UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-K





(Mark
One)





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





For the fiscal year ended:     December
31, 2008





 ̈
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ________ to ________





Commission
File No. 000-52849





AFH HOLDING III,
INC.


(Exact
name of registrant as specified in its charter)








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





9595
Wilshire Blvd.


Suite
939


Beverly
Hills, CA 90212


(Address
of principal executive offices)




Issuer’s
      telephone number:
            (310) 300-3431Issuer’s
      facsimile number:
            (310)
      300-3412





N/A


(Former
name, former address and former


fiscal
year, if changed since last report)


Securities
registered under Section 12(b) of the Exchange Act:





None





Securities
registered under Section 12(g) of the Exchange Act:








Common Stock, par value
$0.001 per share


(Title of
Class)





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes  ̈No x





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.


Yes  ̈No x





Indicate
by check mark whether the registrant (1) has 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 registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yesx  No ̈





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.     ̈








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). Yesx
No ̈





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.





There is
currently no market for any of our securities.





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date:





State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the last practicable date: As of April 15, 2009, there were 5,355,000
shares of common stock, par value $0.001 per share, of the Registrant issued and
outstanding.





DOCUMENTS
INCORPORATED BY REFERENCE:


None









TABLE
OF CONTENTS





ITEM
            PAGE
      NO.PART
      IItem
      1.                 Business.Item
      1A.                 Risk
      Factors.Item
      1B.                 Unresolved
      Staff Comments.Item
      2.                 Properties.Item
      3.                 Legal
      Proceedings.Item
      4.                 Submission
      of Matters to a Vote of Security Holders.PART
      IIItem
      5.                 Market
      For Registrant’s Common Equity, Related Stockholder Matters
              and Issuer Purchase of Equity
      Securities.Item
      6.                 Selected
      Financial Data.Item
      7.                 Management’s
      Discussion and Analysis of Financial Condition
              and Results of
      Operations.Item
      7A.                 Quantitative
      and Qualitative Disclosure About Market Risk.Item
      8.                 Financial
      Statements and Supplementary Data.Item
      9.                 Changes
      in and Disagreements With Accountants on Accounting
              and Financial
      Disclosure.Item
      9A(T).                      Controls
      and Procedures.Item
      9B.                 Other
      InformationPART
      IIIItem
      10.                 Directors,
      Executive Officers and Corporate Governance.Item
      11.                 Executive
      Compensation.Item
      12.                 Security
      Ownership and Certain Beneficial Owners
              And Management’s and Related
      Stockholder Matters.Item
      13.                 Certain
      Relationships and Related Transactions,
              and
      Director Independence.Item
      14.                 Principal
      Accountant Fees and Services.PART
      IVItem
      15.                 Exhibits
      and Financial Statement Schedules.SIGNATURES



















PART
I





FORWARD-LOOKING
STATEMENTS





Certain
statements made in this Annual Report on Form 10-K are “forward-looking
statements” (within the meaning of the Private Securities Litigation Reform Act
of 1995) regarding the plans and objectives of management for future operations.
Such statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of THE Registrant to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. The forward-looking
statements included herein are based on current expectations that involve
numerous risks and uncertainties. The Registrant’s plans and objectives are
based, in part, on assumptions involving the continued expansion of business.
Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Registrant. Although
the Registrant believes its assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance the forward-looking statements included in
this Report will prove to be accurate. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Registrant or
any other person that the objectives and plans of the Registrant will be
achieved.





ITEM
1. BUSINESS




(a)
            Business
      Development





AFH Holding III, Inc. (the “Registrant”) was incorporated on April 16,
2007 in the State of Delaware for the purpose of conducting a public
distribution of securities (the Proposed Distribution) and then effecting a
merger, acquisition or other business combination transaction (Business
Combination) with an unidentified privately-held company (a Target). 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.





On
October 5, 2007, the Registrant voluntarily filed with the Securities and
Exchange Commission (“SEC”) a Registration Statement on Form 10-SB therein
registering the Registrant’s common stock, par value $0.001 per share, under
Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). The Form 10-SB went effective by operation of law 60 days after the
filing date, and since such date, the Registrant has been a reporting company
and required to file periodic and current reports with the SEC under the
Exchange Act.





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 this offering to pursue an
acquisition of a private company and working capital purposes.








(b)
            Business
      of Issuer





The
Registrant, based on proposed business activities, is a “blank check” company as
defined in Rule 419(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”). The SEC defines those companies as “any development stage
company that has no specific business plan or purpose or has indicated that its
business plan is to engage in a merger or acquisition with an unidentified
company or companies, or other entity or person and that is issuing a penny
stock, within the meaning of Section 3(a)(51) of the Exchange
Act.  Many states have enacted statutes, rules and regulations
limiting the sale of securities of “blank check” companies in their respective
jurisdictions. Management does not intend to undertake any efforts to cause a
market to develop in our securities, either debt or equity, until we have
successfully concluded a business combination. The Registrant intends to comply
with the periodic reporting requirements of the Exchange Act for so long as we
are subject to those requirements.








The
Registrant was organized as a vehicle to investigate and, if such investigation
warrants, acquire a target company or business seeking the perceived advantages
of being a publicly held corporation. The Registrant’s principal business
objective for the next 12 months and beyond such time will be to achieve
long-term growth potential through a combination with a business rather than
immediate, short-term earnings. The Registrant will not restrict its potential
candidate target companies to any specific business, industry or geographical
location and, thus, may acquire any type of business.





The
analysis of new business opportunities has and will be undertaken by or under
the supervision of the officers and directors of the Registrant. The Registrant
has considered potential acquisition transactions with several companies, but as
of this date has not entered into any definitive agreement with any party. The
Registrant has unrestricted flexibility in seeking, analyzing and participating
in potential business opportunities. In its efforts to analyze potential
acquisition targets, the Registrant will consider the following kinds of
factors:





(a)
            Potential
      for growth, indicated by new technology, anticipated market expansion or
      new products;





(b)
            Competitive
      position as compared to other firms of similar size and experience within
      the industry segment as well as within the industry as a
      whole;





(c)
            Strength
      and diversity of management, either in place or scheduled for
      recruitment;





(d)
            Capital
      requirements and anticipated availability of required funds, to be
      provided by the Registrant or from operations, through the sale of
      additional securities, through joint ventures or similar arrangements or
      from other sources;





(e)
            The
      cost of participation by the Registrant as compared to the perceived
      tangible and intangible values and potentials;(f)
            The
      extent to which the business opportunity can be
      advanced;




(g)
            The
      accessibility of required management expertise, personnel, raw materials,
      services, professional assistance and other required items;
      and(h)
            Other
      relevant factors.




