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

**Washington,      D.C. 20549**

**FORM      10-Q**

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

**AFH      Holding III, Inc.**

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

**9595      Wilshire Blvd.**

**Suite      939**

**Beverly      Hills, CA 90212**

**(310)      300-3431**

**(310)      300-3412**

**N/A**

**www.SourlisLaw.com**

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

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**TABLE      OF CONTENTS**

|                                              | **Page**                                                                                                         |
|---------------------------------------------------|------------------------------------------------------------------------------------------------------------------|
| **PART                I - FINANCIAL INFORMATION** |                                                                                                             |
| Item                1.                            | Financial                Statements                                                                              | F-1                - F-5 |
| Item                2.                            | Management’s                Discussion and Analysis or Plan of Operation                                   | 1 |
| Item                3.Item                4T.     | Quantitative                and Qualitative Disclosures About Market Risk Controls                and Procedures | 33 |
|                                              |                                                                                              |
| **PART                II - OTHER INFORMATION**    |                                                                                                             |
| Item                1.                            | Legal                Proceedings                                                                                 | 4 |
| Item                1A. Item                2.    | Risk                FactorsUnregistered                Sale of Equity Securities and Use of Proceeds             | 44 |
| Item                3.                            | Defaults                Upon Senior Securities                                                                   | 4 |
| Item                4.                            | Submission                of Matters to a Vote of Security Holders                                               | 5 |
| Item                5.                            | Other                Information                                                                                 | 5 |
| Item                6.                            | Exhibits                                                                                                         | 5 |
|                                              |                                                                                                             |
| **SIGNATURES**                                    |                                                                                                             |

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**PART      I - FINANCIAL INFORMATION**

**Item      1.                      Financial      Statements.**

|                                                                                  | Page                          |
|---------------------------------------------------------------------------------------|-------------------------------|
|                                                                                  |                          |
| Financial                Statements:                                                  |                          |
|                                                                                  |                          |
|      Balance                Sheet                            | F−1                     |
|                                                                                  |                          |
|      Statements                of Operations                 | F−2                     |
|                                                                                  |                          |
|      Statements                of Stockholder’s Equity | F−3                     |
|                                                                                  |                          |
|      Statements                of Cash Flows                 | F−4                     |
|                                                                                  |                          |
| Notes                to Financial Statements                                          | F-5 -                F-6 |

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|                                                                                                                                   |   |   | June                30, 2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------|--------|
|                                                                                                                                        |   |   | (Unaudited)                  |   |
|                                                                                                                                   |   |   |                              |   |
| ASSETS                                                                                                                                 |   |   |                         |   |
|                                                                                                                                   |   |   |                         |   |
| Due                from Parent                                                                                                         |   | $      | 710,000                      |   |
|                                                                                                                                   |   |   |                         |   |
| Total                assets                                                                                                            |   | $      | 710,000                      |   |
|                                                                                                                                   |   |   |                         |   |
| LIABILITIES                AND STOCKHOLDER'S EQUITY                                                                                    |   |   |                         |   |
|                                                                                                                                   |   |   |                         |   |
| Commitment                and contingencies                                                                                            |   | $      | —                      |   |
|                                                                                                                                   |   |   |                         |   |
| Stockholder's                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                        |   |
|                                                                                                                                   |   |   |                         |   |
| Additional                paid in capital                                                                                              |   |   | 711,666                      |   |
|                                                                                                                                   |   |   |                              |   |
| Deficit                accumulated                                                                                                     |   |   | (7,021                       | )      |
|                                                                                                                                   |   |   |                              |   |
| Total                stockholder's equity                                                                                              |   |   | 710,000                      |   |
|                                                                                                                                   |   |   |                         |   |
| Total                liabilities and stockholder's equity                                                                              |   | $      | 710,000                      |   |

