UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                   FORM 10-QSB

(Mark One)
[ X ] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended June 30, 2003

[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period from to

Commission File Number:  33-84336-LA


                                  JetFleet III
              (Exact name of small business issuer in its charter)


               California                                 94-3208983
      (State or other jurisdiction          (I.R.S. Employer Identification No.)
    of incorporation or organization)

      1440 Chapin Avenue, Suite 310
         Burlingame, California                               94010
(Address of principal executive offices)                   (Zip Code)

Issuer's telephone number, including area code:    (650) 340-1880
Securities registered pursuant to Section 12(b) of the Act:    None

Securities registered pursuant to Section 12(g) of the Act:    None


Check whether the Issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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


On August 14, 2003 the aggregate market value of the voting and non voting
Common equity held by non-affiliates (computed by reference to the price at
which the common equity was sold) was $0.


As of August 14, 2003 the Issuer has 815,200 Shares of Common Stock and 195,465
Shares of Series A Preferred Stock outstanding.


Transitional Small Business Disclosure Format (check one):  Yes       No  X
                                                               -----    -----




<page>


                                  JETFLEET III
                                  Balance Sheet
                                  June 30, 2003
                                    Unaudited

                                     ASSETS

Current assets:
     Cash                                                         $   2,201,660
     Deposits                                                         2,862,060
     Accounts receivable                                                112,940
                                                                  -------------
Total current assets                                                  5,176,660

Aircraft and aircraft engines under operating leases,
     net of accumulated depreciation of $3,173,620                   10,473,140
Debt issue costs, net of accumulated
     amortization of $1,585,250                                          76,210
Deferred rent receivable                                                 17,940
Deferred taxes                                                          395,240
Prepaid expenses                                                          8,470
                                                                  -------------

Total assets                                                      $  16,147,660
                                                                  =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                             $      81,990
     Interest payable                                                   152,120
     Prepaid rents                                                      171,280
     Security deposits                                                  369,980
     Maintenance deposits                                             2,576,150
     Medium-term secured bonds                                       11,076,350
                                                                  -------------

Total liabilities                                                    14,427,870
                                                                  -------------

Preferred stock, no par value,
     300,000 shares authorized, 195,465
     issued and outstanding                                           1,661,450
Common stock, no par value,
     1,000,000 shares authorized, 815,200
     issued and outstanding                                             815,200
Accumulated deficit                                                   (756,860)
                                                                  -------------
Total shareholders' equity                                            1,719,790
                                                                  -------------

Total liabilities and shareholders' equity                        $  16,147,660
                                                                  =============

The accompanying notes are an integral part of these statements.


<PAGE>





                                  JETFLEET III
                            Statements of Operations

<table>
<caption>


                                       For the Six Months Ended June 30,      For the Three Months Ended June 30,
                                              2003            2002                   2003              2002
                                              ----            ----                   ----              ----
                                                    Unaudited                               Unaudited
<S>                                     <C>               <C>                   <C>              <C>


Revenues:

     Rent income                        $     706,970     $   1,113,610         $     365,990    $     542,500
     Other income                              17,860            23,120                 9,430           13,440
                                        -------------     -------------         -------------    -------------

                                              724,830         1,136,730               375,420          555,940
                                        -------------     -------------         -------------    -------------


Expenses:

     Depreciation                             348,750           348,750               174,380          174,380
     Amortization                             114,310           114,310                57,150           57,150
     Interest                                 456,350           456,350               228,170          228,170
     Maintenance                               50,010             1,800                49,250            1,800
     Insurance                                104,880            11,250                44,820           10,170
     Professional fees and
        general and administrative             15,190            14,970                 5,930            7,010
     Management fees                           97,730            97,730                48,870           48,870
                                        -------------     -------------         -------------    -------------

                                            1,187,220         1,045,160               608,570          527,550
                                        -------------     -------------         -------------    -------------

(Loss)/income before taxes                  (462,390)            91,570             (233,150)           28,390

Tax (benefit)/provision                     (156,870)            37,010              (79,480)           10,550
                                        -------------     -------------         -------------    -------------

Net (loss)/income                       $   (305,520)     $      54,560         $   (153,670)    $      17,840
                                        =============     =============         =============    =============
Weighted average common
   shares outstanding                         815,200           815,200               815,200          815,200
                                        =============     =============         =============    =============

Basic (loss)/income per common share    $      (0.37)     $        0.07         $      (0.19)    $        0.02
                                        =============     =============         =============    =============

</table>
The accompanying notes are an integral part of these statements.




<PAGE>



                                  JETFLEET III
                            Statements of Cash Flows

<table>
<caption>

                                                                    For the Six Months Ended June 30,
                                                                       2003                  2002
                                                                       ----                  ----
                                                                                Unaudited

<S>                                                               <C>                   <C>


Net cash provided by operating activities                         $      159,510        $     291,110
                                                                  --------------        -------------

Investing activities:
     Purchase of interests in aircraft                                  (23,680)                    -
     Proceeds from sale of aircraft and aircraft engines                       -              197,000
                                                                  --------------        -------------
Net cash (used)/provided by investing activities                        (23,680)              197,000
                                                                  --------------        -------------

Net increase in cash                                                     135,830              488,110

Cash, beginning of period                                              2,065,830            1,045,450
                                                                  --------------        -------------

Cash, end of period                                               $    2,201,660        $   1,533,560
                                                                  ==============        =============

Supplemental disclosures of cash flow information:
Cash paid during the period for:                                       2003                  2002
                                                                       ----                  ----
     Interest, net of amount capitalized                          $      456,350        $     456,350
     Income taxes                                                              -                2,950

</table>

The accompanying notes are an integral part of these statements.


