**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**


**__________________**





**FORM
      10-Q**





(Mark
      One)





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





**For
      The Quarterly Period Ended March 31, 2008**





** ̈**
            **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 Incorporation or Organization)
            
            (I.R.S. Employer Identification No.)**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 whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      definitions of "large accelerated filer”, “accelerated filer” and “smaller
      reporting company" in Rule 12b-2 of the Exchange Act. (Check one):





Large
      accelerated filer o Accelerated
      filer o Non-accelerated
      filer o Smaller
      reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).    Yes x No o





The
      number of shares outstanding of each of the issuer's classes of common equity:
      As of May 14, 2008: 4,162,500 shares of common stock, par value $.0001 per
      share, were issued and outstanding.








**AFFINITY
      MEDIA INTERNATIONAL CORP**


**FORM
      10-Q**


**INDEX**





PART
                IFINANCIAL
                INFORMATIONITEM
                1. Financial Statements.Condensed
                Consolidated Balance Sheets as of March 31, 2008 (Unaudited) and
                December
                31, 2007
            1Condensed
                Consolidated Statements of Operations for the Three Months Ended
                March 31,
                2008, 2007 and for the Period from August 12, 2005 (Inception) through
                March 31, 2008 (Unaudited)
            2Condensed
                Consolidated Statements of Cash Flows for the Three Months Ended
                March 31,
                2008, 2007 and for the period from August 12, 2005 (Inception) through
                March 31, 2008 (Unaudited)
            3Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            5ITEM
                2. Management’s Discussion and Analysis of Financial Condition and Results
                of Operations.
            18ITEM
                3. Quantitative and Qualitative Disclosures About Market
                Risk.
            23ITEM
                4T.Controls and Procedures.
            23PART
                II
            24OTHER
                INFORMATIONITEM
                1. Legal Proceedings.
            24ITEM
                1A.Risk Factors.
            24ITEM
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds.
            24ITEM
                3. Defaults Upon Senior Securities.
            24ITEM
                4. Submission of Matters to a Vote of Security Holders.
            24ITEM
                5. Other Information.
            24ITEM
                6. Exhibits.
            25Signatures.
            26







Part
        I -
        FINANCIAL INFORMATION
 
 Item
        1.
        Financial Statements
 
 **Affinity
        Media International Corp. and Subsidiary**
 **(A
        Development Stage Enterprise)**
 **CONDENSED
        CONSOLIDATED BALANCE SHEETS**
 
 **As
                  of****March 31, 2008**
              
              **December 31, 2007****(unaudited)****ASSETS**CURRENT
                  ASSETSCash
                  and cash equivalents
              
              $
              38,767
              
              $
              43,655Cash
                  and cash equivalents held in trust
              
              
              -
              
              
              88,987Interest
                  receivable
              
              
              -
              
              
              78,862Prepaid
                  expenses
              
              
              11,550
              
              
              13,393Income
                  taxes receivable
              
              
              35,599
              
              
              -Total
                  Current Assets
              
              
              85,916
              
              
              224,897Cash
                  and cash equivalents held in trust
              
              
              18,075,283
              
              
              18,131,250Cash
                  and cash equivalents held in trust - restricted
              
              
              843,750
              
              
              843,750Interest
                  receivable
              
              
              54,742
              
              
              -Deferred
                  acquisition costs
              
              
              612,539
              
              
              426,598Total
                  Assets
              
              $
              19,672,230
              
              $
              19,626,495LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCURRENT
                  LIABILITIESAccounts
                  payable and accrued expenses
              
              $
              544,069
              
              $
              351,727Total
                  Current Liabilities
              
              
              544,069
              
              
              351,727Other
                  liabilities (Note 1)
              
              
              843,750
              
              
              843,750Total
                  Liabilities
              
              
              1,387,819
              
              
              1,195,477Common
                  stock subject to possible conversion, 862,097 shares at conversion
                  value
              
              
              4,959,226
              
              
              4,959,226COMMITMENTSSTOCKHOLDERS'
                  EQUITYPreferred
                  stock - $0.0001 par value; 1,000,000 shares authorized; none issued
                  or
                  outstanding
              
              
              -
              
              
              -Common
                  stock - $0.0001 par value; 15,000,000 shares authorized; 4,162,500
                  shares
                  issued and outstanding, (which includes 862,097 shares subject
                  to possible
                  conversion)
              
              
              330
              
              
              330Additional
                  paid-in capital
              
              
              13,367,304
              
              
              13,367,304(Deficit)
                  earnings accumulated during the development stage
              
              
              (42,449
              )
              
              104,158Total
                  Stockholders’ Equity
              
              
              13,325,185
              
              
              13,471,792Total
                  Liabilities and Stockholders’ Equity
              
              $
              19,672,230
              
              $
              19,626,495
  *The
          accompanying notes are an integral part of these condensed consolidated
          financial statements.*
  1
 
 **Affinity
        Media International Corp. and Subsidiary**
 **(A
        Development Stage Enterprise)**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(Unaudited)**
 
 **For the Three Months**
                **Ended March 31, 2008**
              
              **For the Three Months**
                **Ended March 31, 2007**
              
              **For the period from**
                **August 12, 2005**
                **(Inception) through**
                **March 31, 2008**OPERATING
                  EXPENSESAdministrative
                  cost allowance - related party
              
              $
              22,500
              
              $
              22,500
              
              $
              165,000Marketing,
                  general and administrative expenses
              
              
              357,941
              
              
              207,452
              
              
              1,581,816Total
                  operating expenses
              
              
              380,441
              
              
              229,952
              
              
              1,746,816OTHER
                  INCOMEInterest
                  income
              
              
              185,981
              
              
              246,714
              
              
              1,724,297Total
                  other income
              
              
              185,981
              
              
              246,714
              
              
              1,724,297(Loss)
                  income before income taxes
              
              
              (194,460
              )
              
              16,762
              
              
              (22,519
              )(Benefit)
                  provision for income taxes
              
              
              (47,853
              )
              
              6,705
              
              
              19,930NET
                  LOSS (INCOME)
              
              $
              (146,607
              )
              $
              10,057
              
              $
              (42,449
              )Loss
                  per share:Basic
                  and Diluted
              
              $
              (0.04
              )
              $
              -Weighted
                  average shares outstanding:Basic
                  and Diluted
              
              
              3,300,403
              
              
              3,300,403
  *The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*
  2
 
 **Affinity
        Media International Corp. and Subsidiary**
 **(A
        Development Stage Enterprise)**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS**
 **(Unaudited)**
 
 **For the Three
                  Months Ended**
                **March 31, 2008**
              
              **For the Three
                  Months Ended**
                **March 31, 2007**
              
              **For the period**
                **from August 12,
                  2005 (Inception) through March 31,
                  2008**Cash
                  Flows From Operating ActivitiesNet
                  (loss) income
              
              $
              (146,607
              )
              $
              10,057
              
              $
              (42,449
              )Changes
                  in operating assets and liabilities:Prepaid
                  expenses
              
              
              1,843
              
              
              6,740
              
              
              (11,550
              )Income
                  tax refund receivable
              
              
              (35,599
              )
              
              -
              
              
              (35,599
              )Interest
                  receivable
              
              
              24,120
              
              
              (484
              )
              
              (54,742
              )Accounts
                  payable and accrued expenses
              
              
              127,859
              
              
              51,013
              
              
              252,380Net
                  cash (used in) provided by operating activities
              
              
              (28,384
              )
              
              67,326
              
              
              108,040Cash
                  Flows From Investing ActivitiesPayments
                  for deferred acquisition costs
              
              
              (121,458
              )
              
              -
              
              
              (320,850
              )Cash
                  and cash equivalents held in trust fund
              
              
              144,954
              
              
              (120,915
              )
              
              (18,075,283
              )Cash
                  and cash equivalents held in trust fund - restricted
              
              
              -
              
              
              -
              
              
              (843,750
              )Net
                  cash provided by (used in) investing activities
              
              
              23,496
              
              
              (120,915
              )
              