In
applying the foregoing criteria, not one of which will be controlling,
management will attempt to analyze all factors and circumstances and make a
determination based upon reasonable investigative measures and available data.
Potentially available business opportunities may occur in many different
industries, and at various stages of development, all of which will make the
task of comparative investigation and analysis of such business opportunities
extremely difficult and complex. Due to the Registrant’s limited capital
available for investigation, the Registrant may not discover or adequately
evaluate adverse facts about the opportunity to be acquired.





FORM OF
ACQUISITION





The
manner in which the Registrant participates in an opportunity will depend upon
the nature of the opportunity, the respective needs and desires of the
Registrant and the promoters of the opportunity, and the relative negotiating
strength of the Registrant and such promoters.





It is
likely that the Registrant will consummate a transaction through the issuance of
common stock or other securities of the Registrant. Although the terms of any
such transaction cannot be predicted, it should be noted that in certain
circumstances, the criteria for determining whether or not an acquisition is a
so-called “tax free” reorganization under Section 368(a)(1) of the Internal
Revenue Code of 1986, as amended (the “Code”), depends upon whether the owners
of the acquired business own 80% or more of the voting stock of the surviving
entity. If a transaction were structured to take advantage of these provisions
rather than other “tax free” provisions provided under the Code, all prior
stockholders would in such circumstances retain 20% or less of the total issued
and outstanding shares of the surviving entity. Under other circumstances,
depending upon the relative negotiating strength of the parties, prior
stockholders may retain substantially less than 20% of the total issued and
outstanding shares of the surviving entity. This could result in substantial
additional dilution to the equity of those who were stockholders of the
Registrant prior to such reorganization.





The
present stockholders of the Registrant will likely not have control of a
majority of the voting shares of the Registrant following a reorganization
transaction. As part of such a transaction, all or a majority of the
Registrant’s directors may resign and new directors may be appointed without any
vote by stockholders.








In the
case of an acquisition, the transaction may be accomplished upon the sole
determination of management without any vote or approval by stockholders. In the
case of a statutory merger or consolidation directly involving the Registrant,
it will likely be necessary to call a stockholders’ meeting and obtain the
approval of the holders of a majority of the outstanding shares. The necessity
to obtain such stockholder approval may result in delay and additional expense
in the consummation of any proposed transaction and will also give rise to
certain appraisal rights to dissenting stockholders. Most likely, management
will seek to structure any such transaction so as not to require stockholder
approval.





It is
anticipated that the investigation of specific business opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and
substantial cost for accountants, attorneys and others. If a decision is made
not to participate in a specific business opportunity, the costs theretofore
incurred in the related investigation would not be recoverable. Furthermore,
even if an agreement is reached for the participation in a specific business
opportunity, the failure to consummate that transaction may result in the loss
to the Registrant of the related costs incurred.





We
presently have no employees. Our officers and directors contribute their
services to the Registrant and are engaged in outside business activities and
anticipate that they will devote to our business only several hours per week
until the acquisition of a successful business opportunity has been consummated.
We expect no significant changes in the number of our employees other than such
changes, if any, incident to a business combination.





(c)
            Reports
      to security holders.








1)
            The
      Registrant files reports with the SEC. The Registrant is a reporting
      company and complies with the requirements of the Exchange
      Act.








2)
            The
      Registrant delivers annual and quarterly reports to it security
      holders.








3)
            The
      public may read and copy any materials the Registrant files with the SEC
      at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington,
      D.C. 20549. The public may obtain information on the operation of the
      Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally,
      the SEC maintains an Internet site that contains reports, proxy and
      information statements, and other information regarding issuers that file
      electronically with the SEC, which can be found at
      http://www.sec.gov.





Employees





The
Registrant currently has no employees.





ITEM
1A. RISK FACTORS





An
investment in our securities is highly speculative and subject to numerous and
substantial risks. These risks include those set forth below and elsewhere in
this Form 10-K. Readers are encouraged to review these risks carefully before
making any investment decision.





AN
INVESTMENT IN THE REGISTRANT IS HIGHLY SPECULATIVE IN NATURE AND INVOLVES AN
EXTREMELY HIGH DEGREE OF RISK.





There may
be conflicts of interest between our management and our non-management
stockholders.





Conflicts
of interest create the risk that management may have an incentive to act
adversely to the interests of other investors. A conflict of interest may arise
between our management’s personal pecuniary interest and its fiduciary duty to
our stockholders. Further, our management’s own pecuniary interest may at some
point compromise its fiduciary duty to our stockholders. In addition, our
officers and directors are currently involved with other blank check companies
and conflicts in the pursuit of business combinations with such other blank
check companies with which they and other members of our management are, and may
be the future be, affiliated with may arise. If we and the other blank check
companies that our officers and directors are affiliated with desire to take
advantage of the same opportunity, then those officers and directors that are
affiliated with both companies would abstain from voting upon the opportunity.
In the event of identical officers and directors, the officers and directors
will arbitrarily determine the Registrant that will be entitled to proceed with
the proposed transaction.








OUR
BUSINESS IS DIFFICULT TO EVALUATE BECAUSE WE HAVE NO OPERATING
HISTORY.





As we
have no operating history or revenue and only minimal assets, there is a risk
that we will be unable to continue as a going concern and consummate a business
combination. We have had no recent operating history nor any revenues or
earnings from operations since inception. We have no significant assets or
financial resources. We will, in all likelihood, sustain operating expenses
without corresponding revenues, at least until the consummation of a business
combination. This may result in our incurring a net operating loss that will
increase continuously until we can consummate a business combination with a
profitable business opportunity. We cannot assure you that we can identify a
suitable business opportunity and consummate a business
combination.





THERE
IS COMPETITION FOR THOSE PRIVATE COMPANIES SUITABLE FOR A MERGER TRANSACTION OF
THE TYPE CONTEMPLATED BY MANAGEMENT.





We are in
a highly competitive market for a small number of business opportunities which
could reduce the likelihood of consummating a successful business combination.
We are and will continue to be an insignificant participant in the business of
seeking mergers with, joint ventures with and acquisitions of small private and
public entities. A large number of established and well-financed entities,
including small public companies and venture capital firms, are active in
mergers and acquisitions of companies that may be desirable target candidates
for us. Nearly all these entities have significantly greater financial
resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination. These
competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination.





FUTURE
SUCCESS IS HIGHLY DEPENDENT ON THE ABILITY OF MANAGEMENT TO LOCATE AND ATTRACT A
SUITABLE ACQUISITION.





