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


**Washington,
      D.C. 20549**





**FORM
      10-QSB**





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





**For
      the quarterly period ended** **March
      31, 2008**





o
      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**





**No
      change**


(Former
      name, former address and former


fiscal
      year, if changed since last report)





Copies
      to :


**AFH
      Holding III, Inc.**


**9595
      Wilshire Blvd.,  Suite 900**


**Beverly
      Hills, CA 90212**





Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the preceding 12 months (or for such shorter
      period that the issuer was required to file such reports), and (2) has been
      subject to such filing requirements for the past 90 days. Yes x No o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes x No
o





State
      the
      number of shares outstanding of each of the issuer's classes of common equity,
      as of May 19, 2008 **:
      5,000,000 shares of common stock** .









**TABLE
        OF CONTENTS**
 
 **Page****PART
                  I - FINANCIAL INFORMATION**Item
                  1.
              Financial
                  Statements
              3Item
                  2.
              Management’s
                  Discussion and Analysis or Plan of Operation
              4Item
                  3.
              Controls
                  and Procedures
              6**PART
                  II - OTHER INFORMATION**Item
                  1.
              Legal
                  Proceedings
              6Item
                  2.
              Unregistered
                  Sale of Equity Securities and Use of Proceeds
              6Item
                  3.
              Defaults
                  Upon Senior Securities
              6Item
                  4.
              Submission
                  of Matters to a Vote of Security Holders
              6Item
                  5.
              Other
                  Information
              7Item
                  6.
              Exhibits
              7**SIGNATURES**
              7
 
 *-2-*




**Item
      1.                      Financial
      Statements.**





AFH
      HOLDING III, INC.





FINANCIAL
      STATEMENTS


(Unaudited)





March
      31,
      2008





AFH
      HOLDING III, INC.


(A
      Development Stage Enterprise)


INDEX
      TO
      INTERIM AND UNAUDITED FINANCIAL STATEMENTS


March
      31,
      2008


(Unaudited)





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




*-3-*






AFH
      HOLDING III, INC.


(A
      Development Stage Enterprise)


INTERIM
      AND UNAUDITED BALANCE SHEET


MARCH
      31,
      2008


(Unaudited)





March
                31, 2008(Unaudited)ASSETSTotal
                assets
            
            $
            —LIABILITIES
                AND STOCKHOLDER'S EQUITYCommitment
                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,5,000,000
                issued and outstanding
            
            $
            5,000Additional
                paid in capital
            
            
            462,790Deficit
                accumulated
            
            
            (7,021
            )Common
                Stock Subscribed
            
            
            231Subscriptions
                Receivable
            
            
            (461,000
            )Total
                stockholder's equity
            
            
            —Total
                liabilities and stockholder's equity
            
            $
            —





The
      accompanying notes are an integral part of these financial
      statements


F-1




AFH
      HOLDING III, INC.


(A
      Development Stage Enterprise)


INTERIM
      AND UNAUDITED STATEMENTS OF OPERATIONS


(Unaudited)





**Income**
            
            For
                the
              three
              months
              ended
              March
                31,
              2008
            
            For
                the
              period
              16-Apr-07
              (Inception)
              through
              March
                31,
              2008Revenue
            
            $
            —
            
            $
            —Expenses
            
            
            —
            
            
            —General
                and Administrative
            
            
            —
            
            
            (7,021
            )Net
                (Loss)
            
            $
            —
            
            $
            (7,021
            )Basic
                and Diluted (Loss) Per Share
            
            $
            (.00
            )
            $
            (.00
            )Weighted
                average shares outstanding (basic and diluted)
            
            
            5,000,000
            
            
            5,000,000




The
      accompanying notes are an integral part of these financial
      statements


F-2




AFH
      HOLDING III, INC.


(A
      Development Stage Enterprise)


INTERIM
      AND UNAUDITED STATEMENTS OF STOCKHOLDER’S EQUITY


For
      the
      period from April 16, 2007 (Inception) to March 31, 2008


(Unaudited)





**Issuance
                of Common Stock**
            
            **Stock**
            
            **Amount**
            
            **APIC**
            
            **Receivable**
            
            **Subscribed**
            
            **Deficit**
            
            **Total**Shares
                Issued in Lieu of Exp
            
            $
            5,000,000
            
            $
            5,000
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            -
            
            $
            5,000Unissued
                Stock Subscriptions
            
            
            -
            
            
            -
            
            
            460,769
            
            
            (461,000
            )
            
            231
            
            
            -
            
            
            -Net
                Loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (7,021
            )
            
            (7,021
            )Contributed
                Capital for Service
            
            
            -
            
            
            -
            
            
            2,021
            
            
            -
            
            
            -
            
            
            -
            
            
            2,021$
            5,000,000
            
            $
            5,000
            
            $
            462,790
            
            $
            (461,000
            )
            $
            231
            
            $
            (7,021
            )
            $
            -




The
      accompanying notes are an integral part of these financial
      statements


F-3




AFH
      HOLDING III, INC.