<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

1.       Summary of Significant Accounting Policies

         Basis of Presentation

         JetFleet III (the "Company") was incorporated in the state of
California in August 1994 ("Inception"). The Company was formed solely for the
purpose of acquiring Income Producing Assets. The Company offered up to
$20,000,000 in $1,000 Series A Units (the "Offering") consisting of $850 of
bonds maturing on November 1, 2003 (the "Bonds") and $150 of preferred stock
(the "Preferred Stock") pursuant to a prospectus dated September 27, 1995 (the
"Prospectus"). In accordance with the trust indenture governing the Bonds, the
maturity date of the Bonds may be extended by up to six months at the Company's
sole discretion. In August 2003, the Company sent a notice to the indenture
trustee extending the maturity date of the Bonds to April 30, 2004.

         All of the Company's outstanding common stock is owned by JetFleet
Holding Corp. ("JHC"), a California corporation formed in January 1994. JHC's
wholly owned subsidiary, JetFleet Management Corp. ("JMC") has a management
agreement with the Company. JMC also manages AeroCentury Corp., a Delaware
corporation, and AeroCentury IV, Inc., a California corporation, which are
affiliates of JHC and which have objectives similar to the Company's. Neal D.
Crispin, the President of the Company, holds the same position with JHC and JMC
and owns a significant amount of the common stock of JHC.

         Although the Company believes that it has included all adjustments
necessary for a fair presentation of the interim periods presented and that the
disclosures are adequate to make the information presented not misleading, the
Company suggests that these financial statements be read in conjunction with the
financial statements and related notes included in the Company's annual report
on Form 10-KSB for the fiscal year ended December 31, 2002.

         Cash and Cash Equivalents/Deposits

         The Company considers highly liquid investments readily convertible
into known amounts of cash, with original maturities of 90 days or less, as cash
equivalents. Deposits represent cash balances held related to maintenance
reserves and security deposits and generally are subject to withdrawal
restrictions. As of June 30, 2003, the Company maintained $4,401,050 of its cash
balances in two money market funds held by regional brokerage firms, which are
not federally insured.

         Aircraft and Aircraft Engines Under Operating Leases

         The Company's interests in aircraft are recorded at cost, which
includes acquisition costs (see Note 2). Depreciation is computed using the
straight-line method over each aircraft's estimated economic life to its
estimated residual value.

         Impairment of Long-lived Assets

         In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets,"
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the book value of the asset may not be recoverable. Periodically,
the Company reviews its long-lived assets for impairment based on third party
valuations. In the event such valuations are less than the recorded value of the
assets, the assets are written down to their estimated realizable value.



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

1.       Summary of Significant Accounting Policies (continued)

         Organization and Offering Costs

         Pursuant to the terms of the Prospectus, the Company paid an
Organization and Offering Expense Reimbursement to JHC in cash in an amount up
to 2.0% of Aggregate Gross Offering Proceeds for reimbursement of certain costs
incurred in connection with the organization of the Company and the Offering
(the "Reimbursement").

         JHC contributed $450,000 of the total it paid for organization and
offering expenses as a common stock investment in the Company (the "Initial
Contribution"). The Company issued 450,000 shares of common stock to JHC in
return for the Initial Contribution. To the extent that JHC incurred expenses in
excess of the 2.0% cash limit, such excess expenses were repaid to JHC in the
form of Common Stock issued by the Company at a price of $1.00 per share (the
"Excess Stock"). The amount of Excess Stock that the Company issued was limited
according to the amount of Aggregate Gross Offering Proceeds raised by the
Company.

         The Company capitalized the portions of both the Reimbursement paid and
the Initial Contribution related to the Bonds (85%) and amortizes such costs
over the life of the Bonds (approximately eight years). The remainder of any of
the Initial Contribution and Reimbursement is deducted from shareholders'
equity.

         Assets Subject to Lien

         The Company's obligations under the Bonds are secured by a security
interest in all of the Company's right, title and interest in the Income
Producing Assets acquired by the Company.

         Income Taxes

         The Company follows the liability method of accounting for income taxes
as required by the provisions of Statement of Financial Accounting Standards No.
109 - Accounting for Income Taxes.

         Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.

         The most significant estimates with regards to these financial
statements are the residual values of the aircraft, the useful lives of the
aircraft, the estimated amount and timing of cash flow associated with each
aircraft that are used to evaluate impairment, if any, and accrued maintenance
costs in excess of amounts received from lessees.

         Maintenance Deposits

         Maintenance costs under the Company's triple net leases are generally
the responsibility of the lessees. The Company periodically reviews maintenance
deposits for adequacy in light of the number of hours flown, airworthiness
directives issued by the manufacturer or government authority, and the return
conditions specified in the lease. As a result of such review, when it is
probable that the Company has incurred costs for maintenance in excess of
amounts received from lessees, the Company accrues its share of costs for work
to be performed as a result of hours flown.

