**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





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





**For
      the quarterly period ended September 30, 2008**





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





For
      the
      transition period from





Commission
      File No. **000-52849**





**AFH
      HOLDING III, INC.**


(Name
      of
      Small Business Issuer in its charter)





**Delaware**
            
            **26-1365024**(State
                or other jurisdiction of
            
            (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)
                300-3431**Issuer’s
                facsimile number:
            **(310)
                300-3412**





**N/A**


(Former
      name, former address and former


fiscal
      year, if changed since last report)





Copies
      to :


The
      Sourlis Law Firm


Virginia
      K. Sourlis, Esq.


The
      Galleria


2
      Bridge
      Avenue


Red
      Bank,
      New Jersey 07701


(732)
      530-9007


**www.SourlisLaw.com**





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange act of 1934 during
      the
      preceding 12 months (or such shorter period that the registrant was required
      to
      file such reports), and (2) has been subject to such filing requirements for
      the
      past 90 days.


x Yes  ̈ No





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer,”
"non-accelerated filer" and “smaller reporting company” in Rule 12b-2 of the
      Exchange Act. (Check one):





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





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


x Yes  ̈ No





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the 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 November 14, 2008, there were 5,355,000
      shares of common stock, par value $0.001 per share, of the Registrant issued
      and
      outstanding.





**TABLE
      OF CONTENTS**




**Page****PART
                I - FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements
            2Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition and Results of Operations
            2Item
                3.
            Quantitative
                and Qualitative Disclosures About Market Risk
            3Item
                4T.
            Controls
                and Procedures
            55**PART
                II - OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            6Item
                1A.
            Risk
                Factors
            6Item
                2.
            Unregistered
                Sale of Equity Securities and Use of Proceeds
            6Item
                3.
            Defaults
                Upon Senior Securities
            7Item
                4.
            Submission
                of Matters to a Vote of Security Holders
            7Item
                5.
            Other
                Information
            7Item
                6.
            Exhibits
            7**SIGNATURES**
            8


2





**PART
      I - FINANCIAL INFORMATION**


**Item
      1.                      Financial
      Statements.**




AFH
        HOLDING III, INC.
 (A
        Development Stage Enterprise)
 BALANCE
        SHEET
 SEPTEMBER
        30, 2008
 (Unaudited)
 
 **September 30, 2008**
              
              **December 31, 2007****(Unaudited)**ASSETSDue
                  from Parent
              
              $
              710,000Total
                  assets
              
              $
              710,000
              
              $
              —LIABILITIES
                  AND STOCKHOLDERS’ EQUITYCommitment
                  and contingencies
              
              $
              —
              
              $
              —Stockholders’
                  equity:Preferred
                  stock, $.001 par value, authorized 20,000,000 shares, none
                  issued
              
              
              —
              
              
              —Common
                  stock, $.001 par value, authorized 100,000,000 shares, 5,355,000
                  issued
                  and outstanding
              
              
              5,355
              
              
              5,000Additional
                  paid in capital
              
              
              711,666
              
              
              2,021Deficit
                  accumulated during the development stage
              
              
              (7,021
              )
              
              (7,021
              )Total
                  stockholders’ equity
              
              
              710,000
              
              
              —Total
                  liabilities and stockholders’ equity
              
              
              710,000
              
              
              —$
              
              
              $
 
 The
        accompanying notes are an integral part of these financial
        statements
  F-1
  AFH
        HOLDING III, INC.
 (A
        Development Stage Enterprise)
 STATEMENTS
        OF OPERATIONS
 (Unaudited)
  **Income**
                
                For the nine
                  months ended
                  September
                  30, 2008
                
                For the period
                  April 16, 2007
                  (Inception)
                  through
                  September 30,
                  2007
                
                For the three
                  months
                  ended
                  September
                  30, 2008
                
                For the
                  three
                  months
                  ended
                  September
                  30, 2007
                
                For the
                  period April
                  16, 2007
                  (Inception)
                  through
                  September
                  30, 2008Revenue
                
                $
                -
                
                $
                
                
                $
                -
                
                $
                -
                
                $
                —Expenses
                
                $
                -
                
                $
                
                
                $
                -
                
                $
                -
                
                $
                —General
                    and Administrative
                
                $
                -
                
                $
                (5,000
                )
                $
                -
                
                $
                -
                
                $
                (7,021
                )Total
                    Expenses
                
                $
                -
                
                $
                (5,000
                )
                $
                -
                
                $
                -
                
                $
                (7,021
                )Net
                    Loss
                
                
                
