##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 March 31, 2006
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
  CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
      
      þ o
 o þ
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 Not applicable
 APPLICABLE ONLY TO CORPORATE ISSUERS
 Not applicable
 o þ




---



##### Table of Contents



CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
 Index to Form 10-QSB
  
 Item No.
    
    
    
    PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:Balance Sheets, March 31, 2006 and December 31, 2005
    
    
    3Statements of Operations for the three months
ended March 31, 2006 and 2005
    
    
    4Statement of Changes in Partners Capital for the three months
ended March 31, 2006
    
    
    5Statements of Cash Flows for the three months
ended March 31, 2006 and 2005
    
    
    6Notes to Financial Statements
    
    
    7-9Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    9-11Item 3.
    
    Controls and Procedures
    
    
    12PART II
    
    OTHER INFORMATION
Other Information
    
    
    13SIGNATURES
    
    
    
    
    14CERTIFICATION
    
    Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
    
    
    15-17Certification Pursuant to Section 302Certification Pursuant to Section 906
 2




---



##### Table of Contents



Captec Franchise Capital Partners L.P. III
Balance Sheets
 March 31,
    
    
    December 31,2006
    
    
    2005(unaudited)AssetsCash and cash equivalents
    
    $
    2,393,322
    
    
    $
    935,510Assets Held for Sale:Operating leases, net
    
    
    
    
    
    
    1,052,218Unbilled rent, net
    
    
    
    
    
    
    121,650Investment in leases:Operating leases, net
    
    
    890,508
    
    
    
    896,038Due from related parties
    
    
    151
    
    
    
    151Total assets
    
    $
    3,283,981
    
    
    $
    3,005,567Liabilities and Partners CapitalLiabilities:Accounts payable and accrued expenses
    
    $
    57,864
    
    
    $
    57,626Due to Affiliates
    
    
    6,936
    
    
    
    145,371Total liabilities
    
    
    64,800
    
    
    
    202,997Partners capital:Limited partners capital accounts
    
    
    3,189,042
    
    
    
    2,772,309General partners capital account
    
    
    30,139
    
    
    
    30,261Total partners capital
    
    
    3,219,181
    
    
    
    2,802,570Total liabilities and partners capital
    
    $
    3,283,981
    
    
    $
    3,005,567
 The accompanying notes are an integral part of the financial statements.
 3




---



##### Table of Contents



Captec Franchise Capital Partners L.P. III
Statements of Operations
 2006
    
    
    2005Operating revenue:Rental income
    
    $
    33,075
    
    
    $
    33,075Total operating revenue
    
    
    33,075
    
    
    
    33,075Operating costs and expenses:Depreciation
    
    
    5,530
    
    
    
    General and administrative
    
    
    55,246
    
    
    
    50,002Total operating costs and expenses
    
    
    60,776
    
    
    
    50,002Loss from continuing operations before other income
    
    
    (27,701
    )
    
    
    (16,927
    )Other income:Interest and other income
    
    
    15,460
    
    
    
    222Total other income
    
    
    15,460
    
    
    
    222Loss from continuing operations
    
    
    (12,241
    )
    
    
    (16,705
    )Discontinued operations:Net income from discontinued operations, net
    
    
    
    
    
    
    256,432Gain on sale of real estate
    
    
    428,852
    
    
    
    Income from discontinued operations
    
    
    428,852
    
    
    
    256,432Net income
    
    $
    416,611
    
    
    $
    239,727Net income (loss) allocable to general partner
    
    $
    (122
    )
    
    $
    2,397Net income allocable to limited partners
    
    $
    416,733
    
    
    $
    237,330Net loss from continuing operations per limited partnership unit
    
    $
    (0.62
    )
    
    $
    (0.84
    )Net income from discontinued operations per limited partnership unit
    
    $
    21.85
    
    
    $
    12.93Net income per limited partnership unit
    
    $
    21.23
    
    
    $
    12.09Weighted average number of limited partnership
units outstanding
    
    
    19,633
    
    
    
    19,633
 The accompanying notes are an integral part of the financial statements.
 4




---



##### Table of Contents



Captec Franchise Capital Partners L.P. III
Statement of Changes in Partners Capital
 Limited
    
    
    Limited
    
    
    General
    
    
    TotalPartners'
    
    
    Partners'
    
