PART
      I**




**Item
      1. Description of Business**





**Introduction**





Affinity
      Media International Corp. (a development stage enterprise) 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.




At
      December 31, 2006, we had not yet commenced any operations. All activity through
      December 31, 2006 relates to our formation, completion of our public offering
      and the identification of suitable business combinations. As of the date of
      this
      filing, we have not acquired any business operations. 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.





**Recent
      Developments**





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 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 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. We intend to utilize our
      cash derived from the proceeds of the Public Offering, including the funds
      held
      in the trust fund, capital stock, debt or a combination of these in effecting
      a
      business combination.  Since
      the
      completion of our initial public offering, we have contacted and continue
      to contact those industry professionals who we believe can be of strategic
      assistance in sourcing potential deals for us, including investment bankers,
      business consultants, accountants and lawyers.  We have also sought out
      owners and institutional owners of publishing industry businesses and investment
      bankers or business brokerage companies that are active in the publishing
      industry.





**Overview**





According
      to the Association of American Publishers, net sales for the entire United
      States publishing industry are estimated to have increased by 4.6% from 2002
      to
      2003 and a further 1.3% from 2003 to 2004 to a total of $23.7 billion. These
      variations in annual growth are typical of the year-to-year fluctuations in
      the
      publishing industry. Within these figures, various segments of the industry
      grew
      at widely different rates. Therefore, as we evaluate possible acquisitions,
      we
      will take into account the growth history and forecast of the areas in which
      the
      companies to be acquired operate.




1





Further,
      according to a report published in 2005 by Book Industry Study Group titled
      “Under the Radar: A Breakthrough, In-Depth Study of the Book Industry’s
      Underreported Segments and Channels,” approximately 63,000 small and mid-sized
      publishers, each with annual revenues of less than $50 million generated
      aggregate sales of $14.2 billion, and of those, roughly 3,600 publishers
      generated aggregate sales of $11.5 billion. The report indicates that small
      and
      midsize publishers have been multiplying, and sometimes prospering, while the
      largest publishing companies have been consolidating. Based on these figures,
      our management believes that, especially among small and midsize publishers,
      there will be a number of acquisition targets available.





Through
      our management team, directors and special advisor, we believe we have extensive
      contacts and sources from which to generate acquisition opportunities in the
      publishing industry. These contacts and sources include the owners of publishing
      companies themselves, private equity and venture capital funds, public and
      private companies, investment bankers, attorneys and accountants. To date,
      no
      such sources have been approached or have presented or identified potential
      targets to the special advisor or any of our officers or directors. We expect
      that, from time to time, one of these contacts or sources will advise either
      our
      management team, directors or special advisor of the existence of one or more
      potential acquisition candidates or that potential acquisition candidates will
      become known to our management team, directors or special advisor through their
      other business activities. Our management will evaluate these leads and
      determine whether to pursue discussions with any of these
      candidates.





2




**Effecting
      a Business Combination**




*General*




We
      are
      not presently engaged in any substantive commercial business. We intend to
      utilize cash derived from the proceeds of our initial public offering and the
      private placement, our capital stock, debt or a combination of these in
      effecting a business combination. A business combination may involve the
      acquisition of, or merger with, a company which does not need substantial
      additional capital but which desires to establish a public trading market for
      its shares, while avoiding what it may deem to be adverse consequences of
      undertaking a public offering itself. These include time delays, significant
      expense, loss of voting control and compliance with various Federal and state
      securities laws. In the alternative, we may seek to consummate a business
      combination with a company that may be financially unstable or in its early
      stages of development or growth.




*We
      have not entered into any definitive agreement with a target
      business*




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.




Subject
      to the limitations that a target business or businesses have a collective fair
      market value of at least 80% of our net assets at the time of the acquisition,
      as described below in more detail, we will have virtually unrestricted
      flexibility in identifying and selecting a prospective business combination
      candidate. We have not established any other specific attributes or criteria
      (financial or otherwise) for prospective target businesses. We do not intend
      to
      specifically target financially unstable, early stage or unestablished
      companies; however, to the extent we effect a business combination with a
      financially unstable company or an entity in its early stage of development
      or
      growth, including entities without established records of sales or earnings,
      we
      may be affected by numerous risks inherent in the business and operations of
      financially unstable and early stage or potential emerging growth companies.
      Although our management will endeavor to evaluate the risks inherent in a
      particular target business, we cannot assure you that we will properly ascertain
      or assess all significant risk factors.




*Sources
      of target businesses*




We
      anticipate that target business candidates will be brought to our attention
      from
      various unaffiliated sources, including investment bankers, attorneys,
      accountants, venture capital funds, private equity funds, leveraged buyout
      funds, management buyout funds, brokers, publishing executives and consultants
      and other members of the financial community, who may present solicited or
      unsolicited proposals. We expect such sources to become aware that we are
      seeking a business combination candidate by a variety of means, such as publicly
      available information relating to our initial public offering, public relations
      and marketing efforts, articles that may be published in industry trades
      discussing our intent on making acquisitions, and/or direct contact by
      management. Our founding stockholders, officers and directors as well as their
      affiliates may also bring to our attention target business candidates. While
      our
      officers and directors make no commitment as to the amount of time they will
      spend trying to identify or investigate potential target businesses, they
      believe that the various relationships they have developed over their careers
      together with their direct inquiry of their contacts will generate a number
      of
      potential target businesses that will warrant further investigation. We may
      engage the services of professional firms that specialize in business
      acquisitions, in which event we may pay a finder’s fee or other compensation.
      The terms of any such arrangements will be negotiated with such persons on
      an
      arm’s length basis and be disclosed to our stockholders in the proxy materials
      we provide in connection with any proposed business combination. In no event,
      however, will we pay any of our existing officers, directors or stockholders
      or
      any entity with which they are affiliated any finder’s fee or other
      compensation, other than the $7,500 payable monthly in the aggregate to
      Silverback Books ($4,500 of such amount payable from the interest earned on
      the
      trust account), an affiliate of Messrs. Engel, Cohl and Dombrowski (our
      chief executive officer, president and chief operating officer, respectively),
      for office space and certain general and administrative services rendered to
      us
      prior to or in connection with the consummation of a business combination.
      We
      will not enter into any business combinations with any affiliates of our initial
      stockholders, officers or directors. In addition, none of our officers,
      directors or founding stockholders will receive any finder’s fee, consulting
      fees or any similar fees or other compensation from any other person or entity
      in connection with any business combination other than any compensation or
      fees
      to be received for any services provided following such business combination.
      Although we are not under any contractual obligation to engage any of the
      underwriters to provide any services for us after our initial public offering,
      any of the underwriters may, among other things, introduce us to potential
      target businesses or assist us in raising additional capital, as needs may
      arise
      in the future. If any of the underwriters provide services to us, we may pay
      such underwriter fair and reasonable fees that would be determined at that
      time
      in arm’s length negotiations.




3




*Selection
      of a target business and structuring of a business combination*




Subject
      to the requirement that our initial business combination must be with a target
      business with a fair market value that is at least 80% of our net assets at
      the
      time of such acquisition, our management has virtually unrestricted flexibility
      in identifying and selecting a prospective target business. In evaluating a
      prospective target business, our management will consider, among other factors,
      the following:




·
            growth
                potential;




·
            financial
                condition and results of operation;




·
            experience
                and skill of management;




·
            capital
                requirements;




·
            the
                value and extent of intellectual
                content;




·
            competitive
                position;




·
            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 protection of the products, processes or
                services;




·
            adaptability
                of products or services to new forms of
                communication;




·
            regulatory
                environment of the industry; and




·
            costs
                associated with effecting the business
                combination.




These
      criteria are not intended to be exhaustive. Any evaluation relating to the
      merits of a particular business combination will be based, to the extent
      relevant, on the above factors as well as other considerations deemed relevant
      by our management in effecting a business combination consistent with our
      business objective. In evaluating a prospective target business, we will conduct
      an extensive due diligence review which will encompass, among other things,
      meetings with incumbent management, where applicable, and inspection of
      facilities, as well as review of financial and other information which will
      be
      made available to us.




The
      time
      and costs required to select and evaluate a target business and to structure
      and
      complete the business combination cannot presently be ascertained with any
      degree of certainty. Any costs incurred with respect to the identification
      and
      evaluation of a prospective target business with which a business combination
      is
      not ultimately completed will result in a loss to us and reduce the amount
      of
      capital available to otherwise complete a business combination. While we may
      pay
      fees or compensation to third parties for their efforts in introducing us to
      a
      potential target business, in no event, however, will we pay any of our existing
      officers, directors or stockholders or any entity with which they are affiliated
      any finder’s fee or other compensation for services rendered to us prior to or
      in connection with the consummation of a business combination, other than the
      $7,500 payable monthly in the aggregate to Silverback Books ($4,500 of such
      amount payable from the interest earned on the trust account), an affiliate
      of
      Messrs. Engel, Cohl and Dombrowski (our chief executive officer, president
      and chief operating officer, respectively), for office space and certain general
      and administrative services. In addition, none of our officers, directors,
      special advisors or founding stockholders will receive any finder’s fee,
      consulting fees or any similar fees from any other person or entity in
      connection with any business combination involving us other than any
      compensation or fees that may be received for any services provided following
      such business combination.