The
nature of our operations is highly speculative and there is a consequent risk of
loss of your investment. The success of our plan of operation will depend to a
great extent on the operations, financial condition and management of the
identified business opportunity. While management intends to seek business
combination(s) with entities having established operating histories, we cannot
assure you that we will be successful in locating candidates meeting that
criterion. In the event we complete a business combination, the success of our
operations may be dependent upon management of the successor firm or venture
partner firm and numerous other factors beyond our control.







THE
REGISTRANT HAS NO EXISTING AGREEMENT FOR A BUSINESS COMBINATION OR OTHER
TRANSACTION.





We have
no arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public entity. No
assurances can be given that we will successfully identify and evaluate suitable
business opportunities or that we will conclude a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluation. We cannot guarantee that we will be able to
negotiate a business combination on favorable terms, and there is consequently a
risk that funds allocated to the purchase of our shares will not be invested in
a company with active business operations.





MANAGEMENT
INTENDS TO DEVOTE ONLY A LIMITED AMOUNT OF TIME TO SEEKING A TARGET COMPANY
WHICH MAY ADVERSELY IMPACT OUR ABILITY TO IDENTIFY A SUITABLE ACQUISITION
CANDIDATE.





While
seeking a business combination, management anticipates devoting no more than a
few hours per week to the Registrant’s affairs. Our officers have not entered
into written employment agreements with us and are not expected to do so in the
foreseeable future. This limited commitment may adversely impact our ability to
identify and consummate a successful business combination.





THE
TIME AND COST OF PREPARING A PRIVATE COMPANY TO BECOME A PUBLIC REPORTING
COMPANY MAY PRECLUDE US FROM ENTERING INTO A MERGER OR ACQUISITION WITH THE MOST
ATTRACTIVE PRIVATE COMPANIES.





Target
companies that fail to comply with SEC reporting requirements may delay or
preclude acquisition. Sections 13 and 15(d) of the Exchange Act require
reporting companies to provide certain information about significant
acquisitions, including certified financial statements for the Registrant
acquired, covering one, two, or three years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target entities to prepare these statements may significantly delay or
essentially preclude consummation of an acquisition. Otherwise suitable
acquisition prospects that do not have or are unable to obtain the required
audited statements may be inappropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable.








THE
REGISTRANT MAY BE SUBJECT TO FURTHER GOVERNMENT REGULATION WHICH WOULD ADVERSELY
AFFECT OUR OPERATIONS.





Although
we will be subject to the reporting requirements under the Exchange Act,
management believes we will not be subject to regulation under the Investment
Company Act of 1940, as amended (the “Investment Company Act”), since we will
not be engaged in the business of investing or trading in securities. If we
engage in business combinations which result in our holding passive investment
interests in a number of entities, we could be subject to regulation under the
Investment Company Act. If so, we would be required to register as an investment
company and could be expected to incur significant registration and compliance
costs. We have obtained no formal determination from the Securities and Exchange
Commission as to our status under the Investment Company Act and, consequently,
violation of the Act could subject us to material adverse
consequences.




ANY
POTENTIAL ACQUISITION OR MERGER WITH A FOREIGN COMPANY MAY SUBJECT US TO
ADDITIONAL RISKS.





If we
enter into a business combination with a foreign concern, we will be subject to
risks inherent in business operations outside of the United States. These risks
include, for example, currency fluctuations, regulatory problems, punitive
tariffs, unstable local tax policies, trade embargoes, risks related to shipment
of raw materials and finished goods across national borders and cultural and
language differences. Foreign economies may differ favorably or unfavorably from
the United States economy in growth of gross national product, rate of
inflation, market development, rate of savings, and capital investment, resource
self-sufficiency and balance of payments positions, and in other
respects.





THERE
IS CURRENTLY NO TRADING MARKET FOR OUR COMMON STOCK.





Outstanding
shares of our Common Stock cannot be offered, sold, pledged or otherwise
transferred unless subsequently registered pursuant to, or exempt from
registration under, the Securities Act and any other applicable federal or state
securities laws or regulations. These restrictions will limit the ability of our
stockholders to liquidate their investment.





OUR BUSINESS WILL HAVE NO REVENUES
UNLESSANDUNTIL WE MERGE WITH OR ACQUIRE AN
OPERATING BUSINESS.





We are a
development stage company and have had no revenues from operations. We may not
realize any revenues unless and until we successfully merge with or acquire an
operating business.





THE
REGISTRANT INTENDS TO ISSUE MORE SHARES IN A MERGER OR ACQUISITION, WHICH WILL
RESULT IN SUBSTANTIAL DILUTION.





Our
certificate of incorporation authorizes the issuance of up to 100,000,000 shares
of Common Stock, and up to 20,000,000 shares of Preferred Stock. Any merger or
acquisition effected by us may result in the issuance of additional securities
without stockholder approval and may result in substantial dilution in the
percentage of our common stock held by our then existing stockholders. Moreover,
the common stock issued in any such merger or acquisition transaction may be
valued on an arbitrary or non-arm’s-length basis by our management, resulting in
an additional reduction in the percentage of common stock held by our then
existing stockholders. Our Board of Directors has the power to issue any or all
of such authorized but unissued shares without stockholder approval. To the
extent that additional shares of Common Stock or Preferred Stock are issued in
connection with a business combination or otherwise, dilution to the interests
of our stockholders will occur and the rights of the holders of Common Stock
might be materially adversely affected.





OUR
STOCKHOLDER MAY ENGAGE IN A TRANSACTION TO CAUSE THE REGISTRANT TO REPURCHASE
ITS SHARES OF COMMON STOCK.





In order
to provide an interest in the Registrant to a third party, our stockholders may
choose to cause us to sell our securities to third parties, with the proceeds of
such sale being utilized by us to repurchase shares of common stock held by our
stockholders. As a result of such transaction, our management, stockholders and
Board of Directors may change.





THE
REGISTRANT HAS CONDUCTED NO MARKET RESEARCH OR IDENTIFICATION OF BUSINESS
OPPORTUNITIES, WHICH MAY AFFECT OUR ABILITY TO IDENTIFY A BUSINESS TO MERGE WITH
OR ACQUIRE.





We have
neither conducted nor have others made available to us results of market
research concerning prospective business opportunities. Therefore, we have no
assurances that market demand exists for a merger or acquisition as contemplated
by us. Our management has not identified any specific business combination or
other transactions for formal evaluation by us, such that it may be expected
that any such target business or transaction will present such a level of risk
that conventional private or public offerings of securities or conventional bank
financing will not be available. There is no assurance that we will be able to
acquire a business opportunity on terms favorable to us. Decisions as to which
business opportunity to participate in will be unilaterally made by our
management, which may act without the consent, vote or approval of our
stockholders.