    
    Partner's
    
    
    Partners'Units
    
    
    Accounts
    
    
    Account
    
    
    CapitalBalance, December 31, 2005
    
    
    19,633
    
    
    $
    2,772,309
    
    
    $
    30,261
    
    
    $
    2,802,570Net income
    
    
    
    
    
    
    416,733
    
    
    
    (122
    )
    
    
    416,611Balance, March 31, 2006
    
    
    19,633
    
    
    $
    3,189,042
    
    
    $
    30,139
    
    
    $
    3,219,181
 The accompanying notes are an integral part of the financial statements.
 5




---



##### Table of Contents



Captec Franchise Capital Partners L.P. III
Statements of Cash Flows
 2006
    
    
    2005Cash flows from operating activities:Net Income
    
    $
    416,611
    
    
    $
    239,727Adjustments to net income:Depreciation
    
    
    5,530
    
    
    
    Amortization of debt issuance costs
    
    
    
    
    
    
    11,947Gain on sale of real estate
    
    
    (428,852
    )
    
    
    Decrease (increase) in unbilled rent
    
    
    770
    
    
    
    (23,409
    )Decrease in accounts receivable
    
    
    
    
    
    
    4,228Increase (decrease) in accounts payable and accrued expenses
    
    
    238
    
    
    
    (21,472
    )Increase in restricted cash
    
    
    
    
    
    
    (44,961
    )Decrease in due to related parties
    
    
    (138,435
    )
    
    
    Net cash (used in) provided by operating activities
    
    
    (144,138
    )
    
    
    166,060Cash flows from investing activities:Net proceeds from sale of real estate
    
    
    1,601,950
    
    
    
    Principal payments on financing leases
    
    
    
    
    
    
    28,604Net cash provided by investing activities
    
    
    1,601,950
    
    
    
    28,604Cash flows from financing activities:Repayments of notes payable
    
    
    
    
    
    
    (41,105
    )Distributions to limited partners
    
    
    
    
    
    
    (277,746
    )Net cash used in financing activities
    
    
    
    
    
    
    (318,851
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,457,812
    
    
    
    (124,187
    )Cash and cash equivalents, beginning of period
    
    
    935,510
    
    
    
    1,556,320Cash and cash equivalents, end of period
    
    $
    2,393,322
    
    
    $
    1,432,133
 The accompanying notes are an integral part of the financial statements.
 6




---



##### Table of Contents



CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
NOTES TO FINANCIAL STATEMENTS
 1.
    
    THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING PRINCIPLES:Captec Franchise Capital Partners L.P. III (the Partnership), a
Delaware limited partnership, was formed on February 18, 1994 for the
purpose of acquiring income-producing commercial real properties and
equipment leased on a triple net basis, primarily to operators of
national and regional franchised businesses.The initial general partners upon formation of the Partnership were
Captec Franchise Capital Corporation III (the Corporation), a
wholly-owned subsidiary of Captec Financial Group, Inc. (Captec), an
affiliate, and Patrick L. Beach, the Chairman of the Board of
Directors, President and Chief Executive Officer of the Corporation and
Captec. In August 1998, Captec Net Lease Realty, Inc. (Captec Net
Lease Realty), an affiliate, acquired the general partnership
interests of the Partnership. In December 2001, Captec Net Lease Realty
merged with and into Commercial Net Lease Realty, Inc. (Commercial Net
Lease). In connection with the merger, Commercial Net Lease agreed to
sell and assign its general partnership interest in the Partnership to
GP3 Asset Acquisition, LLC (GP3 Asset Acquisition), which is
wholly-owned by Mr. Beach and is an affiliate of Captec. Effective
January 15, 2002, the limited partners consented to the transfer of the
general partnership interest. On September 11, 2003, the Partnerships
secured lender consented to the transfer of the general partnership
interest to GP3 Asset Acquisition. Upon receipt of the secured lenders
consent, the general partnership interest was immediately transferred
to GP3 Asset Acquisition. Therefore, as of September 11, 2003, GP3
Asset Acquisition became the general partner of the Partnership.The Partnership commenced a public offering (the Offering) of up to
20,000 units (the Units) of limited partnership interests, priced at
$1,000 per Unit, by means of a Registration Statement on Form SB-2,
under the Securities Act of 1933, as amended, which was declared
effective by the Securities and Exchange Commission on August 12, 1994.
The Partnership accepted subscriptions for the minimum number of Units
on January 24, 1995 and immediately commenced operations. The Offering
was fully subscribed in August 1996. Since 1997, 367 Units have been
repurchased by the Partnership pursuant to the terms of the Repurchase
Plan set forth in the Partnerships August 12, 1994 prospectus with
respect to the Offering. At March 31, 2006, the Partnership had 19,633
Units issued and outstanding.The principal investment objectives of the Partnership are: (i)
preservation and protection of capital; (ii) distribution of cash flow
generated by the Partnerships leases; (iii) capital appreciation of
the Partnerships properties; (iv) generation of increased income and
protection against inflation through contractual escalation of base
rents or participation in gross revenues of tenants of the
Partnerships properties; and (v) deferred taxation of cash
distributions to the limited partners.Allocation of profits, losses and cash distributions from operations
and cash distributions from sale or refinancing are made pursuant to
the terms of the Partnership Agreement. Profits and losses from
operations are allocated among the limited partners based upon the
number of Units owned.Net income per limited partnership interest is calculated using the
weighted average number of limited partnership Units outstanding during
the period and the limited partners allocable share of the net income.Distributions per limited partnership Unit is calculated using the
actual distributions disbursed during the period to the weighted
average number of limited partnership Units during the period. Actual
individual limited partner distributions realized may vary from this
calculation as a result of a variety of factors including: (i) actual
distributions are computed based on quarterly operating
 7




