AFH HOLDING II, INC. - FORM 10-Q

Attached files

file	filename
EX-32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT OF 2002 - AFH HOLDING II, INC.	ex-32_1.htm
EX-31.1 - CERTIFICATION BY CHIEF EXECUTIVE OFFICER PURSUANT TO SARBANES-OXLEY SECTION 302 - AFH HOLDING II, INC.	ex-31_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 March 31, 2010

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

For the transition period from

Commission File No. 000-52685

AFH HOLDING II, INC.

(Name of registrant in its charter)

Delaware		26-1364883
(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

N/A

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

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer 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 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” 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 o No

State the number of shares outstanding of each of the issuer’s classes of common equity, as of May 12, 2010: 1,500,000 shares of common stock.

PART I – FINANCIAL INFORMATION

AFH HOLDING II, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA


	FINANCIAL REPORTS
	AT
	MARCH 31, 2010

AFH HOLDING II, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

TABLE OF CONTENTS

Balance Sheets at March 31, 2010 (Unaudited) and December 31, 2009	F-2

Statements of Changes in Stockholders’ Deficit for the Period
from Date of Inception (April 16, 2007) through March 31, 2010 (Unaudited)	F-3

Statements of Operations for the Three Months Ended March 31, 2010 and 2009,
and for the Period from Date of Inception (April 16, 2007) through
March 31, 2010 (Unaudited)	F-4

Statements of Cash Flows for the Three Months Ended March 31, 2010 and 2009,
and for the Period from Date of Inception (April 16, 2007) through
March 31, 2010 (Unaudited)	F-5

Notes to Financial Statements	F-6 - F-8

F-1

AFH HOLDING II, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

BALANCE SHEETS

		(Unaudited)
		March 31,			December 31,
		2010			2009

ASSETS		$	—		$	—


LIABILITIES AND STOCKHOLDERS' DEFICIT

Liabilities
Accrued Expenses		$	1,331		$	4,733
Due to Parent			6,608			1,750

Total Liabilities			7,939			6,483

Stockholders' Deficit
Preferred Stock:	$.001 Par; 20,000,000 Shares Authorized,
	-0- Issued and Outstanding		—			—
Common Stock:	$.001 Par; 100,000,000 Shares Authorized;
	5,000,000 Issued and 1,500,000 Outstanding		5,000			5,000
Additional Paid-In-Capital			11,021			11,021
Deficit Accumulated During Development Stage			(15,210	)		(13,754	)
Treasury Stock - 3,500,000 Shares at Cost, $.0025			(8,750	)		(8,750	)

Total Stockholders' Deficit			(7,939	)		(6,483	)

Total Liabilities and Stockholders' Deficit		$	—		$	—

F-2

AFH HOLDING II, 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 MARCH 31, 2010 (UNAUDITED)

							Deficit
							Accumulated
	Common Stock				Additional		During						Total
	Number				Paid-In		Development			Treasury			Stockholder's
	of Shares		Value		Capital		Stage			Stock			Deficit

Balance - April 16, 2007		—	$	—	$	—	$	—		$	—		$	—

Common Stock Issued in Lieu of Services		5,000,000		5,000		—		—			—			5,000

Contributed Capital for Services		—		—		2,271		—			—			2,271

Purchase of Treasury Stock		—		—		—		—			(12,500	)		(12,500	)

Sale of Treasury Stock		—		—		8,750		—			3,750			12,500

Net Loss		—		—		—		(7,271	)		—			(7,271	)

Balance - December 31, 2007		5,000,000		5,000		11,021		(7,271	)		(8,750	)		—

Net Loss		—		—		—		(2,750	)		—			(2,750	)

Balance - December 31, 2008		5,000,000		5,000		11,021		(10,021	)		(8,750	)		(2,750	)

Net Loss		—		—		—		(3,733	)		—			(3,733	)

Balance - December 31, 2009		5,000,000		5,000		11,021		(13,754	)		(8,750	)		(6,483	)

Net Loss		—		—		—		(1,456	)		—			(1,456	)

Balance - March 31, 2010		5,000,000	$	5,000	$	11,021	$	(15,210	)	$	(8,750	)	$	(7,939	)

F-3

AFH HOLDING II, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

STATEMENTS OF OPERATIONS (UNAUDITED)

							Period From
							Date of Inception
	For the Three Months Ended						(April 16, 2007)
	March 31,						Through
	2010			2009			March 31, 2010


Revenues	$	—		$	—		$	—

Expenses
General and Administrative		1,331			1,250			14,995
Interest		—			—			15

Total Expenses		1,331			1,250			15,010

Net Loss for the Period Before Taxes		(1,331	)		(1,250	)		(15,010	)

Franchise Tax		125			—			200

Net Loss for the Period After Taxes	$	(1,456	)	$	(1,250	)	$	(15,210	)

Loss per Share - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.01	)

Weighted Average Common Shares Outstanding		1,500,000			1,500,000			2,181,186

F-4

AFH HOLDING II, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

STATEMENTS OF CASH FLOWS (UNAUDITED)

							Period From
							Date of Inception
	For the Three Months Ended						(April 16, 2007)
	March 31,						Through
	2010			2009			March 31, 2010

Cash Flows from Operating Activities

Net Loss	$	(1,456	)	$	(1,250	)	$	(15,210	)

Non Cash Adjustments:
Common Stock Issued in Lieu of Services		—			—			5,000
Contributed Capital for Services		—			—			2,271

Changes in Assets and Liabilities:
Accrued Expenses		(3,402	)		1,250			1,331

Net Cash Flows from Operating Activities		(4,858	)		—			(6,608	)