*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. There is no
      limitation on our ability to raise funds privately or through loans that would
      allow us to acquire a target business or businesses with a fair market value
      in
      an amount considerably greater than 80% of our net assets at the time of
      acquisition. We have not had any preliminary discussions, or made any agreements
      or arrangements, with respect to financing arrangements with any third party.
      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. If our board
      is not able to independently determine that the target business has a sufficient
      fair market value, we will obtain an opinion from an unaffiliated, independent
      investment banking firm which is a member of the National Association of
      Securities Dealers, Inc. with respect to the satisfaction of such criteria.
      Since any opinion, if obtained, would merely state that fair market value meets
      the 80% of net assets threshold, it is not anticipated that copies of such
      opinion would be distributed to our stockholders, although copies will be
      provided to stockholders who request it. We will not be required to obtain
      an
      opinion from an investment banking firm as to the fair market value of a
      proposed business combination if our board of directors independently determines
      that the target business has sufficient fair market value.




4




*Probable
      lack of business diversification*




While
      we
      may seek to effect business combinations with more than 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,
      as
      discussed above. Consequently, it is probable that we will have the ability
      to
      effect only a single business combination, although this may entail the
      simultaneous acquisition of several compatible operating businesses or assets.
      We may not be able to engage in a business combination with more than one target
      business because of various factors, including possible complex accounting
      issues, which would include generating pro forma financial statements reflecting
      the operations of several target businesses as if they had been combined, and
      numerous logistical issues, which could include attempting to coordinate the
      timing of negotiations, proxy statement disclosure and other legal issues and
      closings with multiple target businesses. In addition, we would also be exposed
      to the risks that conditions to closings with respect to the transaction with
      one or more of the target businesses would not be satisfied, bringing the fair
      market value of the initial business combination below the required fair market
      value of 80% of net assets threshold. Therefore, at least initially, the
      prospects for our success may 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.




Additionally,
      since our business combination may entail the simultaneous acquisitions of
      several assets or operating businesses at the same time and may be with
      different sellers, we will need to convince such sellers to agree that the
      purchase of their assets or closely related businesses is contingent upon the
      simultaneous closings of the other acquisitions.




5




*Limited
      ability to evaluate the target business’ management*




Although
      we intend to closely scrutinize the management of a prospective target business
      when evaluating the desirability of effecting a business combination, we cannot
      assure you that our assessment will prove to be correct. In addition, we cannot
      assure you that new members that join our management following a business
      combination will have the necessary skills, qualifications or abilities to
      manage a public company. Furthermore, the future role of our officers and
      directors, if any, in the target business following a business combination
      cannot presently be stated with any certainty. While certain of our current
      officers and directors may remain associated in senior management or advisory
      positions with us following a business combination, they may not devote their
      full time and efforts to our affairs subsequent to a business combination.
      Moreover, they would only be able to remain with the company after the
      consummation of a business combination if they are able to negotiate employment
      or consulting agreements in connection with such business combination, which
      would be negotiated at the same time as the business combination negotiations
      are being conducted and which may be a term of the business combination. Such
      negotiations would take place simultaneously with the negotiation of the
      business combination and could provide for such individuals to receive
      compensation in the form of cash payments and/or our securities for services
      they would render to the company after the consummation of the business
      combination. While the personal and financial interests of such individuals
      may
      influence their motivation in identifying and selecting a target business,
      the
      ability of such individuals to remain with the company after the consummation
      of
      a business combination will not be the determining factor in our decision as
      to
      whether or not we will proceed with any potential business combination.
      Additionally, we cannot assure you that our officers and directors will have
      significant experience or knowledge relating to the operations of the particular
      target business.




Following
      a business combination, we may seek to recruit additional managers to supplement
      the incumbent management of the target business. We cannot assure you that
      we
      will have the ability to recruit additional managers, or that any such
      additional managers we do recruit will have the requisite skills, knowledge
      or
      experience necessary to enhance the incumbent management.




*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.




6




*Conversion
      rights*




At
      the
      time we seek stockholder approval of any 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 any business combination if public stockholders, owning more than
      27.26% 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%). 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,
      consummate a different 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, if we do not complete a business combination within 18 months
      of
      our initial public offering, or within 24 months if the extension criteria
      described below have been satisfied, 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.




7




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
      enter 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 are unable
      to
      complete the business combination within the 18-month period, then 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.




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. 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.




8




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 18 and 24 month deadlines 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;




·
            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




9




·
            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. In addition, if we seek approval from our
      stockholders to consummate a business combination within 90 days of the
      expiration of 24 months (assuming that the period in which we need to consummate
      a business combination has been extended, as provided in our amended and
      restated certificate of incorporation) from the date of the initial public
      offering, the proxy statement related to such a business combination will also
      seek stockholder approval for our board’s recommended plan of distribution and
      dissolution, in the event our stockholders do not approve such a business
      combination. 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 the 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.
      Immediately upon the approval by our stockholders of our plan of dissolution
      and
      distribution, we will liquidate our trust account to our public
      stockholders.




10




**Competition
      for Target Businesses**




In
      identifying, evaluating and selecting a target business, we may encounter
      intense competition from other entities having a business objective similar
      to
      ours. Many of these entities are well established and have extensive experience
      identifying and effecting business combinations directly or through affiliates.
      Many of these competitors possess greater technical, human and other resources
      than us and our financial resources will be relatively limited when contrasted
      with those of many of these competitors. While we believe there are numerous
      potential target businesses that we could acquire with the net proceeds of
      our
      initial public offering and the private placement, our ability to compete in
      acquiring certain sizable target businesses is limited by our available
      financial resources. This inherent competitive limitation gives others an
      advantage in pursuing the acquisition of a target business.
      Further:




·
            our
                obligation to seek stockholder approval of a business combination
                or
                obtain the necessary financial information to be included in the
                proxy
                statement to be sent to stockholders in connection with such business
                combination may delay or prevent the completion of a
                transaction;




·
            our
                obligation to convert into cash shares of common stock held by our
                public
                stockholders in certain instances may reduce the resources available
                to us
                for a business combination;




·
            our
                outstanding warrants and options, and the future dilution they potentially
                represent, may not be viewed favorably by certain target businesses;
                and




·
            the
                requirement to acquire assets or an operating business that has a
                fair
                market value equal to at least 80% of our net assets at the time
                of the
                acquisition could require us to acquire several assets or closely
                related
                operating businesses at the same time, all of which sales would be
                contingent on the closings of the other sales, which could make it
                more
                difficult to consummate the business
                combination.




Additionally,
      we face competition from other blank-check companies which have formed recently,
      a number of which may consummate a business combination in any industry they
      choose. We may therefore be subject to competition from these companies, which
      are seeking to consummate a business plan similar to ours and which will, as
      a
      result, increase demand for privately-held companies to combine with companies
      structured similarly to ours.




Any
      of
      these factors may place us at a competitive disadvantage in negotiating a
      business combination. Our management believes, however, that our status as
      a
      public entity and potential access to the United States public equity markets
      may give us a competitive advantage over privately-held entities having a
      similar business objective as us in acquiring a target business with significant
      growth potential on favorable terms.




If
      we
      effect a business combination, there will be, in all likelihood, intense
      competition from competitors of the target business. We cannot assure you that,
      subsequent to a business combination, we will have the resources or ability
      to
      compete effectively.




**Employees**




We
      have
      three executive 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. The amount of time they will devote in any time period will
      vary
      based on the availability of suitable target businesses to investigate, although
      we expect such individuals to devote an average of approximately ten hours
      per
      week to our business. We have one full time employee.




**Financial
      Information**




We
      will
      not acquire an operating business in the publishing industry if audited
      financial statements based on United States generally accepted accounting
      principles cannot be obtained for such target business. Additionally, our
      management will provide stockholders with audited financial statements, prepared
      in accordance with United States generally accepted accounting principles,
      of
      the prospective target business as part of the proxy solicitation materials
      sent
      to stockholders to assist them in assessing each specific target business or
      assets we seek to acquire. We cannot assure you that any particular target
      business identified by us as a potential business combination candidate will
      have financial statements prepared in accordance with United States generally
      accepted accounting principles or that the potential target business will be
      able to prepare its financial statements in accordance with United States
      generally accepted accounting principles. The financial statements of a
      potential target business will be required to be audited in accordance with
      United States generally accepted accounting standards.




11




To
      the
      extent that this requirement cannot be met, we will not be able to effect a
      business combination with the proposed target business. Our management believes
      that although the requirement of having available financial information for
      the
      target business or assets may limit the pool of potential target businesses
      or
      assets available for acquisition, the narrowing of the pool is not expected
      to
      be material.




**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.





**RISKS
      ASSOCIATED WITH OUR BUSINESS**




***We
      are a development stage company 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 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 company 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
      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
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.




***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.”




***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.




12




***Because
      of our limited resources and the significant competition for business
      combination opportunities, including numerous companies with a business plan
      similar to ours, it may be more difficult for us to complete a business
      combination.***




Based
      on
      publicly available information, approximately 80 similarly structured blank
      check companies have completed initial public offerings since August 2003,
      and
      numerous others have filed registration statements. Of these companies, only
      19
      companies have consummated a business combination, while 20 other companies
      have
      announced that they have entered into definitive agreements or letters of intent
      with respect to potential business combinations, but have not yet consummated
      such business combinations and another four will be liquidating. Accordingly,
      there are approximately 37 blank check companies with more than $3.1 billion
      in
      trust that have filed registration statements and are or will be seeking to
      enter into a business combination. While some of these companies have specific
      industries in which they must identify a potential target business, a number
      of
      these companies may consummate a business combination in any industry and/or
      geographic location they choose. As a result, we may be subject to competition
      from these and other companies seeking to consummate a business combination
      within any of our target sectors, which, in turn, will result in an increased
      demand for privately-held companies in these industries. Because of this
      competition, we cannot assure you that we will be able to effectuate a business
      combination within the required time period. Further, the fact that only 39
      of
      such companies have either consummated a business combination or entered into
      a
      definitive agreement for a business combination may indicate that there are
      fewer attractive target businesses available to such entities or that many
      privately-held target businesses are not inclined to enter into these types
      of
      transactions with publicly-held blank check companies like ours.