                
                
                5,000
                
                
                
                
                
                
                
                
                7,021Basic
                    and Diluted (Loss) Per Share
                
                $
                (.00
                )
                $
                (.00
                )
                $
                (.00
                )
                $
                (.00
                )
                $
                (.00
                )Weighted
                    average shares outstanding (basic and diluted)
                
                
                5,171,648
                
                
                5,000,000
                
                
                5,355,000
                
                
                5,000,000
                
                
                5,088,083
 
 The
        accompanying notes are an integral part of these financial
        statements
  F-2
  AFH
        HOLDING III, INC.
 (A
        Development Stage Enterprise)
 STATEMENTS
        OF STOCKHOLDER’S EQUITY
 For
        the
        period from April 16, 2007 (Inception) to September 30, 2008
 (Unaudited)
  **Issuance of Common Stock**
              
              **Stock**
              
              **Amount**
              
              **APIC**
              
              **Deficit**
              
              **Total**Balance
                  April 16, 2007
              
              
              -
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Net
                  Loss at December 31, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              (7,021
              )
              
              (7,021
              )Contributed
                  Capital for Service
              
              
              -
              
              
              -
              
              
              2,021
              
              
              -
              
              
              2,021Shares
                  Issued in Lieu of Expenses
              
              
              5,000,000
              
              $
              5,000
              
              $
              -
              
              $
              -
              
              $
              5,000Balance
                  at December 31, 2007
              
              
              5,000,000
              
              
              5,000
              
              
              2,021
              
              
              (7,021
              )
              
              -Shares
                  Issued
              
              
              355,000
              
              
              355
              
              
              709,645
              )
              
              -
              
              
              -Net
                  Loss at September 30, 2008
              
              
              -
              
              
              -
              
              
              -
              
              
              -
              
              
              -5,355,000
              
              $
              5,355
              
              $
              711,666
              )
              $
              (7,021
              )
              $
              710,000
  The
        accompanying notes are an integral part of these financial
        statements
  F-3
  AFH
        HOLDING III, INC.
 (a
        Development Stage Enterprise)
 STATEMENTS
        OF CASH FLOWS
 (Unaudited)
  For the nine
                months ended
                September30,
                2008
              
              For the
                period
                April 16,
                2007
                (Inception)
                through
                September30,
                2007
              
              For the
                period
                April 16,
                2007
                (Inception)
                through
                September30,
                2008Cash
                  flows from operating activitiesNet
                  Loss
              
              
              —
              
              
              (5,000
              )
              $
              (7,021
              )Shares
                  issued in lieu of expenses paid
              
              
              —
              
              
              5,000
              
              
              5,000Contributed Capital
                  For Services
              
              
              —
              
              
              
              
              
              2,021Cash
                  flows used in operating activities
              
              
              —
              
              
              —
              
              
              —Net
                  increase in cash
              
              
              —
              
              
              —
              
              
              —Cash,
                  beginning of period
              
              
              —
              
              
              —
              
              
              —Cash,
                  end of period
              
              
              —
              
              
              —
              
              $
              —SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Non-Cash
                  Proceeds held by Parent
              
              $
              710,000
              
              
              
              
              $
              710,000Cash
                  paid during the period for:Interest
              
              
              —
              
              
              —
              
              
              —Income
                  taxes
              
              
              —
              
              
              —
              
              
              —
 
 The
        accompanying notes are an integral part of these financial
        statements
  F-4
  AFH
        HOLDING III, INC.
 (A
        Development Stage Enterprise)
 NOTES
        TO
        FINANCIAL STATEMENTS
 SEPTEMBER
        30, 2008
 (Unaudited)
 
 **NOTE
        1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES**
 
 Nature
        of Operations
 
 AFH
        HOLDING III, INC., a development stage company (the “Company”), was incorporated
        in the State of Delaware on April 16, 2007. The Company is 100% owned by
        AFH
        Holding and 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.
 
 General
  The
        accompanying unaudited financial statements include all adjustments of a
        normal
        and recurring nature, which, in the opinion of Company’s management, are
        necessary to present fairly the Company’s financial position as of September 30,
        2008, the results of its operations for the three and nine months ended
        September 30, 2008 and 2007, and from the date of inception (April 16, 2007)
        through September 30, 2008, and cash flows for the nine months ended September
        30, 2008 from the date of inception (April 16, 2007) through September 30,
        2007
        and 2008.
  Certain
        information and footnote disclosures normally included in financial statements
        prepared in accordance with generally accepted accounting principles have
        been
        omitted pursuant to the rules and regulations of the Securities and Exchange
        Commission.
 
