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, 1999

[   ]    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
            (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  16,  1999 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  16,  1999 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>




Part I.           Financial Information

Item 1.           Financial Statements.

<TABLE>

<CAPTION>
                                        JETFLEET III

                                        Balance Sheet
                                        June 30, 1999

                                           ASSETS
<S>                                                                                          <C>

Current assets:
     Cash                                                                                    $   3,117,980
     Deposits                                                                                      662,760
     Accounts receivable                                                                             3,430
     Rent receivable                                                                                60,360
                                                                                             -------------
Total current assets                                                                             3,844,530
Aircraft and aircraft engines under operating leases,
     net of accumulated depreciation of $1,472,290                                               8,923,900
Debt issue costs, net of accumulated
     amortization of $670,760                                                                      990,690
Other assets                                                                                         6,590
                                                                                             -------------

Total assets                                                                                 $  13,765,710
                                                                                             =============

                                                 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                                        $       6,530
     Interest payable                                                                              152,120
     Prepaid rents                                                                                  92,960
     Security deposits                                                                              56,000
     Maintenance deposits                                                                          606,760
                                                                                             -------------
Total current liabilities                                                                          914,370

Medium-term secured bonds                                                                       11,076,350

Total liabilities                                                                               11,990,720

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                                                                              (701,660)
                                                                                             -------------
Total shareholders' equity                                                                       1,774,990
                                                                                             -------------

Total liabilities and shareholders' equity                                                   $  13,765,710
                                                                                             =============


See accompanying notes.

</TABLE>



<PAGE>

<TABLE>


                                                             JETFLEET III
                                                       Statements of Operations

<CAPTION>
                                                    For the Six Months Ended          For the Three Months Ended
                                                            June 30,                           June 30,
<S>                                              <C>             <C>                <C>              <C>

                                                      1999               1998           1999              1998
                                                      ----               ----           ----              ----
Revenues:

     Rent income                                 $     950,990    $    1,138,620    $     409,110    $      569,310
     Gain on sale of aircraft                           12,900                 -                -                 -
     Interest income                                    58,300            20,680           34,800            10,210
                                                 -------------    --------------    -------------    --------------

                                                     1,022,190         1,159,300          443,910           579,520
                                                 -------------    --------------    -------------    --------------


Expenses:

     Depreciation                                      273,790           300,540          132,020           150,270
     Amortization                                      114,310           114,310           57,150            57,150
     Interest                                          456,350           716,640          228,170           358,320
     Professional fees and
        general and administrative                      32,980            14,380           24,240             7,190
     Management fees                                    97,730            97,730           48,870            48,870
                                                 -------------    --------------    -------------    --------------

                                                       975,160         1,243,600          490,450           621,800
                                                 -------------    --------------    -------------    --------------

Income/(loss) before taxes                              47,030          (84,300)         (46,540)          (42,280)

Provision for income taxes                                 920                 -                -                 -
                                                 -------------    --------------    -------------    --------------

Net income/(loss)                                $      46,110    $     (84,300)    $    (46,540)    $     (42,280)
                                                 =============    ==============    =============    ==============

Weighted average common shares outstanding             815,200           815,200          815,200           815,200
                                                 =============    ==============    =============    ==============

Basic earnings/(loss) per common share           $        0.06    $       (0.10)    $      (0.06)    $       (0.05)
                                                 =============    ==============    =============    ==============


See accompanying notes.
</TABLE>





<PAGE>

<TABLE>


                                                            JETFLEET III
                                                       Statements of Cash Flows

<CAPTION>


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

                                                                       1999                  1998

Net cash provided by operating activities                         $      403,250        $     349,480

Investing activity -
     Proceeds from sale of aircraft                                    1,074,970                    -
                                                                  --------------        -------------

Net increase in cash                                                   1,478,220              349,480

Cash, beginning of period                                              1,639,760              539,620
                                                                  --------------        -------------

Cash, end of period                                               $    3,117,980        $     889,100
                                                                  ==============        =============

Supplemental  disclosures of cash flow information:  Cash paid during the period
for:
     Interest                                                     $      456,350        $     716,640
     Income taxes                                                            920                1,080


See accompanying notes.

</TABLE>

<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                  June 30, 1999


1.       Basis of Presentation

         JetFleet  III  (the  "Company")  was   incorporated  in  the  state  of
California on August 23, 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 an $850 bond
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").

         The  accompanying  balance  sheet at June 30,  1999 and  statements  of
operations  and cash flows for the six months  and three  months  ended June 30,
1999 and 1998  reflect all  adjustments  (consisting  of only  normal  recurring
accruals)  which  are,  in the  opinion  of the  Company,  necessary  for a fair
presentation of the financial results. The results of operations of such periods
are not  necessarily  indicative of results of operations  for a full year.  The
statements should be read in conjunction with the Summary of Significant Account
Policies  and other notes to  financial  statements  included  in the  Company's
Annual Report on Form 10-KSB for the year ended December 31, 1998.