We
      expect
      to encounter intense competition from other entities having a business objective
      similar to ours, including private investors (which may be individuals or
      investment partnerships), other blank check companies, and other entities,
      domestic and international, competing for the type of businesses that we may
      intend to acquire. Many of these individuals and entities are well established
      and have extensive experience in identifying and effecting, directly or
      indirectly, acquisitions of media, entertainment or telecommunications assets
      and entities. Many of these competitors possess greater technical, human and
      other resources, or more local industry knowledge, than we do and our financial
      resources are relatively limited when contrasted with those of many of these
      competitors. While we believe that there are numerous target acquisitions that
      we could potentially acquire with the net proceeds of this offering, our ability
      to compete with respect to the acquisition of certain target acquisitions that
      are sizable is limited by our available financial resources. This inherent
      competitive limitation gives others an advantage in pursuing the acquisition
      of
      certain target acquisitions. Furthermore, the obligation we have to seek
      stockholder approval of a business combination may delay the consummation of
      a
      transaction. Additionally, our outstanding warrants and the future dilution
      they
      potentially represent may not be viewed favorably by certain target
      acquisitions. Also, our obligation to convert into cash the shares of common
      stock in certain instances may reduce the resources available for a business
      combination. Any of these obligations may place us at a competitive disadvantage
      in successfully negotiating a business combination.




We
      cannot
      assure you we will be able to successfully compete for an attractive business
      combination. Additionally, because of this competition, we cannot assure you
      we
      will be able to effectuate a business combination within the prescribed time
      period. If we are unable to consummate a business combination within the
      prescribed time period, we will be forced to liquidate.




***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.




13




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.




14




***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
      18
      months after the consummation of our initial public offering (or within 24
      months after the consummation of our initial public offering if certain
      extension criteria are 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.




***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 18 months
      after the consummation of our initial public offering, or 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.




If
      we
      enter 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 are unable
      to
      complete the business combination within the 18-month period, then 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.




15




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.





16




***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 18 and 24 month deadlines 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




·
            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.




***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.





17




***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. Although we have no commitments as
      of
      the date of this Annual Report to issue our securities, we may issue a
      substantial number of additional shares of our common stock or preferred stock,
      or a combination of common and preferred stock, to complete a business
      combination. 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.”




***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.




18




***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 most of our management and other key personnel 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. Moreover,
      our current management will only be able to remain with the combined company
      after the consummation of a business combination if they are able to negotiate
      terms with the combined company as part of any such combination. If we acquired
      a target business in an all-cash transaction, it would be more likely that
      current members of management would remain with us if they chose to do so.
      If a
      business combination were structured as a merger whereby the stockholders of
      the
      target company were to control the combined company following a business
      combination, it may be less likely that management would remain with the
      combined company unless it was negotiated as part of the transaction via the
      acquisition agreement, an employment or consulting agreement or other
      arrangement. The determination to remain as officers of the resulting business
      will be determined prior to the completion of the transaction and will depend
      upon the appropriateness or necessity of current management to remain. In making
      the determination as to whether current management should remain with us
      following the business combination, management will analyze the experience
      and
      skill set of the target business’ management and negotiate as part of the
      business combination that certain members of current management remain if it
      is
      believed that it is in the best interests of the combined company post-business
      combination. If management negotiates to be retained post-business combination
      as a condition to any potential business combination, such negotiations may
      result in a conflict of interest.




***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.
      Accordingly, you may not have sufficient information with which to evaluate
      the
      ability of our management team to identify and complete a business combination
      using the proceeds of our initial public offering and the private placement.
      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.




***If
      management were to negotiate to be retained by the company post-business
      combination as a condition to any potential business combination, such
      negotiations may result in a conflict of
      interest.***




Our
      current management will only be able to remain with the combined company after
      the consummation of a business combination if they are able to negotiate
      mutually agreeable employment terms as part of any such combination, which
      terms
      would be disclosed to stockholders in any proxy statement relating to such
      transaction. The financial interest of our officers and directors, including
      any
      compensation arrangements, could influence their motivation in selecting,
      negotiating and structuring a transaction with 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.




***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.




19




***Our
      officers and directors are currently affiliated with entities engaged in
      business activities similar to those intended to be conducted by us and
      accordingly, may have conflicts of interest in determining which entity a
      particular business opportunity should be presented
      to.***




Our
      officers and directors may in the future become affiliated with other entities,
      including other “blank check” companies, engaged in business activities similar
      to those intended to be conducted by us. Additionally, our officers and
      directors may become aware of business opportunities which may be appropriate
      for presentation to us as well as the other entities with which they are or
      may
      be affiliated. Further, certain of our officers and directors are currently
      involved in other businesses that are similar to the business activities that
      we
      intend to conduct following a business combination. Due to these existing
      affiliations, they have prior fiduciary obligations to present potential
      business opportunities to those entities prior to presenting them to us which
      could cause additional conflicts of interest. Accordingly, they have conflicts
      of interest in determining to which entity a particular business opportunity
      should be presented. For a complete discussion of our management’s business
      affiliations and the potential conflicts of interest that you should be aware
      of, see the sections below entitled “Management—Directors and Executive
      Officers” and “Management—Conflicts of Interest.”  We cannot assure you
      that these conflicts will be resolved in our favor.




***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.




***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 for the next 24 months 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.




20




***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.




***It
      is probable that 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 may not be able to acquire more than one target business
      because of various factors, including the amount of funds available to
      consummate a business combination, possible complex accounting issues, which
      would include generating pro forma financial statements reflecting the
      operations of several target businesses as if they had been combined, and
      numerous logistical issues, which could include attempting to coordinate the
      timing of negotiations, proxy statement disclosure and closings with multiple
      target businesses. In addition, we may not have sufficient management, financial
      and other resources to effectively investigate the business and affairs of
      multiple acquisition candidates simultaneously or to negotiate the terms of
      multiple acquisition agreements at the same time which could result in a failure
      to properly evaluate multiple aquisitions. Further, we would also be exposed
      to
      the risk that conditions to closings with respect to the acquisition of one
      or
      more of the target businesses would not be satisfied bringing the fair market
      value of the initial business combination below the required fair market value
      of 80% of our net assets threshold. Accordingly, while it is possible that
      we
      may attempt to effect our initial business combination with more than one target
      business, we are more likely to choose a single target business if deciding
      between one target business meeting such 80% threshold and comparable multiple
      target business candidates collectively meeting the 80% threshold. Consequently,
      it is probable that, unless the purchase price consists substantially of our
      equity, 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.




21




***If
      we seek to consummate more than one business combination, we may have problems
      financing such transaction, and as a result we may only be able to complete
      a
      single business combination. In addition, exercise of conversion rights by
      our
      stockholders may leave us with insufficient funds to complete a business
      combination.***




The
      net
      proceeds from our initial public offering, including the over-allotment option,
      and the private placement have provided us with approximately $18,057,000 which
      we may use to complete a business combination. Our initial business combination
      must be with a business or businesses with a fair market value of at least
      80%
      of our net assets at the time of such acquisition. We currently have no
      restrictions on our ability to seek additional funds through the sale of
      securities or through loans. As a consequence, we could seek to acquire a target
      business or businesses that have a fair market value significantly in excess
      of
      80% of our net assets. Although as of the date of this Annual Report we have
      not
      engaged or retained, had any discussions with, or entered into any agreements
      with, any third party regarding any such potential financing transactions,
      we
      could seek to fund such a business combination by raising additional funds
      through the sale of our securities or through loan arrangements. However, if
      we
      were to seek such additional funds, any such arrangement would only be
      consummated simultaneously with our consummation of a business combination.
      Consequently, it is probable that we will have the ability to complete only
      a
      single business combination, although this may entail the simultaneous
      acquisitions of several assets or closely-related operating businesses at the
      same time.




We
      will
      proceed with a business combination only if a majority of the shares of common
      stock included in the units sold in our initial public offering and the private
      placement 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 described elsewhere. 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.  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, consummate
      a
      different business combination or dissolve and liquidate as part of our
      stockholder-approved plan of dissolution and liquidation.




***We
      will not be required to obtain an opinion from an investment banking firm as
      to
      the fair market value of a proposed business combination if our board of
      directors independently determines that the target business has sufficient
      fair
      market value.***




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. There is no
      limitation on our ability to raise funds privately or through loans that would
      allow us to acquire a target business or businesses with a fair market value
      in
      an amount considerably greater than 80% of our net assets at the time of
      acquisition. We have not had any preliminary discussions, or made any agreements
      or arrangements, with respect to financing arrangements with any third party.
      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. If our board
      is not able to independently determine that the target business has a sufficient
      fair market value, we will obtain an opinion from an unaffiliated, independent
      investment banking firm which is a member of the National Association of
      Securities Dealers, Inc. with respect to the satisfaction of such criteria.
      Since any opinion, if obtained, would merely state that fair market value meets
      the 80% of net assets threshold, it is not anticipated that copies of such
      opinion would be distributed to our stockholders, although copies will be
      provided to stockholders who request it. We will not be required to obtain
      an
      opinion from an investment banking firm as to the fair market value of a
      proposed business combination if our board of directors independently determines
      that the target business has sufficient fair market value.




22




***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,
      in as much as we have not yet identified any prospective target business, we
      cannot ascertain the capital requirements for any particular transaction. If
      the
      net proceeds of our initial public offering and the private placement prove
      to
      be insufficient, either because of the size of the business combination or
      the
      depletion of the available net proceeds in search of a target business, or
      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 a particular business combination, we would be compelled
      to
      restructure the transaction or abandon that particular business combination
      and
      seek an alternative target business candidate. In addition, if we consummate
      a
      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 24.0% 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.