 The
        results of operations and cash flows for the period ended September 30, 2008
        are
        not necessarily indicative of the results to be expected for the full year’s
        operation.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 The
        accompanying financial statements are prepared in accordance with accounting
        principles generally accepted in the United States. Significant accounting
        policies follow:
 
 New
        Accounting Pronouncements :
  Management
        does not believe any recently issued, but not yet effective accounting
        pronouncements, if adopted, would have a material effect on the accompanying
        financial statements.
  F-5
  Loss
        per Common Share :
        Basic
        loss per share is calculated using the weighted-average number of common
        shares
        outstanding during each period. Diluted loss per share includes potentially
        dilutive securities such as outstanding options and warrants, using various
        methods such as the treasury stock or modified treasury stock method in the
        determination of dilutive shares outstanding during each period. The Company
        does not have any potentially dilutive instruments.
 
 **NOTE
        3 - GOING CONCERN**
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern, which contemplates the recoverability of
        assets and the satisfaction of liabilities in the normal course of
        business.
 
 The
        Company has had no revenue and has incurred accumulated net losses from April
        16, 2007 (inception) through the period ended September 30, 2008 of $7,071.
        In
        addition, the Company’s development activities since inception have been
        financially sustained through equity financing.
 
 The
        ability of the Company 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 Company be unable to recover the value
        of its
        assets or satisfy its liabilities
 
 **NOTE
        4 - SHAREHOLDERS’ EQUITY**
 
 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
        of any class, whether now hereafter authorized or whether issued for money,
        for
        consideration other than money, or by way of dividend.
 
 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. From February
        1,
        2008 to March 12, 2008, the Company sold an aggregate of 230,500 Shares with
        gross proceeds of $461,000. From April 8, 2008 to April 28, 2008, the Company
        sold an aggregate of 124,500 Shares with gross proceeds of $249,000. The
        total
        amount of Shares sold in the Offering was 355,000 with gross proceeds of
        $710,000.
  F-6


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





**Forward-Looking
      Statements**





*This
      Report contains statements that we believe are, or may be considered to be,
      “forward-looking statements” within the meaning of the Private Securities
      Litigation Reform Act of 1995. All statements other than statements of
      historical fact included in this Report regarding the prospects of our industry
      or our prospects, plans, financial position or business strategy, may constitute
      forward-looking statements. In addition, forward-looking statements generally
      can be identified by the use of forward-looking words such as “may,” “will,”
“expect,” “intend,” “estimate,” “foresee,” “project,” “anticipate,” “believe,”
“plans,” “forecasts,” “continue” or “could” or the negatives of these terms or
      variations of them or similar terms. Furthermore, such forward-looking
      statements may be included in various filings that we make with the SEC or
      press
      releases or oral statements made by or with the approval of one of our
      authorized executive officers. Although we believe that the expectations
      reflected in these forward-looking statements are reasonable, we cannot assure
      you that these expectations will prove to be correct. These forward-looking
      statements are subject to certain known and unknown risks and uncertainties,
      as
      well as assumptions that could cause actual results to differ materially from
      those reflected in these forward-looking statements. Readers are cautioned
      not
      to place undue reliance on any forward-looking statements contained herein,
      which reflect management’s opinions only as of the date hereof. Except as
      required by law, we undertake no obligation to revise or publicly release the
      results of any revision to any forward-looking statements. You are advised,
      however, to consult any additional disclosures we make in our reports to the
      SEC. All subsequent written and oral forward-looking statements attributable
      to
      us or persons acting on our behalf are expressly qualified in their entirety
      by
      the cautionary statements contained in this Report.*





Overview





AFH
      Holding III, Inc. ("we", "us", "our", the "Company" 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 Company’s inception, it has been engaged in organizational
      efforts and obtaining initial financing. The Company was formed as a vehicle
      to
      pursue a business combination through the acquisition of, or merger with, an
      operating business. The Company 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 Company has focused its efforts to identify
      a
      possible business combination. Since the effective date of the Company’s Form
      10-SB, the Company has been a reporting company and required to file periodic
      and current reports with the SEC under the Exchange Act.





Plan
      of Operation





The
      Company will attempt to locate and negotiate with a business entity for the
      combination of that target company with the Company. 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
      Company has identified an undisclosed potential target company for a possible
      business combination.  The Company is currently engaged in preliminary
      negotiations with the target company.  No assurances can be given that
      the Company will be successful in locating or negotiating with any target
      company.





