Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended April 30, 2011, for AFH Acquisition X, Inc. (a Delaware corporation). The registrant is classified as a shell company and a development stage company. Its primary business objective is to pursue a business combination through the acquisition or merger with an existing company. As of the filing date, the company is not conducting negotiations with any target business and has generated no revenue since its inception on October 18, 2007.
Key Financial Metrics
| Metric | Three Months Ended Apr 30, 2011 | Six Months Ended Apr 30, 2011 | Cumulative (Inception to Apr 30, 2011) |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Net Loss | $(1,202) | $(2,477) | $(51,525) |
| Total Assets | $0 | $0 | $0 |
| Total Liabilities | $26,525 | $26,525 | $26,525 |
| Stockholder's Deficit | $(26,525) | $(26,525) | $(26,525) |
| Cash and Cash Equivalents | $0 | $0 | $0 |
| Shares Outstanding | 5,000,000 | 5,000,000 | 5,000,000 |
Debt and Liquidity: The company has no cash on hand. Total liabilities consist of $6,074 in accrued expenses and $20,451 due to the parent company (AFH Holding & Advisory, LLC). The "Due to Parent" balance represents cash advances with no specified repayment terms.
Material Changes vs. Prior Period
- Net Loss: The net loss for the three months ended April 30, 2011, was $(1,202), compared to $(1,369) for the same period in 2010. For the six-month period, the loss was $(2,477) versus $(2,156) in the prior year.
- Expenses: Expenses for the three months ended April 30, 2011, were primarily legal and professional fees totaling $802. In the prior year's comparable period, legal and professional fees were $1,244.
- Liquidity: Cash balances remained at zero for both the current and prior periods. The company continues to rely entirely on advances from its parent company to fund operations.
Outlook, Risks, and Management Commentary
Plan of Operation: Management intends to locate a target company for acquisition through solicitation methods, including advertisements and direct contact with financial advisors. The company anticipates that any future business combination will likely involve the issuance of additional securities, which could be dilutive to existing shareholders.
Going Concern: The filing includes a significant going concern warning. The company has reported recurring losses and has an accumulated deficit of $51,525. Continued existence is dependent on the ability to raise capital or acquire a marketable company. The financial statements do not include adjustments that might be necessary if the company cannot continue as a going concern.
Risks:
- No assurance exists that the company will successfully locate or negotiate with a target company.
- The company has no capital resources and relies on shareholder contributions.
- Future issuance of securities for an acquisition may depress the market value of existing securities.
Investor Verification Checklist
- Shell Company Status: Verify the implications of investing in a shell company with no active operations or revenue.
- Parent Company Dependency: Confirm the terms and sustainability of the $20,451 debt owed to the parent company, AFH Holding & Advisory, LLC.
- Capital Requirements: Assess the likelihood of the company raising additional capital to fund an acquisition, given the current zero-cash position.
- Management Incentives: Review potential conflicts of interest regarding referral fees paid to consultants for target business referrals.
- Dilution Risk: Understand that any future merger or acquisition will likely result in significant dilution of the current 5,000,000 shares outstanding.