              (19,239,883
              )Cash
                  Flows From Financing ActivitiesProceeds
                  from the sale of common stock
              
              
              -
              
              
              -
              
              
              25,000Proceeds
                  from notes payable-related party
              
              
              -
              
              
              -
              
              
              235,000Net
                  proceeds of private offering
              
              
              -
              
              
              -
              
              
              1,365,000Gross
                  proceeds of public offering
              
              
              -
              
              
              -
              
              
              18,975,000Payments
                  of costs of public and private offering and deferred offering
                  costs
              
              
              -
              
              
              -
              
              
              (1,134,490
              )Repayment
                  of advance from founding stockholder
              
              
              -
              
              
              -
              
              
              (60,000
              )Repayment
                  of notes payable - related party
              
              
              -
              
              
              -
              
              
              (235,000
              )Proceeds
                  from issuance of option
              
              
              -
              
              
              -
              
              
              100Net
                  cash provided by financing activities
              
              
              -
              
              
              -
              
              
              19,170,610Net
                  Increase (Decrease) in Cash and Cash Equivalents
              
              
              (4,888
              )
              
              (53,589
              )
              
              38,767Cash
                  and Cash Equivalents - Beginning of the Period
              
              
              43,655
              
              
              88,877
              
              
              -Cash
                  and Cash Equivalents - End of the Period
              
              $
              38,767
              
              $
              35,288
              
              $
              38,767
  *The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*
  3
 
 **Affinity
        Media International Corp. and Subsidiary**
 **(A
        Development Stage Enterprise)**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF CASH FLOWS, continued**
 **(Unaudited)**
 
 
 **For the Three
                  Months Ended**
                **March 31, 2008**
              
              **For the Three
                  Months Ended**
                **March 31, 2007**
              
              **For the period from
                  August 12, 2005 (Inception) through**
                **March 31, 2008****SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION**Cash
                  paid during the period for:Interest
              
              $
              -
              
              $
              -
              
              $
              -Income
                  taxes
              
              $
              -
              
              $
              30,050
              
              $
              49,489Non-Cash
                  Financing Activities:Deferred
                  offering cost advanced from founding stockholders
              
              $
              -
              
              $
              -
              
              $
              60,000Accrual
                  of other current liability for offering costs
              
              $
              -
              
              $
              -
              
              $
              843,750Deferred
                  acquisition costs accrued and deferred
              
              $
              64,483
              
              $
              -
              
              $
              291,689
  *The
        accompanying notes are an integral part of these condensed consolidated
        financial statements.*
  4
  
 
 Affinity
        Media International Corp. and Subsidiary
 (A
        Development Stage Enterprise)
 NOTES
        TO
        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 
 **NOTE
        1 -** **Organization,
        Business and** **Operations**
 
 Affinity
        Media International Corp. (a development stage enterprise) (“Affinity”) was
        incorporated in Delaware on August 12, 2005 as a blank check company whose
        objective is to acquire an operating business or businesses in the publishing
        industry located in the United States.
 
 On
        July
        23, 2007, Affinity formed Affinity Acquisition Subsidiary Corp. (“Affinity
        Subsidiary”), a Delaware Corporation, for the purpose of effecting a business
        combination with Hotels at Home, Inc. Affinity and Affinity Subsidiary are
        collectively referred to as the “Company”. See Note 9 – Merger Agreement
        for a discussion of a definitive agreement and plan of merger entered into
        on
        July 24, 2007 and amended on January 14, 2008. See Note 10 – Subsequent
        Event, Second Amendment to the Merger Agreement, dated May 7, 2008, for a
        discussion of the definitive agreement and plan of merger.
  At
        March
        31, 2008, the Company had not yet commenced any operations. All activity
        through
        March 31, 2008 relates to the Company’s formation, completion of the Public
        Offering described below and the identification and qualification of a suitable
        Business Combination, as defined below. Affinity has selected December 31
        as its
        year end.
  The
        registration statement of the Company’s initial public offering (“Public
        Offering”) was declared effective on June 5, 2006. The Company consummated its
        Public Offering on June 9, 2006 and received net proceeds of approximately
        $14,660,000, after reserving $720,000 for contingent underwriting compensation
        which is included in other liabilities. Prior to the Public Offering, the
        Company consummated a private placement (“Private Placement”) and received net
        proceeds of $1,365,000. Both the Public Offering and the Private Placement
        are
        discussed in Note 5. On June 29, 2006, the Company consummated the funding
        of
        the Underwriter’s over-allotment option from the Public Offering, receiving net
        proceeds of approximately $2,277,000, after reserving $123,750 for contingent
        underwriting compensation which is included in other liabilities.
 
 Substantially,
        all of the net proceeds of the Public Offering and the Private Placement
        are
        intended to be applied toward consummating a business combination with an
        operating business or businesses in the publishing industry (“Business
        Combination”). Pursuant to the Company’s amended and restated Certificate of
        Incorporation, the Company’s initial Business Combination must be with a
        business or businesses having a collective fair market value, as determined
        by
        the board of directors of the Company, equal to at least 80% of the Company’s
        net assets at the time of such acquisition. Furthermore, there is no assurance
        that the Company will be able to successfully affect a Business Combination.
        An
        amount of $18,900,750 of the net proceeds from the Public Offering and Private
        Placement, was placed in a trust account (“Trust Account”) and invested in
        government securities or certain money market funds to be held in the trust
        account until the earlier of the consummation of the Company’s first Business
        Combination or the Company’s dissolution and liquidation of the Trust Account to
        the Company’s Public Stockholders (as defined below) as part of any plan of
        dissolution and liquidation approved by a majority of the Company’s
        stockholders. The placing of funds in the Trust Fund may not protect those
        funds
        from third party claims against the Company. Although the Company will seek
        to
        have all vendors, prospective target businesses or other entities it engages,
        execute agreements with the Company waiving any right, title, interest or
        claim
        of any kind in or to any monies held in the Trust Fund, there is no guarantee
        that they will execute such agreements. The Company's Chairman and certain
        of
        its officers have severally agreed that they will be personally liable to
        ensure
        that the proceeds in the Trust Fund are not reduced by the claims of target
        businesses or vendors or other entities that are owed money by the Company
        for
        services rendered or contracted for or products sold to the Company. However,
        there can be no assurance that the Chairman and certain of the Company’s
        officers will be able to satisfy those obligations. The remaining proceeds,
        not
        held in trust, may be used to pay for business, legal and accounting expenses,
        expenses which may be incurred related to the investigation and selection
        of a
        target business, the negotiation of an agreement to acquire a target business,
        and for continuing general and administrative expenses.
  5
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        1 -** **Organization,
        Business and** **Operations,
        continued**
 
 The
        Company, after signing a definitive agreement for the acquisition of a target
        business or businesses, will submit such transaction for stockholder approval.
        All of the Company’s stockholders prior to the Public Offering and the Private
        Placement, including all of the officers and directors of the Company (“Founding
        Stockholders”), have agreed to vote their founding shares of Common Stock, par
        value $.0001 (“Common Stock”) consisting of 750,000 shares owned at March 31,
        2008, in accordance with the vote of the majority interest of the Public
        Stockholders (see below) of the Company with respect to any Business
        Combination. One of the Founding Stockholders and two non-affiliated accredited
        investors have agreed that the shares of Common Stock they acquired through
        the
        Private Placement prior to the Public Offering, consisting of 250,000 shares
        of
        Common Stock and any other shares acquired in the aftermarket, will be voted
        in
        favor of a Business Combination approved by the Board. The Company will proceed
        with a Business Combination only if a majority of the shares of Common Stock
        included in the units sold in the Public Offering and the Private Placement
        and
        cast at the meeting are voted in favor of the Business Combination, and Public
        Stockholders (see below) owning 27.26% or a lesser amount of the shares issued
        in the Public Offering exercise their conversion rights, as described below,
        and
        provided further, that the board of directors and officers of the Company
        may,
        in the exercise of their business judgment, stipulate any percentage lower
        than
        27.26% as a condition to the closing of a Business Combination. After
        consummation of a Business Combination, these voting safeguards will no longer
        be applicable.
 
