UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                             -----------------------

                                    FORM 10-Q
                   Quarterly Report Under Section 13 or 15(d)
              of the United States Securities Exchange Act of 1934

                             -----------------------


For The Quarter Ended September 30, 1996             Commission File No. 2-95011


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
             (Exact name of registrant as specified in its charter)


         Massachusetts                                                04-2846629
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)


    One Financial Center, 21st Floor, Boston, MA                           02111
(Address of principal executive offices)                              (Zip Code)


Registrant's telephone number, including area code                (617) 482-8000

                           ---------------------------


                                 Not Applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

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 for 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.

                                  Yes X No ___

                             There are no Exhibits.

                                  Page 1 of 13

<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)




<S>           <C>                                                                                                   <C>
                                        INDEX                                                                       Page No.

Part I.       FINANCIAL INFORMATION

              Financial Statements

                    Balance Sheets as of September 30, 1996 and December 31, 1995                                   3

                    Statements of Operations For the Quarters Ended
                          September 30, 1996 and 1995 and For the Nine Months Ended
                          September 30, 1996 and 1995                                                               4

                    Statements of Cash Flows For the Nine Months Ended
                          September 30, 1996 and 1995                                                               5

                    Notes to Financial Statements                                                                   6 - 7

              Management's Discussion and Analysis of Financial Conditions
                    and Results of Operations                                                                       8 - 10

              Computer Equipment Portfolio                                                                          11

Part II.      OTHER INFORMATION

              Items 1 - 6                                                                                           12

              Signature                                                                                             13
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                          PART I. FINANCIAL INFORMATION

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                                 Balance Sheets

                                      Assets                                        (Unaudited)             (Audited)
                                                                                      9/30/96                12/31/95
                                                                                 ----------------        ----------------
<S>                                                                              <C>                     <C>             
Investment property, at cost (note 3):
   Computer equipment                                                            $        592,514        $      1,495,761
     Less accumulated depreciation                                                        429,218               1,217,633
                                                                                 ----------------        ----------------
       Investment property, net                                                           163,296                 278,128

Cash and cash equivalents                                                                  20,440                  58,929
Marketable securities (note 5)                                                             40,675                  44,599
Rents receivable, net (note 2)                                                              9,700                  25,775
Sales receivable                                                                                -                      50
                                                                                 ----------------        ----------------

     Total assets                                                                $        234,111        $        407,481
                                                                                 ================        ================

                        Liabilities and Partners' Equity
Liabilities:
   Current portion of long-term debt                                             $              -        $         38,051
   Accounts payable and accrued expenses - affiliates (note 4)                              6,071                   8,210
   Accounts payable and accrued expenses                                                  120,818                 176,888
   Unearned rental revenue                                                                  5,856                   2,176
                                                                                 ----------------        ----------------

     Total liabilities                                                                    132,745                 225,325
                                                                                 ----------------        ----------------

Partners' equity:
   General Partner:
     Capital contribution                                                                   1,000                   1,000
     Cumulative net income                                                                633,164                 540,111
     Cumulative cash distributions                                                       (634,046)               (624,170)
     Unrealized losses on marketable securities (note 5)                                     (118)                    (79)
                                                                                 ----------------        ----------------
                                                                                                -                 (83,138)
                                                                                 ----------------        ----------------
   Limited Partners (25,020 units):
     Capital contribution, net of offering costs                                       11,139,685              11,139,685
     Cumulative net income                                                              1,020,238                 992,631
     Cumulative cash distributions                                                    (12,046,880)            (11,859,230)
     Unrealized losses on marketable securities (note 5)                                  (11,677)                 (7,792)
                                                                                 ----------------        ----------------
                                                                                          101,366                 265,294
                                                                                 ----------------        ----------------
     Total partners' equity                                                               101,366                 182,156
                                                                                 ----------------        ----------------

     Total liabilities and partners' equity                                      $        234,111        $        407,481
                                                                                 ================        ================
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                            Statements of Operations
                                   (Unaudited)

                                                     Quarters Ended                         Nine Months Ended
                                                      September 30,                           September 30,
                                            -------------------------------        ---------------------------------
                                                 1996              1995                1996                1995
                                            -------------------------------        ---------------------------------