<page>

                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

1.       Summary of Significant Accounting Policies (continued)

         Recent Accounting Pronouncements

         In January 2003, the FASB issued  interpretation FIN No. 46,
Consolidation of Variable  Interest  Entities  ("FIN No. 46").  FIN No. 46
requires a variable interest  entity to be  consolidated by a company if that
company is the primary beneficiary of the entity.  A company is a primary
beneficiary if it is subject to a majority of the risk of loss from the variable
interest entity's activities or entitled to receive a majority of the entity's
residual returns or both. FIN No. 46 also requires disclosures about variable
interest entities that a company is not  required  to  consolidate  but in
which it has a  significant  variable interest.  The consolidation  requirements
of FIN No. 46 apply  immediately to variable  interest  entities  created after
January 31, 2003. The  consolidation requirements  apply to  existing  entities
in the first  fiscal year or interim period  beginning  after June 15, 2003.
Certain of the disclosure  requirements apply in all financial statements issued
after January 31, 2003,  regardless of when the variable interest entity was
established. At June 30, 2003, the Company is a beneficiary of the services of
one of its affiliates,  the details of which are disclosed in Note 5. The
Company is currently evaluating the classification of this entity under FIN
No. 46.

2.       Aircraft and Aircraft Engines Under Operating Leases

         Aircraft and Aircraft Engines

         The Company owns a deHavilland DHC-8-100, serial number 13 ("S/N 13"),
a deHavilland DHC-8-102, serial number 106 ("S/N 106"), three deHavilland
DHC-6-300 aircraft ("S/Ns 640, 751 and 696") and a Saab 340A, serial number 24
("S/N 24"). The Company did not acquire any assets during the first six months
of 2003 because, in accordance with the trust indenture, the Company's excess
cash flow is being held for deposit to a sinking fund account.

         In June 2003, S/N 13 was re-leased to a new customer, a U.S. company
which is using the aircraft in Asia, under a six month lease, with an option to
extend for an additional six months.

         S/N 106 is subject to a lease, expiring in November 2004, with a
Caribbean regional carrier.

         S/N 640 and S/N 751 are leased to a regional carrier in the Maldives
for terms expiring in August 2005 and October 2004, respectively.

         In May 2003, the lease for S/N 696 was extended by the carrier in the
United Kingdom through April 2004.

         S/N 24 was re-delivered to the Company in November 2002 after
expiration of the lease. The Company has signed a term sheet for the re-lease of
this aircraft to a Puerto Rican carrier. Delivery is expected to occur in the
third quarter of 2003.

         As of June 30, 2003, minimum future lease rent payments receivable
under noncancelable leases were as follows:

         Year                          Amount
         ----                          ------

         2003                       $     883,750
         2004                           1,015,000
         2005                             157,500
                                    -------------

                                    $   2,056,250
                                    =============

<page>

                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

3.       Medium-Term Secured Bonds

         The Company raised $13,031,000 through the Offering from November 1995
to June 1997. Each $1,000 Unit subscribed in the offering included an $850
medium-term secured bond maturing on November 1, 2003. The Bonds bore interest
at an annual rate of 12.94% through October 31, 1998 and, thereafter, a variable
rate, adjusted annually on November 1, equal to the one-year United States
Treasury bill rate plus 2%, but not less than 8.24%. Based on the one-year
Treasury Bill rate at the measurement dates, the Bonds have borne interest at
the rate of 8.24% per annum for the periods November 1, 1998 through October 31,
2002. The rate will remain at 8.24% through October 31, 2003. The carrying
amount of the Bonds approximates fair value.

         The revenue generated from the Income Producing Assets is used to fund
interest payments on the Bonds and, since November 2001, deposits to a sinking
fund established to facilitate repayment of principal on the Bonds on their
maturity. As of June 30, 2003, the Company had approximately $2,202,000
available for deposit to the sinking fund, interest payments on the Notes and
operational expenses.

         As provided for in the trust indenture, the Company has elected to
extend the maturity date of the Bonds to April 30, 2004. As the maturity date of
the Bonds nears, it is likely that the Company will seek to refinance the Bonds
using bank financing. The proceeds of such financing would be used to repay all
or part of the outstanding indebtedness of the Bonds, depending on the appraised
value of the aircraft and the amount of the financing that the Company is able
to obtain.

4.       Income Taxes

         The items comprising income tax expense are as follows:

<table>
<caption>

                                                                                   For the Six Months Ended June 30,
                                                                                          2003             2002
                                                                                          ----             ----
<S>                                                                                 <C>              <C>


         Current tax (benefit)/provision
              Federal                                                               $           -    $            -
              State                                                                       (3,920)             3,750
                                                                                    -------------    --------------
              Current (benefit)/provision                                                 (3,920)             3,750
                                                                                    -------------    --------------

         Deferred tax (benefit)/provision
              Federal                                                                   (156,430)            31,140
              State                                                                         3,480             2,120
                                                                                    -------------    --------------
              Deferred tax (benefit)/provision                                          (152,950)            33,260
                                                                                    -------------    --------------

         Total (benefit)/provision for income taxes                                 $   (156,870)    $       37,010
                                                                                    =============    ==============

         The total provision for income taxes differs from the amount which
would be provided by applying the statutory federal income tax rate to pretax
earnings as illustrated below:

                                                                                   For the Six Months Ended June 30,
                                                                                          2003             2002
                                                                                          ----             ----

         Income tax (benefit)/expense at statutory federal income tax rate          $   (157,210)    $       31,140
         State tax (benefit)/expense net of federal benefit                                 (370)               800
         Tax refunds                                                                      (4,720)                 -
         Tax rate differences                                                               5,430             5,070
                                                                                    -------------    --------------
         Total (benefit)/provision for income taxes                                 $   (156,870)    $       37,010
                                                                                    =============    ==============

</table>



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

4.       Income Taxes (continued)

         Temporary differences and carryforwards which gave rise to a
significant portion of deferred tax assets and liabilities as of June 30, 2003
are as follows:

         Deferred tax assets:
              Net operating loss                            $     139,150
              Maintenance deposits                                877,980
              Prepaid rent and other                               65,100
                                                            -------------
                  Subtotal                                      1,082,230
                  Valuation allowance                                   -
                                                            -------------
                  Net deferred tax assets                       1,082,230
         Deferred tax liability -
              Depreciation of aircraft                          (678,510)
              Other                                               (8,480)
                                                            -------------
                                                            $     395,240
                                                            =============

         The Company expects to generate adequate future taxable income to
realize the benefits of the remaining deferred tax assets on the balance sheet.
The Company's net operating losses of $406,200 may be carried forward for twenty
years and begin to expire in 2021.

