Form 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  |x|   Quarterly  Report Pursuant to Section 13
                                        or 15(d) of the Securities  Exchange Act
                                        of 1934. For the quarterly  period ended
                                        September 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

                               SEPTEMBER 30, 1999
                                   (Unaudited)


                                     ASSETS




Cash and cash equivalents                                            $4,639,664

Accounts receivable                                                      64,033

Investment in leases                                                  4,284,990
                                                                ----------------
                                                                     $8,988,687
                                                                ================



                       LIABILITIES AND PARTNERS' CAPITAL



Non-recourse debt                                                      $ 84,792
Accounts payable:
     General Partners                                                    12,664
     Other                                                              105,592
Unearned operating lease income                                          30,381
                                                                ----------------
Total liabilities                                                       233,429

Partners' capital:
     General Partners                                                   246,831
     Limited Partners                                                 8,508,427
                                                                ----------------
Total partners' capital                                               8,755,258
                                                                ----------------
                                                                     $8,988,687
                                                                ================

                             See accompanying notes



<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                                INCOME STATEMENTS

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 1999 AND 1998
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                Nine Months Ended               Three Months Ended
                                                  September 30,                     September 30,
                                             1999              1998             1999             1998
Revenues:
Lease income:
<S>                                         <C>                <C>               <C>              <C>
   Operating                                $ 1,125,221        $3,134,750        $ 271,883        $ 841,181
   Direct financing                              60,793           211,082           18,659           70,570
   Leveraged                                     15,842            13,930            5,280            4,643
   Gain (loss) on sales of assets                38,505           (37,875)          81,854           36,709
Interest income                                 253,645           302,393           72,578          104,066
Other                                             3,991            24,272            1,706           20,315
                                        ---------------- ----------------- ---------------- ----------------
                                              1,497,997         3,648,552          451,960        1,077,484
                                        ---------------- ----------------- ---------------- ----------------
Expenses:
Depreciation                                    637,679         1,953,426          205,924          567,924
Administrative cost reimbursements              155,774           168,747           68,332           59,200
Management fees                                 114,822           257,236           33,632           80,796
Other                                            71,198            57,652            8,030           21,572
Taxes                                            49,014            28,746           11,670          (13,824)
Professional fees                                22,251            20,546            6,885           12,779
Interest expense                                 18,425            98,487            3,243           21,109
Provision for losses                                  -            17,173                -                -
                                        ---------------- ----------------- ---------------- ----------------
                                              1,069,163         2,602,013          337,716          749,556
                                        ---------------- ----------------- ---------------- ----------------
Net income                                    $ 428,834        $1,046,539        $ 114,244        $ 327,928
                                        ================ ================= ================ ================
Net income:
     General Partners                           $ 4,288          $ 10,465          $ 1,142          $ 3,279
     Limited Partners                           424,546         1,036,074          113,102          324,649
                                        ---------------- ----------------- ---------------- ----------------
                                              $ 428,834        $1,046,539        $ 114,244        $ 327,928
                                        ================ ================= ================ ================
Net income per limited partnership unit          $ 0.06            $ 0.14           $ 0.02           $ 0.04
Weighted average number of units
   outstanding                                7,376,284         7,376,284        7,376,284        7,376,284
</TABLE>




                             See accompanying notes

<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                    STATEMENT OF CHANGES IN PARTNERS' CAPITAL

                             NINE MONTH PERIOD ENDED
                               SEPTEMBER 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                        (8,304,354)               -       (8,304,354)
Net income                                                  424,546            4,288          428,834
                                  ---------------- ----------------- ---------------- ----------------
Balance September 30, 1999              7,376,284        $8,508,427        $ 246,831       $8,755,258
                                  ================ ================= ================ ================
</TABLE>

                             See accompanying notes


                            STATEMENTS OF CASH FLOWS

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                  Nine Months Ended                Three Months Ended
                                                                    September 30,                      September 30,
                                                                1999              1998             1999             1998
Operating activities:
<S>                                                              <C>              <C>               <C>              <C>
Net income                                                       $ 428,834        $1,046,539        $ 114,244        $ 327,928