<S>                                         <C>                <C>                  <C>                 <C>         
Revenue:
   Rental income                            $     54,549       $    135,670         $    155,765        $    385,132
   Other income                                        -             24,764                    -              75,987
   Interest income                                   641              1,656                2,716               6,707
   Net gain (loss) on sale
     of equipment                                      -                  -              139,983             (47,379)
   Recovery of net unsecured
     pre-petition claim                                -              8,195                    -              52,470
                                            ------------       ------------         ------------        ------------

       Total revenue                              55,190            170,285              298,464             472,917
                                            ------------       ------------         ------------        ------------

Costs and expenses:
   Depreciation                                   30,754             54,293               97,488             227,901
   Interest                                           99              1,231                1,165               4,539
   Related party expenses (note 4):
     Management fees                               3,869              7,535               12,327              23,506
     General and administrative                   20,067             15,382               58,661              49,862
   (Reversal of) provision for
     doubtful accounts                            (8,693)            13,047                8,163               5,720
                                            ------------       ------------         ------------        ------------

       Total costs and expenses                   46,096             91,488              177,804             311,528
                                            ------------       ------------         ------------        ------------

Net income                                  $      9,094       $     78,797         $    120,660        $    161,389
                                            ============       ============         ============        ============

Net (loss) income per Limited
   Partnership Unit                         $      (0.44)      $       2.94         $       1.10        $       2.85
                                            ============       ============         ============        ============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>

<TABLE>
<CAPTION>

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                            Statements of Cash Flows
              For the Nine Months Ended September 30, 1996 and 1995
                                   (Unaudited)

                                                                                            1996                     1995
                                                                                            ----                     ----

<S>                                                                                    <C>                      <C>          
Cash flows from operating activities:
   Net income                                                                          $    120,660             $     161,389
                                                                                       ------------             -------------

   Adjustments  to  reconcile  net  income  to
     net cash  provided  by  operating activities:
       Depreciation                                                                          97,488                   227,901
       Provision for doubtful accounts                                                        8,163                     5,720
       Net (gain) loss on sale of equipment                                                (139,983)                   47,379
       Net decrease (increase) in current assets                                              7,962                   (84,156)
       Net decrease in current liabilities                                                  (54,529)                  (49,727)
                                                                                       ------------             -------------

         Total adjustments                                                                  (80,899)                  147,117
                                                                                       ------------             -------------

         Net cash provided by operating activities                                           39,761                   308,506
                                                                                       ------------             -------------

Cash flows from investing activities:
   Purchase of investment property                                                                -                  (167,898)
   Proceeds from sales of investment property                                               157,327                    14,858
                                                                                       ------------             -------------

         Net cash provided by (used in) investing activities                                157,327                  (153,040)
                                                                                       ------------             -------------

Cash flows from financing activities:
     Principal payments on long-term debt                                                   (38,051)                  (39,621)
     Cash distributions to partners                                                        (197,526)                 (388,468)
                                                                                       ------------             -------------

         Net cash used in financing activities                                             (235,577)                 (428,089)
                                                                                       ------------             -------------

Net decrease in cash and cash equivalents                                                   (38,489)                 (272,623)

Cash and cash equivalents at beginning of period                                             58,929                   325,125
                                                                                       ------------             -------------

Cash and cash equivalents at end of period                                             $     20,440             $      52,502
                                                                                       ============             =============

Supplemental cash flow information:
   Interest paid during the period                                                     $      1,165             $       5,616
                                                                                       ============             =============
</TABLE>

                 See accompanying notes to financial statements.


<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements
       For the Nine Months Ended September 30, 1996 and September 30, 1995
                                   (Unaudited)

(1)   Organization and Partnership Matters

The foregoing financial statements of Wellesley Lease Income Limited Partnership
III-C (the  "Partnership")  have been prepared in accordance  with the rules and
regulations of the Securities and Exchange  Commission for Form 10-Q and reflect
all  adjustments  which are, in the opinion of management,  necessary for a fair
presentation of the results for the interim periods presented.  Pursuant to such
rules and  regulations,  certain note  disclosures  which are normally  required
under  generally  accepted  accounting  principles  have  been  omitted.  It  is
recommended  that these  financial  statements be read in  conjunction  with the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1995.

