Form 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                 |X|    Quarterly Report Pursuant to Section 13 or 15(d) of
                        the Securities Exchange Act of 1934.
                        For the quarterly period ended June 30, 1999

                 |_|    Transition Report Pursuant to Section 13 or 15(d) of
                        the Securities Exchange Act of 1934.
                        For the transition period from _______ to _______

                        Commission File Number 000-19160

                      ATEL Cash Distribution Fund III, L.P.
             (Exact name of registrant as specified in its charter)

California                                                    94-3100855
(State or other jurisdiction of                             (I. R. S. Employer
 incorporation or organization)                            Identification No.)

           235 Pine Street, 6th Floor, San Francisco, California 94104
                    (Address of principal executive offices)

        Registrant's telephone number, including area code: (415)989-8800



Indicate  by a 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 |_|

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>

                          Part I FINANCIAL INFORMATION

Item 1.               Financial Statements.


<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                                  BALANCE SHEET

                                  JUNE 30, 1999
                                   (Unaudited)


                                     ASSETS



Cash and cash equivalents                                         $6,933,628

Accounts receivable                                                   91,871

Investments in leases                                              4,783,156
                                                             ----------------
                                                                 $11,808,655
                                                             ================


                       LIABILITIES AND PARTNERS' CAPITAL

Non-recourse debt                                                   $155,632

Accrued interest                                                         349

Accounts payable                                                     121,976

Unearned operating lease income                                      122,119
                                                             ----------------
Total liabilities                                                    400,076

Partners' capital:
     General partners                                                245,689
     Limited partners                                             11,162,890
                                                             ----------------
Total partners' capital                                           11,408,579
                                                             ----------------
                                                                 $11,808,655
                                                             ================


                        See notes to financial statements


<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                                INCOME STATEMENTS

                        THREE AND SIX MONTH PERIODS ENDED
                             JUNE 30, 1999 AND 1998
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Six Months Ended               Three Months Ended
                                                                  June 30,                          June 30,
Revenues:                                                 1999             1998             1999             1998
                                                          ----             ----             ----             ----
<S>                                                        <C>              <C>              <C>              <C>
Lease revenues:
   Operating leases                                         $853,338       $2,293,569         $391,892         $935,972
   Direct financing leases                                    42,134          140,512           18,323           83,074
   Leveraged leases                                           10,562            9,287            5,281            4,643
   (Loss) gain on sales of assets                            (43,349)         (74,584)         (47,026)        (278,326)
Interest income                                              181,067          198,327           90,971          106,032
Other                                                          2,285            3,957            1,634            2,386
                                                     ---------------- ---------------- ---------------- ----------------
                                                           1,046,037        2,571,068          461,075          853,781
                                                     ---------------- ---------------- ---------------- ----------------
Expenses:
Depreciation                                                 431,755        1,385,502          231,636          570,027
Equipment and partnership management fees                     81,190          176,440           28,464           92,862
Administrative cost reimbursements                            87,442          109,547           62,747           36,548
Interest expense                                              15,182           77,378            6,106           31,458
Taxes                                                         37,344           42,570              761           42,570
Other                                                         63,168           36,080           48,636           13,227
Provision for losses                                               -           17,173                -                -
Professional fees                                             15,366            7,767           11,364            5,171
                                                     ---------------- ---------------- ---------------- ----------------
                                                             731,447        1,852,457          389,714          791,863
                                                     ---------------- ---------------- ---------------- ----------------
Net Income                                                  $314,590         $718,611          $71,361          $61,918
                                                     ================ ================ ================ ================

Net income:
     General partners                                         $3,146           $7,186             $714             $619
     Limited partners                                        311,444          711,425           70,647           61,299
                                                     ---------------- ---------------- ---------------- ----------------
                                                            $314,590         $718,611          $71,361          $61,918
                                                     ================ ================ ================ ================

Net income per limited partnership unit                        $0.04            $0.10            $0.01            $0.01
Weighted average number of units
   outstanding                                             7,376,284        7,376,284        7,376,284        7,376,284
</TABLE>

                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL

                             SIX MONTH PERIOD ENDED
                                  JUNE 30, 1999
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     Limited Partners      General
                                          Units           Amount          Partners           Total
<S>                                        <C>            <C>                 <C>           <C>
Balance December 31, 1998                  7,376,284      $16,388,235         $242,543      $16,630,778
Distributions to limited partners                          (5,536,789)                       (5,536,789)
Net income                                                    311,444            3,146          314,590
                                     ---------------- ---------------- ---------------- ----------------
Balance June 30, 1999                      7,376,284      $11,162,890        $ 245,689      $11,408,579
                                     ================ ================ ================ ================
</TABLE>

