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EX-31.1 - 302 CERTIFICATION OF THE CEO/CFO - AFH Holding III, Inc.ex-31_1.htm
EX-32.1 - 906 CERTIFICATION OF THE CEO/CFO - AFH Holding III, Inc.ex-32_1.htm
 


 
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2011

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File No. 000-52849

AFH HOLDING III, INC.
(Name of Small Business Issuer in its charter)

Delaware
 
26-1365024
(State or other jurisdiction of incorporation or formation)
 
(I.R.S. employer identification number)

9595 Wilshire Blvd.
Suite 700
Beverly Hills, CA 90212
(Address of principal executive offices)

Issuer’s telephone number:
(310) 492-9898
Issuer’s facsimile number:
(310) 492-9926

N/A
(Former name, former address and former
fiscal year, if changed since last report)

Copies to:

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 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.
x Yes ¨ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o 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 the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large accelerated filer 
¨
Accelerated filer
¨
Non-accelerated filer
¨
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).
x Yes ¨ No
 
State the number of shares outstanding of each of the issuer's classes of common equity, as of the last practicable date: As of November 14, 2011, there were 5,355,000 shares of common stock, par value $0.001 per share, of the Registrant issued and outstanding.

 
 

 
 
 
TABLE OF CONTENTS

   
Page
PART I - FINANCIAL INFORMATION
 
     
1
     
  Balance Sheets at September 30, 2011 (Unaudited) and December 31, 2010  
     
 
from Date of Inception (April 16, 2007) through September 30, 2011 (Unaudited)
 
     
 
and 2010 and for the Cumulative Period from Date of Inception (April 16, 2007)
through September 30, 2011 (Unaudited)
 
     
 
and 2010 and for the Cumulative Period from Date of Inception (April 16, 2007)
through September 30, 2011 (Unaudited)
 
     
   
     
Item 2.  
     
5
     
5
   
PART II - OTHER INFORMATION
 
     
6
     
10
     
10
     
10
     
10
     
10
   
11

 
 

 
 
 
   
Item 1.
Financial Statements.
 
 
AFH HOLDING III, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA

FINANCIAL REPORTS
AT
SEPTEMBER 30, 2011
 
 
 

 
 
 
   
AFH HOLDING III, INC.
(A Development Stage Company)
(A DELAWARE Corporation)
Beverly Hills, CA
   
   
TABLE OF CONTENTS
   
   
1
   
2
   
3
   
4
   
5-8
 
 
 

 
 
 
AFH HOLDING III, INC.
           
(A DEVELOPMENT STAGE COMPANY)
           
(A DELAWARE CORPORATION)
           
Beverly Hills, CA
           
             
             
BALANCE SHEETS AT SEPTEMBER 30, 2011 (UNAUDITED) AND DECEMBER 31, 2010
           
             
   
(Unaudited)
       
   
September 30,
   
December 31,
 
   
2011
   
2010
 
             
ASSETS
           
Due from Parent
  $ 710,000     $ 710,000  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Liabilities
               
Accrued Expenses
  $ 7,872     $ 1,544  
Due to Parent
    22,170       20,626  
                 
Total Liabilities
    30,042       22,170  
                 
Stockholders' Equity
               
Preferred Stock:  $.001 Par; 20,000,000 Shares Authorized,
               
                            -0- Issued and Outstanding
           
Common Stock:  $.001 Par; 100,000,000 Shares Authorized;
               
                            5,355,000 Issued and Outstanding
    5,355       5,355  
Additional Paid-In-Capital
    711,666       711,666  
Deficit Accumulated During Development Stage
    (37,063 )     (29,191 )
                 
Total Stockholders' Equity
    679,958       687,830  
                 
Total Liabilities and Stockholders' Equity
  $ 710,000     $ 710,000  
 
 
F-1

 
 
AFH HOLDING III, INC.
                             