***We
      will be dependent upon interest earned on the trust account to fund our search
      for a target company and consummation of a business
      combination.***




Of
      the
      net proceeds of our initial public offering and the private placement, only
      $150,000 was available to us initially outside the trust account to fund our
      working capital requirements. We will be dependent upon sufficient interest
      being earned on the proceeds held in the trust account to provide us with the
      additional working capital we will need to search for a target company and
      consummate a business combination. While we are entitled to the interest earned
      on the trust account in excess of the amount necessary to allow for a $6.00
      per
      share liquidation price to our public stockholders for such purpose, if interest
      rates were to decline substantially, we may not have sufficient funds available
      to complete a business combination. In such event, we would need to borrow
      funds
      from our insiders or others or be forced to dissolve, liquidate and wind
      up.




23


***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.




***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
      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 of 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.




24




***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.




***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.




25




***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.




After
      the
      consummation of a business combination, we expect to pay two of our directors,
      Messrs. Arthur and Jaffe, $100,000 each in director’s fees for services to
      be provided in their capacity as directors in the one year following such
      business combination, should they agree to remain on our board of directors
      and
      if our stockholders approve such payments. Additionally, as part of their
      compensation as directors, we have discussed issuing both Messrs. Arthur
      and Jaffe options to purchase shares of our common stock upon consummation
      of a
      business combination and implementation of a stock option plan, should they
      agree to remain on our board of directors. We have not yet entered into any
      formal agreements with regard to these matters. If we do enter into formal
      agreements, at the time such agreements become operative, Messrs. Arthur
      and Jaffe may no longer qualify as independent directors and, if necessary,
      we
      would need to locate additional directors to serve as our independent
      directors.




***Since
      we have not yet publicly identified a prospective target business with which
      to
      complete a business combination, our stockholders are unable to currently
      ascertain the merits or risks of the target business’
operations.***




Since
      we
      have not yet publicly identified a prospective target, our stockholders have
      no
      current basis to evaluate the possible merits or risks of the target business’
operations. To the extent we complete a business combination with a financially
      unstable company, an entity in its development stage and/or an entity subject
      to
      unknown or unmanageable liabilities, we may be affected by numerous risks
      inherent in the business operations of those entities. Although our management
      will endeavor to evaluate the risks inherent in a particular target business,
      we
      cannot assure you that we will properly ascertain or assess all of the
      significant risk factors. We also cannot assure you that an investment in our
      units will not ultimately prove to be less favorable to our stockholders than
      a
      direct investment, if an opportunity were available, in a target business.
      For a
      more complete discussion of our selection of a target business, see the section
      above entitled “Effecting a business combination—We have not identified a target
      business.”




***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.




26




***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.




27




**Risks
      Associated with the Publishing Industry**




Even
      if
      we consummate a business combination, of which no assurances can be given,
      our
      proposed business will be subject to numerous risks, including the
      following:




***Our
      potential business would be heavily dependent on publishing, and any revenue
      or
      income we would derive could decrease as a result of industry downturns or
      cost
      increases.***




Because
      our potential business may depend on publishing books, magazines or other
      publications, we may be adversely affected by increased publishing industry
      costs. The publishing industry is subject to various economic factors that
      could
      cause a downturn in industry revenues and profits and a decline in our potential
      business. For example, increases in the cost of paper, printing expenses and
      mailing costs could reduce income from our potential publications. To the extent
      that we become involved in the magazine industry, a decline in magazine
      popularity generally and/or in advertising revenue could also adversely affect
      our results and financial condition.




***Any
      potential revenues and income we earn could decline due to general economic
      trends and declines in spending.***




In
      the
      industry segments in which we plan to operate, i.e. publishing and related
      businesses, revenues are largely generated by business and/or consumers
      discretionary spending. Advertising in magazines, and consumer spending on
      books, periodicals, or other publications, may therefore tend to decline during
      recessionary periods. They may also decline at other times for various,
      not-always-measurable reasons. In parallel, the industries that are symbiotic
      with publishing (such as marketers of products whose sales may be impacted
      by
      the books or magazines we publish, or entertainment companies using the content
      of our published materials) may also decline. Such declines would adversely
      affect our business.




***We
      would compete in highly competitive markets, and we would be vulnerable to
      larger, more experienced, and better financed
      competitors.***




The
      publishing markets in which we may compete are extremely competitive. We believe
      the competition we would face would be based primarily on the following
      factors:




·
            price;




·
            editorial
                quality;




·
            distribution;




·
            marketing;




·
            licenses;




·
            timely
                introduction of new titles;




·
            product
                positioning; and




·
            author
                name recognition.




Many
      of
      our potential competitors in the publishing market will have significantly
      more
      resources, broader market presence, and greater experience than we have. These
      advantages will allow them to spend considerably more on marketing, and may
      allow them to use their greater resources more effectively than we can.
      Accordingly, these competitors may be able to take advantage of market
      opportunities and withstand market downturns better than we can.




The
      industries related to publishing in which we may compete similarly face
      competition. In videos and DVDs, established television channels may be able
      to
      market products that are competitive to ours with more media support than we
      can
      afford. In Internet product offerings, large competitors such as Amazon, eBay,
      Barnes & Noble and Yahoo, may copy any successful launches we pioneer and
      thus inhibit our offerings’ long term success.




28




***There
      are few barriers to entry into our potential lines of business, allowing new
      companies to launch books or other publications competitive with
      ours.***




The
      publishing industry has relatively low barriers to entry. As a result, new
      companies and ventures may, and in all likelihood will, launch books,
      publications or other products which will compete with any that we may in the
      future produce. In addition, some of our competitors may be well financed by
      larger rivals, and they may gain popularity in the marketplace at our expense.
      This could in turn result in a decline in our potential revenues.




***We
      would face competition directly not only from other book publishers, but
      indirectly from non-print media such as the Internet, CD-ROMs, or various forms
      of electronic downloads.***




While
      we
      will seek out businesses that prove adaptable to new means of communication and
      dissemination of information, we cannot guarantee you that we will succeed
      in
      finding or consummating a business combination with such a business. If
      consumers generally were to begin to rely on information disseminated via
      non-print media, our potential business, to the extent it was not adaptable
      to
      such dissemination, would be adversely affected.




***If
      we are unable to predict, respond to, or influence trends that appeal to our
      customers, our potential revenues would fall.***




Any
      potential business we enter will be heavily dependent on our ability to provide
      creative, useful and attractive ideas, information and concepts, with strong
      appeal to our potential individual and/or corporate customers. In order to
      accomplish this, we will have to respond quickly and effectively to the demand
      for changing ideas, information, concepts and products. We cannot be sure that
      any new ideas and content that we may develop will fulfill those demands, or
      that such ideas or content will gain commercial acceptance.




***A
      decline in demand may generate heavy returns of our potential
      products.***




Most
      books, DVDs, and video sales are made on a “guaranteed sale” basis. Thus, if the
      product fails to sell, or if a retailer, after ordering product, decides not
      to
      put part or all of it up for sale, the retailer may return the merchandise
      for
      full credit. If the return is substantial, it may result in excess inventory
      that is unsalable at normal retail rates and must be sold at a considerable
      loss, or even scrapped. Such returns would adversely affect our potential
      revenues and results of operations.




***New
      product introductions may fail.***




As
      our
      potential book titles, publications or other assets age, they will sell more
      slowly. Consequently, maintaining or building our revenue will depend on our
      ability to identify market trends and launch new titles, publications, or
      Internet offerings to serve them. We cannot assure you that such new products
      will be successful.




***We
      may not recoup the cost of developing new products.***




To
      establish market acceptance of any new book or publication, we would have to
      dedicate significant time and money to research, intellectual property
      development, production, marketing, and sales. These costs would be especially
      high and speculative in developing new products in the rapidly evolving
      electronic arenas such as DVDs, video-on-demand and video games where
      substantial expenses often precede meaningful revenues. Thus, we may not recoup
      the cost of developing any new books or publications, especially electronic
      products, for lengthy periods or at all.




***Our
      stock may not reach its full value due to fluctuations in our sales and profit
      performance and seasonality.***




Revenues
      from quarter-to-quarter and from year-to-year may be adversely affected by
      the
      number and timing of new books, publications, or other intellectual property.
      As
      a result, our sales and profit performance may not be steady, adversely
      affecting the attitudes of investors towards us, as well as the price of our
      stock. Additionally, the publishing industry’s seasonal nature is directly tied
      to the buying patterns of consumers for books, many of which sell more heavily
      during the pre-Christmas season. These buying patterns may also affect our
      quarterly revenues and results of operations.




29




***Companies
      we may acquire may be dependent on licenses for intellectual property that
      may
      be of limited duration and may not be renewed.***




Many
      publishers depend for much of their volume on licensed brand names or
      characters. Such licenses may be of only a limited remaining duration. Upon
      their expiration, the licensor may either demand higher fees, our may refuse
      to
      extend the license at all. To the extent we find ourselves in such a situation,
      we may experience a considerable reduction in the sales and profits of any
      potential companies we may acquire.




***Authors
      whose books become successful may demand larger advances, or may switch to
      another publisher.***




Certain
      books which we may publish or otherwise produce may become “best-sellers”
garnering considerable publicity for their authors. In such cases, authors
      may
      demand higher fees for future books, or switch to larger publishers who can
      afford to pay them more than we can. Such actions would block our opportunity
      to
      capitalize on any such successful books.