(2)   Summary of Significant Accounting Policies

Allowance for Doubtful Accounts

The financial statements include an allowance for estimated losses on receivable
balances.  The  allowance  for  doubtful  accounts  is based on past  write  off
experience  and an evaluation  of potential  uncollectible  accounts  within the
current  receivable  balances.  Receivable  balances  which are determined to be
uncollectible  are charged against the allowance and subsequent  recoveries,  if
any, are credited to the allowance. At September 30, 1996 and December 31, 1995,
the allowance for doubtful  accounts included in rents receivable was $8,377 and
$814, respectively, and $600 and $0 included in sales receivable, respectively.

(3)   Investment Property

At  September  30,  1996,  the  Partnership  owned  computer  equipment  with  a
depreciated cost basis of $163,296, subject to existing leases. All purchases of
computer  equipment  are  subject to a 3%  acquisition  fee paid to the  General
Partner.

(4)   Related Party Transactions

Fees,  commissions  and other expenses paid or accrued by the Partnership to the
General  Partner or affiliates of the General  Partner for the nine months ended
September 30, 1996 and 1995, are as follows:

<TABLE>
<CAPTION>
                                                      1996               1995
                                                      ----               ----

<S>                                               <C>                <C>         
Equipment acquisition fees                        $          -       $      4,890
Management fees                                         12,327             23,506
Reimbursable expenses paid                              57,367             49,780
                                                  ------------       ------------

                                                  $     69,694       $     78,176
                                                  ============       ============
</TABLE>



<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                          Notes to Financial Statements
       For the Nine Months Ended September 30, 1996 and September 30, 1995
                                   (Unaudited)

Under the terms of the Partnership Agreement, the General Partner is entitled to
an equipment acquisition fee of 3% of the purchase price paid by the Partnership
for the  equipment.  The General  Partner is also  entitled to a management  fee
equal to 7% of the monthly rental billings collected. The Partnership reimburses
the General Partner and its affiliates for certain expenses  incurred by them in
connection with the operation of the Partnership.

(5)   Fair Values of Financial Instruments

Pursuant to Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity  Securities," which requires  investments
in debt and equity  securities  other than those  accounted for under the equity
method  to be  carried  at fair  value or  amortized  cost  for debt  securities
expected to be held to maturity,  the Partnership has classified its investments
in equity  securities as available  for sale.  Accordingly,  the net  unrealized
gains and losses computed in marking these  securities to market are reported as
a component of partners'  equity.  At September 30, 1996 the difference  between
the fair value and the cost basis of these  securities is an unrealized  loss of
$11,795.

The fair value is based on currently  quoted market  prices.  The cost basis and
estimated fair value of the Partnership's marketable securities at September 30,
1996 and December 31, 1995, respectively, are as follows:

<TABLE>
<CAPTION>
                                                               September 30, 1996            December 31, 1995
                                                             ----------------------       ------------------------

                                                             Cost           Fair          Cost             Fair
                                                             Basis          Value         Basis            Value


<S>                                                          <C>           <C>            <C>              <C>     
Investment in Continental Information
     Systems Corporation Stock                               $ 52,470      $ 40,675       $ 52,470         $ 44,599
                                                             ========      ========       ========         ========
</TABLE>



<PAGE>


                   WELLESLEY INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                   (Unaudited)

Results of Operations

The following discussion relates to the Partnership's operations for the quarter
and nine months ended September 30, 1996, compared to the same periods in 1995.

The Partnership  realized net income of $9,094 and net income of $78,797 for the
quarters  ended  September  30,  1996  and  1995,  respectively.  Rental  income
decreased  $81,121 or 60%  between  the three  month  periods.  The  decrease is
primarily due to lower rental rates obtained on equipment  lease  extensions and
remarketings  resulting  after the initial  lease term  expires and due to a net
decrease in the overall size of the equipment  portfolio.  Other income reported
in 1995 is the result of the  reduction of  overstated  liabilities  recorded in
prior  periods.  The recovery of the unsecured  pre-petition  claim in the prior
quarter was the result of the  establishment  of the carrying value of the stock
received  in  the  December  27,  1994  distribution  from  the  Trustee  of the
Liquidating  Estate of CIS Corporation,  et al. The receivables  associated with
the stock settlement had been fully reserved in a prior year;  accordingly,  the
Partnership was able to show a recovery on those receivables as of September 30,
1995,  at which time an  objective  stock value could be  determined  due to the
stock's  trading  activities.  Interest  income  decreased  $1,015  due to lower
average short-term investment balances held during the current quarter.