(A DEVELOPMENT STAGE COMPANY)
                         
(A DELAWARE CORPORATION)
                             
Beverly Hills, CA
                             
                               
                               
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT FOR THE PERIOD FROM
             
DATE OF INCEPTION (APRIL 16, 2007) THROUGH SEPTEMBER 30, 2011 (UNAUDITED)
       
                               
                     
Deficit
       
                     
Accumulated
       
   
Common Stock
   
Additional
   
During
   
Total
 
   
Number
   
 
   
Paid-In
   
Development
   
Stockholders'
 
   
of Shares
   
Value
   
Capital
   
Stage
   
Equity
 
                               
Balance - April 16, 2007
        $     $     $     $  
                                         
Common Stock Issued in Lieu of Services
    5,000,000       5,000                   5,000  
                                         
Contributed Capital for Services
                2,021             2,021  
                                         
Net Loss
                      (7,021 )     (7,021 )
                                         
Balance - December 31, 2007
    5,000,000       5,000       2,021       (7,021 )      
                                         
Common Stock Issued for Cash
    355,000       355       709,645             710,000  
                                         
Net Loss
                      (3,550 )     (3,550 )
                                         
Balance - December 31, 2008
    5,355,000       5,355       711,666       (10,571 )     706,450  
                                         
Net Loss
                      (9,153 )     (9,153 )
                                         
Balance - December 31, 2009
    5,355,000       5,355       711,666       (19,724 )     697,297  
                                         
Net Loss for the Period
                      (9,467 )     (9,467 )
                                         
Balance - December 31, 2010
    5,355,000       5,355       711,666       (29,191 )     687,830  
                                         
Net Loss for the Period
                      (7,872 )     (7,872 )
                                         
Balance - September 30, 2011
    5,355,000     $ 5,355     $ 711,666     $ (37,063 )   $ 679,958  
 
 
F-2

 
 
AFH HOLDING III, INC.
                             
(A DEVELOPMENT STAGE COMPANY)
                             
(A DELAWARE CORPORATION)
                             
Beverly Hills, CA
                             
                               
                               
STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2011 AND 2010 AND FOR THE CUMULATIVE PERIOD FROM
DATE OF INCEPTION (APRIL 16, 2007) THROUGH SEPTEMBER 30, 2011 (UNAUDITED)
                         
                               
                           
Period From
 
                           
Date of Inception
 
   
For the Nine Months Ended
   
For the Three Months Ended
   
(April 16, 2007)
 
   
September 30,
   
September 30,
   
Through
 
   
2011
   
2010
   
2011
   
2010
   
September 30, 2011
 
                               
                               
Revenues
  $     $     $     $     $  
                                         
Expenses
                                       
General and Administrative
    4,159       3,013       1,763       775       23,650  
Interest
          85                   100  
                                         
Total Expenses
  $ 4,159     $ 3,098     $ 1,763     $ 775     $ 23,750  
                                         
Net Loss for the Period Before Taxes
  $ (4,159 )   $ (3,098 )   $ (1,763 )   $ (775 )   $ (23,750 )
                                         
Franchise Tax
  $ 3,713     $ 5,600     $     $     $ 13,313  
                                         
Net Loss for the Period After Taxes
  $ (7,872 )   $ (8,698 )   $ (1,763 )   $ (775 )   $ (37,063 )
                                         
                                         
Loss per Share - Basic and Diluted
  $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )   $ (0.00 )
                                         
Weighted Average Common Shares Outstanding
    5,355,000       5,355,000       5,355,000       5,355,000       5,286,463  
 
 
F-3

 
 
AFH HOLDING III, INC.
                 