                        See notes to financial statements

<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                            STATEMENTS OF CASH FLOWS

                        THREE AND SIX MONTH PERIODS ENDED
                             JUNE 30, 1999 AND 1998

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                              Six Months Ended               Three Months Ended
                                                                    June 30,                      June 30,
                                                          1999             1998             1999             1998
                                                          ----             ----             ----             ----
Operating activities:
<S>                                                         <C>             <C>               <C>             <C>
Net income                                                  $314,590         $718,611          $71,361          $61,918

Adjustment to reconcile net income to net cash
   provided by operations:
     Depreciation                                            431,755        1,385,502          231,636          570,027
     Leveraged lease income                                  (10,562)          (9,287)          (5,281)          (4,643)
     Gain on sales of assets                                  43,349           74,584           47,026          278,326
     Provision for losses                                          -           17,173                -                -
   Changes in operating assets and liabilities:
      Accounts receivable                                    (25,842)          42,994           13,844          372,141
      Accounts payable, general partner                     (339,374)         (72,539)         (21,240)         (96,138)
      Accounts payable, other                                (22,189)         143,479         (102,803)         255,544
      Accrued interest                                        (1,014)          (6,300)            (513)         (13,290)
      Unearned operating lease income                         68,992           58,235           40,565           60,902
                                                     ---------------- ---------------- ---------------- ----------------
Net cash provided by operating activities                    459,705        2,352,452          274,595        1,484,787
                                                     ---------------- ---------------- ---------------- ----------------

Investing activities:

Proceeds from sales of lease assets                          736,868        2,799,814          394,667        2,233,653
Reduction in net investment in direct
   financing leases                                          236,977          448,401          121,056          148,629
                                                     ---------------- ---------------- ---------------- ----------------
Net cash provided by investing activities                    973,845        3,248,215          515,723        2,382,282
                                                     ---------------- ---------------- ---------------- ----------------
</TABLE>
<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                            STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

                        THREE AND SIX MONTH PERIODS ENDED
                             JUNE 30, 1999 AND 1998

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             Six Months Ended                Three Months Ended
                                                                  June 30,                        June 30,
                                                                  --------                        --------
                                                          1999             1998             1999             1998
                                                          ----             ----             ----             ----
Financing activities:
<S>                                                       <C>              <C>              <C>              <C>

Distributions to limited partners                         (5,536,789)      (4,924,431)      (2,770,745)      (2,767,632)
Repayments of long-term non-recourse debt                   (258,075)      (1,404,026)        (130,516)        (949,033)
                                                     ---------------- ---------------- ---------------- ----------------

Net cash used in financing activities                     (5,794,864)      (6,328,457)      (2,901,261)      (3,716,665)
                                                     ---------------- ---------------- ---------------- ----------------

Net increase (decrease) in cash and
   cash equivalents                                       (4,361,314)        (727,790)      (2,110,943)         150,404
Cash and cash equivalents at
   beginning of period                                    11,294,942        9,342,727        9,044,571        8,464,533
                                                     ---------------- ---------------- ---------------- ----------------
Cash and cash equivalents at end of
   period                                                 $6,933,628       $8,614,937       $6,933,628       $8,614,937
                                                     ================ ================ ================ ================

Supplemental disclosures of cash flow information:
Cash paid during period for interest                         $15,182          $77,378           $6,106          $31,458
                                                     ================ ================ ================ ================
</TABLE>


                        See notes to financial statements



<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1999
                                   (Unaudited)


1. Summary of significant accounting policies:

Interim financial statements:

The unaudited interim financial statements reflect all adjustments which are, in
the opinion of the general partners,  necessary to a fair statement of financial
position and results of operations for the interim periods  presented.  All such
adjustments are of a normal recurring nature.  These unaudited interim financial
statements  should be read in  conjunction  with the most recent  report on Form
10K.


2. Organization and partnership matters:

ATEL Cash  Distribution Fund III, L.P. (the  Partnership),  was formed under the
laws of the State of California in September  1989, for the purpose of acquiring
equipment to engage in equipment leasing and sales activities.

The Partnership's business consists of leasing various types of equipment. As of
June 30, 1999,  the  Partnership's  leases were for terms of six months to eight
years and nine months.