BECAUSE
WE MAY SEEK TO COMPLETE A BUSINESS COMBINATION THROUGH A “REVERSE MERGER”,
FOLLOWING SUCH A TRANSACTION WE MAY NOT BE ABLE TO ATTRACT THE ATTENTION OF
MAJOR BROKERAGE FIRMS.





Additional
risks may exist since we will assist a privately held business to become public
through a “reverse merger.” Securities analysts of major brokerage firms may not
provide coverage of our Company since there is no incentive to brokerage firms
to recommend the purchase of our common stock. No assurance can be given that
brokerage firms will want to conduct any secondary offerings on behalf of our
post-merger company in the future.





WE
CANNOT ASSURE YOU THAT FOLLOWING A BUSINESS COMBINATION WITH AN OPERATING
BUSINESS; OUR COMMON STOCK WILL BE LISTED ON NASDAQ OR ANY OTHER SECURITIES
EXCHANGE.





Following
a business combination, we may seek the listing of our common stock on NASDAQ or
the American Stock Exchange. However, we cannot assure you that following such a
transaction, we will be able to meet the initial listing standards of either of
those or any other stock exchange, or that we will be able to maintain a listing
of our common stock on either of those or any other stock exchange. After
completing a business combination, until our common stock is listed on the
NASDAQ or another stock exchange, we expect that our common stock would be
eligible to trade on the OTC Bulletin Board, another over-the-counter quotation
system, or on the “pink sheets,” where our stockholders may find it more
difficult to dispose of shares or obtain accurate quotations as to the market
value of our common stock. In addition, we would be subject to an SEC rule that,
if it failed to meet the criteria set forth in such rule, imposes various
practice requirements on broker-dealers who sell securities governed by the rule
to persons other than established customers and accredited investors.
Consequently, such rule may deter broker-dealers from recommending or selling
our common stock, which may further affect its liquidity. This would also make
it more difficult for us to raise additional capital following a business
combination.







THERE
IS NO PUBLIC MARKET FOR OUR COMMON STOCK, NOR HAVE WE EVER PAID DIVIDENDS ON OUR
COMMON STOCK.





There is
no public trading market for our common stock and none is expected to develop in
the foreseeable future unless and until we complete a business combination with
an operating business and such business files a registration statement under the
Securities Act. Additionally, we have never paid dividends on our Common Stock
and do not presently intend to pay any dividends in the foreseeable future. We
anticipate that any funds available for payment of dividends will be re-invested
into the Registrant to further its business strategy.





OUR
CERTIFICATE OF INCORPORATION AUTHORIZES THE ISSUANCE OF UP TO 5,000,000 SHARES
OF PREFERRED STOCK WITH DESIGNATIONS, RIGHTS AND PREFERENCES DETERMINED FROM
TIME TO TIME BY ITS BOARD OF DIRECTORS WITHOUT STOCKHOLDER
APPROVAL.





Our
Certificate of Incorporation authorizes the issuance of up to 20,000,000 shares
of preferred stock with designations, rights and preferences determined from
time to time by its Board of Directors without stockholder approval.
Accordingly, our Board of Directors is empowered, without stockholder approval,
to issue preferred stock with dividend, liquidation, conversion, voting, or
other rights which could adversely affect the voting power or other rights of
the holders of the common stock. In the event of issuance, the preferred stock
could be utilized, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Registrant. Although we
have no present intention to issue any shares of its authorized preferred stock,
there can be no assurance that the Registrant will not do so in the
future. If a market were to develop for our common stock, the prevailing
price of our common to stock might suppress the volume and price of our common
stock.





CONTROL
BY MANAGMENT





Amir F.
Heshmatpour, our sole executive officer and director, beneficially owns
approximately 93.4% of all the issued and outstanding capital stock of the
Registrant. Consequently, management has the ability to influence control of our
operations and, acting together, will have the ability to influence or control
substantially all matters submitted to stockholders for approval,
including:




●
            Election
      of the board of directors;





●
            Removal
      of any directors;








●
            Amendment
      of our certificate of incorporation or bylaws;
  and





●
            Adoption
      of measures that could delay or prevent a change in control or impede a
      merger, takeover or other business
combination.




Amir F.
Heshmatpour will control our management and affairs and other stockholders
of the Registrant possess no practical ability to remove management or effect
the operations of the business of the Registrant. Accordingly, this
concentration of ownership by itself may have the effect of impeding a merger,
consolidation, takeover or other business consolidation, or discouraging a
potential acquirer from making a tender offer for the common stock.





ITEM
1B.  UNRESOLVED STAFF COMMENTS





None.





ITEM
2.  PROPERTIES





The
Registrant neither rents nor owns any properties. The Registrant currently has
no policy with respect to investments or interests in real estate, real estate
mortgages or securities of, or interests in, persons primarily engaged in real
estate activities.





ITEM
3.  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
4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS





None.
















PART
II





ITEM
5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES








General
Common or Preferred Stock.





The
Registrant is authorized by its Certificate of Incorporation to issue an
aggregate of 120,000,000 shares of capital stock, of which 100,000,000 are
shares of common stock, par value $.001 per share (the "Common Stock") and
20,000,000 are shares of preferred stock, par value $.001 per share (the
"Preferred Stock"). As of the date of filing this Form 10-K, 5,355,000 shares of
Common Stock and no shares of Preferred Stock are issued and
outstanding.





Common
Stock





All
outstanding shares of Common Stock are of the same class and have equal rights
and attributes. The holders of Common Stock are entitled to one vote per share
on all matters submitted to a vote of stockholders of the Registrant. All
stockholders are entitled to share equally in dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available. In the event of liquidation, the holders of Common Stock are entitled
to share ratably in all assets remaining after payment of all liabilities. The
stockholders do not have cumulative or preemptive rights.





Preferred
Stock





Our
Certificate of Incorporation authorizes the issuance of Preferred Stock with
designations, rights and preferences determined from time to time by our Board
of Directors, without stockholder approval. Accordingly, our Board of Directors
is empowered, without stockholder approval, to issue Preferred Stock with
dividend, liquidation, conversion, voting, or other rights which could adversely
affect the voting power or other rights of the holders of the Common
Stock.








Market





The
Registrant’s common stock is not trading on any stock exchange. The Registrant
is not aware of any market activity in its stock since its inception through the
date of this filing.