---



##### Table of Contents



results and
outstanding limited partnership units, which are disbursed in the
subsequent quarter; (ii) certain limited partners have elected to
receive monthly distributions versus quarterly distributions which
creates timing differences between comparative calculations, (iii) the
calculation ignores the timing of repurchases, and (iv) liquidating
distributions are determined based on the tax account balances of the
partners per the Partnership agreement.In November 2004, the limited partners approved a plan to liquidate the
Partnership and dispose of all the assets of the Partnership. With this
approval, the Partnership commenced activities to liquidate and dispose
of the assets of the Partnership, which activities included entering
into an exclusive listing agreement with a third party, who will
oversee the marketing and offering for sale of all the real estate
assets and equipment leases and loans on behalf of the Partnership. In
accordance with Financial Accounting Standards No. 144 Accounting for
the Impairment or Disposal of Long Lived-Assets (FAS 144), as a
result of the approval of this plan, as of December 31, 2004 all
assets, excluding cash were previously classified as Assets Held for
Sale, and the results of the operations for these Assets Held for Sale
were previously classified as discontinued operations for all years
presented, since the operations are directly related to the assets held
for sale. Depreciation of real estate assets ceased at that time. One
real property owned by the Partnership as of March 31, 2006 and
December 31, 2005 which was not disposed of within one year from the
initial held for sale designation has been reclassified to investment
in operating leases, and the respective results of operations have been
presented within continuing operations for all periods presented in
accordance with FAS 144. Also, in accordance with FAS 144, the
partnership recognized depreciation expense of $5,530 in the quarter
ended March 31, 2006 and $22,121 for this asset for the year ended
December 31, 2005 in the fourth quarter of 2005 to cumulatively
catch-up depreciation since its cessation in December 2004 upon
reclassification of this asset. One property remained classified as
held for sale at December 31, 2005 due to the sale of this property on
January 3, 2006. The remaining asset of the Partnership will be sold
and the cash will be used to distribute the net proceeds from such
liquidation after the repayment of all liabilities in accordance with
the partnership agreement.On January 3, 2006, the Partnership sold the property located in Ewing,
New Jersey and the related lease for net sale proceeds of approximately
$1.6 million. There were no debt retirement costs associated with the
disposition of this property.The balance sheet of the Partnership as of March 31, 2006, the
statements of operations and cash flows for the periods ending March 31, 2006 and March 31, 2005 and the statement of changes in partners
capital for the period ending March 31, 2006 have not been audited. In
the opinion of management, these unaudited financial statements contain
all adjustments necessary to present fairly the financial position and
results of operations and cash flows of the Partnership for the periods
then ended. Results of operations for the interim periods are not
necessarily indicative of results for the full year. These unaudited
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Partnerships annual
report on Form 10-KSB for the year ended December 31, 2005 filed with
the United States Securities and Exchange Commission on March 29, 2006.2.
    