(A DEVELOPMENT STAGE COMPANY)
                 
(A DELAWARE CORPORATION)
                 
Beverly Hills, CA
                 
                   
                   
STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 
AND 2010 AND FOR THE CUMULATIVE PERIOD FROM DATE OF INCEPTION (APRIL 16, 2007)
THROUGH SEPTEMBER 30, 2011 (UNAUDITED)
                 
                   
               
Period From
 
               
Date of Inception
 
   
For the Nine Months Ended
   
(April 16, 2007)
 
   
September 30,
   
Through
 
   
2011
   
2010
   
September 30, 2011
 
                   
Cash Flows from Operating Activities
                 
                   
Net Loss
  $ (7,872 )   $ (8,698 )   $ (37,063 )
                         
Non Cash Adjustments:
                       
Common Stock Issued in Lieu of Services
                5,000  
Contributed Capital for Services
                2,021  
                         
Changes in Assets and Liabilities:
                       
Accrued Expenses
    6,328       (10,178 )     7,872  
                         
Net Cash Flows from Operating Activities
    (1,544 )     (18,876 )     (22,170 )
                         
Net Cash Flows from Investing Activities
                 
                         
Cash Flows from Financing Activities
                       
Cash Advance by Parent
    1,544       18,876       22,170  
                         
Net Change in Cash and Cash Equivalents
                 
                         
Cash and Cash Equivalents - Beginning of Period
                 
                         
Cash and Cash Equivalents - End of Period
  $     $     $  
                         
SUPPLEMENTAL NON-CASH DISCLOSURES
                       
Common Stock Proceeds Held by Parent
  $     $ 710,000     $ 710,000  
                         
                         
Cash Paid During the Period for:
                       
Interest
  $     $     $  
Franchise Tax
  $     $     $  
 
 
F-4

 
 
AFH HOLDING III, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA




Note A -
The Company
 
AFH Holding III, Inc., a development stage company (the “Company”), was incorporated under the laws of the State of Delaware on April 16, 2007.  The Company is 93.4% owned by AFH Holding & Advisory, LLC (the “Parent”).  The financial statements presented represent only those transactions of AFH Holding III, Inc.  The Company is looking to acquire an existing company or acquire the technology to begin operations.

 
As a blank check company, the Company’s business is to pursue a business combinationthrough acquisition, or merger with, an existing company. As of the date of the financial statements, the Company is not conducting negotiations with any target business. No assurances can be given that the Company will be successful in locating or negotiating with any target company.

 
Since inception, the Company has been engaged in organizational efforts.

The condensed financial statements of AFH Holding III, Inc., (the “Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s registration statement on Form 10-K, and other reports filed with the SEC.
 
 
The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented.  The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Certain information that is not required for interim financial reporting purposes has been omitted.

Note B -
Summary of Significant Accounting Policies
 
Method of Accounting
 
The Company maintains its books and prepares its financial statements on the accrual basis of accounting.

 
Development Stage
 
The Company has operated as a development stage enterprise since its inception by devoting substantially all of its efforts to financial planning, raising capital, research and development, and developing markets for its services.  The Company prepares its financial statements in accordance with the requirements of FASB ASC 915.
 
 
F-5

 

 
 
Cash and Cash Equivalents
 
Cash and cash equivalents include time deposits, certificates of deposit, and all highly liquid debt instruments with original maturities of three months or less.  The Company maintains cash and cash equivalents at financial institutions, which periodically may exceed federally insured amounts.

 
Loss Per Common Share
 
Loss per common share is computed in accordance with FASB ASC 260 by dividing income (loss) available to common stockholders by weighted average number of common shares outstanding for each period.  The calculation of diluted net loss per share gives effect to common stock equivalents, however, potential common shares are excluded if their effect is anti-dilutive.

 
Use of Estimates
 
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results can differ from those estimates.

Income Taxes
The Company accounts for income taxes in accordance with FASB ASC 740, using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities.  This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment.  Deferred tax assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards.  Deferred income tax expense represents the change in net deferred assets and liability balances.

 
Financial Instruments
The Company’s financial instruments consist of cash and due to parent. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The fair value of these financial instruments approximates their carrying value, unless otherwise noted.

Recent Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.

 
F-6

 


AFH HOLDING III, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA


NOTES TO FINANCIAL STATEMENTS


Note C -     Equity Securities
Holders of shares of common stock shall be entitled to cast one vote for each common share held at all stockholder’s meetings for all purposes, including the election of directors.  The common stock does not have cumulative voting rights.