Dividend
Policy





All
stockholders are entitled to share equally in dividends, if any, as may be
declared from time to time by the Board of Directors out of funds legally
available. In the event of liquidation, the holders of Common Stock are entitled
to share ratably in all assets remaining after payment of all liabilities. The
stockholders do not have cumulative or preemptive rights.





The
Registrant has not declared or paid any cash dividends on its common stock and
does not intend to declare or pay any cash dividend in the foreseeable future.
The payment of dividends, if any, is within the discretion of the Board of
Directors and will depend on the Registrant’s earnings, if any, its capital
requirements and financial condition and such other factors as the Board of
Directors may consider.





Holders





As of the
date of this filing, there are 71 holders of the Registrant’s Common
Stock.





Sales
of Unregistered Securities





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 6.  SELECTED FINANCIAL DATA





Not
applicable.





ITEM
7.  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 939, 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.





GOING
CONCERN





In our
accountant’s report for the fiscal year ended December 31, 2008, they expressed
their doubt as to the Registrant’s ability to continue as a going
concern.  The financial statements included in this Annual 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
December 31, 2008, the Registrant had $0 cash on hand. The Registrant has had no
revenue and has incurred an accumulated net loss from April 16, 2007 (inception)
through the period ended December 31, 2008 of $10,571.  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.





Results
of Operations





The
Registrant 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 Registrant during such period, and it is unlikely the
Registrant 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.








For the
year ending December 31, 2008 and the period from April 16, 2007 (Inception) to
December 31, 2008, the Registrant has had no activities that produced revenues
from operations.





For the
year ending December 31, 2008, the Registrant had a net loss of $3,550. For the
period from April 16, 2007 (Inception) to December 31, 2008 and 2007, the
Registrant had a net loss of $10,571 and $7,021, respectively, comprised mostly
of legal, accounting, audit and other professional service fees incurred in
relation to the filing of the Registrant’s Registration Statement on Form 10-SB
filed on July 7, 2006 and annual and quarterly reports filed since the
effectiveness of such registration statement.





For the
year ending December 31, 2008, the Registrant had operating expenses of $3,550.
For the period from April 16, 2007 (Inception) to December 31, 2008 and 2007,
the Registrant had operating expenses of $10,571 and $7,021, respectively. 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.





Liquidity
and Capital Resources





At
December 31, 2008, the Registrant had cash on hand of $0 and total assets equal
to $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 December 31, 2008 totaled $3,550 which comprised of Accrued
Expenses and amounts 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,
2008, 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 this 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 Registrant's cash flows from operating, investing,
and financing activities:





For the Cumulative Period
fromApril 16,
2007(Inception) toDecember 31,
2008





Operating
      activities
            
            $
            (1,750)Investing
      activities
            
            $
            0Financing
      activities
            
            $
            1,750Net
      effect on cash
            
            $
            0










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
7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.







ITEM 8. 
FINANCIAL STATEMENTS




AFH
HOLDING III, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 (A
DELAWARE CORPORATION)
 Beverly
Hills, CA
 
 FINANCIAL
      REPORTSATDECEMBER
      31, 2008
 
  
 AFH
HOLDING III, INC.
 (A
DEVELOPMENT STAGE COMPANY)
 (A
DELAWARE CORPORATION)
 Beverly
Hills, CA
  TABLE
OF CONTENTS
 
 Report
      of Independent Registered Public Accounting Firm
                1Balance
      Sheets at December 31, 2008 and 2007
                2Statement
      of Changes in Stockholder’s Deficit for the Periodfrom
      Date of Inception (April 16, 2007) through December 31,
    2008
                3Statements
      of Operations for the Year Ended December 31, 2008, the Period
      fromDate
      of Inception (April 16, 2007) through December 31, 2007, and for the
      Periodfrom
      Date of Inception (April 16, 2007) through December 31,
    2008
                4Statements
      of Cash Flows for the Year Ended December 31, 2008, the Period
      fromDate
      of Inception (April 16, 2007) through December 31, 2007, and for the
      Periodfrom
      Date of Inception (April 16, 2007) through December 31,
    2008
                5Notes
      to Financial Statements
                6-9
 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board of Directors and Stockholders of
 AFH Holding III, Inc.
  We have audited the accompanying balance sheets of AFH Holding III, Inc.
as of December 31, 2008 and 2007, and the related statements of operations,
changes in stockholder’s equity (deficit), and cash flows for the year ended
December 31, 2008, for the period from date of inception (April 16, 2007)
through December 31, 2007 and for the period from date of inception (April 16,
2007) through December 31, 2008. AFH Holding III, Inc.’s management is responsible for these
financial statements. Our responsibility is to express an opinion on these
financial statements based on our audits.
  We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of AFH Holding III,
Inc. as of December 31, 2008 and 2007, and the results of its operations and its
cash flows for the year ended December 31, 2008, for the period from date of
inception (April 16, 2007) through December 31, 2007 and for the period from
date of inception (April 16, 2007) through December 31, 2008 in conformity with
accounting principles generally accepted in the United States of America.
  The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note D to the
financial statements, the Company’s significant operating losses raise
substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
  /s/Rotenberg & Co.,LLP
 Rochester, New York
 April 15, 2009
  1
  AFH
      HOLDING III, INC.(A
      DEVELOPMENT STAGE COMPANY)(A
      DELAWARE CORPORATION)Beverly
      Hills, CA
  BALANCE
      SHEETSDecember
      31,
                
                2008
                
                
                2007ASSETSDue
      from Parent
                
                $
                710,000
                
                
                $
                —LIABILITIES
      AND STOCKHOLDER'S EQUITYLiabilitiesAccrued
      Expenses
                
                $
                1,800
                
                
                $
                —Due
      to Parent
                
                
                1,750
                
                
                
                —Total
      Liabilities
                
                
                3,550
                
                
                
                —Stockholder's
      EquityPreferred
      Stock:  $.001 Par; 20,000,000 Shares Authorized,-0-
      Issued and Outstanding
                
                
                —
                
                
                
                —Common
      Stock:  $.001 Par; 100,000,000 Shares
Authorized;5,355,000
      and 5,000,000 Issued and Outstanding, Respectively
                
                
                5,355
                
                
                
                5,000Additional
      Paid-In-Capital
                
                
                711,666
                
                
                
                2,021Deficit
      Accumulated During Development Stage
                
                
                (10,571
                )
                
                
                (7,021
                )Total
      Stockholder's Equity
                
                
                706,450
                
                
                
                —Total
      Liabilities and Stockholder's Equity
                
                $
                710,000
                
                
                $
                —
  The accompanying notes are an integral part of these financial
statements.
 2
  AFH
      HOLDING III, INC.(A
      DEVELOPMENT STAGE COMPANY)(A
      DELAWARE CORPORATION)Beverly
      Hills, CA