Adjustments to reconcile net income to net cash
   provided by operations:
     Depreciation                                                  637,679         1,953,426          205,924          567,924
     Leveraged lease income                                        (15,842)          (13,930)          (5,280)          (4,643)
     (Gain) loss on sales of assets                                (38,505)           37,875          (81,854)         (36,709)
     Provision for losses                                                -            17,173                -                -
Changes in operating assets and liabilities:
   Accounts receivable                                               1,996            33,746           27,838           (9,248)
   Accounts payable, General Partner                              (326,710)          (41,540)          12,664           30,999
   Accounts payable, other                                         (38,573)        1,177,023          (16,384)       1,033,544
   Accrued interest                                                 (1,363)           (3,646)            (349)           2,654
   Unearned operating lease income                                 (22,746)          (35,904)         (91,738)         (94,139)
                                                           ---------------- ----------------- ---------------- ----------------
Net cash provided by operations                                    624,770         4,170,762          165,065        1,818,310
                                                           ---------------- ----------------- ---------------- ----------------

Investing activities:
Proceeds from sales of equipment                                   999,366         3,203,765          262,498          403,951
Reduction in net investment in direct financing
   leases                                                          353,855           566,951          116,878          118,550
                                                           ---------------- ----------------- ---------------- ----------------
Net cash provided by investing activities                        1,353,221         3,770,716          379,376          522,501
                                                           ---------------- ----------------- ---------------- ----------------
</TABLE>


<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                            STATEMENTS OF CASH FLOWS
                                   (CONTINUED)

                       NINE AND THREE MONTH PERIODS ENDED
                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                  Nine Months Ended                Three Months Ended
                                                                     September 30,                     September 30,
                                                                1999              1998             1999             1998
Financing activities:
<S>                                                             <C>               <C>              <C>              <C>
Distributions to limited partners                               (8,304,354)       (7,691,142)      (2,767,565)      (2,766,711)
Repayments of non-recourse debt                                   (328,915)       (1,621,698)         (70,840)        (217,672)
                                                           ---------------- ----------------- ---------------- ----------------
Net cash used in financing activities                           (8,633,269)       (9,312,840)      (2,838,405)      (2,984,383)
                                                           ---------------- ----------------- ---------------- ----------------

Net decrease in cash and cash equivalents                       (6,655,278)       (1,371,362)      (2,293,964)        (643,572)
Cash and cash equivalents at beginning
   of period                                                    11,294,942         9,342,727        6,933,628        8,614,937
                                                           ---------------- ----------------- ---------------- ----------------

Cash and cash equivalents at end of period                     $ 4,639,664        $7,971,365      $ 4,639,664       $7,971,365
                                                           ================ ================= ================ ================

Supplemental disclosures of cash flow
   information:
Cash paid for interest                                            $ 18,425          $ 98,487          $ 3,243         $ 21,109
                                                           ================ ================= ================ ================
</TABLE>


                             See accompanying notes

<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1999
                                   (Unaudited)


1.  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. Investment in leases:

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

<TABLE>
<CAPTION>
                                                             Depreciation
                                                              Expense or        Reclass-
                                           December 31,      Amortization     ifications &     September 30,
                                               1998           of Leases       Dispositions         1999
                                               ----           ---------      --------------        ----
<S>                                           <C>                <C>             <C>               <C>
Net investment in operating leases            $ 4,961,101        $ (637,679)     $(1,928,373)      $2,395,049
Net investment in direct financing leases       1,114,623          (353,855)         (60,813)         699,955
Net investment in leveraged leases                144,944            15,842                -          160,786
Equipment held for sale or lease                  363,048                 -          791,943        1,154,991
Reserve for losses                               (362,173)                           236,382         (125,791)
                                          ---------------- ----------------- ---------------- ----------------
                                              $ 6,221,543        $ (975,692)      $ (960,861)      $4,284,990
                                          ================ ================= ================ ================
</TABLE>

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 nine months ended September 30, 1999
and as of September 30, 1999.