5.       Related Party Transactions

         The Company's Income Producing Asset portfolio is managed and
administered under the terms of a management agreement with JMC. Under this
agreement, on the last day of each calendar quarter, JMC receives a quarterly
management fee equal to 0.375% of the Company's Aggregate Gross Proceeds
received through the last day of such quarter. In the first six months of 2003
and 2002, the Company accrued a total of $97,730 and $97,730, respectively, in
management fees.

         JMC may receive an acquisition fee for locating assets for the Company
and a remarketing fee in connection with the sale of the Company's assets,
provided that such fees are not more than the customary and usual fees that
would be paid to an unaffiliated party for such a transaction. The total of the
Aggregate Purchase Price plus the acquisition fee cannot exceed the fair market
value of the asset based on appraisal. JMC may also receive reimbursement of
Chargeable Acquisition Expenses incurred in connection with a transaction which
are payable to third parties. Because the Company did not purchase aircraft
during the first six months of 2003 or 2002, it did not pay any acquisition fees
or Chargeable Acquisitions Expenses to JMC. The Company paid remarketing fees of
$3,000 to JMC in the first six months of 2002 in connection with the sale of an
aircraft. No such fees were paid in 2003.

         As discussed in Note 1, the Company reimbursed JHC for certain costs
incurred in connection with the organization of the Company and the Offering.
The Company made no such payments during 2003 or 2002.





<PAGE>



Item 2.           Management's Discussion and Analysis or Plan of Operation.

Forward-Looking Statements

Certain statements contained in this report and, in particular, the discussion
regarding the Company's beliefs, plans, objectives, expectations and intentions
regarding delivery of S/N 24 in the third quarter of 2003; the refinancing of
the Bonds using bank financing; the generation of future taxable income
sufficient to realize the benefits of the remaining deferred tax asset on the
balance sheet; the incurrence of significant operating expenses in connection
with its ownership of Income Producing Assets on lease; the sufficiency of
reserves to meet immediate cash requirements; the Company's belief that a sale
of assets at this time would not yield maximum value for the portfolio; the
belief that the Company will be able to obtain sufficient financing to repay the
Bondholder indebtedness; the anticipation of a recovery in aircraft prices
creating additional value for the Company's shareholders; the belief that the
current market value of the aircraft are at a level that will enable it to
refinance the entire Bond indebtedness; are forward looking statements. While
the Company believes that such statements are accurate, actual results may
differ due to availability of refinancing debt on terms acceptable to the
Company, market conditions in the air travel industry and demand for turboprop
aircraft; lack of unanticipated defaults or terminations by lessees; the depth
and length of the current aircraft industry downturn, and future trends and
results that cannot be predicted with certainty. There can be no assurance that
the Company will actually obtain refinancing debt sufficient to enable full
repayment of the Bonds by their maturity date. The Company's actual results
could differ materially from those discussed in such forward looking statements.
Factors that could cause or contribute to such differences include those
discussed below in the section entitled "Factors that May Affect Future
Results." The cautionary statements made in this Report should be read as being
applicable to all related forward-looking statements wherever they appear in
this Report.

Critical Accounting Policies

In response to the Securities and Exchange Commission's Release No. 33-8040,
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies", the
Company has identified the most critical accounting policies upon which its
financial status depends. It determined the critical policies by considering
those that involve the most complex or subjective decisions or assessments. The
Company identified these policies to be those related to lease rental revenue
recognition, depreciation policies, valuation of aircraft and maintenance
deposits.

Revenue Recognition

Revenue from leasing of aircraft assets is recognized as operating lease revenue
on a straight-line basis over the terms of the applicable lease agreements.

Depreciation Policies

The Company's interests in aircraft are recorded at cost, which includes
acquisition costs. Depreciation is computed using the straight-line method over
each aircraft's estimated economic life to its estimated residual value.

Valuation of Aircraft

In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets," assets are
reviewed for impairment whenever events or changes in circumstances indicate
that the book value of the asset may not be recoverable. Periodically, the
Company reviews its long-lived assets for impairment based on third party
valuations. In the event such valuations are less than the recorded value of the
assets, the assets are written down to their estimated realizable value.

Maintenance Deposits

Maintenance costs under the Company's triple net leases are generally the
responsibility of the lessees. The Company periodically reviews maintenance
deposits for adequacy in light of the number of hours flown, airworthiness
directives issued by the manufacturer or government authority, and the return
conditions specified in the lease. As a result of such review, when it is
probable that the Company has incurred costs for maintenance in excess of
amounts received from lessees, the Company accrues its share of costs for work
to be performed as a result of hours flown.