***Intellectual
      property claims and other litigation against us can be costly and result in
      the
      loss of significant rights, as well as impair our management’s ability to run
      our potential business.***




If
      we
      acquire a business or assets in the publishing industry, other parties may
      assert, against us, claims of ownership or infringement of some or all of the
      intellectual property we purchased. They may then either demand payment for
      the
      use of that property, or force us to cease and desist. We cannot assure you
      that
      we would prevail against any such claims. Additionally, such litigation may
      result in substantial costs and may detract from the time our management can
      devote to our affairs, including running any potential businesses we have
      acquired or searching for potential target companies or assets for business
      combinations. This would materially adversely affect our results of operations,
      as well as our chances of successfully completing such business
      combinations.




***Rights
      we may own or acquire may be limited in scope and not extend to all present
      or
      future media, and may not include the right to create derivative
      works.***




Licenses
      held by companies we may acquire or otherwise obtained by us may not extend
      to
      the right to reproduce such intellectual property in all present and future
      media formats. As a result, if there were a shift to media other than that
      for
      which we hold licenses, we may lose business in our traditional areas without
      being able to replace it in the new areas. This may materially reduce our
      potential revenue.




***There
      may be risks associated with our potential distribution
      channels.***




We
      may
      choose to sell our potential books or other publications primarily to large
      retail chains, large wholesalers, warehouse clubs, office superstores and
      computer and electronics superstores. Our future financial results may therefore
      depend in large part on our relationship with such customers. Any disruption
      in
      such relationships could adversely affect our financial
      performance.




***To
      obtain sufficiently low prices, we may have to purchase relatively large
      quantities of book inventories some of which may prove to be
      unsalable.***




In
      general, the price of book printing and binding drops significantly with
      increased quantities per title. Thus, publishers are often forced to purchase
      quantities that, if the book fails to live up to expectations, may not sell
      for
      long periods, or may have to be liquidated at well below cost. To the extent
      that any potential business we acquire would be forced to take such action,
      such
      sell-offs may materially reduce its potential revenue.




***If
      we acquire several companies with the intent of merging them to achieve
      economies of combination, a failure to merge them smoothly may harm our
      financial results.***




If
      we
      acquire several companies, rather than a single one, to total a value of at
      least 80% of our net assets, we would expect to achieve economies of combination
      by downsizing the combined management and administrative staffs into a smaller,
      less expensive management cadre. If we are not successful in achieving these
      economies of combination, our financial results could suffer.





30


**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, 2006.




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
              (through
                March30,
                2007)
            
            $
            6.50
            
            $
            6.20
            
            $
            5.69
            
            $
            5.54
            
            $
            0.44
            
            $
            0.36





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
      29,
      2007, 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


**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.




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.




33


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, $.001 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 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 warrant separately
      on
      July 26, 2006.





At
      December 31, 2006, approximately $19,092,000 is currently being held in trust
      and the remaining funds of $ 89,000 are being held outside of the trust. The
      remaining proceeds 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 a business combination that is presented to us. We would only
      consummate such a financing simultaneously with the consummation of a business
      combination.





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





34





**Item
      6. Management 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.





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.




**Results
      of Operations**




For
      the
      year ended December 31, 2006 and the period for August 12, 2005 (inception)
      through December 31, 2005, we had net income (loss) of $94,294 and $(27,355),
      respectively. The net income for the year ended December 31, 2006 is
      attributable primarily to interest income of $551,090, offset by marketing,
      general and administrative expenses of $412,170. The net loss for the period
      from August 12, 2005 (Inception) through December 31, 2005 was attributable
      to
      organization and formation costs of $27,355.





**Liquidity
      and Capital Resources**





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.





35


**Liquidity
      and Capital Resources (continued)**





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 a business combination will be consummated. Should a
      business combination not be consummated by December 9, 2007, or June 9, 2008,
      if
      certain extension criteria have been satisfied, 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. This condition
      raises substantial doubt about our ability to continue as a going
      concern.





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.





**Critical
      Accounting Policies**





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 revenues and
      expenses during the reporting period. Actual results could differ from those
      estimates.





36


**Recent
      Accounting Pronouncements**





In
      June
      2006, the Financial Accounting Standards Board (the “FASB”)
      issued SFAS Interpretation No. 48 (“FIN 48"), Accounting for
      Uncertainty in Income Taxes - an  interpretation  of FASB Statement
      No. 109. FIN 48 clarifies the accounting for uncertainty in
      income taxes recognized in enterprises financial statements in accordance with
      FASB Statement No. 109. Accounting for Income Taxes this interpretation
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. This interpretation also provides guidance on
      derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure and transition. FIN 48 is effective for financial statements
      issued for fiscal years beginning after December 15, 2006. The Company is
      currently evaluating the requirements of FIN 48 and has not yet determined
      if
      the adoption of FIN 48 will have a significant impact on the Company’s financial
      statements.





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 is in the process of evaluating the impact that the adoption of SFAS
      No.
      157 will have on its results of operations and financial condition.




In
      September 2006, the staff of the SEC issued Staff Accounting Bulletin No. 108
      ("SAB 108") which provides interpretive guidance on how the effects of the
      carryover or reversal of prior year misstatements should be considered in
      quantifying a current year misstatement. SAB 108 becomes effective in fiscal
      2007. Adoption of SAB 108 is not expected 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. The Company
      is currently evaluating the expected effect of FSP EITF 00-19-02 on its
      consolidated financial statements and is currently not yet in a position to
      determine such effects.





In
      February 2007, the FASB issued Statement of Financial Accounting Standard 159
      “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an amendment of FASB Statement No. 115”, 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 FASB Statement No. 157, Fair Value Measurements. The
      Company is currently evaluating the expected effect of SFAS 159 on its financial
      statements and is currently not yet in a position to determine such
      effects.





37


**Off-Balance
      Sheet Arrangements**




As
      of
      December 31, 2006 and 2005, 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.





CAUTIONARY
      STATEMENT FOR FORWARD-LOOKING STATEMENTS





Statements
      contained in this "Management's Discussion and Analysis or Plan of Operation"
      may contain information that includes or is based upon certain "forward-looking
      statements" relating to our business. These forward-looking statements represent
      management's current judgment and assumptions, and can be identified by the
      fact
      that they do not relate strictly to historical or current facts. Forward-looking
      statements are frequently accompanied by the use of such words as "anticipates,"
      "plans," "believes," "expects," "projects," "intends," and similar expressions.
      Such forward-looking statements involve known and unknown risks, uncertainties,
      and other factors, including, while it is not possible to predict or identify
      all such risks, uncertainties, and other factors, those relating
      to:





·
            our
                ability to secure the additional financing adequate to execute our
                business plan;





·
            our
                ability to identify, negotiate and complete the acquisition of targeted
                operations, consistent with our business
                plan;





·
            existing
                or new competitors consolidating operators ahead of the
                Company;





·
            we
                may be unable to attract new personnel, which would adversely affect
                implementation of our overall business
                strategy.





·
            the
                success of our investor relations program to create and sustain interest
                and liquidity in our stock, which is currently thinly traded on the
                OTCBB;





Any
      one
      of these or other risks, uncertainties, other factors, or any inaccurate
      assumptions may cause actual results to be materially different from those
      described herein or elsewhere by us. We caution readers not to place undue
      reliance on any such forward-looking statements, which speak only as of the
      date
      they were made. Certain of these risks, uncertainties, and other factors may
      be
      described in greater detail in our filings from time to time with the Securities
      and Exchange Commission, which we strongly urge you to read and consider.
      Subsequent written and oral forward-looking statements attributable to us or
      to
      persons acting on our behalf are expressly qualified in their entirety by the
      cautionary statements set forth above and elsewhere in our reports filed with
      the Securities and Exchange Commission. We expressly disclaim any intent or
      obligation to update any forward-looking statements.




**Item
      7. Financial Statements**




Our
      financial statements and the related notes to the financial statements are
      on
      pages F-1 through F-14 comprising a portion of this annual report on
      Form 10-KSB.




38




Affinity
                  Media International Corp.(A
                  Development Stage Enterprise)Financial
                  StatementsFor
                  the Year Ended December 31, 2006For
                  the Period from August 12, 2005 (Inception) Through December 31,
                  2005For
                  the Period from August 12, 2005 (Inception) Through December 31,
                  2006Index
                  to Financial Statements
 
 Page
                  Nos.Report
                  of Independent Registered Public Accounting Firm
              
              F-1Financial
                  StatementsBalance
                  Sheet
              
              F-2Statements
                  of Operations
              
              F-3Statements
                  of Changes in Stockholders' Equity (Deficit)
              
              F-4Statements
                  of Cash Flows
              
              F-5,
                  F-6Notes
                  to Financial Statements
              
              F-7









REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors and Stockholders


of
      Affinity Media International Corp.