 The
        Company’s shares of Common Stock issued in connection with the Public Offering
        or acquired in the aftermarket, excluding shares held by the Company’s officers
        and directors, their nominees or designees, shares held by the two
        non-affiliated accredited investors, all of which were acquired in the Private
        Placement and also excluding the shares acquired prior to the Public Offering
        and the Private Placement, represent the shares held by the public stockholders
        (“Public Stockholders”). Pursuant to the Company’s amended and restated
        Certificate of Incorporation, with respect to a Business Combination which
        is
        approved and consummated, any Public Stockholder who voted against the Business
        Combination may demand that the Company convert his or her shares into cash.
        The
        per share conversion price is $6.00, which is equal to the original purchase
        price of the Units issued in the Public Offering. Accordingly, Public
        Stockholders holding up to 27.26% of the number of shares owned by all Public
        Stockholders may seek conversion of their shares in the event of a Business
        Combination.
  The
        Company’s amended and restated certificate of incorporation (“Certificate of
        Incorporation”) filed on May 23, 2006 provides for mandatory liquidation of the
        Trust Account to the Company’s Public Stockholders in connection with a
        dissolution approved by a majority of the Company’s stockholders in the event
        that the Company does not consummate a Business Combination within 18 months
        from the date of the consummation of the Public Offering, or 24 months from
        the
        consummation of the Public Offering upon the satisfaction of certain extension
        criteria (which has been satisfied). This condition raises substantial doubt
        as
        to the Company’s ability to continue as a going concern (See Note 3 for
        managements’ plans). All of the Company’s Founding Stockholders and the
        stockholders who acquired shares of Common Stock in the Private Placement
        have
        agreed if the Company does not consummate a business combination they will
        vote
        such shares and any shares of Common Stock acquired in the Public Offering
        or in
        the aftermarket in favor of a plan of dissolution and liquidation. In the
        event
        of the liquidation of the Trust Account in connection with the Company’s
        dissolution approved by a majority of the Company’s stockholders, the per share
        value of the residual assets remaining available for distribution (including
        Trust Fund assets) is expected to be equal to the initial public offering
        price
        of the units in the Public Offering (assuming no value is attributed to the
        Warrants contained in the Units offered in the Public Offering discussed
        in
        Note 5).
  6
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        1 -** **Organization,
        Business and** **Operations,
        continued**
 
 Commencing
        July 26, 2006, the Company was informed by the Underwriter of the Public
        Offering that the holders of the Company’s Units can separately trade the common
        stock and Warrants included in such units and that trading in the units will
        continue. The Common Stock, Warrants and Units are quoted on the
        Over-The-Counter Bulletin Board under the symbols AFMI, AFMIW and AFMIU,
        respectively.
 
 **NOTE
        2 - Basis of Presentation**
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared by the Company in accordance with accounting principles generally
        accepted in the United States of America for interim financial information
        and
        the instructions to Form 10-Q. In the opinion of the Company’s management, such
        statements include all adjustments consisting of normal and recurring
        adjustments, necessary for the fair presentation of the Company’s financial
        position as of March 31, 2008 and the results of operations and cash flows
        for
        the periods indicated. Accordingly, they do not include all of the information
        and disclosures required for annual financial statements. Certain information
        and disclosures normally included in financial statements prepared in accordance
        with United States generally accepted accounting principles (“GAAP”) have been
        condensed or omitted pursuant to such rules and regulations. The accounting
        policies used in preparing these unaudited condensed consolidated financial
        statements are materially consistent with those described in the audited
        December 31, 2007 financial statements. These financial statements should
        be
        read in conjunction with the financial statements and related footnotes included
        in the Company’s audited financial statements filed on Form 10-K as of and for
        the year ended December 31, 2007, and for the period from August 12, 2005
        (Inception) through December 31, 2007.
 
 The
        results of operations for the three months ended March 31, 2008 are not
        necessarily indicative of the results to be expected for the year ended December
        31, 2008 or any other interim period.
 
 **NOTE
        3 -** **Going
        Concern and Management Plans**
 
 The
        Company’s Certificate of Incorporation provides for mandatory liquidation of the
        Company in the event that the Company does not consummate a Business Combination
        within 18 months from the date of the consummation of the Public Offering
        (June
        9, 2006), or 24 months from the consummation of the Offering upon the
        satisfaction of certain extension criteria (which have been satisfied). This
        condition raises substantial doubt as to the Company’s ability to continue as a
        going concern.
 
 There
        can
        be no assurance that the Business Combination discussed in Note 9 and Note
        10
        will be consummated. Should this Business Combination not be consummated
        by June
        9, 2008, the Company would be required to return the funds held in trust
        to
        holders of shares issued in the Public Offering described in Note 5, as a
        mandatory liquidating distribution, pursuant to a plan of dissolution and
        liquidation approved by the stockholders. See Note 9 for a discussion of
        the
        Company’s Agreement and Plan of Merger with Hotels and Note 10 for a discussion
        of the May 7, 2008 Second Amendment of such agreement.
  **NOTE
        4 -** **Summary
        of Significant Accounting Policies**
 
 ***Concentrations
        of Credit Risk***–***Cash and Cash
        Equivalents***
  The
        Company maintains its cash and cash equivalents with various financial
        institutions, which may exceed insured limits throughout the period. At March
        31, 2008 the Company had cash balances in excess of the maximum amount insured.
        The Company mitigates its risk by depositing its cash and cash equivalents
        with
        major financial institutions.
  7
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        4 -** **Summary
        of Significant Accounting Policies, continued**
 
 ***Income
        Taxes***
 
 The
        Company recorded a (benefit) provision for income taxes of ($47,853) and
        $6,705
        for the three months ended March 31, 2008 and 2007, respectively. At March
        31,
        2008, the Company has $35,599 of federal income taxes receivable, on account
        of
        the federal net operating loss (“NOL”) carryback and $6,040 of state income tax
        payable included in accounts payable and accrued expenses in the accompanying
        financial statements. At December 31, 2007, accrued income taxes of $18,294
        have
        been included in accounts payable and accrued expenses in the accompanying
        financial statements.
 
 Deferred
        income taxes are provided for the differences between the bases of assets
        and
        liabilities for financial reporting and income tax purposes. A valuation
        allowance is established when necessary to reduce deferred tax assets to
        the
        amount expected to be realized.
 
 The
        effective tax rate for the three months ended March 31, 2008 differs from
        the
        statutory rate of 34% due primarily to the affects of California state income
        taxes, the increase in the valuation allowance for the state net operating
        loss
        carryover, the effect of graduated income tax rates, permanent differences
        and
        other differences. The effective tax rate for the three months ended March
        31,
        2007 differs from the statutory rate of 34% due primarily to the effects
        of
        California state income taxes.
 
 Effective
        January 1, 2007, the Company adopted the provisions of Financial Accounting
        Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
        clarifies the accounting for uncertainty in income taxes recognized in the
        Company’s financial statements in accordance with FASB Statement 109,
“Accounting for Income Taxes”, and prescribes a recognition threshold and
        measurement process for financial statement recognition and measurement of
        a tax
        position taken or expected to be taken in a tax return. FIN 48 also provides
        guidance on derecognition, classification, interest and penalties, accounting
        in
        interim periods, disclosure and transition.
 
 Management
        has evaluated and concluded that there were no significant uncertain tax
        positions requiring recognition in the Company’s financial statements. The
        evaluation was performed for the tax period August 12 (inception) to December
        31, 2005 and for the years ended December 31, 2006 and 2007, the tax years
        which
        remain subject to examination for Federal and California State purposes as
        of
        March 31, 2008. The Company believes that its income tax positions and
        deductions would be sustained on audit and does not anticipate any adjustments
        that would result in a material change to its financial position.
 
 The
        Company’s policy is to classify assessments, if any, for tax related interest as
        interest expenses and penalties as marketing general and administrative
        expenses. Management is currently unaware of any issues under review that
        could
        result in significant payments, accruals or material deviations from its
        position.
 