STATEMENTS
      OF CHANGES IN STOCKHOLDER'S EQUITY FOR THE PERIOD FROMDATE
      OF INCEPTION (APRIL 16, 2007) THROUGH DECEMBER 31, 2008DeficitAccumulatedCommon
      Stock
              
              
              Additional
              
              
              During
              
              
              TotalNumber
              
              
              
              
              
              Paid-In
              
              
              Development
              
              
              Stockholder'sof
      Shares
              
              
              Value
              
              
              Capital
              
              
              Stage
              
              
              DeficitBalance
      - April 16, 2007
              
              
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —
              
              
              $
              —Common
      Stock Issued in Lieu of Services
              
              
              5,000,000
              
              
              
              5,000
              
              
              
              —
              
              
              
              —
              
              
              
              5,000Contributed
      Capital for Services
              
              
              —
              
              
              
              —
              
              
              
              2,021
              
              
              
              —
              
              
              
              2,021Net
      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
              
              
              
              —
              
              
              
              710,000Net
      Loss
              
              
              —
              
              
              
              —
              
              
              
              —
              
              
              
              (3,550
              )
              
              
              (3,550
              )Balance
      - December 31, 2008
              
              
              5,355,000
              
              
              $
              5,355
              
              
              $
              711,666
              
              
              $
              (10,571
              )
              
              $
              706,450




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


3






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




STATEMENTS
      OF OPERATIONSPeriod
      From
              
              
              Period
      FromFor
      the Year
              
              
              Date
      of Inception
              
              
              Date
      of InceptionEnded
              
              
              (April
      16, 2007)
              
              
              (April
      16, 2007)December
      31,
              
              
              Through
              
              
              Through2008
              
              
              December
      31, 2007
              
              
              December
      31, 2008Revenues
              
              $
              —
              
              
              $
              —
              
              
              $
              —ExpensesGeneral
      and Administrative
              
              
              3,550
              
              
              
              7,021
              
              
              
              10,571Total
      Expenses
              
              $
              3,550
              
              
              $
              7,021
              
              
              $
              10,571Net
      Loss
              
              $
              (3,550
              )
              
              $
              (7,021
              )
              
              $
              (10,571
              )Loss
      per Share - Basic and Diluted
              
              $
              (0.00
              )
              
              $
              (0.00
              )
              
              $
              (0.00
              )Weighted
      Average Common Shares Outstanding
              
              
              5,302,141
              
              
              
              5,000,000
              
              
              
              5,176,651




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


4






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




STATEMENTS
      OF CASH FLOWSPeriod
      From
              
              
              Period
      FromFor
      the Year
              
              
              Date
      of Inception
              
              
              Date
      of InceptionEnded
              
              
              (April
      16, 2007)
              
              
              (April
      16, 2007)December
      31,
              
              
              Through
              
              
              Through2008
              
              
              December
      31, 2007
              
              
              December
      31, 2008Cash
      Flows from Operating ActivitiesNet
      Loss
              
              $
              (3,550
              )
              
              $
              (7,021
              )
              
              $
              (10,571
              )Non
      Cash Adjustments:Common
      Stock Issued in Lieu of Services
              
              
              —
              
              
              
              5,000
              
              
              
              5,000Contributed
      Capital for Services
              
              
              —
              
              
              
              2,021
              
              
              
              2,021Changes
      in Assets and Liabilities:Accrued
      Expenses
              
              
              1,800
              
              
              
              —
              
              
              
              1,800Net
      Cash Flows from Operating Activities
              
              
              (1,750
              )
              
              
              —
              
              
              
              (1,750
              )Net
      Cash Flows from Investing Activities
              
              
              —
              
              
              
              —
              
              
              
              —Cash
      Flows from Financing ActivitiesCash
      Advance by Parent
              
              
              1,750
              
              
              
              —
              
              
              
              1,750Net
      Cash Flows from Financing Activities
              
              
              1,750
              
              
              
              —
              
              
              
              1,750Net
      Change in Cash and Cash Equivalents
              
              
              —
              
              
              
              —
              
              
              
              —Cash
      and Cash Equivalents - Beginning of Year
              
              
              —
              
              
              
              —
              
              
              
              —Cash
      and Cash Equivalents - End of Year
              
              $
              —
              
              
              $
              —
              
              
              $
              —Cash
      Paid During the Year for:Interest
              
              $
              —
              
              
              $
              —
              
              
              $
              —Income
      Taxes
              
              $
              —
              
              
              $
              —
              
              
              $
              —Supplemental
      Disclosures:Non-Cash
      Proceeds Held by Parent
              
              $
              710,000
              
              
              $
              —
              
              
              $
              710,000






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


5




AFH
HOLDING III, INC.


(A
DEVELOPMENT STAGE COMPANY)


(A
DELAWARE CORPORATION)


Beverly
Hills, CA








NOTES
TO FINANCIAL STATEMENTS








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 majority owned by AFH Holding &
      Advisory, LLC.  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.





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 Statement of Financial Accounting
      Standards No. 7, “Accounting and Reporting by Development Stage
      Enterprises.”








.


-
      continued -




6


AFH
HOLDING III, 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 Statement of Financial
      Accounting Standards No. 128, “Earnings Per Share,” by dividing income
      (loss) available to common stockholders by weighted average number of
      common shares outstanding for each period.  Diluted earnings per
      share includes the dilutive effect of any stock options or warrants, if
      any.





Use
      of Estimates


The
      preparation of financial statements in conformity with 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 Statement of Financial
Accounting Standards 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 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.





7


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 $10,571 at December 31, 2008.





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 the majority shareholder
      of the Company. There are no repayment
terms.








8











AFH
HOLDING III, INC.


(A
DEVELOPMENT STAGE COMPANY)


(A
DELAWARE CORPORATION)


Beverly
Hills, CA








NOTES
TO FINANCIAL STATEMENTS








NOTE F
- Shareholders’ Equity


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. 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.











9





ITEM 9.  CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE





None.




ITEM
9A(T).  CONTROLS AND PROCEDURES





Evaluation
of Disclosure Controls and Procedures





In
connection with the preparation of this annual report, an evaluation was carried
out by the Registrant’s management, with the participation of the principal
executive officer and the principal financial officer, of the effectiveness of
the Registrant’s disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange
Act”)) as of December 31, 2008. Disclosure controls and procedures are designed
to ensure that information required to be disclosed in reports filed or
submitted under the Exchange Act is recorded, processed, summarized, and
reported within the time periods specified in the Commission’s rules and forms,
and that such information is accumulated and communicated to management,
including the chief executive officer and the chief financial officer, to allow
timely decisions regarding required disclosures.