Total  costs and  expenses  decreased  $45,392 or 50%  between  the three  month
periods.  The  decrease  in costs and  expenses  is  primarily a result of lower
depreciation  expense  combined  with the reversal of the provision for doubtful
accounts. Depreciation expense decreased $23,539 in the current quarter due to a
portion of the equipment  portfolio becoming fully depreciated.  For the quarter
ended  September 30, 1996, the  Partnership  reversed the provision for doubtful
accounts  by $8,693  due to the  successful  collection  efforts  on  delinquent
accounts. Management fees expense decreased between the three month periods as a
result of the  decline  in  rental  income.  General  and  administrative  costs
increased $4,685 or 30% mainly due to the increase in the allocable  salaries of
the partnership accounting and reporting personnel of the General Partner.



<PAGE>


                   WELLESLEY INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                   (Unaudited)

The  Partnership  realized net income of $120,660 and $161,389 and rental income
of $155,765 and $385,132 for the nine months ended  September 30, 1996 and 1995,
respectively.  The decrease in rental  income can be  attributed to lower rental
rates obtained on equipment lease extensions and remarketings  after the initial
lease term expires and the overall reduction in the equipment portfolio. Another
factor impacting rental income between the two periods was a $53,340  adjustment
for an  overaccrual  of rental income  recognized  in prior periods  relating to
equipment  that came off lease and was  returned  to  inventory.  Other  income,
reported  in 1995,  is the result of the  reduction  of  overstated  liabilities
recorded in prior periods, as discussed in the quarter analysis above.  Interest
income  decreased  $3,991 as a result  of lower  average  short-term  investment
balances held during 1996.  The net gain on sale of equipment of $139,983 can be
attributed to sales of primarily fully depreciated equipment during 1996, versus
a net loss of  $47,379  recognized  in the prior  period.  The  recovery  of the
unsecured  pre-petition claim in 1995 was the result of the establishment of the
carrying value of the stock received in the December 27, 1994  distribution from
the Trustee of the Liquidating Estate of CIS Corporation, et al. The receivables
associated  with the stock  settlement  had been fully reserved in a prior year;
accordingly, the Partnership was able to show a recovery on those receivables as
of September 30, 1995 at which time an objective stock value could be determined
due to the stock's trading activities.

Total  costs and  expenses  decreased  $133,724  or 43%  between  the nine month
periods.  The decrease in costs and  expenses is  primarily  the result of lower
depreciation  expense. As discussed above in the quarter analysis,  depreciation
expense  decreased  $130,413 or 57% between 1995 and 1996 due to a large portion
of the equipment  portfolio becoming fully depreciated and due to a reduction in
the equipment  portfolio.  Interest expense decreased $3,374, in relation to the
decrease in long-term  debt  outstanding.  Management  fees decreased due to the
decline in rental income.  General and administrative  expenses increased $8,799
or 18%. As mentioned above, a major factor  contributing to this increase is the
increase in the allocable  salaries of the partnership  accounting and reporting
personnel of the General  Partner.  The Partnership  increased its provision for
doubtful accounts to reserve for potential  uncollectible rents receivable as of
September 30, 1996.

The  Partnership  had a net loss per Limited  Partnership  Unit of $0.44 and net
income  of  $2.94  for  the  quarters   ended   September  30,  1996  and  1995,
respectively,  and net  income  of $1.10 and  $2.85  for the nine  months  ended
September 30, 1996 and 1995, respectively.  The per unit allocation for the nine
months ended September 30, 1996 and 1995, includes a cost recovery allocation of
profit and loss among the  General  and  Limited  Partners  which  results in an
allocation  of net loss to the Limited  Partners  in the third  quarter of 1996.
This  cost  recovery   allocation  is  required  to  maintain  capital  accounts
consistent with the  distribution  provisions of the Partnership  Agreement.  In
certain periods,  the cost recovery  allocation of profit and loss may result in
an  allocation  of net  loss to the  Limited  Partners  in  instances  when  the
Partnership's operations were profitable for the period.