<TABLE>
<CAPTION>
                                                             Reclass-
                                           December 31,     ifications &      September 30,
                                              1998          Dispositions          1999
                                              ----         --------------         ----
<S>                                            <C>              <C>               <C>
Mining                                         $2,171,980       $1,792,055        $3,964,035
Printing                                        3,044,659           90,715         3,135,374
Medical                                         2,155,489                -         2,155,489
Transportation                                  2,214,215       (1,508,021)          706,194
Materials handling                                529,071         (224,545)          304,526
Manufacturing                                   3,618,000       (3,618,000)                -
Utilities                                       2,839,101       (2,839,101)                -
Food processing                                 2,438,524       (2,438,524)                -
Other                                              65,695          (65,695)                -
                                        ------------------ ---------------- -----------------
                                               19,076,734       (8,811,116)       10,265,618
Less accumulated depreciation                 (14,115,633)       6,245,064        (7,870,569)
                                        ------------------ ---------------- -----------------
                                              $ 4,961,101      $(2,566,052)       $2,395,049
                                        ================== ================ =================
</TABLE>


<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1999
                                   (Unaudited)


2. Investment in leases (continued):

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

<TABLE>
<CAPTION>
                                                               Direct
                                         Operating            Financing          Total
<S>                                             <C>              <C>              <C>
   Three months ending December 31, 1999        $ 209,395        $ 135,538        $ 344,933
           Year ending December 31, 2000          238,486          140,876          379,362
                                    2001           59,415           23,836           83,251
                                    2002                -           17,877           17,877
                                         ----------------- ---------------- ----------------
                                                $ 507,296        $ 318,127        $ 825,423
                                         ================= ================ ================
</TABLE>


3. 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 or
financed with the proceeds of the particular notes.  Interest rates on the notes
vary from 9.5% to 11%.

Future minimum principal  payments of non-recourse debt as of September 30, 1999
are as follows:

<TABLE>
<CAPTION>
                                          Principal         Interest           Total
<S>                                            <C>               <C>             <C>
 Three months ending December 31, 1999         $ 27,501          $ 2,332         $ 29,833
         Year ending December 31, 2000           57,291            2,374           59,665
                                       ----------------- ---------------- ----------------
                                               $ 84,792          $ 4,706         $ 89,498
                                       ================= ================ ================
</TABLE>


4. Commitments, management and report of fees:

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         $ 155,774        $ 168,747
Incentive and equipment management fees         114,822          257,236
                                        ---------------- ----------------
                                               $270,596         $425,983
                                        ================ ================

<PAGE>

                      ATEL CASH DISTRIBUTION FUND III, L.P.

                          NOTES TO FINANCIAL STATEMENTS

                               SEPTEMBER 30, 1999
                                   (Unaudited)


5.  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  28,  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 September
30, 1999.



<PAGE>

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

Capital Resources and Liquidity

During the third quarter of 1999, the Partnership's primary sources of liquidity
were proceeds from sales of assets and from operating 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.

In the  event  the  Partnership's  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  September  30,  1999,  the   Partnership   had  borrowed   approximately
$32,425,000.  The remaining  unpaid balance of such  borrowings at September 30,
1999  was  approximately   $85,000.  The  borrowings  are  non-recourse  to  the
Partnership,  that is, the only recourse of the lender for a lessee default will
be to the equipment or corresponding lease acquired with the loan proceeds.  The
General  Partners do not expect that there will be additional  borrowings in the
future.

The  Partnership  participates  with the  General  Partner  and  certain  of its
affiliates  in  a  $95,000,000   revolving  line  of  credit  with  a  financial
institution. The line of credit expires on January 28, 2000.

No  commitments  of capital  have been or are expected to be made other than for
the acquisition of additional equipment. As of September 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 Partnership made
distributions  of cash from 1999 third quarter  operations in August,  September
and October 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.

