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AFH ACQUISITION VII, INC. - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operation.

February 13, 2014

The Company currently does not engage in any business activities that provide cash flow. During the next twelve months we anticipate incurring costs related to:



(i) filing Exchange Act reports, and

(ii) investigating, analyzing and consummating an acquisition.

We believe we will be able to meet these costs through use of funds in our treasury, through deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors. The Company may consider acquiring a business which has recently commenced operations, is a developing company in need of additional funds for expansion into new products or markets, is seeking to develop a new product or service, or is an established business which may be experiencing financial or operating difficulties and is in need of additional capital. In the alternative, a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering. Any target business that is selected may be a financially unstable company or an entity in its early stages of development or growth, including entities without established records of sales or earnings. In that event, we will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or potential emerging growth companies. In addition, we may effect a business combination with an entity in an industry characterized by a high level of risk, and, although our management will endeavor to evaluate the risks inherent in a particular target business, there can be no assurance that we will properly ascertain or assess all significant risks. The Company anticipates that the selection of a business combination will be complex and extremely risky. Because of general economic conditions, rapid technological advances being made in some industries and shortages of available capital, our management believes that there are numerous firms seeking even the limited additional capital which we will have and/or the perceived benefits of becoming a publicly traded corporation. Such perceived benefits of becoming a publicly traded corporation include, among other things, facilitating or improving the terms on which additional equity financing may be obtained, providing liquidity for the principals of and investors in a business, creating a means for providing incentive stock options or similar benefits to key employees, and offering greater flexibility in structuring acquisitions, joint ventures and the like through the issuance of stock. Potentially available business combinations may occur in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. 25



Liquidity and Capital Resources

As of October 31, 2013, the Company had assets equal to $63,208, comprised of cash and cash equivalents and deferred expenses. This compares with assets of $95,489, comprised of cash and cash equivalents and deferred expenses, as of October 31, 2012. The Company's current liabilities as of October 31, 2013 totaled $32,231, comprised of accrued expenses and monies due to parent. This compares with liabilities of $26,375 comprised exclusively of accrued expenses and monies due to parent, as of October 31, 2012. The Company can provide no assurance that it can continue to satisfy its cash requirements for at least the next twelve months. The following is a summary of the Company's cash flows provided by (used in) operating, investing and financing activities for the years ended October 31, 2013, October 31, 2012 and for the cumulative period from September 24, 2007 (Inception) to October 31, 2013. For the Cumulative Period from Fiscal Year Fiscal Year September 24, 2007 Ended Ended (Inception) to October 31, 2013 October 31, 2012 October 31, 2013 Net Cash (Used in) Operating Activities $ (1,792,339 ) $ 37,575 $ (1,885,187 ) Net Cash (Used in) Investing Activities - - - Net Cash Provided by Financing Activities $ 1,742,363 $ 12,914 $ 1,885,700 Net Increase (Decrease) in Cash and Cash Equivalents $ 513 $ 50,489 $ 513 The Company has nominal assets and has generated no revenues since inception. The Company is also 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. In addition, the Company is dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, the Company may not be able to implement its plan of operations.



Private Placement Commencing from October 2012

In October 2012, the Company commenced a private placement offering, as amended, (the "Offering") to several accredited investors (the "Purchasers") for up to 1,300,000 Shares for aggregate proceeds equal to $2,600,000 No warrants were issued to investors in the Offering. The Offering was conducted pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, pursuant to Regulation D, Section 4(2) and Rule 506 thereunder. Proceeds from the Offering were utilized to pay fees and expenses incurred in connection with the Reverse Merger with the Target Companies as indicated in the LOI.



The Offering was undertaken pursuant to a definitive Subscription Agreement between the Company and the Purchasers (the "Subscription Agreement"), which contains customary representations, warranties and covenants of the parties.

As of the date of this Annual Report, the Company has received proceeds in an aggregate amount of $1,815,700.

Results of Operations

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 September 24, 2007 (Inception) to October 31, 2013. 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. It is management's assertion that these circumstances may hinder the Company's ability to continue as a going concern. The Company's plan of operation for the next twelve months shall be to continue its efforts to locate suitable acquisition candidates. 26 For the fiscal year ended October 31, 2013, the Company had a net loss of $2,137,837, consisting of legal, accounting, audit, other professional service fees and expenses incurred in relation to the filing of the Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K and reverse merger expenses which represent cash from the private placement offering (see financial statements Note F) which were used towards fees in relation to the LOI (see financial statements Note A). $1,200,000 of such proceeds will be kept by the parent, AFH Holding & Advisory. For the fiscal year ended October 31, 2012, the Company had a net loss of $777,379, consisting of legal, accounting, audit, other professional service fees and expenses incurred in relation to the filing of the Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K and reverse merger expenses which represent cash from the private placement offering (see financial statements Note F) which were used towards fees in relation to the LOI (see financial statements Note A). $1,200,000 of such proceeds will be kept by the parent, AFH Holding & Advisory. For the period from September 24, 2007 (Inception) to October 31, 2013, the Company had a net loss of $2,960,459 comprised exclusively of legal, accounting, audit, other professional service fees and other organizational costs and expenses incurred in relation to the formation of the Company, the filing of the Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K and reverse merger expenses which represent cash from the private placement offering (see financial statements Note F) which were used towards fees in relation to the LOI (see financial statements Note A). $1,200,000 of such proceeds will be kept by the parent, AFH Holding & Advisory.



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. Contractual Obligations



As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.


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Source: Edgar Glimpses


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