 ***Deferred
        Acquisition Costs***
 
 In
        accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141 -
        Business Combinations (“SFAS 141”), the Company records costs incurred for
        accounting, legal, investigations and appraisals related to the acquisitions
        of
        targeted businesses as deferred acquisition costs. The disposition of these
        costs will be determined upon consummation of the related acquisition. Through
        March 31, 2008, the Company has recorded $612,539 of such deferred acquisition
        costs in connection with the proposed business combination described more
        fully
        in Note 9.
  8
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        4 - Summary of Significant Accounting Policies, continued**
  ***Earnings
        (Loss) Per Share***
 
 The
        Company follows the provisions of SFAS No. 128, “Earnings Per Share” (“SFAS No.
        128”). In accordance with SFAS No. 128, earnings per common share amounts
        (“Basic EPS”) are computed by dividing earnings (loss) available to common
        shareholders by the weighted average number of common shares outstanding
        for the
        period. Earnings per common share amounts, assuming dilution (“Diluted EPS”),
        gives effect to dilutive options, warrants, and other potential common stock
        outstanding during the period. SFAS No. 128 requires the presentation of
        both
        Basic EPS and Diluted EPS on the face of the statements of operations. Common
        shares subject to possible conversion totaling up to 862,097 have been excluded
        from the calculation of Basic EPS since such shares if redeemed, only
        participate in their pro-rata share of the trust fund up to a maximum amount
        of
        $6.00 per share. The exercise of 6,825,000 outstanding Warrants issued in
        connection with the Public Offering and the Private Placement described in
        Note 5 are contingent upon the occurrence of future events, and therefore,
        are not included in the calculation of diluted earnings per share in accordance
        with SFAS No. 128. The effect of the 427,000 Incentive Warrants (not yet
        issued), as described in Note 5 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 5 have not been considered in the
        diluted earnings per share calculation since the Unit Purchase Option is
        contingently exercisable.
 
 ***Use
        of Estimates***
  The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities and disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of expenses during the
        reporting period. Actual results could differ from those estimates.
 
 ***Principles
        of Consolidation***
  The
        consolidated financial statements of the Company include the accounts of
        Affinity and its wholly owned subsidiary, Affinity
        Subsidiary. All
        material intercompany accounts and transactions are eliminated in consolidation.
 
 ***Recent
        Accounting Pronouncements***
  Effective January
        1, 2008, the Company adopted the provisions of Statement of Financial Accounting
        Standards No. 157 ("SFAS 157"), “Fair Value Measurements” for financial assets
        and liabilities, as well as any other assets and liabilities that are carried
        at
        fair value on a recurring basis in the financial statements. SFAS 157 defines
        fair value, establishes a framework for measuring fair value and expands
        disclosures about fair value measurements. SFAS 157 applies under other
        accounting pronouncements that require or permit fair value measurements,
        the
        Financial Accounting Standards Board ("FASB") having previously concluded
        in
        those accounting pronouncements that fair value is the relevant measurement
        attribute. Accordingly, SFAS 157 does not require any new fair value
        measurements. There was no impact to the Company’s condensed consolidated
        financial statements upon the adoption of SFAS 157. On February 12, 2008,
        the
        FASB issued FASB staff position No. FAS 157-2, "Effective Date of FASB Statement
        157" which defers the provisions of SFAS 157 for nonfinancial assets and
        liabilities to the first fiscal period beginning after November 15, 2008. 
The Company is required to adopt SFAS 157 for nonfinancial assets and
        liabilities in the first quarter of fiscal 2009 .
        Currently, the Company does not have any non-financial assets or liabilities
        that are required to be measured at fair value on a recurring basis.
  9
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 
 **NOTE
        4 - Summary of Significant Accounting Policies, continued**
 
 ***Recent
        Accounting Pronouncements, continued***
 
 Effective
        January 1, 2008, the Company adopted Statement of Financial Accounting Standards
        No. 159 ("SFAS 159"), “The Fair Value Option for Financial Assets and Financial
        Liabilities.” SFAS 159 permits entities to choose to measure many financial
        instruments and certain other items at fair value. The Company did not elect
        the
        fair value reporting option for any assets and liabilities not previously
        recorded at fair value and accordingly, the adoption of SFAS 159 did not
        have an
        impact on the Company’s condensed consolidated financial statements.
 
 ***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
        5 - Public Offering and Private Placement**
  On
        June
        9, 2006, the Company sold to the public 2,750,000 units (“Units”) at $6.00 per
        Unit, for a total of $16,500,000. On June 29, 2006, 412,500 Units were sold
        pursuant to the underwriters’ over-allotment option at $6.00 per unit for a
        total of $2,475,000. Each Unit consisted of one share of the Company’s Common
        Stock and two Redeemable Common Stock Purchase Warrants (“Warrants”). Each
        Warrant will entitle the holder to purchase from the Company one share of
        Common
        Stock at an exercise price of $5.00. Each Warrant shall become exercisable
        commencing upon the later of the completion of a Business Combination with
        a
        target business or one year from the effective date of the Public Offering
        and
        shall expire four years from the effective date of the Public Offering. The
        Warrants will be redeemable at the Company’s option, in whole and not in part,
        at a price of $.01 per Warrant upon thirty (30) days prior written notice
        at any
        time after the Warrants become exercisable, only in the event that the average
        closing sales price of the Common Stock equals or exceeds $8.50 per share
        for
        any twenty (20) trading days within a thirty (30) trading day period ending
        three business days prior to the date on which notice of redemption is
        given.
 
 Should
        the Company be unable to deliver shares of its Common Stock underlying the
        exercise of the Warrants included in the Units and shares of its Common Stock
        underlying the exercise of the Unit Purchase Option (see below) as a result
        of
        an absence of an effective registration statement with respect to these
        securities, then the Warrants and Unit Purchase Option would not be exercisable
        and the Company will have no obligation to pay holders of the Warrants and
        the
        Unit Purchase Option any cash or otherwise “net cash settle” the Warrant or the
        Unit Purchase Option. In this event, the Warrants and the Unit Purchase Option
        may expire worthless.
 
 Prior
        to
        the Public Offering, one of the Founding Stockholders and two non-affiliated
        accredited investors purchased from the Company in the Private Placement,
        an
        aggregate of 250,000 Units at $6.00 per Unit, for a total of $1,500,000.
        These
        Units consist of the same Common Stock and Warrants as offered by the Company
        in
        the Public Offering. The shares and Warrants comprising the Private Placement
        units may not be sold, assigned or transferred until after the Company
        consummates a Business Combination. Thereafter, under certain conditions,
        the
        shares held by the Founding Stockholders, including the shares acquired through
        the Private Placement by one of the Founding Stockholders and two non-affiliated
        accredited investors, include certain piggyback and other registration rights
        that may be demanded by those stockholders. The Company is required to use
        its
        best efforts to cause the registration of the 250,000 shares of Common Stock
        underlying these Units and the 500,000 shares of Common Stock underlying
        the
        Warrants included in these Units to be effective and to maintain such
        effectiveness. However, the agreement does not provide for liquidating damages
        in the event that the Company is unable to cause or maintain such effectiveness.
        See Note 10 – Subsequent Event, for a discussion of the Second Amendment
        whereby stockholders have agreed to forfeit 83,334 of these shares.
  10
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 
 **NOTE
        5 - Public Offering and Private Placement, continued**
 
 Pursuant
        to an agreement with the Company, if at any time within five years of a Business
        Combination, the Company’s publicly-traded Common Stock reaches a volume
        weighted average trading price of $6.60 per share for each day during any
        five
        (5) day period, the Company’s Chief Executive Officer, President and Chief
        Operating Officer, so long as they are either an officer, employee or consultant
        to the Company, will be granted warrants (“Incentive Warrants”) allowing them to
        purchase 200,000 shares, in the aggregate, of the Company’s Common Stock at an
        exercise price of $.10 per share.  If, at any time within five years of a
        Business Combination, the Company’s publicly-traded Common Stock reaches a
        volume weighted average trading price of $7.20 per share for each day during
        any
        five day period these same officers, so long as they are either an officer,
        employee or consultant to the Company, will be granted Incentive Warrants
        allowing them to purchase an additional 227,000 shares, in the aggregate,
        of the
        Company’s Common Stock at an exercise price of $.10 per share.  All such
        Incentive Warrants will be exercisable for a period of five years from the
        date
        on which they are granted. If
        such
        shares are issued upon the exercise of these Incentive Warrants, the holders
        will have demand and “piggy-back” registration rights with respect to these
        427,000 shares at any time after the Company consummates a business combination.
        The demand registration may be exercised by the holders of a majority of
        such
        shares. The Company is required to use its best efforts to cause the
        registration of 427,000 shares of Common Stock underlying these Incentive
        Warrants to be effective and to maintain such effectiveness. However, the
        agreement does not provide for liquidating damages in the event that the
        Company
        is unable to cause or maintain such effectiveness. See Note 10 – Subsequent
        Event for discussion of a material change to the terms of this agreement.
 