         Organization and Capitalization

         All of the  Company's  outstanding  common  stock is owned by  JetFleet
Holding Corp.  ("JHC"), a California  corporation formed in January 1994. In May
1998, JetFleet Management Corp., the sole shareholder of the Company was renamed
JetFleet Holding Corp. The rights and obligations under the management agreement
between  the  Company  and  JHC  were  assigned  by  JHC  to  its  newly-created
wholly-owned  subsidiary  named "JetFleet  Management  Corp." ("JMC").  JMC also
manages AeroCentury Corp., a Delaware  corporation,  and AeroCentury IV, Inc., a
California  corporation  ("AeroCentury IV"), which are affiliates of the Company
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.

         Aircraft and Aircraft Engines Under Operating Leases

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

         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  estimated  it would pay 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 by
the  Company  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 has been deducted
from shareholders' equity.



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                  June 30, 1999


1.       Basis of Presentation (continued)

         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.

         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  and
are  subject  to  withdrawal  restrictions.  As of June 30,  1999,  the  Company
maintained  $3,417,590  of its cash  balances  in a money  market fund held by a
regional brokerage firm, which is not federally insured.

         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.

2.       Aircraft and Aircraft Engines Under Operating Leases

         Aircraft and Aircraft Engines

         At June 30, 1999,  the Company  owns a  deHavilland  DHC-8-100,  serial
number 13 ("S/N 13") a Pratt & Whitney JT8D-9A  aircraft  engine,  serial number
674267 ("S/N 674267"),  three deHavilland DHC-6-300 aircraft ("S/Ns 646, 751 and
696"),  a Fairchild  Metro III  SA-227-AC,  Serial No.  AC-621 ("S/N  AC-621") a
Shorts SD3-60,  serial number S/N 3656 ("S/N 3656") and a 50% undivided interest
in a Shorts SD3-60, serial number S/N 3676 ("S/N 3676").

         The Company did not invest in any aircraft  during the first six months
of 1999.  During March 1999, the Company sold its Shorts  SD3-60,  serial number
3611 ("S/N 3611").  The Company  recognized a gain of  approximately  $12,900 in
connection with the sale.

         Aircraft and Aircraft Engines Leases

         S/N 13 was  re-leased on June 15, 1999 to the previous  sub-lessee,  an
Australian carrier, for a one-year term.

         S/N  674267 is used on a  McDonnell  Douglas  DC-9 and is  subject to a
60-month  sublease,  expiring  on  November  1, 2001,  between  the seller and a
Mexican based regional carrier.

         S/Ns 646,  751 and 696 are subject to similar  36-month  leases,
expiring on July 1, 2001,  with a U.S.  regional  carrier in Hawaii.

         S/N AC-621 is subject to a 36-month lease expiring on May 31, 1999 with
a U.S. regional carrier in Alaska.  The lessee has agreed to extend the lease to
August 31, 1999.

         S/N 3656 and S/N 3676 are subject to similar 48-month leases,  expiring
on July 27, 2001, with an English regional airline.

<PAGE>

                                  JETFLEET III
                          Notes to Financial Statements
                                  June 30, 1999


3.       Medium-term secured bonds

         As mentioned  above, the Company raised funds 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. During 1997, the
Company accepted  subscriptions for 2,310 Units aggregating  $2,310,000 in Gross
Offering Proceeds.  Pursuant to the Prospectus,  the Company subsequently issued
$1,963,500  in Bonds  and  40,050  shares of  Preferred  Stock.  The Bonds  bear
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%.  Interest is due and
payable on a quarterly basis, in arrears, on the first business day of February,
May,  August and November.  Based on the one-year  Treasury bill rate on October
31, 1998, the Bonds bear interest at the minimum rate of 8.24% per annum for the
period  November 1, 1998 through  October 31, 1999.  The carrying  amount of the
Bonds approximates fair value.

4.       Income taxes

         The items  comprising  income tax expense for the six months ended June
30, 1999 are as follows:

         Current tax provision:
                  Federal                                         $            -
                  State                                                      920
                                                                  --------------
                  Current tax provision                                      920
                                                                  --------------

         Deferred tax provision:
                  Federal                                                 15,410
                  State                                                   29,950
                                                                  --------------
                  Deferred tax provision                                  45,360
                  Valuation allowance                                   (45,360)
                                                                  --------------

         Total provision for income taxes                         $          920
                                                                  =============

         Total  income  tax  expense  differs  from the  amount  which  would be
provided by applying the statutory federal income tax rate to pretax earnings as
illustrated below:

         Income tax expense at
               statutory federal income tax rate                  $       15,990
         State taxes net of federal benefit                                  640
         State franchise taxes                                               920
         Tax rate differences                                             28,730
         Valuation allowance                                            (45,360)
                                                                  --------------
         Total provision for income taxes                         $          920
                                                                  =============



<PAGE>


                                  JETFLEET III
                          Notes to Financial Statements
                                  June 30, 1999


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, 1999
are as follows:

         Deferred tax assets:
                  Net operating loss                              $      365,400
                  Maintenance reserves                                   172,150
                  Prepaid rent                                            32,880
                  State franchise taxes                                      270
                  Amortization of organizational costs                       100
                                                                  --------------
                           Subtotal                                      570,800
                           Valuation allowance                         (248,420)
                                                                  --------------
                           Net deferred tax assets                $      322,380
         Deferred tax liability:
                  Depreciation on aircraft                             (322,380)

                                                                  $            -
                                                                  ==============

         The Company  anticipates that the deferred tax liability will be offset
by deferred tax assets and has recorded a valuation  allowance for the remaining
portion of deferred  tax assets as the Company  does not  anticipate  generating
adequate future taxable income to realize the benefits of the remaining deferred
tax assets on the balance  sheet.  The  Company's  net  operating  losses may be
carried  forward for fifteen or twenty years depending on when they were created
and begin to expire in 2009.