The preferred stock of the Company shall be issued by the Board of Directors of the Company in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Company may determine, from time to time.

No holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock or any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.

Note D -      Going Concern
The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reportedrecurring losses from operations.  As a result, there is an accumulated deficit of $37,063 at September 30, 2011.

 
The Company’s continued existence is dependent upon its ability to raise capital or acquire a marketable company. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Note E -      Due to Parent
 
Due to parent represents cash advances from AFH Holding & Advisory LLC.  AFH Holding & Advisory LLC is related to the Company through common ownership. There are no repayment terms.

Note F -      Stock Transactions and Due from Parent
 
In February 2008, the Company commenced a private placement (the “Offering”) of up to 350,000 shares (the “Shares”) of Common Stock at a purchase price of $2.00 per share on a “best efforts” basis with expected gross proceeds of up to $700,000 to “accredited investors” (as defined in Rule 501 promulgated under Regulation D under the Securities Act of 1933, amended (the “Securities Act”)) pursuant to Rule 506 of Regulation D under the Securities Act.

 
                                                                                   - continued -

 
F-7

 

AFH HOLDING III, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Beverly Hills, CA


NOTES TO FINANCIAL STATEMENTS


Note F -      Stock Transactions and Due from Parent – continued
 
From February 1, 2008 to March 12, 2008 the Company sold an aggregate of 230,500 Shares with gross proceeds of $461,000.  From April 8, 2008 to April 28, 2008 the Company sold an aggregate of 124,500 Shares with gross proceeds of $249,000.  The total amount of Shares sold in the Offering was 355,000 with gross proceeds of $710,000.  These funds are held by the Company’s parent.

 
F-8

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

Overview

AFH Holding III, Inc. ("we", "us", "our" or the "Registrant") was incorporated in the State of Delaware on April 16, 2007, and maintains its principal executive offices at 9595 Wilshire Blvd., Suite 700, Beverly Hills, CA 90212. Since the Registrant’s inception, it has been engaged in organizational efforts and obtaining initial financing. The Registrant was formed as a vehicle to pursue a business combination through the acquisition of, or merger with, an operating business. The Registrant filed a registration statement on Form 10-SB with the U.S. Securities and Exchange Commission (the "SEC") on October 5, 2007, and since its effectiveness, the Registrant has focused its efforts to identify a possible business combination. Since the effective date of the Registrant’s Form 10-SB, the Registrant has been a reporting company and required to file periodic and current reports with the SEC under the Exchange Act.

Plan of Operation

The Registrant will attempt to locate and negotiate with a business entity for the combination of that target company with the Registrant. The combination will normally take the form of a merger, stock-for-stock exchange or stock-for- assets exchange (the "business combination"). In most instances the target company will wish to structure the business combination to be within the definition of a tax-free reorganization under Section 351 or Section 368 of the Internal Revenue Code of 1986, as amended. As of the date of this report, the Registrant has identified an undisclosed potential target company for a possible business combination.  The Registrant is currently engaged in preliminary negotiations with the target company.  No assurances can be given that the Registrant will be successful in locating or negotiating with any target company.

The Registrant has not restricted its search for any specific kind of businesses, and it may acquire a business which is in its preliminary or development stage, which is already in operation, or in essentially
any stage of its business life. It is impossible to predict the status of any business in which the Registrant may become engaged, in that such business may need to seek additional capital, may desire to have its shares publicly traded, or may seek other perceived advantages which the Registrant may offer.
 
In implementing a structure for a particular business acquisition, the Registrant may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity.