 The
        Company has also issued on June 9, 2006, to Maxim Group LLC and Legend Merchant
        Group, Inc., in the aggregate, for $100, an option to purchase up to a total
        of
        192,500 Units at $6.60 per Unit (the “Unit Purchase Option”). The Units issuable
        upon the exercise of this option are identical to those offered in the Public
        Offering except that the exercise price of the Units underlying such purchase
        option is $6.60 per Unit. The Unit Purchase Option is exercisable on the
        later of the consummation of a Business Combination or one year after the
        effective date of the Public Offering. The Company has accounted for the
        fair
        value of the Unit Purchase Option, inclusive of the receipt of the $100 cash
        payment, as a cost of the Public Offering resulting in a charge directly
        to
        stockholders’ equity. The Company estimated that the fair value of this Unit
        Purchase Option was approximately $686,920 ($3.57 per Unit), as of June 9,
        2006,
        using a Black-Scholes option-pricing model. The fair value of the Unit Purchase
        Option was estimated as of the date of grant using the following assumptions:
        (1) expected volatility of 69.44%, (2) risk-free interest rate of 4.95%,
        (3) a
        dividend rate of 0% and (4) expected life of 5 years.
 
 Deferred
        offering costs consisted principally of underwriting fees, legal registration
        and Blue Sky fees incurred through June 9, 2006 that were related to the
        Public
        Offering and Private Placement. These costs were charged to additional paid-in
        capital upon the consummation of the Public Offering on June 9,
        2006.
  The
        Company had notes payable aggregating $235,000 from American Consulting Corp.,
        an affiliate of one of the Founding Stockholders, and from another of the
        Founding Stockholders, both of whom are also officers of the Company. Such
        parties agreed that such loans were non-interest bearing. The Company repaid
        these notes in full on June 9, 2006.
  11
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        6 - 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 approximately $0.03
        per
        share. The
        holders of the majority of these shares will be entitled to require the Company,
        on up to two occasions, to register these shares. The holders of the majority
        of
        these shares may elect to exercise these registration rights at any time
        after
        the date on which these shares of common stock are released from escrow,
        which
        is not before June 9, 2009, and have certain “piggy-back” registration rights on
        registration statements filed subsequent to the date on which these shares
        of
        common stock are released from escrow. The Company is required to use its
        best
        efforts to cause the registration of such shares to be effective and to maintain
        such effectiveness. However, the agreements do not provide for liquidating
        damages in the event that the Company is unable to cause or maintain such
        effectiveness. See
        Note
        10 – Subsequent Event, for a discussion of the Second Amendment whereby
        stockholders have agreed to forfeit 541,666 of these shares.
 
 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 5). On June 29, 2006 the Company issued an additional 412,500 shares
        of Common Stock as part of the units issued pursuant to the exercise of the
        Underwriters’ over-allotment option.
 
 On
        November 12, 2007 the Company’s Board of Directors approved an increase in the
        number of shares of common stock that the Company is authorized to issue
        from
        15,000,000 to 29,000,000 shares, subject to shareholder approval.
  **NOTE
        7 - 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
        8- 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.
  12
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 
 **NOTE
        8- Commitments and Related Party Transactions, continued**
 
 The
        Company has engaged Maxim Group LLC, the representative of the underwriters,
        on
        a non-exclusive basis, as the agent for the solicitation of the exercise
        of the
        warrants. To the extent not inconsistent with the guidelines of the NASD
        and the
        rules and regulations of the SEC, the Company has agreed to pay the
        representative for bona fide services rendered a commission equal to 3% of
        the
        exercise price for each warrant exercised more than one year after the date
        of
        this prospectus if the exercise was solicited by the underwriters. In addition
        to soliciting, either orally or in writing, the exercise of the warrants,
        the
        representative’s services may also include disseminating information, either
        orally or in writing, to warrant holders about the Company or the market
        for our
        securities, and assisting in the processing of the exercise of the warrants.
        No
        compensation will be paid to the representative upon the exercise of the
        warrants if:
 
 ·
              The
                  market price of the underlying shares of common stock is lower
                  than the
                  exercise price;
 
 ·
              The
                  holder of the warrants has not confirmed in writing that the underwriters
                  solicited theexercise;
 
 ·
              The
                  warrants are held in a discretionary
                  account;
 
 ·
              The
                  warrants are exercised in an unsolicited transaction;
                  or
 
 ·
              The
                  arrangement to pay the commission is not disclosed in the prospectus
                  provided to warrant holders at the time of
                  exercise.
 
 The
        Company’s Founding Stockholders and stockholders who have purchased units in the
        Private Placement, are entitled to require the Company to register the resale
        of
        their shares of common stock at any time after the date on which their shares
        are released from escrow, which, except in limited circumstances, will not
        be
        before three years from the date of this prospectus. If such existing
        stockholders exercise their registration rights with respect to all of their
        shares of common stock (including those 250,000 shares and 500,000 shares
        issuable upon exercise of warrants convertible into shares of common stock
        issued in the private placement, and up to 427,000 warrants that may be issued
        to Founding Stockholders upon meeting certain price targets for our common
        stock
        ), then there will be an additional 1,927,000 shares of common stock eligible
        for trading in the public market and the Company will bear the costs of
        registering such securities.
 
 On
        January 3, 2007, as amended on January 9, 2008, the Company signed an agreement
        with Maxim Group LLC to provide merger and acquisition advisory services
        to the
        Company. This agreement will terminate upon the consummation of a merger
        or
        acquisition transaction as described within the agreement (the “Close”), unless
        earlier terminated or extended to another date mutually agreed to in writing.
        In
        consideration of its performance of these advisory services, the Company
        shall
        pay at the Close a cash fee equal to $100,000 (the “Fee”) and the equivalent of
        $100,000 in shares of common stock of the Company based on the 10-day volume
        weighted average price of such common stock prior to the date of the Close
        (the
“Financial Advisor Common Stock”). Should the Close not occur, Maxim Group LLC
        shall not be entitled to receive the Fee or the Financial Advisor Common
        Stock.
        The Company recognizes that the fees contemplated by this agreement are separate
        from the Company’s obligations to Maxim Group LLC under the underwriting
        agreement dated June 5, 2006 between Maxim Group LLC and the Company. See
        Note
        10 – Subsequent Event for discussion of a material change to the terms of
        this agreement.
  13
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        8- Commitments and Related Party Transactions, continued**
 
 On
        June
        29, 2007 the Company signed an agreement with Brainerd Communicators, Inc.
        to
        provide financial public relations services for a fee of $7,500 per month.
        The
        term of the agreement is for the period commencing July 12, 2007, expiring
        30
        days after the completion of the first acquisition and may be terminated
        by
        either party upon 30 days notice.
 