<page>

Results of Operations

The Company recorded net loss of ($305,520) or ($0.37) per share for the six
months ended June 30, 2003 versus net income of $54,560 or $0.07 per share for
the same period in 2002. The Company recorded net loss of ($153,670) or ($0.19)
per share for the three months ended June 30, 2003 versus net income of $17,840
or $0.02 per share for the same period in 2002.

Rent income was approximately $407,000 and $177,000 lower in the six months and
three months, respectively, ended June 30, 2003 than 2002, primarily because of
the loss of rent from aircraft which were returned to the Company in the fourth
quarter of 2002 after lease expiration, the effect of which was partially offset
by the rent received in 2003 for an aircraft which had been off lease for part
of 2002. Other income was lower in the six month and three month periods of 2002
by approximately $5,000 and $4,000, respectively, due to lower cash balances and
lower prevailing interest rates.

Depreciation, amortization, interest and management fees were the same in both
years. Maintenance expense was approximately $48,000 and $47,000 higher in the
six months and three months ended June 30, 2003, respectively, versus the same
periods in 2002 primarily as a result of work performed on an aircraft to
prepare it for delivery to a new customer. Insurance expense was approximately
$94,000 and $35,000 higher in the six months and three months ended June 30,
2003, respectively, versus the same periods in 2002 as a result of higher
insurance premium costs for coverage of aircraft which were on lease in 2002
(and therefore covered by lessee's insurance) but were off lease in 2003.
Professional fees and general and administrative expenses were approximately the
same the six month and three month periods of both years.

Capital Resources and Liquidity

Since Inception, the Company's funds have come primarily in the form of an
initial contribution from JHC, proceeds from the Offering and rental income from
the Income Producing Assets purchased using those proceeds. The Company's
liquidity varies, increasing to the extent cash flows from operations exceed
expenses, and decreasing to the extent expenses, including interest payments to
the Unitholders, exceed cash flows from leases.

The leases for the Company's aircraft expire at varying times through September
2005.

The Company's primary use of its operating cash flow is interest payments to its
Unitholders. Since the Company has acquired Income Producing Assets which are
subject to triple net leases (the lessee pays operating and maintenance
expenses, insurance and taxes), the Company has not and does not anticipate that
it will incur significant operating expenses in connection with ownership of its
Income Producing Assets while they remain on lease. The Company currently has
available adequate reserves to meet its immediate cash requirements.

As discussed in Item 1, the interest rate on the Bonds was 12.94% through
October 31, 1998 and has been a variable rate thereafter, calculated annually on
November 1. The variable rate is equal to the higher of (i) 2% plus the annual
yield rate on one-year U.S. Treasury Bills on the last business day of October
of that year or (ii) 8.24%. Based on the one-year Treasury Bill rate at the
measurement dates, the Bonds have borne interest at the rate of 8.24% per annum
for the periods November 1, 1998 through October 31, 2002. The Company has
determined that the rate will remain at 8.24% through October 31, 2003.

The Company's decrease in cash flow from operations was due primarily to a net
loss in 2003 versus net income in 2002, and by the effect of the change in
deposits and deferred taxes. The effect of these changes was partially offset by
the effect of the change in accounts receivable, accounts payable and
maintenance deposits.

Cash flow provided by investing activities was lower in 2003 versus 2002 because
the Company sold no aircraft in 2003 versus one such sale in 2002 and because,
in 2003, the Company made equipment purchases of $23,680 for equipment added to
aircraft already owned. There were no cash flows from financing activities
during 2003 or 2002 because the Offering terminated during June 1997.

<page>

Outlook

The Company has made the strategic decision not to sell assets at this time as a
means of funding repayment of the Bonds because it believes that such a sale of
the assets would not yield maximum value for the portfolio due to depressed
prices for aircraft in the current industry downturn.

As provided for in the trust indenture, the Company has elected to extend the
maturity date of the Bonds to April 30, 2004. In the coming months prior to the
extended maturity date, the Company will be focusing on obtaining bank financing
secured by the Company's portfolio, the entire proceeds of which, together with
cash from the sinking fund, will be used to repay the Bondholder indebtedness.
The Company believes that based on the current value of the aircraft portfolio
and loan-to-value ratios on loans negotiated by the management company for other
aircraft portfolios, the Company will be able to obtain sufficient financing to
repay the Bondholder indebtedness.

A critical financing prerequisite will be the on-lease status of the Company's
aircraft because, if an asset is not on lease, the aircraft may not be accepted
by the lender as collateral for financing. Therefore, the Company will also
focus in the coming months on maintaining the Company's assets on lease. The
Company currently has one aircraft off lease for which it has a signed term
sheet from a lessee for a proposed lease commencing in late September 2003. If,
however, the Company has an off-lease asset at the time of the refinancing
transaction, the Company may nonetheless need to sell that asset in order to
obtain cash needed to timely meet its Bondholder repayment obligations.

Even if the bank financing is obtained and the proceeds along with available
cash are sufficient to repay the Bonds, the Company anticipates that any
refinancing it obtains will be of one year or less, and the Company will need to
consider, in the coming year, alternative means to monetize the value of the
portfolio and/or provide liquidity for the preferred and common shareholders.
Such options may include permanent debt financing, sale of the aircraft
portfolio, an orderly sale of individual aircraft over time, or a sale or merger
of the Company. The Company anticipates that as the market recovers, aircraft
prices will recover to a level more accurately reflecting the true worth of the
Company's aircraft portfolio, thereby creating additional value for the
Company's preferred and common shareholders.