The
      Company 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 Company
      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 Company may offer.




In
      implementing a structure for a particular business acquisition, the Company
      may
      become a party to a merger, consolidation, reorganization, joint venture, or
      licensing agreement with another corporation or entity.


3





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 Company 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 Company 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 Company's securities may depress the market value of the
      Company's securities in the future if such a market develops, of which there
      is
      no assurance. However, if the Company cannot effect a non-cash acquisition,
      the
      Company may have to raise funds from a private offering of its securities under
      Rule 506 of Regulation D. There is no assurance the Company would obtain any
      such equity funding.





The
      Company 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 Company 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 Company can be expected to have a significant dilutive effect
      on
      the percentage of shares held by the Company's shareholders at such
      time.





**GOING
      CONCERN**





The
      financial statements included in this Quarterly Report have been prepared
      assuming that the Company will continue as a going concern, which contemplates
      the recoverability of assets and the satisfaction of liabilities in the normal
      course of business.





The
      Company has had no revenue and has incurred accumulated net losses from April
      16, 2007 (inception) through the period ended September 30, 2008 of $7,021.
      In
      addition, the Company’s development activities since inception have been
      financially sustained through equity financing.





The
      ability of the Company 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 Company be unable to recover the value of
      its
      assets or satisfy its liabilities





**Results
      of Operations**





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




At
      September 30, 2008, the Company had an accumulated deficit of $710,000compared
      to $0 at December 31, 2007, and there is doubt as to the Company’s ability to
      continue as a going concern.





For
      the
      three and nine month periods ending September 30, 2008 and 2007, and for the
      period from April 16, 2007 (Inception) to September 30, 2008, the Company had
      no
      activities that produced revenues from operations.





For
      the
      three month periods ended September 30, 2008 and 2007, the Company had a net
      loss of $0, respectively. From the Company’s date of inception (April 16, 2007)
      to September 30, 2008, the Company had a net loss of $7,021, compared to a
      net
      loss of $5,000 from the Company’s date of inception to September 30, 2007. These
      losses were mostly due to legal, accounting, audit and other professional
      service fees incurred in relation to the filing of the Company’s Registration
      Statement on Form 10-SB filed on October 5, 2007.


4





**Liquidity
      and Capital Resources**





At
      September 30, 2008 and December 31, 2007, the Company had total assets of
      $710,000 and $0 respectively. At September 30, 2008 and December 31, 2007,
      the
      Company had no liabilities.




The
      Company is dependent upon the receipt of capital investment or other financing
      to fund its ongoing operations and to execute its business plan of seeking
      a
      combination with a private operating company. If continued funding and capital
      resources are unavailable at reasonable terms, the Company may not be able
      to
      implement its plan of operations.





The
      Company intends to fund its operations for the next 12 months with the net
      proceeds of its private placement of securities discussed below.





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. From October
      5,
      2007 to March 12, 2008, the Company sold an aggregate of 230,500 Shares with
      gross proceeds of $461,000. From April 8, 2008 to April 28, 2008, the Company
      sold an aggregate of 124,500 Shares with gross proceeds of $249,000. The total
      amount of Shares sold in the Offering was 355,000 with gross proceeds of
      $710,000.





Management
      anticipates seeking out a target company through solicitation. Such solicitation
      may include newspaper or magazine advertisements, mailings and other
      distributions to law firms, accounting firms, investment bankers, financial
      advisors and similar persons, the use of one or more internet websites and
      similar methods. No estimate can be made as to the number of persons who will
      be
      contacted or solicited. Management may engage in such solicitation directly
      or
      may employ one or more other entities to conduct or assist in such solicitation.
      Management and its affiliates may be obligated to pay referral fees to
      consultants and others who refer target businesses for mergers into public
      companies in which management and its affiliates have an interest. The Company
      inte4nds to make payments if a business combination occurs, which may consist
      of
      cash or a portion of the stock in the Company.





The
      Company and/or shareholders will supervise the search for target companies
      as
      potential candidates for a business combination. The Company and/or shareholders
      may pay as their own expenses any costs incurred in supervising the search
      for a
      target company. The Company and/or shareholders may enter into agreements with
      other consultants to assist in locating a target company and may share stock
      received by it or cash resulting from the sale of its securities with such
      other
      consultants.