 On
        July
        9, 2007, the Company signed an agreement with Ladenburg Thalmann & Co. Inc.
        (“Ladenburg”) engaging them to prepare a fairness opinion regarding the
        potential acquisition of Hotels (See Note 8 – Merger Agreement). The
        Ladenburg fee in connection with this engagement was $75,000 of which $25,000
        was paid on July 11, 2007 and $50,000 was paid on October 29, 2007. On January
        10, 2008, the Company engaged Ladenburg to prepare an updated fairness opinion
        to reflect the amendment to the Merger Agreement, at a cost of $37,500, of
        which
        $18,750 was paid upon the execution of the agreement and the remainder was
        paid
        on February 7, 2008.
 
 On
        July
        24, 2007, the Company entered into an Agreement and Plan of Merger with Hotels
        at Home, Inc. On January 14, 2008, the Company entered into an Amendment
        to the
        Agreement and Plan of Merger with Hotels at Home, Inc (See Note 9 and Note
        10).
 
 On
        February 1, 2008, the Company entered into an agreement with CEOcast, Inc.
        to
        render investor relations services to the Company. The term of the agreement
        is
        effective for a three-month period. The CEOcast, Inc. fee is $30,000 of which
        $10,000 was paid upon signing of the agreement representing the first month’s
        payment and an additional $10,000 to be paid on or before the 1 st day of
        each month during the term of the agreement. In the event that the shareholders
        vote to approve the terms of a “merger or acquisition”, the Company will pay
        CEOcast, Inc. an additional fee of $15,000.
 
 **NOTE
        9**–**Merger Agreement**
  On
        July
        24, 2007, as amended on January 14, 2008, the Company entered into an Agreement
        and Plan of Merger (the “Merger Agreement”) with Hotels at Home, Inc., a
        Delaware corporation (“Hotels”), pursuant to which Hotels will merge into
        Affinity Subsidiary and Hotels will become a wholly-owned subsidiary of the
        Company.  Following consummation of the merger, it is anticipated that
        Affinity Subsidiary will change its name to Hotels at Home, Inc.  Hotels is
        headquartered in Fairfield, New Jersey, with
        subsidiaries located in Fairfield, New Jersey and Paris, France.
 
 The
        original Merger Agreement provided that by virtue of the merger, and subject
        to
        certain adjustments, Hotels stockholders would receive: (a) an aggregate
        of
        3,509,203 shares of Affinity Common Stock and (b) $16,000,000 in cash in
        exchange for all of the issued and outstanding capital stock of Hotels.
  14
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        9**–**Merger Agreement, continued**
 
 On
        January 14, 2008, Affinity, Affinity Subsidiary, Hotels and the Hotels
        Stockholders entered into an amendment to the Merger Agreement (the
“Amendment”). Pursuant to the Amendment, the shares of Affinity common stock to
        be issued to the Hotels Stockholders at the closing of the Merger were reduced
        from 3,509,203 shares of Affinity common stock to 2,456,571 shares of Affinity
        common stock. In addition, the parties agreed to an earn-out provision whereby
        if Hotels satisfies certain established net income levels for each of the
        fiscal
        years ending December 31, 2008, 2009 and 2010, the hotels Stockholders will
        earn
        up to 1,500,000 shares of Affinity common stock. Notwithstanding the foregoing,
        in the event that the Hotels Stockholders do not earn, in the aggregate,
        1,000,000 earn-out Shares, then Affinity shall cause the founding stockholders
        of Affinity to transfer to the Hotels stockholders an aggregate of 500,000
        shares of their Affinity common stock, on a pro-rata basis.
 
 Up
        to
        27.26% of investors holding shares from the Company’s IPO who elect to vote
        against the Merger and convert such shares will be entitled to $6.00 per
        share,
        but only in the event that the merger is consummated. Pursuant to the terms
        of
        the Company’s amended and restated certificate of incorporation, the Company has
        until June 9, 2008 to complete this business combination.
 
 The
        Merger Agreement is subject to customary representations and warranties by
        both
        the Company and Hotels.
 
 The
        Merger Agreement provides that as a condition to the Company's obligation
        to consummate the Merger certain officers of Hotels will enter into employment
        agreements with the Company which will be effective upon the consummation
        of the
        Merger.
 
 Hotels
        Stockholders have agreed to an eighteen month lockup of the shares of common
        stock issuable to them in the merger. The Company has agreed to register
        the
        shares issuable to Hotels following the closing pursuant to the terms of
        a
        registration rights agreement. The Company has agreed to file a registration
        statement to provide for the resale of such shares within 90 days after the
        effective date of the merger (the “Effective Date”) and has agreed to grant
        certain demand and piggyback registration rights. In the event the Company
        is
        unable to register and/or maintain the registration of these shares of common
        stock, the Agreement and Plan of Merger does not require penalties or liquidated
        damages.
 
 The
        Merger Agreement provides that at the time of the merger, the Company shall
        designate two members, Hotels shall designate two members, and together the
        Company and Hotels shall designate one independent member to the Company’s board
        of directors.
 
 Pursuant
        to the merger agreement the Company has agreed to seek approval of its
        stockholders to establish a new incentive plan (the “Stock Option Plan”) to
        provide for, among other things, the reservation of 1,400,000 **** of
        the
        Company’s shares of common stock to allow for the grant of stock options and
        other stock based awards under the Stock Option Plan. In addition, Hotels
        has a
        deferred compensation plan in place which Hotels and the Company intend to
        maintain for a period of time after the Effective Date.
 
 Pursuant
        to the terms of the Merger Agreement, the Company may undertake and consummate
        one or more private placements of its equity and/or debt securities prior
        to the
        effective date of the merger upon terms acceptable to it, after consultation
        with Hotels; provided, however, that: (a) the gross proceeds of such private
        placement do not exceed the lesser of the amount paid in conversion payments
        and
        $5,000,000, (b) The Company shall use commercially reasonable efforts to
        ensure
        that the per share consideration received for any equity securities offered
        or
        sold in such private placement is not less than a discount of more than 20%
        of
        the average closing price of the Company’s Common Stock for the 10 days prior to
        the closing of the private placement and (c) the net proceeds of such private
        placement are used solely to: (i) pay a portion of the Cash Consideration
        and
        (ii) provide working capital to the Affinity Subsidiary, which will be renamed
        Hotels at Home, Inc., after the merger.
  15
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
  **NOTE
        9**–**Merger Agreement, continued**
  Pursuant
        to the terms of the Merger Agreement, the Merger Agreement may be terminated
        at
        any time prior to the closing, as follows: (a) by mutual written consent
        of the
        Company and Hotels; (b) by either the Company or Hotels if (a) a permanent
        injunction or other order prohibiting the merger shall have become final
        and
        non-appealable or (b) if the Merger shall not have been consummated on or
        before
        June 9, 2008; (c) by Hotels, if (i) prior to the Closing Date there shall
        have been a material breach of any representation, warranty, covenant or
        agreement on the part of the Company contained in the Merger Agreement or
        any
        representation or warranty of the Company shall have become untrue after
        the
        date of the Merger Agreement, which breach or untrue representation or warranty
        would, individually or in the aggregate with all other such breaches and
        untrue
        representations and warranties, give rise to the failure of a condition and
        is
        incapable of being cured prior to the Closing Date by the Company or is not
        cured within thirty (30) days of notice of such breach, (ii) any of the
        conditions to closing shall have become incapable of fulfillment; (iii) the
        Company has not filed its preliminary proxy statement with the SEC within
        a
        reasonable time of the Company’s receipt of audited financial statements of
        Hotels (the “New Financial Statements”), or such proxy statement has not been
        approved by the SEC by June 9, 2008; (iv) the Company has not held its
        stockholders meeting to approve the Merger within forty-five (45) days of
        approval of the proxy statement by the SEC; (v) the Company’s board of directors
        has withdrawn or changed its recommendation to its stockholders regarding
        the
        Merger; or (vi) the Merger Agreement and the transactions contemplated thereby
        shall fail to be approved and adopted by the affirmative vote of the holders
        of
        the Company’s Common Stock under the Company’s certificate of incorporation, as
        amended, or more than 27.26% of the holders of the shares issued in the IPO
        (the
“IPO Shares”) entitled to vote on the Merger elect to convert their IPO Shares
        into cash from the Trust Fund. (d) By the Company, if (i) prior to the
        Closing Date there shall have been a material breach of any representation,
        warranty, covenant or agreement on the part of Hotels contained in the Merger
        Agreement or any representation or warranty of Hotels shall have become untrue
        after the date of the Merger Agreement, which breach or untrue representation
        or
        warranty (A) would, individually or in the aggregate with all other such
        breaches and untrue representations and warranties, give rise to the failure
        of
        a condition and (B) is incapable of being cured prior to the Closing Date
        by
        Hotels or is not cured within thirty (30) days of notice of such breach;
        or
        (ii) any of the closing conditions shall have become incapable of
        fulfillment; (e) In the event that the New Financial Statements reflect a
        material adverse change in the financial condition of Hotels when compared
        to
        the audited financial statements of Hotels previously delivered to the Company
        for the fiscal year ended December 31, 2006, then the Company shall have
        the
        right to terminate the Merger Agreement upon 10 days prior notice.  If
        the Company terminates the Merger Agreement pursuant to this provision, the
        Company shall be responsible for the costs and expenses of such New Financial
        Statements.
 Upon
          the
          consummation of the proposed merger with Hotels, the Company was obligated
          to
          pay a success fee in cash and stock in the amount of $400,000 to PFK Development
          Group and a fee in the amount of $200,000 to Maxim.
 