Factors that May Affect Future Results

Further Deterioration of the Air Travel Industry. The Company's ability to repay
the Bonds at their maturity date will depend upon its ability to refinance the
debt obligation and sell any off-lease aircraft at a price sufficient to retire
the outstanding Bond principal. The industry is currently on the downside of a
business cycle, and it does not appear that the industry will recover
significantly prior to maturity of the Bonds. The Company believes that the
current market value of its aircraft portfolio is at or near a value that will
nonetheless enable it to refinance the entire Bond indebtedness. If, however,
the industry weakens further, and there is lower demand for aircraft and lower
valuations for aircraft assets, the aggregate market value of the collateral to
be leveraged in the refinancing will decrease and may fall below the level
necessary to enable the Company to fully repay its Bond indebtedness. Even if
values are not significantly affected, a weakening of the aircraft industry may
result in the Company being unable to keep all of its aircraft on lease due to
lack of renewals, early returns or defaults by existing lessees. Since aircraft
off lease at the time of a refinancing transaction are unlikely to be included
in the collateral pool for any refinancing debt, the off-lease status of an
asset reduces the loan proceeds obtainable by the Company from any refinancing.
See "Leasing Risks," below

Availability of Debt Financing. The Company's plan for repayment of the Bond
indebtedness hinges on its ability to find debt financing collateralized by the
Company's aircraft portfolio, in an amount that when combined with available
cash is sufficient to repay the Bondholder indebtedness. While the Company's
management company has obtained similar suitable financing for similar aircraft
portfolios owned by other companies, there is no assurance that such financing
will continue to be available, and even if available, on terms that would enable
the Company to fund full repayment of the Bondholder indebtedness. If
refinancing debt cannot be obtained, the Company may be forced to liquidate the
Company's portfolio quickly in order to promptly repay the Bondholder
indebtedness. The proceeds of such an expedited sale may not be sufficient to
fully repay the entire Bondholder indebtedness.

<page>

Unexpected Expenses. The Company anticipates that nearly all of the available
cash it currently holds will be combined with refinancing proceeds to repay the
Bondholder indebtedness. Unanticipated events such as changes in governmental
regulations or casualties could create obligations for the Company as lessor or
owner of the aircraft and require the Company to immediately use funds in order
to comply with such obligations. If there is an unanticipated expense with
respect to the Company's operations or any of its aircraft that is not covered
by the lessee under its lease or by appropriate insurance, the Company may be
required to use cash reserves in order to comply with its lease or other
contractual obligations to lessees or other obligations. Any significant
unexpected expense may result in a shortfall in the Company's funds needed to
fully repay the Bondholder indebtedness at maturity. See, also "Casualties;
Insurance Coverage," below.

Ownership Risks As the Bond maturity date is approximately nine months from
today, factors that could affect the short-to-medium term value of the aircraft
are crucial to the ability of the Company to repay the Bond indebtedness. As
discussed above, industry conditions will be an important determining factor in
the valuation of the aircraft and potential proceeds realizable from their sale
or leveraging at Bond maturity. In addition, the condition of the aircraft
assets at the time of maturity will also have an effect on their value.
Therefore, continued lessee compliance with maintenance obligations and with
return conditions if an aircraft is returned, will be a significant factor in
what proceeds could be realized from the aircraft assets at the maturity date of
the Bonds (either through sale or refinance).

Risks Related to Regional Air Carriers. Because the Company's leases are all
with regional air carriers, it will be subject to certain risks. First, lessees
in the regional air carrier market include a number of companies that are
start-up, low capital, low margin operations. Often, the success of such
carriers is dependent upon arrangements with major trunk carriers, which may be
subject to termination or cancellation by such major carriers. This market
segment is also characterized by low entry costs, and thus, there is strong
competition in this industry segment from start-ups as well as major airlines.
Thus, leasing transactions with these types of lessees result in a generally
higher lease rate on aircraft, but may entail higher risk of default or lessee
bankruptcy.

Lease Defaults. As discussed above, the on-lease status of the Company's
portfolio will be a critical factor in the Company's ability to repay the
Bondholder indebtedness at the maturity date. If any of the lessee's of the
Company's aircraft default on their lease obligations prior to the Company's
closing of the refinancing transaction, this could have a significant adverse
impact on the refinancing proceeds obtainable by the Company. Thus, the
continued performance of lessees under their leases in the months prior to the
maturity date will be a critical condition to the success of the Company's plan
for repayment of the Bondholder indebtedness.

Reliance on JMC. All management of the Company is performed by JMC pursuant to a
management agreement between JMC and the Company. The Company's Board of
Directors does, however, have ultimate control and supervisory responsibility
over all aspects of the Company and does owe fiduciary duties to the Company and
its stockholders. In addition, while JMC may not owe any fiduciary duties to the
Company by virtue of the management agreement, the officers of the Company are
also officers or employees of JMC, and in that capacity owe fiduciary duties to
the Company and the stockholders by virtue of holding such offices. Although the
Company has taken steps to prevent such conflicts, such conflicts of interest
arising from such dual roles may still occur. JMC is also management company for
two other aircraft portfolio owners, AeroCentury Corp. and AeroCentury IV, Inc.
("AeroCentury IV") and conflicts may arise as a result of those roles. For
instance, AeroCentury Corp. and the Company have common customers, and the
management Company's decisions with respect to such shared customers may create
a conflict when negotiating with the customer with respect to re-leasing of the
respective aircraft owned by the Company and AeroCentury Corp. AeroCentury IV is
in the liquidation or wrap-up phase. In the first quarter of 2002, AeroCentury
IV defaulted on certain obligations to noteholders. The indenture trustee for
AeroCentury IV's noteholders has foreclosed and has taken over management of the
remaining two assets.