Pursuant to the Agreement of Limited  Partnership,  the General Partners receive
compensation  and   reimbursements  for  services  rendered  on  behalf  of  the
Partnership (Note 5.)


3. Investment in leases:

The Partnership's investment in leases consists of the following:

<TABLE>
<CAPTION>
                                                              Depreciation
                                                              Expense or        Reclass-
                                           December 31,      Amortization     ifications &       June 30,
                                                1998           of Leases      Dispositions         1999
                                                ----           ---------     --------------        ----
<S>                                            <C>               <C>             <C>               <C>
Net investment in operating leases             $ 4,961,101       $ (431,755)     $(1,599,464)      $2,929,882
Net investment in direct financing leases        1,114,623         (236,977)         (60,813)         816,833
Net investment in leveraged leases                 144,944           10,562                -          155,506
Equipment held for sale or lease                   363,048                -          643,680        1,006,728
Reserve for losses                                (362,173)               -          236,380         (125,793)
                                           ---------------- ---------------- ---------------- ----------------
                                               $ 6,221,543       $ (658,170)      $ (780,217)     $ 4,783,156
                                           ================ ================ ================ ================
</TABLE>

<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1999
                                   (Unaudited)


3. Investment in leases (continued):

The following  schedule provides an analysis of the Partnership's  investment in
property on operating leases by major  classifications  as of December 31, 1998,
acquisitions and dispositions  during the quarters ended March 31, 1999 and June
30, 1999 and as of June 30, 1999.

<TABLE>
<CAPTION>
                                                         Reclassifications &
                                 December 31,               Dispositions              June 30,
                                     1998          1st Quarter      2nd Quarter         1999
                                     ----          -----------      -----------         ----
<S>                                  <C>             <C>              <C>               <C>
Printing                             $3,044,659                                        $ 3,044,659
Utilities                             2,839,101                                          2,839,101
Food processing                       2,438,524                                          2,438,524
Medical                               2,155,489                                          2,155,489
Transportation                        2,214,215      $(1,443,798)                          770,417
Other                                    65,695                -                            65,695
Manufacturing                         3,618,000       (1,054,185)     $(2,503,060)          60,755
Materials handling                      529,071         (446,058)         (79,160)           3,853
Mining                                2,171,980       (2,171,980)               -                -
                                ---------------- ---------------- ---------------- ----------------
                                     19,076,734       (5,116,021)      (2,582,220)      11,378,493
Less accumulated depreciation       (14,115,633)       3,916,805        1,750,217       (8,448,611)
                                ---------------- ---------------- ---------------- ----------------
                                     $4,961,101      ($1,199,216)       ($832,003)      $2,929,882
                                ================ ================ ================ ================
</TABLE>

Equipment on operating leases was acquired in 1990, 1991, 1992, 1993 and 1995.

At June 30, 1999, the aggregate  amounts of future minimum lease payments are as
follows:

          Year ending      Direct
         December 31,     Financing        Operating          Total
                 1999        $ 271,074        $ 420,409        $ 691,483
                 2000          140,876          238,486          379,362
                 2001           23,836           59,415           83,251
                 2002           17,877                -           17,877
                       ---------------- ---------------- ----------------
                             $ 453,663        $ 718,310      $ 1,171,973
                       ================ ================ ================







<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1999
                                   (Unaudited)


4. Non-recourse debt:

Notes payable to financial  institutions are due in varying  monthly,  quarterly
and semi-annual installments of principal and interest. The notes are secured by
assignments  of lease  payments and pledges of the assets  which were  purchased
with the proceeds of the particular notes. Interest rates on the notes vary from
7.66% to 11.00%.

Future minimum principal and interest payments of long-term non-recourse debt as
of June 30, 1999 are as follows:

            Year ending
           December 31,     Principal        Interest           Total
                   1999         $ 98,341          $ 5,924        $ 104,265
                   2000           57,291            2,374           59,665
                         ---------------- ---------------- ----------------
                               $ 155,632          $ 8,298        $ 163,930
                         ================ ================ ================


5.  Related party transactions:

The terms of the  Agreement  of Limited  Partnership  provide  that the  General
Partners  and/or  Affiliates are entitled to receive  certain fees for equipment
acquisition, management and resale and for management of the Partnership.