<PAGE>


                   WELLESLEY INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations
                                   (Unaudited)

Liquidity and Capital Resources

For the nine months ended  September 30, 1996,  rental  revenue  generated  from
operating  leases and sales proceeds  generated  from  equipment  sales were the
primary sources of funds for the Partnership. As equipment leases terminate, the
General Partner determines if the equipment will be extended to the same lessee,
remarketed to another lessee,  or if it is less marketable,  sold. This decision
is made upon analyzing which options would generate the most favorable results.

Rental income will continue to decrease due to two factors.  First,  lower rates
are obtained due to the remarketing of existing equipment upon the expiration of
the original lease. Typically the remarketed rates are lower due to the decrease
in useful life of the equipment.  Second, the increasing change of technology in
the computer  industry usually  decreases the demand for older  equipment,  thus
increasing the possibility of obsolescence.  Both of these factors together will
cause  remarketed  rates to be lower than original  rates and will cause certain
leases to terminate upon expiration.  This decrease,  however, should not affect
the Partnership's  ability to meet its future cash  requirements.  To the extent
that  future  cash  flows  should  be  insufficient  to meet  the  Partnership's
operating  expenses and liabilities,  additional funds could be obtained through
the sale of equipment, or a reduction in the rate of cash distributions.  Future
rental  revenues  amount to $104,021 and are to be received  over the next three
years.

The  Partnership's  investing  activities  for the  first  nine  months  of 1996
generated  proceeds of $157,327 on equipment sales with a depreciated cost basis
of $17,344. The Partnership has no material capital expenditure  commitments and
will not purchase equipment in the future as the Partnership has reached the end
of its reinvestment period.

The Partnership's financing activities resulted in the paydown on long-term debt
of  $38,051  during  the nine  periods.  Total  long-term  debt  assumed  by the
Partnership from inception is $10,641,478, for a total leverage of 43%.

Cash  distributions  are  currently  at  an  annual  level  of  2%  per  Limited
Partnership  Unit, or $2.50 per Limited  Partnership  Unit on a quarterly basis.
For the quarter  ended  September  30,  1996,  the  Partnership  declared a cash
distribution  of $65,842,  of which $3,292 was allocated to the General  Partner
and $62,550 was allocated to the Limited Partners. The distribution will be made
on November 27, 1996. The Partnership expects to continue paying at or near this
level in the future.  The effects of inflation have not been  significant to the
Partnership  and are not  expected  to have any  material  impact in the  future
periods.

On  January 9, 1996,  TLP  Holding  LLC  purchased  all the common  stock of TLP
Leasing  Programs,  Inc.  from CMI Holding Co.  Under the new  ownership,  it is
expected  that TLP Leasing  Programs,  Inc. will continue to operate in the same
manner of business as it has in the past.



<PAGE>


                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)

                    Computer Equipment Portfolio (Unaudited)
                               September 30, 1996

Lessee

Baylor Health Network, Incorporated
Centura Bank
Hughes Aircraft Company, Incorporated
J. Walter Thompson & Co.
NYNEX National, Incorporated
Sports & Recreation, Incorporated
USG Corporation
Xerox Corporation

<TABLE>
<CAPTION>
Equipment Description                         Acquisition Price

<S>                                              <C>           
Computer peripherals                             $      112,578
Processors & upgrades                                   314,032
Telecommunications                                      148,129
Other                                                    17,775
                                                 --------------

                                                 $      592,514
                                                 ==============
</TABLE>


<PAGE>

<TABLE>
<CAPTION>

                           PART II. OTHER INFORMATION

                WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
                      (A Massachusetts Limited Partnership)


<S>            <C>
Item 1.        Legal Proceedings
               Response:  None

Item 2.        Changes in the Rights of the Partnership's Security Holders
               Response:  None

Item 3.        Defaults by the Partnership on its Senior Securities
               Response:  None

Item 4.        Results of Votes of Security Holders
               Response:  None

Item 5.        Other Information
               Response:  None

Item 6.        Exhibits and Reports on Form 8-K
               Response:

               A.  None

               B.  None
</TABLE>


<PAGE>


                                    SIGNATURE

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-C
(Registrant)

By:    Wellesley Leasing Partnership,
       its General Partner

By:    TLP Leasing Programs, Inc.,
       one of its Corporate General Partners


Date:  November 14, 1996

By:    Arthur P. Beecher,
       President