 See
          Note
          10 - Subsequent Event, for a discussion of the Second Amendment for a material
          change to the Merger Agreement.
 16
 Affinity
            Media International Corp. and Subsidiary
 (A
            Development Stage Enterprise)
 NOTES
            TO
            CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (unaudited)
 
 **NOTE
        10**–**Subsequent Event**
 
 *Second
        Amendment to Merger Agreement*
 
 As
        discussed in Note 9, on July 24, 2007, as amended on January 14, 2008, the
        Company entered into an Agreement and Plan of Merger (the “Merger Agreement”)
        with Hotels at Home, Inc., a Delaware corporation (“Hotels”), pursuant to which
        Hotels will merge into Affinity Subsidiary and Hotels will become a wholly-owned
        subsidiary of the Company.
 
 On
        May 7,
        2008, Affinity, Affinity Subsidiary and Hotels entered into a second amendment
        to the Merger Agreement (the “Second Amendment”). Pursuant to the Second
        Amendment, the stock consideration payable to the Hotels stockholders at
        the
        closing of the Merger has been reduced to 2,281,571 (“Stock Consideration”)
        shares of Affinity common stock. The parties also agreed to reduce the cash
        consideration payable to the Hotels stockholders from $16 million to $15
        million. In addition, the parties agreed to amend the earn-out provision
        to
        increase the net income levels and to make available in the aggregate an
        additional 750,000 earn-out shares. The Second Amendment also provides for
        pro-rata earnings of the earn-out shares under certain
        circumstances.
  Pursuant
        to the Second Amendment, certain of the founding stockholders of Affinity
        and
        participants in the Private Placement prior to the Public Offering, have
        agreed
        to forfeit 625,000 shares of Affinity common stock, consisting of 541,666
        shares
        forfeited by the Founding Stockholders and 83,334 shares forfeited by two
        non-affiliated accredited investors.
 
 Affinity
        has also agreed to issue a one-time special cash and stock distribution to
        stockholders of record as of June16, 2008, provided the Merger is approved,
        as
        follows:
 
 A.
        800,000 shares of Affinity common stock will be distributed, pro-rata (the
        “Stock Distribution”); provided, however, that the Hotels Stockholders waived,
        and are not entitled to, the Stock Distribution with respect to the stock
        consideration; and
 
 B.
        $2.6
        million in cash will be distributed pro-rata (the “Cash Distribution”);
        provided, however, that the Cash Distribution will not be distributed with
        respect to the 750,000 shares held by the founding stockholders of Affinity
        and
        the Stock Consideration.
 
 Affinity
        has also agreed, if the merger is approved, to extend the date upon which
        the
        warrants issued in the Public Offering, as discussed in Note 5, expire by
        one
        year, to June 4, 2011.
 
 The
        underwriter in the Public Offering has agreed to take $400,000 of its contingent
        underwriting compensation cash fee in shares of Affinity common stock at
        a price
        per share of $5.70, or 70,175 shares (See Note 7).
 
 The
        terms
        of the incentive warrants were modified to lower from $6.60 to $4.60 the volume
        weighted average trading price per share upon which the Company will grant
        warrants allowing for the purchase of an aggregate of 200,000 shares of the
        Company’s common stock for $.10 per share. The terms of the incentive warrants
        were also modified to lower from $7.20 to $5.60 the volume weighted average
        trading price per share upon which the Company will grant warrants allowing
        for
        the purchase of an aggregate of 227,000 shares of the Company’s common stock for
        $.10 per share. All such warrants will be exercisable for a period of five
        years
        from the date on which they are granted(See
        Note 5).
 
 PFK,
        an
        advisor of Affinity, has agreed to waive any and all of its fees, including
        stock fees to which it is entitled, upon the consummation of a business
        combination.
  17




**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





Please
      read the following discussion together with the financial statements and related
      notes appearing elsewhere in this Report. This Item 2 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 in our Form 10-K for the
      year ended December 31, 2007, (“10-K”) and Item 2 of Part II under the heading
      "Cautionary Statement for Forward Looking Statements", discussed elsewhere
      in
      this Report.





**Overview**





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




**Planned
      Merger**




On
      July
      24, 2007 as amended on January 14, 2008 and May 7, 2008, we entered into an
      agreement and plan of merger with Hotels At Home, Inc. (“Hotels”), an industry
      leading publisher of in-room retail catalogs and hotel-branded e-commerce Web
      sites for luxury hotels and resorts worldwide. Hotels’ catalogs and Web sites
      allow hotel guests to purchase items they have enjoyed during their stays,
      such
      as pillows, linens, robes, beds, and more. Hotels is a privately held company,
      headquartered in Fairfield, New Jersey with subsidiaries located in Fairfield,
      New Jersey and Paris, France. A more complete description of the transactions
      described above, including exhibits related thereto such as the Merger
      Agreement, is included in a Form 8-K filed on July 20, 2007, a Form 8K/A filed
      on July 27, 2007, a Form 8K/A filed January 14, 2008 and a Form 8-K filed on
      May
      7, 2008.




**Results
      of Operations**


For
      the
      three months ended March 31, 2008 and 2007, we had net (loss) income of
      ($146,607), and $10,057, respectively. The net loss for the three months ended
      March 31, 2008 was attributable primarily to interest income of $185,981, offset
      by marketing, general and administrative expenses of $380,441. The net income
      for the three months ended March 31, 2007 is attributable primarily to interest
      income of $246,714, offset by marketing, general and administrative expenses
      of
      $229,952.





**Liquidity
      and Capital Resources**





For
      the
      three months ended March 31, 2008, our net cash used in operating activities
      was
      $28,384, attributable primarily to net loss of ($146,607) and an increase in
      accounts payable and accrued expenses of $127,859. Our net cash provided by
      investing activities was $23,496 and consisted of payments for deferred
      acquisition costs of $121,458, interest received on trust assets of $210,101,
      less transfers of trust assets of $355,055 to cash. For the three months ended
      March 31, 2007, net cash provided by operating activities was $67,326, and
      consisted of net income of $10,057 and an increase of $51,013 in accounts
      payable and accrued expenses.