The General Partners and/or  Affiliates  earned the following fees,  commissions
and reimbursements, pursuant to the Limited Partnership Agreement as follows:

                                               1999             1998
                                               ----             ----
Reimbursement of administrative costs            $ 87,442        $ 109,547
Incentive and equipment management fees            81,190          176,440
                                          ---------------- ----------------
                                                 $168,632         $285,987
                                          ================ ================





<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                                  JUNE 30, 1999
                                   (Unaudited)


6.  Partners' capital:

The Partnership Net Profits, Net Losses, and Tax Credits are to be allocated 99%
to the Limited Partners and 1% to the General Partners.

As more  fully  described  in the  Partnership  Agreement,  available  Cash from
Operations and Cash from Sales or Refinancing shall be distributed as follows:

     First, 5% of  Distributions of Cash from Operations to the General Partners
     as Incentive Management Compensation.

     Second, the balance to the Limited Partners until the Limited Partners have
     received aggregate  Distributions,  as defined, in an amount equal to their
     Original  Invested  Capital,  as defined,  plus an 8% per annum  cumulative
     (compounded daily) return on their Adjusted Invested Capital, as defined.

     Third,   the  General   Partners  will  receive  as  Incentive   Management
     Compensation, the following:

          (A)  10% of remaining Cash from Operations, as defined,

          (B) 15% of remaining Cash from Sales or Refinancing, as defined.

     Fourth, the balance to the Limited Partners.


7.  Line of credit:

The  Partnership  participates  with the  General  Partner  and  certain  of its
Affiliates in a $95,000,000 revolving credit agreement with a group of financial
institutions  which  expires on January  31,  2000.  The  agreement  includes an
acquisition  facility to be used by the  Partnership  and  Affiliates to provide
bridge financing for assets on leases.  Draws on the acquisition facility by any
individual  borrower  are  secured  only by that  borrower's  assets,  including
equipment and related leases.

The Partnership had no borrowings under the agreement during 1999.

The credit agreement  includes certain  financial  covenants  applicable to each
borrower.  The  Partnership  was in compliance with its covenants as of June 30,
1999.








<PAGE>

Item 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                      FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Capital Resources and Liquidity

Funds which have been  received,  but which have not yet been invested in leased
equipment, are invested in interest-bearing accounts or  high-quality/short-term
commercial paper.

The  Partnership's  primary  source of liquidity  during the first six months of
1999 were  proceeds  from sales of assets and lease rents.  The liquidity of the
Partnership  will vary in the future,  increasing  to the extent cash flows from
leases  exceed  expenses,  and  decreasing  as lease  assets  are  acquired,  as
distributions are made to the limited partners and to the extent expenses exceed
cash flows from leases.

The Partnership currently has available adequate reserves to meet contingencies,
but in the event those  reserves were found to be  inadequate,  the  Partnership
would  likely be in a position to borrow  against its current  portfolio to meet
such  requirements.  The  General  Partners  envision no such  requirements  for
operating purposes.

As of June 30, 1999, the Partnership had borrowed approximately $32,425,000. The
remaining  unpaid balance of such borrowings at June 30, 1999 was $155,632.  The
borrowings are  non-recourse to the  Partnership,  that is, the only recourse of
the lender will be to the  equipment or  corresponding  lease  acquired with the
loan  proceeds.  The General  Partners  expect that there will be no  additional
borrowings.

No  commitments  of capital  have been or are expected to be made other than for
the acquisition of additional equipment. As of June 30, 1999, there were no such
commitments.

The Partnership made distributions of cash from 1999 first quarter operations in
February,  March and April 1999. The Partnership made distributions of cash from
1999 second  quarter  operations in May, June and July 1999.  The amounts of the
monthly  distributions  were each $0.125 per Unit.  The amounts of the quarterly
distributions  were each  $0.375  per Unit.  These  distributions  represent  an
annualized distribution rate of 15.0%.

If interest rates increase or decrease  significantly,  the lease rates that the
Partnership can obtain on future leases will be expected to increase or decrease
in  parallel  as the cost of capital is a  significant  factor in the pricing of
lease  financing.  Leases  already  in place,  for the most  part,  would not be
affected by changes in interest rates.

Cash Flows, 1999 vs. 1998:

Six months:

Cash flows from operations decreased due to decreases in lease rents compared to
1998.  The decreases  were due to lease asset sales since the second  quarter of
1998.