If  inflation  in the general  economy  becomes  significant,  it may affect the
Partnership  inasmuch as the residual  (resale) values and rates on re-leases of
the  Partnership's  leased  assets may  increase as the costs of similar  assets
increase.  However,  the  Partnership's  revenues from existing leases would not
increase,  as such rates are generally fixed for the terms of the leases without
adjustment for inflation.

1999 vs. 1998 - nine months

During the nine month period ended September 30, 1999, the Partnership's primary
source of cash from  operating  activities  was lease  rents.  Lease  rents have
decreased compared to the prior year as a result of scheduled lease terminations
and asset sales in the last year.

Sources of cash from investing  activities  consisted of direct  financing lease
rents  accounted  for as reductions  of the net  investment in direct  financing
leases and the  proceeds  from  sales of lease  assets.  Proceeds  from sales of
assets decreased  compared to 1998.  Asset sales have decreased.  As more leases
matured and the related assets were  subsequently  sold, the total  portfolio of
leases and leased  assets has  decreased.  Asset  sales are not  expected  to be
consistent from one period to another.  Cash flows from direct  financing leases
have also decreased as a result of lease terminations and asset sales.
<PAGE>

In 1999 and  1998,  there  were no  financing  sources  of cash.  Repayments  of
non-recourse  debt have decreased due to scheduled debt payments.  Distributions
to  limited  partners  have  increased  due  to an  increase  in  the  per  Unit
distribution rates.  Distributions form 1999 and 1998 operations were based on a
higher per Unit rate than the  distributions  made in January of 1998 (from 1997
operations).

1999 vs. 1998 - three months

During  the  third  quarter,  the  Partnership's  primary  source  of cash  from
operations was operating lease rents.

Sources of cash from investing  activities  consisted of direct  financing lease
rents  accounted  for as reductions  of the net  investment in direct  financing
leases and the  proceeds  from sales of lease assets as noted above for the nine
month period.  These cash flows decreased compared to 1998 for the reasons noted
above for the nine month period.

In 1999 and  1998,  there  were no  financing  sources  of cash.  Repayments  of
non-recourse  debt have  decreased  compared to 1998 for the reasons noted above
for the nine month period.


Results of Operations

Operations  in the third  quarter of 1999  resulted  in net  income of  $114,244
compared to  $327,928 in 1998.  Net income for the first nine months of 1999 was
$428,834 compared to $1,046,539 in 1998.

1999 vs. 1998

Nine months:

Operating  lease  revenues   decreased  by  $2,009,529   compared  to  1998  and
depreciation expense decreased by $1,315,747. Both of these decreases are due to
scheduled terminations of operating leases over the last year and the subsequent
sales of the related assets.

Interest  expense has decreased due to scheduled  reductions of debt balances in
the nine month period.

Management fees are based on the Partnership's revenues and its distributions to
its Limited Partners.  Lease revenues  decreased compared to 1998. This decrease
resulted in a decrease in management fees of approximately $142,000.

Three months:

Operating  lease  revenues  decreased  by  $569,298  compared  to  1998.  Direct
financing lease revenues  decreased  $51,911  compared to 1998. The decreases in
operating and direct financing lease revenues are related to the maturing of the
underlying  leases  and  subsequent  sales of the  assets.  Gains or  losses  on
equipment sales have fluctuated  significantly for the reasons noted above. Such
gains and losses are not expected to be consistent for one period to another.

Depreciation expense decreased by $362,000 from 1998 to 1999 for the three month
periods. This decrease resulted from the factors discussed above as they related
to the nine month period.  Management  fees also  decreased by $9,132 due to the
factors noted above relating to the nine month period.


<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, September 30, 1999.

                                 Income  statements for the nine and three month
                                 periods ended September 30, 1999 and 1998.

                                 Statement of changes in  partners'  capital for
                                 the nine month period ended September 30, 1999.

                                 Statements of cash flows for the nine and three
                                 month  periods  ended  September  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:
November 12, 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 L. 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