It is anticipated that any securities issued in any such business combination would be issued in reliance upon exemption from registration under applicable federal and state securities laws. In some circumstances, however, as a negotiated element of its transaction, the Registrant may agree to register all or a part of such securities immediately after the transaction is consummated or at specified times thereafter. If such registration occurs, it will be undertaken by the surviving entity after the Registrant has entered into an agreement for a business combination or has consummated a business combination. The issuance of additional securities and their potential sale into any trading market which may develop in the Registrant's securities may depress the market value of the Registrant's securities in the future if such a market develops, of which there is no assurance. However, if the Registrant cannot effect a non-cash acquisition, the Registrant may have to raise funds from a private offering of its securities under Rule 506 of Regulation D. There is no assurance the Registrant would obtain any such equity funding.

The Registrant will participate in a business combination only after the negotiation and execution of appropriate agreements. Negotiations with a target company will likely focus on the percentage of the Registrant which the target company shareholders would acquire in exchange for their shareholdings.

Although the terms of such agreements cannot be predicted, generally such agreements will require certain representations and warranties of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by the parties prior to and after such closing and will include miscellaneous other terms. Any merger or acquisition effected by the Registrant can be expected to have a significant dilutive effect on the percentage of shares held by the Registrant's shareholders at such time.

 
2

 

 
GOING CONCERN

In our accountant’s report for the fiscal year ended December 31, 2010, they expressed their doubt as to the Registrant’s ability to continue as a going concern.  The financial statements included in this Quarterly Report have been prepared assuming that the Registrant will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.

At September 30, 2011, the Registrant had $0 cash on hand. The Registrant has had no revenue and has incurred an accumulated deficit from April 16, 2007 (inception) through the period ended September 30, 2011 of $37,063.  The Registrant’s development activities since inception have been financially sustained through equity financings and a loan from AFH Holding & Advisory, LLC, the Registrant’s parent company and of which the Registrant’s officer and director, Amir F. Heshmatpour, is the Management Member.

The ability of the Registrant to continue as a going concern is dependent upon its ability to find a suitable acquisition/merger candidate, raise additional capital from the sale of common stock, and receive additional paid-in capital from its shareholder and, ultimately, the achievement of significant operating revenues. The accompanying financial statements do not include any adjustments that might be required should the Registrant be unable to recover the value of its assets or satisfy its liabilities.

Plan of Operation

The Registrant has not realized any revenues from operations since inception, and its plan of operation for the next twelve months is to locate a suitable acquisition or merger candidate and consummate a business combination. The Registrant may need additional cash advances from its stockholder or loans from other parties to pay for operating expenses until the Registrant consummates a merger or business combination with a privately-held operating company. Although it is currently anticipated that the Registrant can satisfy its cash requirements with additional cash advances or loans from other parties, if needed, for at least the next twelve months, the Registrant can provide no assurance that it can continue to satisfy its cash requirements for such period.

Since our formation on April 16, 2007, our purpose has been to effect a business combination with an operating business which we believe has significant growth potential. We are currently considered to be a “blank check” company in as much as we have no specific business plans, no operations, revenues or employees. We currently have no definitive agreements or understanding with any prospective business combination candidates and have not targeted any business for investigation and evaluation nor are there any assurances that we will find a suitable business with which to combine. The implementation of our business objectives is wholly contingent upon a business combination and/or the successful sale of securities in the Registrant.
 
As a result of our limited resources, we expect to effect only a single business combination. Accordingly, the prospects for our success will be entirely dependent upon the future performance of a single business. Unlike certain entities that have the resources to consummate several business combinations or entities operating in multiple industries or multiple segments of a single industry, we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. A target business may be dependent upon the development or market acceptance of a single or limited number of products, processes or services, in which case there will be an even higher risk that the target business will not prove to be commercially viable.

Our officers and directors are only required to devote a very limited portion of their time to our affairs on a part-time or as-needed basis. We expect to use outside consultants, advisors, attorneys and accountants as necessary, none of which will be hired on a retainer basis. We do not anticipate hiring any full-time employees so long as we are seeking and evaluating business opportunities.

We expect our present management to play no managerial role in the Registrant following a merger or business combination. Although we intend to scrutinize closely the management of a prospective target business in connection with our evaluation of a business combination with a target business, our assessment of management may be incorrect. We cannot assure you that we will find a suitable business with which to combine.