We
      have
      audited the accompanying balance sheet of Affinity Media International Corp.
      (a
      development stage enterprise) (the “Company”) as of December 31, 2006, and the
      related statements of operations, changes in stockholders’ equity (deficit) and
      cash flows for the year ended December 31, 2006, for the period from August
      12,
      2005 (inception) through December 31, 2005 and for the period from August 12,
      2005 (inception) through December 31, 2006. 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, as well as 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 financial statements referred to above present fairly, in all
      material respects, the financial position of Affinity Media International Corp.
      (a development stage enterprise) as of December 31, 2006 and the results of
      its
      operations and cash flows for the year ended December 31, 2006, for the period
      from August 12, 2005 (inception) through December 31, 2005 and for the period
      from August 12, 2005 (inception) through December 31, 2006 in conformity with
      United States generally accepted accounting principles.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 1 to the 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 December 9, 2007 or June 9, 2008, if certain
      extension criteria have been satisfied. 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 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
      30, 2007




F-1




**Affinity
                  Media International Corp.****(A
                  Development Stage Enterprise)****BALANCE
                  SHEET****December
                  31, 2006**
 
 ASSETSCURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              88,877Cash
                  and cash equivalents held in trust
              
              
              18,247,795Cash
                  and cash equivalents held in trust - restricted
              
              
              843,750Interest
                  receivable
              
              
              84,609Prepaid
                  expenses
              
              
              18,986Total
                  Current Assets
              
              
              19,284,017LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCURRENT
                  LIABILITIESAccrued
                  expenses
              
              $
              46,468Other
                  current liabilities (See Note 4)
              
              
              843,750Total
                  Current Liabilities
              
              
              890,218Common
                  stock subject to possible redemption, 862,148 shares at conversion
                  value
              
              
              4,959,226COMMITMENTSSTOCKHOLDERS'
                  EQUITYPreferred
                  stock - $.0001 par value; 1,000,000 shares authorized; none issued
                  or
                  outstanding
              
              
              -Common
                  stock - $.0001 par value; 15,000,000 shares authorized; 4,162,500
                  shares
                  issued and outstanding, (which includes 862,148 shares subject
                  to possible
                  conversion)
              
              
              330Additional
                  paid-in capital
              
              
              13,367,304Earnings
                  accumulated during the development stage
              
              
              66,939Total
                  stockholders’ equity
              
              
              13,434,573Total
                  Liabilities and Stockholders’ Equity
              
              $
              19,284,017


*The
        accompany notes are an integral part of these financial
        statements.*




F-2


**Affinity
                  Media International Corp.****(A
                  Development Stage Enterprise)****STATEMENTS
                  OF OPERATIONS**
 
 **For
                  the Year Ended December 31, 2006**
              
              **For
                  the period from August 12, 2005 (Inception) through December 31,
                  2005**
              
              **For
                  the period from August 12, 2005 (Inception) through December 31,
                  2006**OPERATING
                  EXPENSESAdministrative
                  cost allowance - related party
              
              $
              52,500
              
              $
              -
              
              $
              52,500Marketing,
                  general and administrative expenses
              
              
              359,670
              
              
              27,355
              
              
              387,025Total
                  operating expenses
              
              
              412,170
              
              
              27,355
              
              
              439,525OTHER
                  INCOMEInterest
                  income
              
              
              551,090
              
              
              -
              
              
              551,090Total
                  other income
              
              
              551,090
              
              
              -
              
              
              551,090Net
                  income (loss) before income taxes
              
              
              138,920
              
              
              (27,355
              )
              
              111,565Provision
                  for income taxes
              
              
              44,626
              
              
              -
              
              
              44,626NET
                  INCOME (LOSS)
              
              $
              94,294
              
              $
              (27,355
              )
              $
              66,939Earnings
                  per share:Basic
              
              $
              0.04
              
              $
              (0.04
              )Diluted
              
              $
              0.04
              
              $
              (0.04
              )Weighted
                  average shares outstanding:Basic
              
              
              2,187,181
              
              
              750,000
              (1)Diluted
              
              
              2,187,181
              
              
              750,000
              (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
        accompany notes are an integral part of these financial
        statements.*


F-3


**Affinity
                  Media International Corp.****(A
                  Development Stage Enterprise)****STATEMENTS
                  OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)****For
                  the Period From August 12, 2005 (Inception) Through December 31,
                  2006**
 **Common
                    stock**
                
                **Additional**
                  **Paid-In**
                
                **Earnings**
                  **(deficit)
                    accumulated during the Development**
                
                **Total
                    Stockholders****'**
                  **Equity****Shares**
                
                **Amount**
                
                **Capital**
                
                **Stage**
                
                **(Deficit)**Common
                    stock issued on August 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 of underwriters’ discount, on May 9, 2006 at $6.00
                    per share
                
                
                250,000
                
                
                25
                
                
                1,364,975
                
                
                -
                
                
                1,365,000Sale
                    of 2,750,000 units, net of underwriters’ discount and offering expenses
                    (includes 749,700 shares subject to conversion) on June 9, 2006
                    at $6.00
                    per share
                
                
                2,750,000
                
                
                275
                
                
                14,659,485
                
                
                -
                
                
                14,659,760Proceeds
                    subject to possible conversion of 749,700 shares at $5.76 per
                    share
                
                
                (749,700
                )
                
                (75
                )
                
                (4,318,197
                )
                
                -
                
                
                (4,318,272
                )Proceeds
                    from issuance of option
                
                
                -
                
                
                -
                
                
                100
                
                
                -
                
                
                100Sale
                    of 412,500 units, net of underwriters’ discount and offering expenses
                    (includes 112,448 shares subject to conversion) on June 29, 2006
                    at $6.00
                    per share
                
                
                412,500
                
                
                41
                
                
                2,276,959
                
                
                -
                
                
                2,277,000Proceeds
                    subject to possible conversion of 112,448 shares at $5.70 per
                    share
                
                
                (112,448
                )
                
                (11
                )
                
                (640,943
                )
                
                -
                
                
                (640,954
                )Net
                    income for the year ended December 31, 2006
                
                
                -
                
                
                -
                
                
                -
                
                
                94,294
                
                
                94,294Balance
                    at December 31, 2006
                
                
                3,300,352
                
                $
                330
                
                $
                13,367,304
                
                $
                66,939
                
                $
                13,434,573
 
 (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
        accompany notes are an integral part of these financial
        statements.*




F-4


**Affinity
                  Media International Corp.****(A
                  Development Stage Enterprise)****STATEMENTS
                  OF CASH FLOWS**


**For
                  the period from January 1 through December 31,
                  2006**
              
              **For
                  the period from August 12, 2005 (Inception) through December 31,
                  2005**
              
              **For
                  the period from August 12, 2005 (Inception) through December 31,
                  2006**Cash
                  Flows From Operating ActivitiesNet
                  income (loss)
              
              $
              94,294
              
              $
              (27,355
              )
              
              66,939Changes
                  in operating assets and liabilities:Prepaid
                  expenses
              
              
              (18,986
              )
              
              -
              
              
              (18,986
              )Interest
                  receivable
              
              
              (84,609
              )
              
              -
              
              
              (84,609
              )Accrued
                  expenses
              
              
              32,116
              
              
              14,352
              
              
              46,468Net
                  cash provided by (used in) operating activities
              
              
              22,815
              
              
              (13,003
              )
              
              9,812Cash
                  Flows From Investing ActivitiesCash
                  and cash equivalents held in trust fund
              
              
              (18,247,795
              )
              
              -
              
              
              (18,247,795
              )Cash
                  and cash equivalents held in trust fund - restricted
              
              
              (843,750
              )
              
              -
              
              
              (843,750
              )Net
                  cash used in investing activities
              
              
              (19,091,545
              )
              
              -
              
              
              (19,091,545
              )Cash
                  Flows From Financing ActivitiesProceeds
                  from the sale of common stock
              
              
              -
              
              
              25,000
              
              
              25,000Proceeds
                  from notes payable-related party
              
              
              -
              
              
              235,000
              
              
              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
              )
              
              (81,356
              )
              
              (1,134,490
              )Repayment
                  of advance from founding stockholder
              
              
              -
              
              
              (60,000
              )
              
              (60,000
              )Repayment
                  of notes payable - related party
              
              
              (235,000
              )
              
              0
              
              
              (235,000
              )Proceeds
                  from issuance of option
              
              
              100
              
              
              -
              
              
              100Net
                  cash provided by financing activities
              
              
              19,051,966
              
              
              118,644
              
              
              19,170,610Net
                  (Decrease) Increase in Cash
              
              
              (16,764
              )
              
              105,641
              
              
              88,877Cash
                  and Cash Equivalents - Beginning of the Period
              
              
              105,641
              
              
              -
              
              
              -Cash
                  and Cash Equivalents- End of the Period
              
              $
              88,877
              
              $
              105,641
              
              $
              88,877


*The
          accompany notes are an integral part of these financial
          statements.*




F-5


**Affinity
                  Media International Corp.****(A
                  Development Stage Enterprise)****STATEMENTS
                  OF CASH FLOWS,
                  continued**


**For
                  the period from January 1 through December 31,
                  2006**
              
              **For
                  the period from August 12, 2005 (Inception) through December 31,
                  2005**
              
              **For
                  the period from August 12, 2005 (Inception) through December 31,
                  2006****SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION**Cash
                  paid during the period for:Interest
              
              $
              -
              
              $
              -
              
              $
              -Income
                  taxes
              
              $
              -
              
              $
              -
              
              $
              -Non-Cash
                  Financing Activities:Deferred
                  offering cost advanced from foundingstockholders
              
              $
              -
              
              $
              60,000
              
              $
              60,000Accrual
                  of other current liability for offering costs
              
              $
              843,750
              
              $
              -
              
              $
              843,750




*The
      accompany notes are an integral part of these financial
      statements.*




F-6


**Affinity
        Media International Corp.**
 **(A
        Development Stage Enterprise)**
 **NOTES
        TO FINANCIAL STATEMENTS**


**NOTE
      1 - Organization, Business and Operations**




Affinity
      Media International Corp. (a development stage enterprise) (“Affinity” or the
“Company”) 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.




At
      December 31, 2006, the Company had not yet commenced any operations. All
      activity through December 31, 2006 relates to the Company’s formation,
      completion of the Public Offering described below and the identification 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 current 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 current
      liabilities.




Substantially
      all of the net proceeds of the Public Offering and the Private Placement are
      intended to be generally applied toward consummating a business combination
      with
      an operating business or businesses in the publishing industry (“Business
      Combination”). Pursuant to the agreement with the Underwriter (see Note 4), 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, is
      held
      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 remaining net proceeds (not held in
      the Trust Account) may be used to pay for business, legal and accounting
      expenses, as well as due diligence on prospective acquisitions and continuing
      general and administrative expenses.




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,
      2006, in accordance with the vote of the majority in 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 the Business Combination. 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.