Cash flows from the sales of assets  decreased by  $2,062,946  compared to 1998.
The decrease was due to smaller amounts of lease maturities and resulting sales.
The original cost of such assets sold decreased from approximately $9,500,000 in
1998 to  approximately  $3,500,000 in 1999. Cash flows from the reduction of the
Partnership's  net investment in direct financing  leases decreased  compared to
1998 as a result of equipment sales over the last twelve months.

There were no financing sources of cash flows in 1999 or 1998.  Distributions to
limited  partners  increased  compared to 1997 due an increase in the annualized
distribution   rates   compared  to  1998.   The  increase  is  related  to  the
distributions made in January 1999 (from 1998 operations) compared to those made
in January 1998 (from 1997  operations.  Debt  payments for the six month period
decreased due to scheduled debt payments.


<PAGE>

Three months:

Cash flows from  operations  decreased  in the three  month  period for the same
reasons noted above for the six month period.

Cash flows from investing activities in both 1999 and 1998 consisted of proceeds
from sales of assets and from reductions in the  Partnership's net investment in
direct  financing  leases.  Proceeds  from the sales of assets  decreased due to
larger amounts of sales  activities.  Direct financing lease rents decreased for
the same reasons as noted above for the six month period.

There were no financing sources of cash in 1999 or 1998. Debt payments decreased
for the same reasons as noted above for the six month period.

Results of Operations

Operations  in the  second  quarter  of 1999  resulted  in net income of $71,361
compared  to  $61,918  in 1998.  Net income for the first six months of 1999 was
$314,590 compared to $718,611 in 1998.

1999 vs. 1998:

Lease revenues decreased in both the three and six month periods compared to the
prior  year.  This is the result of asset sales  since June 30,  1998.  Interest
income has decreased from 1998 to 1999 for both the three and six month periods.
This a direct  consequence  of having  maintained  lower  average cash  balances
during the 1999 periods than in the 1998 periods.

Operating  lease  revenues  have shown a net decrease for both the three and six
month  periods.  The original cost of the  underlying  assets has decreased from
$24,702,432  at June 30, 1998 to  $11,378,493at  June 30,  1999.  The  decreased
amounts of equipment owned by the Partnership  also gave rise to the decrease in
depreciation expense.

As scheduled  debt payments have been made,  debt balances have been reduced and
this has caused interest expense to decline from 1998 to 1999.

Management fees are based on distributions of cash of generated by operations to
the  limited  partners  and on lease  rents.  Although  distributions  have been
increased, the primary source of the distributions is from the proceeds of asset
sales,  on which no  management  fees are  being  paid.  Lease  rents  have also
declined. As a result, management fees have decreased compared to 1998.




<PAGE>

                            PART II OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS.

         Inapplicable.

Item 2. CHANGES IN SECURITIES.

         Inapplicable.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

         Inapplicable.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         Inapplicable.

Item 5. OTHER INFORMATION.

         Inapplicable.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K.

                   (a)Documents filed as a part of this report

                   1.   Financial Statements

                        Included in Part I of this report:

                        Balance Sheet, June 30, 1999.

                        Income  statement  for the six and three  month  periods
                        ended June 30,  1999 and 1998.

                        Statement  of changes in
                        partners' equity for the six month period ended June 30,
                        1999.

                        Statements  of cash  flows  for the six and three
                        month periods ended June 30, 1999 and 1998.

                        Notes to the Financial Statements.

                   2.   Financial Statement Schedules
                        All other  schedules for which  provision is made in the
                        applicable accounting  regulations of the Securities and
                        Exchange  Commission  are not required under the related
                        instructions  or are  inapplicable,  and therefore  have
                        been omitted.

                   (b)  Report on Form 8-K

                        None

<PAGE>

                                   SIGNATURES


Pursuant  to the  requirements  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.

Date:
August 13, 1999

                      ATEL CASH DISTRIBUTION FUND III, L.P.
                                  (Registrant)





                              By:  /s/ A.  J.  BATT
                                  -------------------------------------------
                                  A. J. Batt,
                                  General Partner of registrant



                              By:   /s/ DEAN L. CASH
                                  -------------------------------------------
                                  Dean Cash,
                                  General Partner of registrant



                              By:   /s/ PARITOSH K. CHOKSI
                                  -------------------------------------------
                                  Paritosh K. Choksi
                                  Principal financial officer of registrant



                              By:   /s/ DONALD E.  CARPENTER
                                  -------------------------------------------
                                  Donald E.  Carpenter,
                                  Principal accounting officer of
                                  registrant