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EX-31.1 - EXHIBIT 31.1 - AFH Holding III, Inc.ex31-1.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 June 30, 2013

 

[  ] 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)

 

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).

[  ] 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 August 14, 2013, 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    
       
Item 1. Condensed Financial Statements   3
       
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   5
       
Item 3. Quantitative and Qualitative Disclosures About Market Risk   10
       
Item 4. Controls and Procedures   10
     
PART II - OTHER INFORMATION    
       
Item 1. Legal Proceedings   11
       
Item 1A. Risk Factors   11
       
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds   11
       
Item 3. Defaults Upon Senior Securities   11
       
Item 4. Mine Safety Disclosures   11
       
Item 5. Other Information   11
       
Item 6. Exhibits   12
     
SIGNATURES   13

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

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

 
FINANCIAL REPORTS
AT
JUNE 30, 2013

 

3
 

 

AFH HOLDING III, INC.
(A Development Stage Company)
(A DELAWARE Corporation)
Beverly Hills, CA

  

TABLE OF CONTENTS    
     
Condensed Balance Sheets at June 30, 2013 and December 31, 2012 (Unaudited)   F-1
     
Condensed Statements of Changes in Stockholders’ Equity for the Period from Date of Inception (April 16, 2007) through June 30, 2013 (Unaudited)   F-2
     
Condensed Statements of Operations for the Three and Six Months Ended June 30, 2013 and 2012 and for the Period from Date of Inception (April 16, 2007) through June 30, 2013 (Unaudited)   F-3
     
Condensed Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012 and for the Period from Date of Inception (April 16, 2007) through June 30, 2013 (Unaudited)   F-4
     
Notes to Condensed Financial Statements (Unaudited)   F-5 - F-8

 

4
 

 

AFH HOLDING III, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

 

CONDENSED BALANCE SHEETS (UNAUDITED)
         
   June 30, 2013   December 31, 2012 
         
ASSETS          
Deferred Expense - Related Party  $   $710,000 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Liabilities          
Accrued Expenses  $2,189   $3,060 
Due to Parent   45,143    37,710 
           
Total Liabilities   47,332    40,770 
           
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   (764,353)   (47,791)
           
Total Stockholders' Equity   (47,332)   669,230 
           
Total Liabilities and Stockholders' Equity  $   $710,000 

 

The accompanying notes are an integral part of these condensed financial statements.

 

F-1
 

 

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

 

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD FROM
DATE OF INCEPTION (APRIL 16, 2007) THROUGH JUNE 30, 2013 (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               (9,467)   (9,467)
                          
Balance - December 31, 2010   5,355,000    5,355    711,666    (29,191)   687,830 
                          
Net Loss               (9,634)   (9,634)
                          
Balance - December 31, 2011   5,355,000    5,355    711,666    (38,825)   678,196 
                          
Net Loss               (8,966)   (8,966)
                          
Balance - December 31, 2012   5,355,000    5,355    711,666    (47,791)   669,230 
                          
Net Loss               (716,562)   (716,562)
                          
Balance - June 30, 2013   5,355,000   $5,355   $711,666   $(764,353)  $(47,332)

 

The accompanying notes are an integral part of these condensed financial statements.

 

F-2
 

  

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

 

CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
                     
                   Period From 
   For the Six Months Ended   For the Three Months Ended   Date of Inception
(April 16, 2007)
 
   June 30,   June 30,   Through 
   2013   2012   2013   2012   June 30, 2013 
                     
Revenues  $   $   $   $   $ 
                          
Expenses                         
Transaction Expenses   710,000        710,000        710,000 
General and Administrative   2,859    4,346    1,189    1,828    34,737 
Interest                   100 
                          
Total Expenses  $712,859   $4,346   $711,189   $1,828   $744,837 
                          
Net Loss for the Period Before Taxes   (712,859)   (4,346)   (711,189)   (1,828)   (744,837)
                          
Franchise Tax   3,703    2,500            19,516 
                          
Net Loss for the Period After Taxes   (716,562)   (6,846)   (711,189)   (1,828)   (764,353)
                          
Loss per Share - Basic and Diluted  $(0.13)  $(0.00)  $(0.13)  $(0.00)  $(0.14)
                          
Weighted Average Common Shares Outstanding   5,355,000    5,355,000    5,355,000    5,355,000    5,305,773 

  

The accompanying notes are an integral part of these condensed financial statements.

 

F-3
 

 

AFH HOLDING III, INC.

(A DEVELOPMENT STAGE COMPANY)

(A DELAWARE CORPORATION)

Beverly Hills, CA

 

CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)       
             
           Period From 
           Date of Inception 
   For the Six Months Ended   (April 16, 2007) 
   June 30,   Through 
   2013   2012   June 30, 2013 
             
Cash Flows from Operating Activities               
                
Net Loss  $(716,562)  $(6,846)  $(764,353)
                
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   (871)   (2,788)   2,189 
                
Net Cash Flows from Operating Activities   (717,433)   (9,634)   (755,143)
                
Net Cash Flows from Investing Activities            
                
Cash Flows from Financing Activities               
Cash Advance by Parent   717,433    9,634    755,143 
                
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 
                
Cash Paid During the Period for:               
Interest  $   $   $ 
Income Taxes  $   $   $ 

 

The accompanying notes are an integral part of these condensed financial statements.