F-7


**Affinity
      Media International Corp.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO FINANCIAL STATEMENTS**





**NOTE
      1 - Organization, Business and Operations, continued**





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 will be 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 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
      if
      certain extension criteria have been satisfied. These conditions raise
      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 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 per share 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).





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 Offering (June 9,
      2006), or 24 months from the consummation of the Offering if certain extension
      criteria 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 a business combination will be consummated. Should a
      Business Combination not be consummated by December 9, 2007 or June 9, 2008,
      if
      certain extension criteria have been satisfied, 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.





F-8


**Affinity
      Media International Corp.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO FINANCIAL STATEMENTS**


**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 Federally insured limits throughout the period.
      At December 31, 2006 the Company had cash balances in excess of the maximum
      amount insured by the FDIC. The Company mitigates its risk by depositing its
      cash and cash equivalents with major financial institutions.





***Income
      Taxes***





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.




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,****2006**
            
            **2005**Tax
                (benefit) at federal statutory rate
            
            
            34.0
            %
            
            (34.0
            )%State
                income taxes net of federal benefit
            
            
            6.0
            
            
            (6.0
            )Decrease
                in valuation allowance
            
            
            (7.9
            )
            
            -Increase
                in valuation allowance
            
            
            -
            
            
            40.0
            %Effective
                income tax rate
            
            
            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.





***Earnings
      Per Share***





The
      Company follows the provisions of Statement of Financial Accounting Standards
      (“SFAS”) No. 128, “Earnings Per Share”. In accordance with SFAS No. 128,
      earnings per common share amounts (“Basic EPS”) were computed by dividing
      earnings (loss) 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 income. The
      effect of the 6,825,000 outstanding Warrants issued in connection with the
      Public Offering and the Private Placement described in Note 4 has not been
      considered in the Diluted EPS since the Warrantsare contingently exercisable .
      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 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. At
      December 31, 2005, the Warrants, Unit Purchase Option and Incentive Warrants
      were not issued or agreed upon. Accordingly they are not included in diluted
      EPS
      at December 31, 2005.





F-9


**Affinity
      Media International Corp.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO FINANCIAL STATEMENTS**


**NOTE
      3 - Summary of Significant Accounting Policies, continued**





***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 at the date of the financial statements and the reported amounts
      of
      expenses during the reporting period. Actual results could differ from those
      estimates.





***Recently
      Issued Accounting Pronouncements***




In
      June
      2006, the Financial Accounting Standards Board (the “FASB”)
      issued SFAS Interpretation No. 48 (“FIN 48"), Accounting for
      Uncertainty in Income Taxes - an  interpretation  of FASB Statement
      No. 109. FIN 48 clarifies the accounting for uncertainty in
      income taxes recognized in enterprises financial statements in accordance with
      FASB Statement No. 109. Accounting for Income Taxes this interpretation
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. This interpretation also provides guidance on
      derecognition, classification, interest and penalties, accounting in interim
      periods, disclosure and transition. FIN 48 is effective for financial statements
      issued for fiscal years beginning after December 15, 2006. The Company is
      currently evaluating the requirements of FIN 48 and has not yet determined
      if
      the adoption of FIN 48 will have a significant impact on the Company’s financial
      statements.





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 is in the process of evaluating the impact that the adoption of SFAS
      No.
      157 will have on its results of operations and financial condition.




In
      September 2006, the staff of the SEC issued Staff Accounting Bulletin No. 108
      ("SAB 108") which provides interpretive guidance on how the effects of the
      carryover or reversal of prior year misstatements should be considered in
      quantifying a current year misstatement. SAB 108 becomes effective in fiscal
      2007. Adoption of SAB 108 is not expected 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. The Company
      is currently evaluating the expected effect of FSP EITF 00-19-02 on its
      consolidated financial statements and is currently not yet in a position to
      determine such effects.





F-10


**Affinity
      Media International Corp.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO FINANCIAL STATEMENTS**


**NOTE
      3 - Summary of Significant Accounting Policies, continued**





***Recently
      Issued Accounting Pronouncements*** , ***continued***




In
      February 2007, the FASB issued Statement of Financial Accounting Standard 159
      “The Fair Value Option for Financial Assets and Financial Liabilities -
      Including an amendment of FASB Statement No. 115”, 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 FASB Statement No. 157, Fair Value Measurements. The
      Company is currently evaluating the expected effect of SFAS 159 on its financial
      statements and is currently not yet in a position to determine such
      effects.




***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.





**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
      and
      the 500,000 shares of Common Stock underlying the Warrants to be effective
      and
      to maintain such effectiveness. However, the agreement does not
      provide for liquidating damages in the event that it is unable to cause or
      maintain such effectiveness.




F-11


**Affinity
      Media International Corp.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO 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
      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 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 to be effective and to maintain such effectiveness.
      However, the agreement does not provide for liquidating damages in the
      event that it 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 have agreed that such loans are non-interest bearing. The Company repaid
      these notes in full on June 9, 2006.




F-12


**Affinity
      Media International Corp.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO 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 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
      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 the agreements do not provide for
      liquidating damages in the event that it 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.




**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.




After
      the
      consummation of a Business Combination, the Company expects to pay two of the
      Company’s directors, Mr. Arthur and Mr. Jaffe, $100,000 each in
      director’s fees for services to be provided in their capacity as directors in
      the one year following such Business Combination, should they agree to remain
      on
      the Company’s board of directors and if the Company’s stockholders approve such
      payments. Additionally, as part of their compensation as directors, the Company
      is considering issuing both Mr. Arthur and Mr. Jaffe options to
      purchase shares of the Company’s Common Stock upon consummation of a Business
      Combination and implementation of a stock option plan, should they agree to
      remain on the Company’s board of directors. The Company has not yet entered into
      any formal agreements with regard to these matters. If the Company does enter
      into such formal agreements with Mr. Arthur and Mr. Jaffe, at the time
      that such agreements become operative, Messrs. Arthur and Jaffe may no
      longer qualify as independent directors on the Company’s board of directors, and
      if necessary, the Company would need to locate additional directors to serve
      as
      independent directors on its board of directors.





**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-13


**Affinity
      Media International Corp.**


**(A
      Development Stage Enterprise)**


**NOTES
      TO FINANCIAL STATEMENTS**


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




None.




**Item 8A.
      Controls and Procedures**





The
      Company's President, who is also the acting principal financial officer, and
      the
      Company’s Chief Executive Officer who is the principal executive officer, have
      evaluated the effectiveness of the Company's "disclosure controls and
      procedures," as such term is defined in Rule 13a-15(e) of the Securities
      Exchange Act of 1934, as amended, as of the end of the period covered by this
      Annual Report on Form 10-KSB. The evaluation process, including the inherent
      limitations on the effectiveness of such controls and procedures is more fully
      discussed below. Based upon his evaluation, the acting principal financial
      officer has concluded that the Company's disclosure controls and procedures
      were
      not effective.




These
      controls were deemed not effective on account of a material weakness related
      to
      the lack of the necessary corporate accounting resources. 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. 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. Reliance on these limited resources impairs our ability to
      provide for segregation of duties and the ability to ensure consistently
      complete and accurate financial reporting, as well as disclosure controls and
      procedures. Our Company's President has concluded that the disclosure controls
      and procedures are not effective, given the foregoing material weakness. If
      the
      Company successfully completes a business combination and becomes an operating
      company, and as resources permit, the Company believes it will be able to hire
      a
      Chief Financial Officer who will in turn hire such additional personnel as
      will
      be necessary to assist in the segregation of duties with respect to financial
      reporting and Sarbanes-Oxley Section 404 compliance.




We
      believe that, at the time specified and for the reasons described above, we
      will
      be able to improve our financial reporting and disclosure controls and
      procedures and remedy the material weakness identified above.




Except
      as
      described above, there were no significant changes in our internal controls
      over
      financial reporting that occurred during the quarter ended December 31, 2006
      that have materially affected, or are reasonably likely to materially affect,
      our internal control over financial reporting.





**Item 8B.
      Other Information.**




Not
      applicable





39


**PART
      III**




**Item
      9.    Directors and Executive Officers, Promoters, Control
      Persons and Corporate Governance; Compliance with Section 16 (a) of the Exchange
      Act.**




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
            
            72
            
            Chairman,
                chief executive officer and treasurerHoward
                Cohl
            
            43
            
            President,
                secretary and directorPeter
                Dombrowski
            
            67
            
            Chief
                operating officer and directorMichael
                Arthur
            
            67
            
            DirectorMarc
                E. Jaffe
            
            54
            
            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 Silverback
      Books, Inc., an independent, privately-held publisher of lifestyle and cooking
      books, a position he has held since 2003. 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 both magazines such as *Parade* in the
      United States and *Woman
      Magazine* in Great
      Britain, and many marketers such as 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. Among other initiatives, ACC proposed various
      publishing concepts to its clients. 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. In this capacity, Mr. Engel orchestrated the publication of the
      Helena Rubinstein Library of Beauty. 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: Personna 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.