 
3

 
 
 
Results of Operations

The Company has not conducted any active operations since inception, except for its efforts to locate a suitable acquisition or merger transaction. No revenue has been generated by the Company during such period, and it is unlikely the Company will have any revenues unless it is able to effect an acquisition of or merger with another operating company, of which there can be no assurance.

Assets

At September 30, 2011 and December 31, 2010, the Company had no cash and due from parent of $710,000.

Liabilities

The Company’s total current liabilities at September 30, 2011 and December 31, 2010 were $30,042 and $22,170, respectively, comprised of Due to Parent and accrued expenses. The increase in liabilities was due to accounting fees for second quarter.

Stockholders’ Deficit

At September 30, 2011, the Company had a stockholders’ deficit of $37,063 compared to $29,191 at December 31, 2010. The increase was due to increased liabilities.
 
Revenues

To date, the Company has not generated any revenues.

Net Loss

For the three month periods ended September 30, 2011 and 2010, the Company had a net loss of $1,763 and $775, respectively. For the nine month periods ended September 30, 2011 and 2010, the Company had a net loss of $7,872 and $8,698, respectively. From April 16, 2007 (Inception) to September 30, 2011, the Company had a net loss of $37,063.

Expenses
 
For the three months ended September 30, 2011, the Company had expenses of $1,763 compared to $775 for the three month period ended September 30, 2010. This increase was primarily due to additional XBRL costs of $1,000. For the nine months ended September 30, 2011, the Company had expenses of $7,872, compared to $8,698 for the nine month period ended September 30, 2010. The decrease was due to the Company’s streamline of accounting and filing costs. For the period from April 16, 2007 (Inception) to September 30, 2011, the Registrant had operating expenses of $37,063 (includes franchise tax of $13,313). These expenses were due to accounting, audit, franchise tax and SEC filing fees incurred in relation to the filing of the Registrant’s Registration Statement on Form 10-SB filed on October 5, 2007 and annual and quarterly reports filed since the effectiveness of such registration statement.
Liquidity and Capital Resources

At September 30, 2011, the Registrant had $0 in cash on hand and total assets of $710,000.  Such assets consist of monies held by the Registrant’s parent company, AFH Holding & Advisory, LLC, and are the net proceeds of the sale of the Registrant’s shares of common stock in a Private Placement Offering which commenced in February 2008. The Registrant’s current liabilities as of September 30, 2011, totaled $30,042 which comprised of $7,872 in accrued expenses and $22,170 due to AFH Holding & Advisory, LLC, the majority owner of the Registrant, under a loan.  The loan does not have any repayment terms.  The Company has not generated any revenues since its inception.  In their report for the fiscal year ended December 31, 2010, the Registrant’s principal accountants expressed their doubt as to our ability to continue as a going concern.  The ability of the Registrant to continue as a going concern is dependent upon its ability to find a suitable acquisition/merger candidate, raise additional capital from the sale of common stock, and receive additional paid-in capital from its shareholder and, ultimately, the achievement of significant operating revenues. The accompanying financial statements do not include any adjustments that might be required should the Registrant be unable to recover the value of its assets or satisfy its liabilities.

 
4

 
 
 
On April 16, 2007, the Registrant sold 5,000,000 shares of Common Stock to AFH Holding & Advisory, LLC, which is controlled by our sole officer and director, Amir F. Heshmatpour, for an aggregate purchase price equal to $5,000. The Registrant sold these shares of Common Stock under the exemption from registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) afforded the Registrant by Section 4(2) of the Securities Act in light of the fact that the offering did not involve a public offering of securities.