    LAND AND BUILDING SUBJECT TO OPERATING LEASES:The net investment in operating leases, including Assets Held for Sale,
as of March 31, 2006 and December 31, 2005 is comprised of the
following:
 March 31, 2006
    
    
    December 31, 2005Land
    
    $
    217,665
    
    
    $
    721,665Building and improvements
    
    
    884,835
    
    
    
    1,580,9851,102,500
    
    
    
    2,302,650Less accumulated depreciation
    
    
    (211,992
    )
    
    
    (354,394
    )Total
    
    $
    890,508
    
    
    $
    1,948,256
 8




---



##### Table of Contents



3.
    
    NOTES PAYABLE:In November 1998, the Partnership entered into a $6.2 million term
note. The note had a ten-year term, was collateralized by certain
properties subject to operating leases which had a carrying value of
approximately $7.6 million, and bore interest at a rate of 8.37% per
annum. In September 2003, the Partnership defeased approximately
$1,979,000 of this notes payable with proceeds from the sale of a
property. The Partnership incurred approximately $481,000 of yield
maintenance costs and $49,000 of professional fees related to the
defeasance. In June 2005, the Partnership defeased the remaining
amounts payable under this note using the proceeds from the sale of
nine properties. The Partnership incurred approximately $539,000 of
yield maintenance costs and $35,000 of professional fees in connection
with the June 2005 defeasance of this note.In March 1999, the Partnership entered into an additional $2.0 million
term note. The note had a ten-year term, was collateralized by certain
properties subject to operating leases which had a carrying value of
approximately $3.7 million, and bore interest at a rate of 8.5% per
annum. In June 2005, the Partnership defeased the remaining amounts
payable under this note using the proceeds from the sale of nine
properties. The Partnership incurred approximately $295,000 of yield
maintenance costs and $36,000 of professional fees in connection with
the defeasance of this noteThe Partnership has no further obligations related to any of its notes
payable.Debt issuance costs of $477,909 in the aggregate were incurred in
connection with the issuance of the notes and were being amortized to
interest expense using the straight-line method over the ten-year term
of the notes. Upon the defeasance and prepayment of the notes payable
in June 2005, the remaining unamortized debt issuance costs associated
with the debt that was prepaid were expensed.
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 When used in this discussion, the words, intends, anticipates,
expects, and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are subject to
certain risks and uncertainties, some of which are beyond the
Partnerships control, which could cause actual results to differ
materially from those projected. Such risks and uncertainties include
the following: (i) a tenant may default in making rent payments, (ii) a
fire or other casualty may interrupt the cash flow stream from a
property, (iii) the properties may not be leased at the assumed rental
rates, (iv) unexpected expenses may be incurred in the ownership of the
properties, and (v) properties may not be sold at the presently
anticipated prices and times. Any statements contained in this report
or any documents incorporated herein by reference that are not
statements of historical fact may be deemed to be forward-looking
statements. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
report. The Partnership disclaims, except as may be required by law,
any obligations to update or release revisions to these forward-looking
statements to reflect events or circumstances after the date of this
report or to reflect the occurrence of unanticipated events.
 9




---



##### Table of Contents



RESULTS OF OPERATIONSThree Months Ended March 31, 2006During the three months ended March 31, 2006, total operating revenue,
consisting of rental revenues from one operating lease was
approximately $33,000, unchanged compared to the three months ended
March 31, 2005.Operating expenses were approximately $61,000 for the three months
ended March 31, 2006, compared to approximately $50,000 for the three
months ended March 31, 2005. In accordance with FAS 144, the
Partnership recognized $5,530 and $0 of depreciation expense in the
quarters ended March 31, 2006 and 2005, respectively, for investment in
operating leases. The Partnership recognized $22,121 of depreciation
expense for investment in operating leases in the fourth quarter of
2005 to cumulatively catch-up depreciation on this asset, when the
asset was reclassified from held for sale in accordance with FAS 144.
In accordance with FAS 144, the Partnership had ceased depreciation on
all assets classified as Assets Held for Sale at December 31, 2004,
with the expectation of disposal of all assets within one year. General
and administrative expenses increased by approximately $5,000 due to
increased professional fees.Other income for the quarter ended March 31, 2006 increased to
approximately $15,500 compared to
$200 for the quarter ended March 31, 2005 due to interest income earned
on cash proceeds from the sale of assets.Income from discontinued operations, net for the quarter ended March
31, 2005 consisted of the following:
 Revenues
    