 

F-4
 

 

AFH HOLDING III, INC.

(A Development Stage Company)

(A DELAWARE Corporation)

Beverly Hills, CA

 

NOTES TO CONDENSED FINANCIAL STATEMENT (UNAUDITED)
   
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 combination  through 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. The condensed balance sheet information as of December 31, 2012 was derived from the audited financial statements included in Form 10-K. These condensed financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2012, and other reports filed with the SEC.
   
  The accompanying unaudited condensed 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
 

 

AFH HOLDING III, INC.
(A Development Stage Company)
(A DELAWARE Corporation)
Beverly Hills, CA

 

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 
  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 260-10 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 CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 
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 $764,353 at June 30, 2013.
   
  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 and Deferred Expense - Related Party
   
  In February 2008, the Company commenced a private placement (the “Offering”) of up to 350,0000 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 CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 
Note F - Stock and Deferred Expense - Related Party – 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 were held by the Company’s parent for expenses in conjunction with a merger or target acquisition. The amount held by parent under the caption “Deferred Expenses-Related party” have been expensed during the period as there is no assurance as to if and when the funds will be expended in a future transaction for the parents time, legal and accounting fees. Any future transactions, acquisitions, or mergers will need more capital with a new PPM or lending through the parent to complete a transaction.

 

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. 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.

 

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.

 

5
 

 

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.

 

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.

 

6
 

 

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.

 

GOING CONCERN

 

In our accountant’s report for the fiscal year ended December 31, 2012, 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 June 30, 2013, 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 June 30, 2013 of $764,353. 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.

 

7
 

  

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 June 30, 2013 the Company had no cash and no other assets, compared to no cash and $710,000 of assets at December 31, 2012.

 

Liabilities

 

The Company’s total current liabilities at June 30, 2013 and December 31, 2012 were $47,332 and $40,770, respectively, comprised of accrued expenses and due to parent. The increase in liabilities was due to accounting fees for second quarter.

 

Deficit Accumulated During Development Stage

 

At June 30, 2013, the Company had a stockholders’ deficit of $764,353 compared to $47,791 at December 31, 2012. The increase was due to increased liabilities and a net operating loss since inception.

 

Revenues

 

To date, the Company has not generated any revenues.

 

Net Loss

 

For the three month periods ended June 30, 2013 and 2012, the Company had a net loss of $711,189 and $1,828, respectively. For the six month periods ended June 30, 2013 and 2012, the Company had a net loss of $716,562 and $6,846, respectively. From April 16, 2007 (Inception) to June 30, 2013, the Company had a net loss of $764,353.

 

Expenses

 

For the three months ended June 30, 2013, the Company had expenses of $711,189, compared to $1,828 for the three month period ended June 30, 2012. For the six months ended June 30, 2013, the Company had expenses of $716,562, compared to $6,846 for the six month period ended June 30, 2013. This increase was primarily due to transaction costs expenses. For the period from April 16, 2007 (Inception) to June 30, 2013, the Registrant had operating expenses of $764,353. These expenses were due to accounting, audit 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 as well as transaction costs in relation to a potential merger.

 

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Liquidity and Capital Resources

 

At June 30, 2013, the Registrant had $- in cash on hand and total assets of $0, as compared to $710,000 in total assets at June 30, 2012. The Registrant’s current liabilities as of June 30, 2013 totaled $47,332 which comprised of $2,189 in Accrued Expenses and $45,143 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, 2012, 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.

 

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 Six
Months Ended
   For the Period
April 16, 2007
(Inception) to
 
   June 30, 2012   June 30, 2011   June 30, 2012 
Net Cash Used in Operating Activities  $(717,433)  $(9,634)  $(755,143)
Net Cash Provided by Investing Activities            
Net Cash Provided by Financing Activities  $717,433   $9,634   $755,143 
Net Effect on Cash  $   $   $ 

 

Due to the uncertainty of our ability to meet our operational expenses, in their report on our audited financial statements as of and for the years ended December 31, 2012 and 2011, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. There is substantial doubt about our ability to continue as a going concern as we have losses for the six months ended June 30, 2013 totaling $716,562 as well as an accumulated deficit since inception amounting to $764,353 and negative working capital of $764,353.

 

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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 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 June 30, 2013. 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 June 30, 2013, that materially affected, or were reasonably likely to materially affect, our internal controls over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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 1A. Risk Factors.

 

As a smaller company we are not required to provide this information.

  

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. Mine Safety Disclosures

 

Not Applicable

 

Item 5. Other Information.

 

None.

 

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Item 6. Exhibits.

 

Exhibit No.   Description
31.1   Certification by Amir F. Heshmatpour, the Principal Executive Officer and Principal Financial and Accounting Officer of AFH Holding III, Inc., pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.*
32.1   Certification by Amir F. Heshmatpour, the Principal Executive Officer and Principal Financial and Accounting Officer of AFH Holding III, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
     
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**

 

*Filed herewith.

**In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 in this Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

 

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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: August 14, 2013

 

  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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