Lessee Credit Risk. If a lessee defaults upon its obligations under a lease, the
Company may be limited in its ability to enforce remedies. Most of the Company's
lessees are small domestic and foreign regional passenger airlines, which may be
even more sensitive to airline industry market conditions than the major
airlines. As a result, the Company's inability to collect rent under a
significant lease or to repossess equipment in the event of a default by a
lessee could have a material adverse effect on the Company's revenue. If a
lessee that is a certified U.S. airline is in default under the lease and seeks
protection under Chapter 11 of the United States Bankruptcy Code, under Section
1110 of the Bankruptcy Code, the Company would be automatically prevented from
exercising any remedies for a period of 60 days. By the end of the 60 day
period, the lessee must agree to perform the obligations and cure any defaults,
or the Company would have the right to repossess the equipment. This procedure
under the Bankruptcy Code has been subject to significant litigation, however,
and it is possible that the Company's enforcement rights may still be further
adversely affected by a declaration of bankruptcy by a defaulting lessee. Even
if an aircraft can be repossessed, the Company may be unable to recover damages
from the lessee if the condition of the aircraft when repossessed was worse than
that required by the lease.

<page>

Leasing Risks. The Company's successful negotiation of lease extensions,
re-leases and sales may be critical to the Company's success, and will involve a
number of substantial risks. Demand for lease or purchase of the assets depends
on the economic condition of the airline industry which is in turn highly
sensitive to general economic conditions. Ability to remarket equipment at
acceptable rates may depend on the demand and market values at the time of
remarketing. The market for used aircraft is cyclical, and generally, but not
always, reflects economic conditions and the strength of the travel and
transportation industry. The demand for and value of many types of used aircraft
in the recent past has been depressed by such factors as airline financial
difficulties, increased fuel costs, the number of new aircraft on order and the
number of older aircraft coming off lease. The Company's concentration in a
limited number of airframe and aircraft engine types (generally, turboprop
equipment) subjects the Company to economic risks if those airframe or engine
types should decline in value. The recent introduction of "regional jets" to
serve on short routes previously thought to be economical only for turboprop
aircraft operation could decrease the demand for turboprop aircraft, while at
the same time increasing the supply of used turboprop aircraft. This could
result in lower lease rates and values for the Company's turboprop aircraft.

International Risks. The Company's portfolio includes leases with foreign air
carriers. Leases with foreign lessees may present somewhat different credit
risks than those with domestic lessees. Foreign laws, regulations and judicial
procedures may be more or less protective of lessor rights as those which apply
in the United States. The Company could experience collection problems related
to the enforcement of its lease agreements under foreign local laws and the
remedies in foreign jurisdictions. The protections potentially offered by
Section 1110 of the Bankruptcy Code would not apply to non-U.S. carriers, and
applicable local law may not offer similar protections. Certain countries do not
have a central registration or recording system with which to locally establish
the Company's interest in equipment and related leases. This could add
difficulty in recovering an aircraft in the event that a foreign lessee
defaults.

Leases with foreign lessees are subject to risks related to the economy of the
country or region in which such lessee is located even if the U.S. economy is
strong. On the other hand, a foreign economy may remain strong even though the
domestic U.S. economy does not. A foreign economic downturn may occur and impact
a foreign lessee's ability to make lease payments, even though the U.S. and
other economies remain stable. Furthermore, foreign lessees are subject to risks
related to currency conversion fluctuations. Although the Company's current
leases are all payable in U.S. dollars, in the future, the Company may agree to
leases that permit payment in foreign currency, which would subject such lease
revenue to monetary risk due to currency fluctuations. Even with
dollar-denominated lease payment provisions, the Company could still be affected
by a devaluation of the lessee's local currency which would make it more
difficult for a lessee to meet its dollar-denominated lease payments, increasing
the risk of default of that lessee, particularly if that carrier's revenue is
primarily derived in the local currency.

Casualties, Insurance Coverage. The Company, as owner of transportation
equipment, may be named in a suit claiming damages for injuries or damage to
property caused by its assets. As a triple net lessor, the Company is generally
protected against such claims, since the lessee would be responsible for, insure
against and indemnify the Company for such claims. Further, some protection may
be provided by the United States Aviation Act with respect to its aircraft
assets. It is, however, not clear to what extent such statutory protection would
be available to the Company and such act may not apply to aircraft operated in
foreign countries. Also, although the Company may require a lessee to insure
against a risk, there may be certain cases where the loss is not entirely
covered by the lessee or its insurance. Though this is a remote possibility, an
uninsured loss with respect to the equipment or an insured loss for which
insurance proceeds are inadequate would result in a possible loss of invested
capital in and any profits anticipated from such equipment.

<page>

Competition. The Company has many competitors in the aircraft leasing industry,
including leasing companies, banks and other financial institutions and aircraft
leasing partnerships. The market is highly competitive. Most of the Company's
competitors have substantially greater financial and other resources than the
Company.

Item 3. Controls and Procedures

Quarterly evaluation of the Company's Disclosure Controls and Internal Controls.
As of the end of the period covered by this report, the Company evaluated the
effectiveness of the design and operation of its "disclosure controls and
procedures" ("Disclosure Controls"), and its "internal control over financial
reporting" ("Internal Controls"). This evaluation (the "Controls Evaluation")
was done under the supervision and with the participation of management,
including the Company's Chief Executive Officer ("CEO") and Chief Financial
Officer ("CFO"). Rules adopted by the SEC require that in this section of the
Report the Company present the conclusions of the CEO and the CFO about the
effectiveness of our Disclosure Controls and Internal Controls based on and as
of the date of the Controls Evaluation.