    $
    384,503Interest expense
    
    
    128,071Income from discontinued operations, net
    
    $
    256,432
 Interest expense is allocated 100% to discontinued operations based on
the lenders requirement that the notes be paid in full with the
proceeds from the sale of properties during the year ended December 31,
2005. There is no income from discontinued operations for the quarter
ended March 31, 2006 as all assets classified as Assets Held for Sale
have been disposed by January 3, 2006.On January 3, 2006, the Partnership sold the property located in Ewing,
New Jersey and the related lease for net sale proceeds of approximately
$1.6 million, resulting in a gain on the sale of real estate of
approximately $429,000. There were no debt retirement costs associated
with the disposition of this property. There were no sales of
properties during the quarter ended March 31, 2005.As a result of the foregoing, the Partnerships net income increased to
approximately $417,000 for the three months ended March 31, 2006,
compared to approximately $240,000 for the three months ended March 31,
2005.LIQUIDITY AND CAPITAL COMMITMENTSThe Partnership commenced the Offering of up to 20,000 Units, priced at
$1,000 per Unit, on August 12, 1994. The Partnership accepted
subscriptions for the minimum number of Units on January 24, 1995, and
immediately commenced operations. The Offering was fully subscribed on
August 12, 1996. Net proceeds after Offering expenses were $17.4
million.In November 1998, the Partnership entered into a $6.2 million term
note. The note had a ten-year term, was collateralized by certain
properties subject to operating leases which had a carrying value of
approximately $7.6 million, and bore interest at a rate of 8.37% per
annum. In September
 10




---



##### Table of Contents



2003, the Partnership defeased approximately
$1,979,000 of this notes payable with proceeds from the sale of a
property. The Partnership incurred approximately $481,000 of yield
maintenance costs and $49,000 of professional fees related to the
defeasance. In June 2005, the Partnership defeased the remaining
amounts payable under this note using the proceeds from the sale of
nine properties. The Partnership incurred approximately $539,000 of
yield maintenance costs and $35,000 of professional fees in connection
with the June 2005 defeasance of this note.In March 1999, the Partnership entered into an additional $2.0 million
term note. The note had a ten-year term, was collateralized by certain
properties subject to operating leases which had a carrying value of
approximately $3.7 million, and bore interest at a rate of 8.5% per
annum. In June 2005, the Partnership defeased the remaining amounts
payable under this note using the proceeds from the sale of nine
properties. The Partnership incurred approximately $295,000 of yield
maintenance costs and $36,000 of professional fees in connection with
the defeasance of this note.The Partnership has no further obligations related to any of its notes
payable.Debt issuance costs of $477,909 in the aggregate were incurred in
connection with the issuance of the notes and were being amortized to
interest expense using the straight-line method over the ten-year term
of the notes. Upon the defeasance and prepayment of the notes payable
in June 2005, the remaining unamortized debt issuance costs associated
with the debt that was prepaid were expensed.As of March 31, 2006, the Partnership had invested $1.1 million in 1
net leased real estate property. As of March 31, 2006, the Partnership
has not made any commitments to purchase additional properties or
equipment, nor does it intend to make any such commitments.The Partnership annually considers written requests to repurchase Units
pursuant to the terms of the repurchase plan set forth in the
Partnerships prospectus with respect to the Offering. Since 1997, a
total of 367 Units have been repurchased by the Partnership. The
Partnership is not obligated to accept Unit repurchase requests if the
General Partner determines that such purchases would impair the capital
or operation of the Partnership and the Partnership may suspend or
cancel the Repurchase Plan at any time in its sole discretion. In
connection with the announcement of the Partnerships liquidation
plans, the General Partner has indefinitely suspended the Repurchase
Plan.The Partnership expects that only limited amounts of liquid assets will
be required for existing properties since its property and equipment
leases require tenants and lessees to pay all taxes and assessments,
maintenance and repairs and insurance premiums, including casualty
insurance thereby minimizing the Partnerships operating expenses and
capital requirements. The General Partner expects that the cash flow to
be generated by the Partnerships properties and equipment will provide
adequate liquidity and capital resources to pay operating expenses and
provide distributions to the limited partners.Effective November 8, 2004, the limited partners consented to the Plan
of Liquidation and Dissolution, which involves the dissolution of the
Partnership, the liquidation of its assets and the winding up of its
affairs. As a result, the general partner is authorized to liquidate
the assets of the Partnership and distribute the net proceeds from such
liquidation after the repayment of all debt in accordance with the
partnership agreement. The Partnership is undertaking steps to
liquidate and dispose of its assets in accordance with the Plan of
Liquidation and Dissolution and has entered into an exclusive listing
agreement with a third party that will oversee the marketing and sale
of the Partnerships assets. Management believes the proceeds on sale
will be adequate to pay off all liabilities and make one or more
distributions to the partners.
 