Based on
that evaluation, the Registrant’s management concluded, as of the end of the
period covered by this report, that the Registrant’s disclosure controls and
procedures were not effective in recording, processing, summarizing, and
reporting information required to be disclosed, within the time periods
specified in the Commission’s rules and forms, and that such information was not
accumulated and communicated to management, including the principal executive
officer and the principal financial officer, to allow timely decisions regarding
required disclosures.








Management’s
Report on Internal Control over Financial Reporting





The
management of the Registrant is responsible for establishing and maintaining
adequate internal control over financial reporting. The Registrant’s internal
control over financial reporting is a process, under the supervision of the
principal executive officer and the principal financial officer, designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the Registrant’s financial statements for external
purposes in accordance with United States generally accepted accounting
principles (GAAP). Internal control over financial reporting includes those
policies and procedures that:




●
            Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the Registrant’s
      assets;





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





●
            Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use, or disposition of the Registrant’s assets
      that could have a material effect on the financial
    statements.





Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.





The
Registrant’s management conducted an assessment of the effectiveness of our
internal control over financial reporting as of December 31, 2008, based on
criteria established in Internal Control – Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission, which
assessment identified material weaknesses in internal control over financial
reporting. A material weakness is a control deficiency, or a combination of
deficiencies in internal control over financial reporting that creates a
reasonable possibility that a material misstatement in annual or interim
financial statements will not be prevented or detected on a timely basis. Since
the assessment of the effectiveness of our internal control over financial
reporting did identify a material weakness, management considers its internal
control over financial reporting to be ineffective.





Management
has concluded that our internal control over financial reporting had the
following deficiency:









●
            We
      were unable to maintain any segregation of duties within our business
      operations due to our reliance on a single individual, Amir F.
      Heshmatpour, fulfilling the role of our principal executive officer and
      principal financial/accounting officer. While this control deficiency did
      not result in any audit adjustments to our 2007 or 2008 interim or annual
      financial statements, it could have resulted in a material misstatement
      that might have been prevented or detected by a segregation of duties.
      Accordingly we have determined that this control deficiency constitutes a
      material weakness.





To the
extent reasonably possible, given our limited resources, our goal is, upon
consummation of a merger with a private operating company, to separate the
responsibilities of principal executive officer and principal financial officer,
intending to rely on two or more individuals. We will also seek to expand our
current board of directors to include additional individuals willing to perform
directorial functions. Since the recited remedial actions will require that we
hire or engage additional personnel, this material weakness may not be overcome
in the near term due to our limited financial resources. Until such remedial
actions can be realized, we will continue to rely on the advice of outside
professionals and consultants.





This
annual report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. We were not required to have, nor have we, engaged our independent
registered public accounting firm to perform an audit of internal control over
financial reporting pursuant to the rules of the Commission that permit us to
provide only management’s report in this annual report.





Changes
in Internal Controls over Financial Reporting





During
the fourth quarter ended December 31, 2008, there has been no change in internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect our internal control over financial
reporting.





ITEM
9B.  OTHER INFORMATION





None







PART
III





ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND ­­CORPORATE
GOVERNANCE





Identification
of Directors, Executive Officers, Promoters, and Control Persons for the fiscal
year ended December 31, 2008:





Name
            Age
            PositionAmir
      F. Heshmatpour
            41
            President,
      Secretary and Sole Director
              (Principal
      Executive Officer)
              (Principal
      Financial/Accounting Officer)





The
Registrant's officers and directors are elected annually for a one year term or
until their respective successors are duly elected and qualified or until their
earlier resignation or removal.





Business
Experience





The
following is a brief account of the education and business experience of the
current director and executive officer during at least the past five years,
indicating the person's principal occupation during the period, and the name and
principal business of the organization by which he was employed.





Amir
F. Heshmatpour - President, Secretary and Director




Mr. Amir
Heshmatpour is the Founder and Managing Director of AFH Holding & Advisory
LLC, an integrated advisory and consulting firm serving U.S. and international
clients who seek strategic counsel and sophisticated access to global capital
markets. Since founding the Company in 2003, he has led AFH through numerous
successful transactions both in the United States and China.




Prior to
founding AFH, Amir Heshmatpour was the Chairman and Chief Executive Officer of
Metrophone Telecommunications, Inc., a company he began in 1994 with $ 30,000.
At the age of 24, Amir Heshmatpour completed his first reverse merger between
Metrophone and Datawave Communications, a prepaid telephone card company, which
was affiliated with AT&T.




Over the
next ten years, Amir Heshmatpour spearheaded Metrophone’s growth, leading it
through a total of 17 acquisitions and growing the business to over $100 million
in revenue. Metrophone was twice named among the 100 fastest growing companies
in the Northwest and by 2003 the company operated in 34 states and was ranked
among the top 10 public service providers in the U.S.







Mr. Amir
Heshmatpour was recognized as "Businessman of the Year" by the National
Republican Congressional Committee in 2003 and served as Head of the Republican
Congressional Business Advisory for the year. Together with his family, he
founded Holding Hands Pediatric Therapy & Diagnostics, an organization
serving children with special needs and their families. He has served on the
Board of "Young Life", a teen-mentoring organization and currently serves on the
board of the California Council on Economic Education (CCEE), an organization
promoting financial and economic literacy. Amir Heshmatpour received a Bachelor
of Arts from Pennsylvania State University in 1988.





Significant
Employees.None





Family
Relationships.    None





Involvement in Certain Legal
Proceedings. There have been no events under any bankruptcy act, no
criminal proceedings and no judgments, injunctions, orders or decrees material
to the evaluation of the ability and integrity of any director, executive
officer, promoter or control person of Registrant during the past five
years.





Nominating
Committee.We have not adopted any procedures by which
security holders may recommend nominees to our Board of Directors.





Audit Committee.The Board of
Directors acts as the audit committee. The Registrant does not have a qualified
financial expert at this time because it has not been able to hire a qualified
candidate. Further, the Registrant believes that it has inadequate financial
resources at this time to hire such an expert. The Registrant intends to
continue to search for a qualified individual for hire.The
Registrant has no qualified financial expert at this time because it has not
been able to hire a qualified candidate. Further, the Registrant believes that
it has inadequate financial resources at this time to hire such an expert. The
Registrant intends to continue to search for a qualified individual for
hire.