**Off-Balance
      Sheet Arrangements**





The
      Company does not have any off-balance sheet arrangements that have or are
      reasonably likely to have a current or future effect on the Company’s financial
      condition, changes in financial condition, revenues or expenses, results of
      operations, liquidity, capital expenditures or capital resources that is
      material to investors.





**Off-Balance
      Sheet Arrangements**





The
      Company does not have any off-balance sheet arrangements that have or are
      reasonably likely to have a current or future effect on the Company’s financial
      condition, changes in financial condition, revenues or expenses, results of
      operations, liquidity, capital expenditures or capital resources that is
      material to investors.




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





N/A




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





*Evaluation
      of Controls and Procedures.*


5





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




*Evaluation
      of Disclosure Controls and Procedures*




Based
      on
      their evaluation of our disclosure controls and procedures (as defined in Rules
      13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2008, our
      Chief Executive Officer and Chief Financial Officer have concluded that our
      disclosure controls and procedures were effective to ensure that the information
      required to be disclosed by us in this Report was (i) recorded, processed,
      summarized and reported within the time periods specified in the SEC’s rules and
      instructions for Form 10-Q.





*Changes
      in Internal Controls.*





No
      change
      in our internal control over financial reporting (as defined in Rules 13a-15(f)
      and 15d-15(f) under the Exchange Act) occurred during the quarter ended
      September 30, 2008 that has materially affected, or is reasonably likely to
      materially affect, the Company’s internal control over financial
      reporting.





*Limitations
      on the Effectiveness of Controls.*





Our
      management does not expect that our Disclosure Controls will prevent all error
      and all fraud. A control system, no matter how well designed and operated,
      can
      provide only reasonable assurance of achieving the designed control objectives,
      and management is required to apply its judgment in evaluating the cost-benefit
      relationship of possible controls and procedures. Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of fraud, if any,
      within the Company have been detected. These inherent limitations include the
      realities that judgments in decision-making can be faulty, and that breakdowns
      can occur because of simple error or mistake. Additionally, controls can be
      circumvented by the individual acts of some persons, by collusion of two or
      more
      people, or by management override of the control. The design of any system
      of
      controls also is based in part upon certain assumptions about the likelihood
      of
      future events, and there can be no assurance that any design will succeed in
      achieving its stated goals under all potential future conditions. Because of
      the
      inherent limitations in a cost-effective control system, misstatements due
      to
      error or fraud may occur and not be detected.





**PART
      II**


**PART
      II - OTHER INFORMATION**




**Item
      1.                      Legal
      Proceedings.**





The
      Company is not a party to any legal proceeding nor has any knowledge of any
      pending claim.




**Item
      1A. Risk Factors.**





N/A.




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





Private
      Placement Offering





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 the exceptions of the registration requirements of the Securities
      Act of 1933, as amended, afforded the company under Rule 506 of Regulation
      D
      promulgated thereunder due to the fact that such issuance did not involve a
      public offering of securities. From October 5, 2007 to March 12, 2008, the
      Company sold an aggregate of 230,500 Shares with gross proceeds of $461,000.
      From April 8, 2008 to April 28, 2008, the Company sold an aggregate of 124,500
      Shares with gross proceeds of $249,000. The total amount of Shares sold in
      the
      Offering was 355,000 with gross proceeds of $710,000. The Company used the
      net
      proceeds of the foregoing sales to fund operations.


6


**Item
      3.                      Defaults
      upon Senior Securities.**





None




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





None




**Item
      5.                      Other
      Information.**





None.





**Item
      6.                      Exhibits.**




**Exhibit No.**
            
            **Description**31.1
            
            Certification
                by Amir F. Heshmatpour, the Principal Executive Officer of AFH Holding
                III, Inc., pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
                Exchange
                Act of 1934, as amended.31.2
            
            Certification
                by Amir F. Heshmatpour, the Principal Financial Officer of AFH Holding
                III, Inc., pursuant to Rule 13a-14(a)/15d-14(a) of the Securities
                Exchange
                Act of 1934, as amended.32.1
            
            Certification
                by Amir F. Heshmatpour, the Principal Executive Officer of AFH Holding
                III, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 200232.2
            
            Certification
                by Amir F. Heshmatpour, the Principal Financial Officer of AFH Holding
                III, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of
                2002


7





**SIGNATURES**





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





Dated:
      November 14, 2008


AFH
                Holding III, Inc.(Registrant)/s/
                Amir F. HeshmatpourAmir
                F. Heshmatpour, President(Principal
                Executive Officer)(Principal
                Financial Officer)


8