CEO and CFO Certifications. Attached as exhibits to this report are two separate
forms of "Certifications" of the CEO and the CFO. The first form of
Certification is required in accordance with Section 302 of the Sarbanes-Oxley
Act of 2002 (the "Section 302 Certification"). This section of the report which
you are currently reading is the information concerning the Controls Evaluation
referred to in the Section 302 Certifications and this information should be
read in conjunction with the Section 302 Certifications for a more complete
understanding of the topics presented.

Disclosure Controls and Internal Controls. Disclosure Controls are procedures
that are designed with the objective of ensuring that information required to be
disclosed in the Company's reports filed under the Securities Exchange Act of
1934 (the "Exchange Act"), such as this report, is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's ("SEC") rules and forms. Disclosure Controls are also
designed with the objective of ensuring that such information is accumulated and
communicated to the Company's management, including the CEO and CFO, as
appropriate to allow timely decisions regarding required disclosure. Internal
Controls are procedures which are designed with the objective of providing
reasonable assurance that (1) the Company's transactions are properly
authorized; (2) the Company's assets are safeguarded against unauthorized or
improper use; and (3) the Company's transactions are properly recorded and
reported, all to permit the preparation of the Company's financial statements in
conformity with generally accepted accounting principles.

Limitations on the Effectiveness of Controls. The Company's management,
including the CEO and CFO, does not expect that its Disclosure Controls or its
Internal Controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

Scope of the Controls Evaluation. The CEO/CFO evaluation of the Company's
Disclosure Controls and the Company's Internal Controls included a review of the
controls objectives and design, the controls implementation by the company and
the effect of the controls on the information generated for use in this report.
In the course of the Controls Evaluation, we sought to identify data errors,
controls problems or acts of fraud and to confirm that appropriate corrective
action, including process improvements, were being undertaken. This type of
evaluation will be done on a quarterly basis so that the conclusions concerning
controls effectiveness can be reported in the Company's quarterly reports on
Form 10-QSB and annual report on Form 10-KSB. The Company's Internal Controls
are also evaluated on an ongoing basis by other personnel in the Company's
finance organization and by the Company's independent auditors in connection
with their audit and review activities. The overall goals of these various
evaluation activities are to monitor the Company's Disclosure Controls and the
Company's Internal Controls and to make modifications as necessary; the
Company's intent in this regard is that the Disclosure Controls and the Internal
Controls will be maintained as dynamic systems that change (including with
improvements and corrections) as conditions warrant.

<page>

Among other matters, the Company sought in its evaluation to determine whether
there were any "significant deficiencies" or "material weaknesses" in the
Company's Internal Controls, or whether the Company had identified any acts of
fraud involving personnel who have a significant role in the Company's Internal
Controls. This information was important both for the Controls Evaluation
generally and because item 5 in the Section 302 Certifications of the CEO and
CFO require that the CEO and CFO disclose that information to the Audit
Committee of the Company's Board and to the Company's independent auditors and
to report on related matters in this section of the Report. In the professional
auditing literature, "significant deficiencies" are referred to as "reportable
conditions"; these are control issues that could have a significant adverse
effect on the ability to record, process, summarize and report financial data in
the financial statements. A "material weakness" is defined in the auditing
literature as a particularly serious reportable condition where the internal
control does not reduce to a relatively low level the risk that misstatements
caused by error or fraud may occur in amounts that would be material in relation
to the financial statements and not be detected within a timely period by
employees in the normal course of performing their assigned functions. The
Company also sought to deal with other controls matters in the Controls
Evaluation, and in each case if a problem was identified, the Company considered
what revision, improvement and/or correction to make in accordance with our
on-going procedures.

In accordance with SEC requirements, the CEO and CFO note that, there has been
no significant change in Internal Controls that occurred during our most recent
fiscal quarter that has materially affected or is reasonably likely to
materially affect our Internal Controls.

Conclusions. Based upon the Controls Evaluation, the Company's CEO and CFO have
concluded that, subject to the limitations noted above, the Company's Disclosure
Controls are effective to ensure that material information relating to the
Company and its consolidated subsidiaries is made known to management, including
the CEO and CFO, particularly during the period when periodic reports are being
prepared, and that the Company's Internal Controls are effective to provide
reasonable assurance that the Company's financial statements are fairly
presented in conformity with generally accepted accounting principles.





<PAGE>



                                     PART II

                                OTHER INFORMATION

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

(a) Exhibits.

    Exhibit
    Number                                       Description

     31.1          Certification of Neal D. Crispin, President, Chief Financial
                   Officer, pursuant to Section 302 of the Sarbanes-Oxley Act
                   of 2002.
     32.1*         Certification of Neal D. Crispin, President, Chief Financial
                   Officer, pursuant to Section 906 of the Sarbanes-Oxley Act
                   of 2002.


* This certificate is furnished to, but shall not be deemed to be filed with,
the Securities and Exchange Commission.



 (b) Reports on Form 8-K.

None



<PAGE>



                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                  JETFLEET III


Date:    August 14, 2003            By:    /s/ Neal D. Crispin
                                           -------------------------------
                                           Neal D. Crispin

                                    Title: President, Chief Financial Officer