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|                                                                   |   | For                the sixmonthsendedJune                30,2008 |   | For                the three                months                ended                June                30, 2008 |          | For                the period                of April                16, 2007(Inception)through June                30, 2007 |   | For                the period                16-Apr-07                (Inception)                through                June                30, 2008  |   |
|------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|---------------|----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Income                                                                 |   |                                                             |   |                                                                                                                |          |                                                                                                                                   |   |                                                                                                                                                       |   |
| Revenue                                                                | $      |  —                                                    | $      | —                                                                                                             |          |                                                                                                                                   | $      | —                                                                                                                                                    |   |
| Expenses                                                               | $      | —                                                          | $      | —                                                                                                             |               |                                                                                                                                   |   | —                                                                                                                                                    |   |
| General                and Administrative                              | $      | —                                                          | $      | —                                                                                                             |  $  |   (5,000)                                                                                                          |   | (7,021                                                                                                                                                     | )      |
| Net                (Loss)                                              | $      |                                                             | $      | —                                                                                                             | $        |   (5,000)                                                                                                          | $      | (7,021                                                                                                                                                     | )      |
|                                                                   |   |                                                             |   |                                                                                                                |          |                                                                                                                                   |   |                                                                                                                                                       |   |
| Basic                and Diluted (Loss) Per Share                      | $      | (.00)                                                            | $      | (.00)                                                                                                               |          | (.00)                                                                                                                        | $      | (.00                                                                                                                                                       | )      |
| Weighted                average shares outstanding (basic and diluted) |   |                  5,079,973                                  |   | 5,159,945                                                                                                           |          |  5,000,000                                                                                                              |   | 5,032,930                                                                                                                                                  |   |

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| **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          |   |   | -           |   |   | 2,021     |   |
|  Shares                Issued in Lieu of Expenses |   |   | 5,000,000 |   | $      | 5,000      |   | $      | -              |   | $      | -           |   | $      | 5,000     |   |
| Balance                at December 31, 2007            |   |   | 5,000,000 |   |   | 5,000      |   |   | 2,021          |   |   | (7,021      | )      |   | -         |   |
|                                                   |   |   | 355,000   |   |   | 355        |   |   | 709,645        | )      |   | -           |   |   | -         |   |
| Net                Loss at June 30, 2008               |   |   | -         |   |   | -          |   |   | -              |   |   | -           |   |   | -         |   |
|                                                   |   |   |      |   |   |       |   |   |           |   |   |        |   |   |      |   |
|                                                   |   |   | 5,355,000 |   | $      | 5,355      |   | $      | 711,666        | )      | $      | (7,021      | )      | $      | 710,000   |   |

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|                                                             |   |   | For the six months ended June                30, 2008  |   |   | For                the periodApril 16,                2007(Inception)                throughJune                30, 2007 |   |   | For                the periodApril 16,                2007(Inception)                throughJune                30, 2008 |   |
|------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|
| Cash                flows from operating activities              |   |   |                                                                                           |   |   |                                                                                                                               |   |   |                                                                                                                               |   |
| Net                Loss                                          |   |   | —                                                                                   |   |   | (5,000                                                                                                                             | )      | $      | (7,021                                                                                                                             | )      |
| Shares                issued in lieu of expenses paid            |   |   | —                                                                                   |   |   | 5,000                                                                                                                              |   |   | 5,000                                                                                                                              |   |
|                                                             |   |   |                                                                                           |   |   |                                                                                                                                    |   |   |                                                                                                                                    |   |
| Contributed Capital                For Services             |   |   | —                                                                                   |   |   |                                                                                                                                    |   |   | 2,021                                                                                                                              |   |
|                                                             |   |   |                                                                                           |   |   |                                                                                                                                    |   |   |                                                                                                                                    |   |
| Cash                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                                                                                   |   |   |                                                                                                                               |   | $      | 710,000                                                                                                                            |   |
|                                                             |   |   |                                                                                      |   |   |                                                                                                                               |   |   |                                                                                                                               |   |
| Cash                paid during the period for:                  |   |   |                                                                                           |   |   |                                                                                                                               |   |   |                                                                                                                               |   |
| Interest                                                         |   |   | —                                                                                   |   |   | —                                                                                                                            |   |   | —                                                                                                                            |   |
| Income                taxes                                      |   |   | —                                                                                   |   |   | —                                                                                                                            |   |   | —                                                                                                                            |   |

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**NOTE      1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES**

**NOTE      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

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**NOTE      3 - GOING CONCERN**

**NOTE      4 - SHAREHOLDERS’ EQUITY**

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**Item      2.                      Management's      Discussion and Analysis or Plan of Operation.**

**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. *

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**GOING      CONCERN**

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

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

*Evaluation      of Controls and Procedures.*

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*Changes      in Internal Controls.*

*Limitations      on the Effectiveness of Controls. *

**PART      II - OTHER INFORMATION**

**Item      1.                      Legal      Proceedings.**

**Item      1A. Risk Factors.**

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

**Item      3.                      Defaults      Upon Senior Securities.**

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

**Item      5.                      Other      Information.**

**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 2002                |
|                       |         |                                                                                                                                                                                                                                                                                |
| 32.2                       |         | 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 |

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**SIGNATURES**

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| **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 2002                |
|                 |         |                                                                                                                                                                                                                                                                                |
| 32.2                 |         | 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 |

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