18




The
      Company’s Founding Stockholders and stockholders who have purchased units in the
      private placement, are entitled to require the Company to register the resale
      of
      their shares of common stock at any time after the date on which their shares
      are released from escrow, which, except in limited circumstances, will not
      be
      before three years from the date of the public offering. If such existing
      stockholders exercise their registration rights with respect to all of their
      shares of common stock consisting of 208,334 Founding Stockholders shares;
      166,666 shares and 500,000 shares issuable upon exercise of warrants convertible
      into shares of common stock issued in the private placement; and up to 427,000
      warrants that may be issued to Founding Stockholders upon meeting certain price
      targets for our common stock; then there will be an additional 1,302,000 shares
      of common stock eligible for trading in the public market after forfeiting
      of
      shares pursuant to the Second Amendment to the Merger Agreement and the Company
      will bear the costs of registering such securities. The presence of this
      additional number of shares of common stock eligible for trading in the public
      market may have an adverse effect on the market price of the Company’s common
      stock. In addition, the existence of these rights may make it more difficult
      to
      effectuate a business combination or increase the cost of the target business,
      as the stockholders or the target business may be discouraged from entering
      into
      a business combination with the Company or will request a higher price for
      their
      securities as a result of these registration rights and the potential future
      effect their exercise may have on the trading market for our common
      stock.




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





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





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





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


19


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.





As
      set
      forth in the Company's prospectus related to its initial public offering and
      pursuant to the Investment Management Trust Agreement dated June 9, 2006
      with American Stock Transfer & Trust Company, we are entitled
      to use in connection with consummating a business combination 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 in the event we
      liquidate, or $18,975,000 in the aggregate (the "Required Trust Balance").
      As of
      March 31, 2008, there was $18,973,775 held in trust, which is approximately
      $1,200 less than the Required Trust Balance. As of the date of the filing of
      this quarterly report, there was approximately $18,950,000 held in trust, which
      is approximately $25,000 less than the Required Trust Balance. We estimate
      that
      as of May 31, 2008, there will be $18,975,000 held in trust, which will satisfy
      the Required Trust Balance.





**Contractual
      Obligations and Commitments**





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





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





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





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





On
      February 1, 2008, the Company entered into an agreement with CEOcast, Inc.
      to
      render Investor Relations services to the Company. The term of the agreement
      is
      effective for a three-month period. The CEOcast, Inc. fee in connection to
      this
      agreement is $30,000 of which $10,000 was paid upon signing of the agreement
      representing the first month’s payment and an additional $10,000 to be paid on
      or before the 1 st day of
      each month during the term of the agreement. In the event that the shareholders
      vote to approve the terms of a “merger or acquisition”, the Company will pay
      CEOcast, Inc. an additional fee of $15,000. The Company shall also pay CEOcast,
      Inc. expenses of which shall not incur more than $500 in expenses without the
      express consent of the Company.


20





In
      connection with the second amendment to the Merger Agreement with Hotels, Maxim
      Group has agreed to accept $400,000 of its contingent fee in shares of Affinity
      common stock at a price of $5.70 per share, or 70,175 shares, providing the
      Merger is approved.





**Critical
      Accounting Policies**





Our
      condensed consolidated financial statements have been prepared in accordance
      with accounting principles generally accepted in the United States. These
      generally accepted accounting principles require 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. Our
      significant accounting policies are described in the notes to the consolidated
      financial statements included in our annual report on Form 10-KSB. Judgments
      and
      estimates of uncertainties are required in applying our accounting policies
      in
      many areas. Management has discussed the development and selection of these
      policies with the Audit Committee of the Company’s Board of Directors, or its
      equivalent, and the Audit Committee of the Board of Directors, or its
      equivalent, has reviewed the Company’s disclosures of these policies. There have
      been no material changes to the critical accounting policies or estimates
      reported in the Management’s Discussion and Analysis section of the audited
      financial statements for the year ended December 31, 2007 as filed with the
      Securities and Exchange Commission.





**Recent
      Accounting Pronouncements**





EffectiveJanuary
      1, 2008, we adopted the provisions of Statement of Financial Accounting
      Standards No. 157 ("SFAS 157"), “Fair Value Measurements” for financial assets
      and liabilities, as well as any other assets and liabilities that are carried
      at
      fair value on a recurring basis in the financial statements. SFAS 157 defines
      fair value, establishes a framework for measuring fair value and expands
      disclosures about fair value measurements. SFAS 157 applies under other
      accounting pronouncements that require or permit fair value measurements, the
      Financial Accounting Standards Board ("FASB") having previously concluded in
      those accounting pronouncements that fair value is the relevant measurement
      attribute. Accordingly, SFAS 157 does not require any new fair value
      measurements. There was no impact to our condensed consolidated financial
      statements upon adoption of SFAS 157. On February 12, 2008, the FASB issued
      FASB
      staff position No. FAS 157-2, "Effective Date of FASB Statement 157" which
      defers the provisions of SFAS 157 for nonfinancial assets and liabilities to
      the
      first fiscal period beginning after November 15, 2008.  We are required to
      adopt SFAS 157 for nonfinancial assets and liabilities in the first quarter
      of
      fiscal 2009.
      Currently, we do not have any non-financial assets or liabilities that are
      required to be measured at fair value on a recurring basis.





Effective
      January 1, 2008, we adopted Statement of Financial Accounting Standards No.
      159
      ("SFAS 159"), “The Fair Value Option for Financial Assets and Financial
      Liabilities.” SFAS 159 permits entities to choose to measure many financial
      instruments and certain other items at fair value. We did not elect the fair
      value reporting option for any assets and liabilities not previously recorded
      at
      fair value and accordingly, the adoption of SFAS 159 did not have an impact
      on
      our condensed consolidated financial statements.





**Off-Balance
      Sheet Arrangements**




As
      of
      March 31, 2008, 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.


21





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





·
            we
                may be unable to attract new personnel, which would adversely affect
                implementation of our overall business strategy if a business combination
                is consummated;





·
            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.


22


**Item
      3. Quantitative and Qualitative Disclosures About Market Risk**





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





**Item 4T.
      Controls and Procedures.**





*Disclosure
      Controls and Procedures*





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





Management’s
      Report on Internal Control over Financial Reporting





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





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





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





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





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





In
      connection with the preparation of this Quarterly Report on Form 10-Q for the
      three months ended March 31, 2008, our Chief Executive Officer and President,
      have evaluated the effectiveness of our disclosure controls and procedures
      and
      internal controls over financial reporting, pursuant to Rule 13a-15 under the
      Exchange Act.





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


23




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




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





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





As
      a
      result of the material weaknesses identified above, our Chief Executive Officer
      and President have concluded that the design and operation of our disclosure
      controls and procedures and our internal controls and procedures are not
      effective as of March 31, 2008.





There
      has
      been no change in our internal control over financial reporting that has
      materially affected or is reasonably likely to materially affect, our internal
      control over financial reporting during the most recently completed fiscal
      quarter.





**PART
      II****-
      OTHER INFORMATION**




**Item
      1.**  **Legal
      Proceedings.**




There
      are
      no material legal proceedings pending against us.





**Item
      1A. Risk Factors**




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





**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds.**




Not
      applicable





**Item
      3.**  **Defaults
      Upon Senior Securities.**




Not
      applicable.




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




Not
      applicable.




**Item
      5.**  **Other
      Information.**




Not
      applicable.


24


**Item
      6.**  **Exhibits**




31.1
            
            Section
                302 Certification of Principal Executive Officer31.2
            
            Section
                302 Certification of Principal Financial Officer32.1
            
            Section
                906 Certification of Principal Executive Officer32.2
            
            Section
                906 Certification of Principal Executive
                Officer





**Exhibits:**





**Exhibit No.**
            
            **Description of Exhibit**31.1
            
            Officer’s
                Certification Pursuant to Rule 13a-14(a) under the Securities Exchange
                Act. (1)31.2
            
            Officer’s
                Certification Pursuant to Rule 13a-14(a) under the Securities Exchange
                Act. (1)32.1
            
            Certification
                Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
                (1)32.2
            
            Certification
                Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
                (1)


______________________


**Footnotes:**





(1)
            Filed
                herewith.


25





**SIGNATURES**





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





Dated:
                May 15, 2008
            Affinity
                Media International Corp.By:
            /s/
                Peter H. EngelPeter
                H. Engel
              Chairman,
                Chief Executive Officer and Treasurer (Principal executive
                officer)By:
            /s/ Howard
                CohlHoward
                Cohl
              President,
                Treasurer and Director
              (Principal
                financial and accounting officer)




26