COMPLIANCE
WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934





Section
16(a) of the Exchange Act requires the Registrant's directors and officers, and
persons who beneficially own more than 10% of a registered class of the
Registrant's equity securities, to file reports of beneficial ownership and
changes in beneficial ownership of the Registrant's securities with the SEC on
Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are
required by SEC regulation to furnish the Registrant with copies of all Section
16(a) forms they file.





Since the
date the Registrant Form 10-SB went effective through December 31, 2008, neither
Amir F. Heshmatpour, the Registrant’s sole executive officer and director and
beneficial owner of more than 10% of Common Stock nor any other person owning 5%
or more of the Registrant’s issued and outstanding common stock, have filed the
required forms under Section 16(a) of the Exchange Act therein reflecting their
beneficial ownership of the Registrant’s shares due to the fact that there is no
market for the Registrant’s common stock. The reporting persons have not
consummated any transactions with regards to their ownership of the Registrant’s
common stock.  Upon the consummation of a transaction with a private
company, such persons intend to file the appropriate Section 16(a)
forms.








CODE
OF ETHICS





We have
not adopted a Code of Business Conduct and Ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. The Registrant does not
have a Code of Ethics due to the Registrant’s status as a shell company with no
operations or revenues and only three individuals who serve as the Registrant’s
officers and/or directors.








ITEM
11.  EXECUTIVE COMPENSATION





None of
the Registrant’s officers or directors has received any cash remuneration since
inception. Officers will not receive any remuneration until the consummation of
an acquisition. No remuneration of any nature has been paid for or on account of
services rendered by a director in such capacity. None of the officers and
directors intends to devote more than a few hours a week to our
affairs.








It is
possible that, after the Registrant successfully consummates a business
combination with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of our management for the purposes of
providing services to the surviving entity. However, the Registrant has adopted
a policy whereby the offer of any post-transaction employment to members of
management will not be a consideration in our decision whether to undertake any
proposed transaction.





No
retirement, pension, profit sharing, stock option or insurance programs or other
similar programs have been adopted by the Registrant for the benefit of its
employees.





There are
no understandings or agreements regarding compensation our management will
receive after a business combination that is required to be included in this
table, or otherwise.





Director
Compensation





We do not
currently pay any cash fees to our directors, but we pay directors’ expenses in
attending board meetings. During the period April 16, 2007 (inception) to
December 31, 2008, no director expenses were incurred.





Employment
Agreements





The
Registrant is not a party to any employment agreements.





ITEM
12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS





The
following tables set forth certain information as of the date of filing this
Form 10-K regarding (i) each person known by the Registrant to be the beneficial
owner of more than 5% of the outstanding shares of Common Stock, (ii) each
director, nominee and executive officer of the Registrant and (iii) all officers
and directors as a group.








Name
      and Address
            
            
            Common
      Stock
              Amount
      Beneficially Owned
            
            
            Percentage
      of Class (1)Amir
      F. Heshmatpour (2)
              9595
      Wilshire Boulevard, Suite 900
              Beverly
      Hills, California 90212
              (President
      and Director)
            
            
            5,000,000
            
            
            93.4%All
      Officers and Directors as a Group
              (1
      Person)
            
            
            5,000,000
            
            
            93.4%




____________________





(1)
            Based
      on 5,355,000 shares of Common Stock issued and outstanding as of the date
      of filing this Form 10-K. Under Rule 13d-3, a beneficial owner of a
      security includes any person who,
              directly
      or indirectly, through any contract, arrangement, understanding,
      relationship, or otherwise has or shares: (i) voting power, which includes
      the power to vote, or to direct the voting of shares; and (ii) investment
      power, which includes the power to dispose or direct the disposition of
      shares.  Certain shares may be deemed to be beneficially owned
      by more than one person (if, for example, persons share the power to vote
      or the power to dispose of the shares).  In addition, shares are
      deemed to be beneficially owned by a person if the person has the right to
      acquire the shares (for example, upon exercise of an option) within 60
      days of the date as of which the information is provided.  In
      computing the percentage ownership of any person, the amount of shares
      outstanding is deemed to include the amount of shares beneficially owned
      by such person (and only such person) by reason of these acquisition
      rights.  As a result, the percentage of outstanding shares of
      any person as shown in this
              table
      does not necessarily reflect the person's actual ownership or voting power
      with respect to the number of shares of common stock actually
      outstanding.(2)
            Represents
      shares of the Registrant's common stock owned by AFH Holding and Advisory,
      LLC located at 9595 Wilshire Boulevard, Suite 900, Beverly Hills,
      California 90212.  As the sole member of AFH Advisory, Mr.
      Heshmatpour is deemed to be the beneficial owner of these shares of the
      Registrant's common stock.











ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE





The
Registrant utilizes the office space and equipment of its sole officer and
director at no cost. Management estimates such costs to be
immaterial.





Except as
otherwise indicated herein, there have been no related party transactions, or
any other transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-K.





ITEM
14.  PRINCIPAL ACCOUNTING FEES AND SERVICES





(1)
Audit Fees




The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by Rotenberg & Co. LLP, our principal accountant for our
audit of annual financial statements and review of financial statements included
in our quarterly reports or services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for those fiscal years were:




Year
            
            
            Amount2008
            
            $
            3,5502007
            
            $
            3,271





(2) Audit-Related
Fees




The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported in the preceding paragraph:




Year
            
            
            Amount2008
            
            $
            02007
            
            $
            0




(3)
Tax Fees




The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning were:




Year
            
            
            Amount2008
            
            $
            02007
            
            $
            0





(4)
All Other Fees




The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2), and (3) was:




Year
            
            
            Amount2008
            
            $
            02007
            
            $
            0







PART
IV





ITEM
15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES





Index to
Exhibits




Exhibit
            
            Description31.1
            
            Certification
      of the Registrant’s Principal Executive Officer and Principal Financial
      Officer pursuant to 15d-15(e), under the Securities and Exchange Act of
      1934, as amended, with respect to the registrant’s Annual Report on
      Form 10-K for the year ended December 31, 2008.32.1
            
            Certification
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Office and
      Chief
Financial Officer).


















SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




AFH
      Holding III, Inc.Dated:
      April 15, 2009
            By:
            /s/ Amir
      F. HeshmatpourAmir
      F. Heshmatpour
              President,
      Secretary and Sole Director
              (Principal
      Executive Officer)
              (Principal
      Financial Officer)





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following person on behalf of the registrant and in the
capacities and on the dates indicated.





Signature
            
            Title
            
            Date/s/
      Amir F. Heshmatpour
            
            President,
      Secretary and Sole Director
            
            April
      15, 2009Amir
      F. Heshmatpour
            
            (Principal Executive Officer)
              (Principal
      Financial/Accounting Officer)