Net Cash Flows from Investing Activities		—			—			—

Cash Flows from Financing Activities
Cash Advance by Parent		4,858			—			6,608

Net Change in Cash and Cash Equivalents		—			—			—

Cash and Cash Equivalents - Beginning of Period		—			—			—

Cash and Cash Equivalents - End of Period	$	—		$	—		$	—

Cash Paid During the Period for:
Interest	$	—		$	—		$	—
Franchise Tax	$	—		$	—		$	—

F-5

AFH HOLDING II, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

NOTES TO FINANCIAL STATEMENTS

Note A -	The Company
	AFH Holding II, Inc., a development stage company (the “Company”), was incorporated under the laws of the State of Delaware on April 16, 2007. The Company is 100% owned by AFH Holding & Advisory, LLC (the “Parent”). The financial statements presented represent only those transactions of AFH Holding II, 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. Subsequent to March 31, 2010, the Company entered into a binding letter of intent with a target company. See Note F for additional details.

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

	The condensed financial statements of AFH Holding II, 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 (prior authoritative literature, FAS No. 7 “Accounting and Reporting by Development Stage Enterprises”).

	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.

	- continued -

F-6

AFH HOLDING II, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

NOTES TO FINANCIAL STATEMENTS

Note B -	Summary of Significant Accounting Policies – continued
	Loss Per Common Share
	Loss per common share is computed in accordance with FASB ASC 260-10 (prior authoritative literature, FAS No. 128 “Earnings Per Share”) by dividing income (loss) available to common stockholders by weighted average number of common shares outstanding for each period. The calculations 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 (prior authoritative literature, FAS No. 109, “Accounting for Income Taxes”) 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-7

AFH HOLDING II, 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 reported recurring losses from operations. As a result, there is an accumulated deficit of $15,210 at March 31, 2010.

	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 -	Subsequent Events
	On April 1, 2010, the Company’s sole shareholder, AFH Holding & Advisory, LLC, entered into a non-binding letter of intent with an operating company with respect to a potential business combination pursuant to a merger, share exchange or otherwise agreed to transaction. This transaction contemplates AFH Holding & Advisory will retain 10% of the combined entities resulting in a change in control and receive a cash fee of $250,000. As this transaction has not been finalized, we do not know what its ultimate impact, nor the ultimate impact of the Company’s intentions, will be on our financial statements or our ability to continue as a going concern.

F-8

Item 2.

Management’s Discussion and Analysis or Plan of Operation.

Plan of Operation

On April 1, 2010, the Company’s sole shareholder, AFH Holding & Advisory, LLC, entered into a non-binding letter of intent with an operating company with respect to a potential business combination pursuant to a merger, share exchange or otherwise agreed to transaction. This transaction contemplates AFH Holding & Advisory will retain 10% of the combined entities resulting in a change in control and receive a cash fee of $250,000. As this transaction has not been finalized, we do not know what its ultimate impact, nor the ultimate impact of the Company’s intentions, will be on our financial statements or our ability to continue as a going concern.

Results of Operations

The Company has not conducted any active operations since inception, except for its efforts to locate suitable acquisition candidates. No revenue has been generated by the Company from April 16, 2007 (inception) to March 31, 2010. It is unlikely the Company will have any revenues unless it is able to effect an acquisition or merger with an operating company, of which there can be no assurance.

Expenses incurred since inception are primarily due to legal, accounting, and other professional service fees.

Liquidity and Capital Resources

At March 31, 2010, the Company had no capital resources and will rely upon the issuance of common stock and additional capital contributions from shareholders to fund administrative expenses pending acquisition of an operating company.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’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

Not applicable.

Item 4T.

Controls and Procedures

The management of the Company, including the principal executive and financial officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e) and 15d-15(e) as of March 31, 2010. Based on that evaluation, the principal executive and financial officer concluded that as of March 31, 2010, our disclosure controls and procedures were effective at the reasonable assurance level to ensure (i) that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) that information required to be disclosed in reports that we file or submit under the Exchange Act is accumulated and communicated to our management including our chief executive and financial officer, to allow timely decisions regarding required disclosure.

Evaluation of Controls and Procedures.

In accordance with Exchange Act Rules 13a-15 and 15d-15, our management is required to perform an evaluation under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period.

Evaluation of Disclosure Controls and Procedures

Our Principal Executive Officer and Principal Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Our Principal Executive Officer and Principal Financial Officer evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2010. 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 quarter ended March 31, 2010, that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings.

None

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

Submission of Matters to a Vote of Security Holders.

None

Item 5.

Other Information.

None

Item 6.

Exhibits.

3.1		Certificate of Incorporation, as filed with the Delaware Secretary of State on April 16, 2007 (1)

3.2		By-Laws (1)

10.1		Stock Redemption Agreement dated November 13, 2007 by and between AFH Holding II, Inc., a Delaware Corporation, and Lauren Scott (2)

10.2		Stock Purchase Agreement dated November 13, 2007 by and between AFH Holding II, Inc., a Delaware corporation, and AFH Holding and Advisory, LLC, a Nevada limited liability company (2)

31.1		Certification by Chief Executive and Financial Officer pursuant to Sarbanes-Oxley Section 302*

32.1		Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002*

* Filed Herewith

(1) Filed as an exhibit to the Company’s Registration Statement on Form 10-SB, as filed with the Securities and Exchange Commission on June 13, 2007, and incorporated herein by this reference.

(2) Filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the Securities and Exchange Commission on November 20, 2007, and incorporated herein by this reference.

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: May 12, 2010

			AFH HOLDING II, INC.
			(Registrant)

			/s/ Amir F. Heshmatpour
			Amir F. Heshmatpour, President

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