(a
      Development Stage Enterprise)


INTERIM
      AND UNAUDITED STATEMENTS OF CASH FLOWS


(Unaudited)





For thethree
              monthsended
              March 31,
              2008
            
            For
                the
              period
              April 16,
              2007
              (Inception)
              through
              March
                31,
              2008Cash
                flows from operating activitiesNet
                Loss
            
            
            —
            
            $
            (7,021Shares
                issued in lieu of expenses paid
            
            
            —
            
            
            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:Cash
                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
        INTERIM AND UNAUDITED FINANCIAL STATEMENTS
 March
        31,
        2008
 
 **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 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.
 
 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 March 31,
        2008, the results of its operations for the three months ended March 31,
        2008,
        and from the date of inception (April 16, 2007) through March 31, 2008, and
        cash
        flows from the date of inception (April 16, 2007) through March 31,
        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 three months ended March 31,
        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.
 
 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 March 31, 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
 
 **NOTE
        4 - SHAREHOLDER'S 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.
 
 **Note
        5 - 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 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.
  In
        relation to the private placement offering, AFH Holding and Advisory, LLC,
        a
        related party, is holding the proceeds as an escrow agent. The shares will
        be
        issued at a date to be determined by the Company at which time the funds
        representing the subscriptions will also be released.
  F-6
  **Item
        2.                      Management's
        Discussion and Analysis or Plan of Operation.**
 
 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.
 
 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.
  *-4-*
  Results
        of Operation
 
 The
        Company has not conducted any active operations since inception, except for
        its
        efforts to locate suitable acquisition candidates. No revenue has been generated
        by the Company from April 16, 2007 (inception) to March 31, 2008. It is unlikely
        the Company will have any revenues unless it is able to effect an acquisition
        or
        merger with an operating company, of which there can be no
        assurance.
 
 Expenses
        incurred since inception are primarily due to legal, accounting and other
        professional service fees.
 
 Liquidity
        and Capital Resources
 
 At
        March
        31, 2008, the Company had no capital resources and will rely upon the issuance
        of common stock and additional capital contributions from shareholders to
        fund
        administrative expenses pending acquisition of an operating
        company.
 
 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 World Wide Web sites
        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 will 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. Payments are made if a business
        combination occurs, and may consist of cash or a portion of the stock in
        the
        Company retained by management and its affiliates, or both.
 
 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.
 
 *-5-*
  **Item
        3.                      Controls
        and Procedures.**
 
 The
        management of the Company, including the principal executive and financial
        officer, conducted an evaluation of the effectiveness of the design and
        operation of our disclosure controls and procedures as defined in Exchange
        Act
        Rule 13a-15(e) and 15d-15(e) as of March 31, 2008. Based on that evaluation,
        the
        principal executive and financial officer concluded that as of March 31,
        2008,
        our disclosure controls and procedures were effective at the reasonable
        assurance level to ensure (i) that information required to be disclosed by
        us in
        the reports we file or submit under the Exchange Act is recorded, processed,
        summarized and reported within the time periods specified in the SEC’s rules and
        forms and (ii) that information required to be disclosed in reports that
        we file
        or submit under the Exchange Act is accumulated and communicated to our
        management including our chief executive and financial officer, to allow
        timely
        decisions regarding required disclosure.
 
  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 fiscal quarter
        ended
        March 31, 2008 that has materially affected, or is reasonably likely to
        materially affect, the Company’s internal control over financial
        reporting.
 
 **PART
        II - OTHER INFORMATION**
 
 **Item
        1.                      Legal
        Proceedings.**
 
 None.
 
 **Item
        2.                      Unregistered
        Sales of Equity Securities and Use of Proceeds.**
 
 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
        exemptions from registration afforded the Company under to Section 4(2) and
        Rule
        506 of Regulation D promulgated 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 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.
  In
        relation to the private placement offering, AFH Holding and Advisory, LLC,
        a
        related party, is holding the proceeds as an escrow agent. The shares will
        be
        issued at a date to be determined by the Company at which time the funds
        representing the subscriptions will also be released.
 
 
 **Item
        3.                      Defaults
        Upon Senior Securities.**
 
 None.
 
 **Item
        4.                      Submission
        of Matters to a Vote of Security Holders.**
 
 None.
  *-6-*
  **Item
        5.                      Other
        Information.**
 
 None.
 
 **Item
        6.                      Exhibits.**
 
 31.1
              
              Certification
                  of Chief Executive Officer and Chief Financial Officer pursuant
                  to Section
                  302 of Sarbanes Oxley Act of 200232.1
              
              Certification
                  pursuant to Section 906 of Sarbanes Oxley Act of
                  2002
  **SIGNATURES**
  In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, there unto duly
        authorized.
 
 Dated:
        May 19, 2008
 **AFH
                    Holding III, Inc.**(Registrant)/s/
                    Amir F. HeshmatpourAmir
                    F. HeshmatpourPresident(Principal
                    Executive Officer)(Principal
                    Financial Officer)
  *-7-*