In February 2008, the Registrant commenced a private placement (the "Offering") of up to 350,000 shares (the "Shares") of Common Stock at a purchase price of $2.00 per Share on a “best efforts” basis with expected gross proceeds of up to $700,000 to “accredited investors” (as defined in Rule 501 promulgated under Regulation D under the Securities Act) pursuant to the exemption from the registration requirements of the Securities Act afforded the Registrant Company under Rule 506 of Regulation D under the Securities Act due to the fact that it did not involve a public offering of securities.  From February 1, 2008 to March 12, 2008, the Registrant sold an aggregate of 230,500 Shares with gross proceeds of $461,000. From April 8, 2008 to April 28, 2008, the Registrant sold an aggregate of 124,500 Shares with gross proceeds of $249,000. The Registrant increased the size of the Offering as permitted. The total amount of Shares sold in the Offering was 355,000 with gross proceeds of $710,000. The Registrant intends to use the net proceeds of the Offering to pursue an acquisition of an operating company and working capital purposes. These funds are held by the Company's parent. 

The following is a summary of the Company's cash flows from operating, investing, and financing activities:
 
   
For the Nine
Months Ended
   
For the Period
April 16, 2007
(Inception) to
 
                   
   
September 30, 2011
   
September 30, 2010
   
September 30, 2011
 
Net Cash Used in Operating Activities
 
$
(1,544
)
 
$
(18,876
)
 
$
(22,170
)
                     
Net Cash Provided by Investing Activities
   
     
     
 
                         
Net Cash Provided by Financing Activities
 
$
1,544
   
$
18,876
   
$
22,170
 
                         
Net Effect on Cash
 
$
   
$
   
$
 
 
Off-Balance Sheet Arrangements

The Registrant does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Registrant’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
   
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.

N/A
   
Item 4.
Controls and Procedures.

Evaluation of Disclosure Controls and Procedures
 
Our Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2011. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Controls.

There have been no significant changes to the Company’s internal controls over financial reporting that occurred during our last fiscal quarter of the three months ended September 30, 2011, that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

 
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PART II – OTHER INFORMATION
   

The Registrant is not party to any legal proceedings nor is it aware of any investigation, claim or demand made on the Registrant that may reasonably result in any legal proceedings.
Item 2.
Unregistered Sale of Equity Securities and Use of Proceeds.

On April 16, 2007, the Registrant issued 5,000,000 shares of Common Stock to AFH Holding & Advisory, LLC, which is controlled by our sole officer and director, Amir F. Heshmatpour, for an aggregate purchase price equal to $5,000. The Registrant sold these shares of Common Stock under the exemption from registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) afforded the Registrant by Section 4(2) of the Securities Act in light of the fact that the offering did not involve a public offering of securities.

In February 2008, the Registrant commenced a private placement (the "Offering") of up to 350,000 shares (the "Shares") of Common Stock at a purchase price of $2.00 per share on a “best efforts” basis with expected gross proceeds of up to $700,000 to “accredited investors” (as defined in Rule 501 promulgated under Regulation D under the Securities Act). From February 1, 2008 to March 12, 2008, the Registrant sold an aggregate of 230,500 Shares with gross proceeds of $461,000. From April 8, 2008 to April 28, 2008, the Registrant sold an aggregate of 124,500 Shares with gross proceeds of $249,000. The Registrant increased the size of the Offering as permitted. The total amount of Shares sold in the Offering was 355,000 with gross proceeds of $710,000. The Registrant intends to use the net proceeds of this offering to pursue an acquisition of a private company and working capital purposes. The Registrant sold these shares of Common Stock under the exemption from registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) afforded the Registrant under Section 4(2) and Rule 506 of Regulation D under the Securities Act in light of the fact that the offering did not involve a public offering of securities.
   
Item 3.
Defaults Upon Senior Securities.

None.
   
Item 4.
Removed and Reserved

None.
   

None.
   
Item 6.

 
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB      XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 
 
10

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

Dated: November 14, 2011

     
AFH HOLDING III, INC.
 
     
(Registrant)
 
         
     
/s/ Amir F. Heshmatpour
 
     
Amir F. Heshmatpour
 
     
President, Secretary and Sole Director
 
     
(Principal Executive Officer)
(Principal Financial and Accounting Officer)
 
 
 
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