 11




---



##### Table of Contents



ITEM 3. Controls and ProceduresMr. Beach, acting in his capacity as the principal executive officer of
GP3 Asset Acquisition is ultimately responsible for the disclosure
controls and procedures of the Partnership. Disclosure controls and
procedures are established and maintained by the Partnership to ensure
the information required to be disclosed by the Partnership in the
reports that it files or submits pursuant to the Securities Exchange
Act of 1934, as amended (the Act), is recorded, processed, summarized
and reported within the time periods specified in the Commissions
rules and forms. Mr. Beach has evaluated the effectiveness of the
Partnerships disclosure controls and procedures and has determined
that, as of the end of the fiscal period covered by this report, these
controls and procedures effectively communicate the information
required to be disclosed by the Partnership in the report it files or
submits under the Act in a manner that allows timely decisions
regarding such disclosures.There have been no significant changes in the Partnerships internal
controls or in other factors that could significantly affect these
controls subsequent to the evaluation date, including, but not limited
to, any actions with regard to significant deficiencies and material
weaknesses.
 12




---



##### Table of Contents



PART II  OTHER INFORMATION
 ITEM 1.
    
    LEGAL PROCEEDINGS.None.
 ITEM 2.
    
    CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.None.
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES.None.
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.None.
 ITEM 5.
    
    OTHER INFORMATION.None
 ITEM 6.
    
    EXHIBITS
  Number
    
    Exhibit2
    
    Plan of Liquidation and Dissolution (Incorporated by reference to the Registrants Definitive Proxy
Statement on Schedule 14A, filed on September 21, 2004)4
    
    Amended Agreement of Limited Partnership of Registrant. (Incorporated by reference to the corresponding
exhibit in the Registrants Form 10-KSB for the year ended December 31, 1998)10.1
    
    Promissory Note dated November 28, 1998 between Registrant and National Realty Funding L.C. (Incorporated
by reference to the corresponding exhibit in the Registrants Form 10-KSB for the year ended December 31,
1998)10.2
    
    Promissory Note dated March 31, 1999 between
Registrant and National Realty Funding L.C.
(Incorporated by reference to the corresponding
exhibit in the Registrants Form 10-QSB for the
quarter ended March 31, 1999)31
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 13




---



##### Table of Contents



SIGNATURES
  By:
    Captec Franchise Capital Partners L.P. IIIGP3 Asset Acquisition, LLCIts Manager By:
    /s/ Patrick L. BeachPatrick L. BeachPresidentDate:
    May 12, 2006 14




---



##### Table of Contents



EXHIBIT INDEX
 Number
    
    Exhibit2
    
    Plan of Liquidation and Dissolution (Incorporated by reference to the Registrants Definitive Proxy
Statement on Schedule 14A, filed on September 21, 2004)4
    
    Amended Agreement of Limited Partnership of Registrant. (Incorporated by reference to the corresponding
exhibit in the Registrants Form 10-KSB for the year ended December 31, 1998)10.1
    
    Promissory Note dated November 28, 1998 between Registrant and National Realty Funding L.C. (Incorporated
by reference to the corresponding exhibit in the Registrants Form 10-KSB for the year ended December 31,
1998)10.2
    
    Promissory Note dated March 31, 1999 between
Registrant and National Realty Funding L.C.
(Incorporated by reference to the corresponding
exhibit in the Registrants Form 10-QSB for the
quarter ended March 31, 1999)31
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002