40




***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 president of Silverback Books, Inc., a San
      Francisco and Los Angeles-based cookbook publisher founded in 1999.
      Mr. Cohl has 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, 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. He
      has headed Michael Arthur & Associates, a consulting, interim management and
      private equity firm specializing in turnarounds, restructurings, mergers and
      acquisitions, business development and strategic planning since 1990. As a
      firm
      principal, Mr. Arthur served as interim chief executive officer and a board
      member during the turnaround and subsequent sale of California Federal Bank;
      was
      advisor to the Franchisee Committee of Long John Silver’s Restaurants in
      bankruptcy; was advisor to the Equity Committee during the turnaround of Sizzler
      Restaurants; and served as CEO to restructure and revitalize a national sales
      promotion and fulfillment firm whose clients included Sam’s Club and K-Mart.
      Mr. Arthur currently serves as a board member, audit committee chairman and
“financial expert” for New World Restaurant Group, Inc., the parent company of
      four popular bagel chains (Einstein Bros. Bagels, Noah’s New York Bagels,
      Manhattan Bagel, and Chesapeake Bagel Bakery). Prior to 1990, Mr. Arthur
      served as executive vice president and chief financial officer of Sizzler
      Restaurants; executive vice president and chief financial officer of Pinkerton
      Security; vice president of marketing for Mattel Toys; vice president at D’Arcy,
      Masius, Benton & Bowles Advertising and as assistant and associate brand
      manager at Procter and Gamble. Mr. Arthur attended Johns Hopkins University
      and the Wharton Graduate School of Business.




41


***Marc
      E. Jaffe*** ***.***  Mr. Jaffe
      has been one of our directors since inception in August 2005. He has more than
      26 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, he has been the Chief Executive Officer of PixFusion LLC, the
      leading publisher of children's audio and photo-personalized animated videos
      incorporating high profile brand characters such as Dora the Explorer,
      Spider-Man and Care Bears. From April 2004 to May 2006, Mr Jaffe has 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.




These
      individuals will play a key role in identifying and evaluating prospective
      acquisition candidates, selecting the target business, and structuring,
      negotiating and consummating its acquisition. None of these individuals has
      been
      a principal of or affiliated with a public company or blank check company that
      executed a business plan similar to our business plan and none of these
      individuals is currently affiliated with such an entity. However, we believe
      that the skills and expertise of these individuals, their collective access
      to
      acquisition opportunities and ideas, their contacts, and their transaction
      expertise should enable them to identify and effect an acquisition although
      we
      cannot assure you that they will, in fact, be able to do so.




In
      addition, for a period of no less than two years after the date of the
      prospectus, we have agreed to engage a designee of Maxim Group LLC as an advisor
      to our board of directors, where such advisor shall attend meetings of the
      board, receive all notices and other correspondence and communications sent
      by
      us to members of our board of directors. In addition, such advisor shall be
      entitled to receive, as his/her sole compensation, reimbursement for all costs
      incurred in attending such meetings. As of December 31, 2006, Maxim has not
      appointed such designee.




42




**Corporate
      Governance**




Our
      board
      of directors intends to establish an audit committee and a compensation
      committee upon consummation of a business combination. At that time our board
      of
      directors intends to adopt charters for these committees.




**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.




**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. 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.





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




Section
      16(a) of the Securities and Exchange Act of 1934, as amended, requires Affinity
      directors, officers and persons owning more than 10% of Affinity’s common stock
      to file reports of ownership and changes of ownership with the Securities and
      Exchange Commission. Based on its review of the copies of such reports furnished
      to Affinity, or representations from certain reporting persons that no other
      reports were required, Affinity believes that all applicable filing requirements
      were complied with during the fiscal year dated December 31, 2006.




**Item
      10. 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.




43





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
            
            2006
            
            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




**Employment
      Agreement**




As
      of
      December 31, 2006, the Company was not a party to any employment
      agreements.


******


**Fiscal
      Year 2006 Stock Option Awards**


**


The
      Company did not award any stock options in 2006.




44


****** **Compensation
      Actions in 2007**




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





**Performance
      Graph**





We
      have
      not included the performance graph index as we became a reporting company on
      June 5, 2006. We do not expect that our securities will trade at prices much
      different than the amounts paid for such securities in our initial public
      offering until such time that we complete a business combination, if we are
      able
      to do so.





45


**Item
      11. 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 30, 2007, 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(2)**
            
            **Percentage
                of Class (3)******Peter
                H. Engel
            
            
            480,834
            
            
            11.6
            %Howard
                Cohl
            
            
            266,250
            
            
            6.4
            %Peter
                Dombrowski
            
            
            45,000
            
            
            1.1
            %Michael
                Arthur
            
            
            13,750
            
            
            *
            %Marc
                E. Jaffe
            
            
            13,750
            
            
            *
            %F
                Sapling, LLC (4)
            
            
            266,909
            
            
            6.4
            %Fir
                Tree, Inc. (5)
            
            
            367,500
            
            
            8.8
            %Baupost
                Group LLC (6)
            
            
            402,000
            
            
            9.7
            %Millenco
                LLC (7)
            
            
            280,100
            
            
            6.7
            %All
                directors and executive officers as a group (fiveindividuals)
                (8)
            
            
            819,584
            
            
            19.7
            %







*
      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.





(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/A filed by Fir Tree,
      Inc. on February 14, 2007. The address of Sapling LLC is 535 Fifth Avenue,
      31st
      Floor, New York, New York 10017. Fir Tree, Inc. is the investment manager for
      Sapling LLC. Jeffrey Tannenbaum is the President of Fir Tree, Inc. and has
      the
      power to vote or dispose of the securities held by this entity.





(5)
      Based
      on information contained in a Statement on Schedule 13G/A filed by Fir Tree,
      Inc. on February 14, 2007. Includes 100,591 shares of common stock beneficially
      held by Fir Tree Recovery Master Fund, LP and 266,909 shares of common stock
      beneficially held by Sapling, LLC, each of which Fir Tree, Inc. is the
      investment manager. The address of Fir Tree Inc. is 535 Fifth Avenue, 31st
      Floor, New York, New York 10017.  Jeffrey
      Tannenbaum is the President of Fir Tree, Inc.  and
      has
      the power to vote or dispose of the securities held by these
      entities.




46





(6)
      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.





(7)
      Based
      on information contained in a Statement on Schedule 13G/A filed by Millenco
      LLC
      on February 7, 2007. 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




(8)
      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.




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.




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.





47


**Item
      12. 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.




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.




48




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.




In
      addition to the above, after the consummation of a business combination, we
      expect to pay two of our directors, Messrs. Arthur and Jaffe, $100,000 each
      in director’s fees for services to be provided in their capacity as directors in
      the one year following such business combination, should they agree to remain
      on
      our board of directors and if our stockholders approve such payments.
      Additionally, as part of their compensation as directors, we have discussed
      issuing both Messrs. Arthur and Jaffe options to purchase shares of our
      common stock upon consummation of a business combination and implementation
      of a
      stock option plan, should they agree to remain on our board of directors. We
      have not yet entered into any formal agreements with regard to these matters.
      If
      we do enter into formal agreements, at the time such agreements become operative
      Messrs. Arthur and Jaffe may no longer qualify as independent directors
      and, if necessary, we would need to locate additional directors to serve as
      independent directors on our board of directors.




49




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. After the
      consummation of a business combination, we expect to pay Messrs. Arthur and
      Jaffe $100,000 each in director’s fees for services to be provided in their
      capacity as directors in the one year following such business combination,
      should they agree to remain on our board of directors and if our stockholders
      approve such payments. Additionally, as part of their compensation as directors,
      we have discussed issuing both Messrs. Arthur and Jaffe options to purchase
      shares of our common stock upon consummation of a business combination and
      implementation of a stock option plan, should they agree to remain on our board
      of directors. We have not yet entered into any formal agreements with regard
      to
      these matters. If we do enter into formal agreements, at the time such
      agreements become operative, Messrs. Arthur and Jaffe may no longer qualify
      as independent directors and, if necessary, we would need to locate additional
      directors to serve as our independent directors.




50


**Item
      13. 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 theRegistrant.
                (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)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.




51




(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.




*Filed
      herewith




52




**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 year ended December 31, 2006 and the period August 12, 2005 (Inception)
      through December 31, 2005, the fees for our principal accountant were $92,500
      and $60,000, respectively, in connection with our initial public offering,
      our
      audits (financial statements included in the Form S-1 and Form 10KSB and Current
      Report on Form 8-K filed with the Securities and Exchange Commission on June
      9,
      2006), and the reviews of our Quarterly Report on Form 10-QSB for the quarters
      ended June 30, 2006 and September 30, 2006.





**Audit
      Related Fees**





During
      the year ended December 31, 2006 and the period from August 12, 2005 (inception)
      through December 31, 2005, 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 year ended December 31, 2006 and the period from August 12, 2005 (inception)
      through December 31, 2005, our principal accountant rendered services to us
      for
      tax compliance, tax advice and tax planning of $3,500.00
      and $0.00 respectively.





**All
      Other Fees**





During
      the year ended December 31, 2006 and the period from August 12, 2005 (inception)
      through December 31, 2005, 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 in a meeting held on April 10, 2007.





53




**SIGNATURE**


In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      Registrant caused this Report to be signed on its behalf by the undersigned,
      thereunto duly authorized.


Dated:
              April 12, 2007
            Affinity Media International Corp.By:
            /s/ Peter
              H.
              EngelPeter
                H. Engel
              Chairman,
                Chief Executive Officer and Treasurer
              (principal
                executive officer)





Pursuant
      to the requirements of the Securities Act of 1933, this Registration Statement
      has been signed by the following persons in the capacities and on the dates
      indicated.




**Name**
            
            **Position**
            
            **Date**/s/
                Peter H. Engel
            
            Chairman,
                chief executive officer and treasurer
              (Principal
                Executive Officer)
            
            April
                12, 2007Peter
                H. Engel/s/
                Howard Cohl
            
            President,
                secretary and director
              (Principal
                Financial & Accounting Officer)
            
            April
                12, 2007Howard
                Cohl/s/
                Peter Dombrowski
            
            Chief
                operating officer and director
            
            April
                12, 2007Peter
                Dombrowski/s/
                Michael Arthur
            
            Director
            
            April
                12, 2007Michael
                Arthur/s/
                Marc E. Jaffe
            
            Director
            
            April
                12, 2007Marc
                E. Jaffe




54