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 1999,
the Company paid a total of $48,870 in management  fees due JMC. The same amount
was accrued during the first six months of 1998.

         JMC may receive a brokerage 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 brokerage 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 1999 or 1998,  it did not pay any  brokerage  fees or  Chargeable
Acquisition  Expenses to JMC. No  remarketing  fee was paid to JMC in connection
with the sale of S/N 3611.

         As discussed in Note 2, the Company  owns a 50%  undivided  interest in
S/N 3676. The remaining 50% undivided  interest is owned by AeroCentury IV. Each
co-owner of S/N 3676  receives its pro-rata  share of rent income  received from
the lessee.

5.       Subsequent Events

         During July 1999, the Company purchased a 33% interest in a deHavilland
DHC-6  aircraft  subject  to a lease with a regional  carrier in  Colombia.  The
remaining  interest is owned by AeroCentury  IV. During August 1999, the Company
purchased a Saab 340A aircraft  subject to a lease with a regional carrier based
in Memphis, Tennessee.




<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:  the Company's lack of significant operating expenses for assets that
remain  on lease  and the  Company's  exposure  to loss as a result of Year 2000
issues are forward  looking  statements.  While the Company  believes  that such
statements  are  accurate,  the  Company's  business is  dependent  upon general
economic  conditions,  particularly  those that affect the demand for  turboprop
aircraft and engines,  including  competition  for turboprop and other aircraft,
and future trends and results cannot be predicted with certainty.  The Company's
actual  results  could differ  materially  from those  discussed in such forward
looking statements. 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.  Factors  that  could  cause  or  contribute  to  such
differences  include those discussed below in the section entitled "Factors that
May Affect Future Results."

Capital Resources and Liquidity

At the end of June  1999,  the  Company  had cash  balances  of  $3,117,980  and
deposits of $662,760.  The  Company's  cash  balances were held for the interest
payment made to the Unitholders in August 1999, for normally  recurring expenses
and for investment in additional  Income  Producing  Assets.  In July and August
1999  the  Company   purchased   additional  Income  Producing  Assets  totaling
approximately $2,800,000.

The primary  source of the  Company's  funds is rental  revenue  from the Income
Producing Assets. The Company's liquidity will vary in the future, increasing to
the  extent  cash flows from  operations  exceed  expenses,  and  decreasing  as
interest  payments are made to the Unitholders and to the extent expenses exceed
cash flows from leases.

The Company's primary use of its operating cash flow is interest payments to its
Unitholders.  Excess cash flow, after payment of interest and operating expenses
is held for investment in additional Income Producing Assets.  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 does not anticipate that it will incur significant operating expenses in
connection with ownership of its Income  Producing Assets as long as they remain
on lease.

The Company currently has available adequate reserves to meet its immediate cash
requirements.  The leases for the  Company's  aircraft  expire at varying  times
between  August  1999 and  November  2001.  The only lease  expiring  during the
remainder of 1999 is for S/N AC-621,  for which management is currently  seeking
re-lease opportunities.  S/N 3611 was sold in March 1999 at the time it came off
lease and the sales proceeds are being held for investment in additional  Income
Producing Assets.

As  discussed  in Item 1, the  interest  rate on the  Bonds was  12.94%  through
October 31, 1998 and 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%.  On October 31, 1998,  the one-year  United States  Treasury bill
rate was 4.10% which would  result in a bond rate of 6.10%.  Therefore,  for the
period  November 1, 1998 through October 31, 1999, the variable rate is equal to
8.24%.

The  increase  in cash flow from  operations  was due  primarily  to the Company
having net income in the first six months of 1999 versus a net loss in the first
six months of 1998 (see Results of Operations, below). This effect was partially
offset by an increase in rent receivable in 1999.

The  increase  in cash flow  provided  by  investing  activities  was due to the
Company's  sale of S/N 3611  during  March  1999.  There were no cash flows from
financing  activities during 1999 or 1998 because the Offering terminated during
June 1997.

Results of Operations

The Company recorded net income of $47,030 or $0.06 and net loss of ($84,011) or
($0.10) per share for the six months ended June 30, 1999 and 1998, respectively,
and net loss of ($46,540) and ($42,280) or ($0.06) and ($0.05) per share for the
three months ended June 30, 1999 and 1998, respectively.



<PAGE>



Rental income  decreased by  approximately  $187,000 and $160,000 during the six
months ended June 30, 1999 and 1998, respectively, as a result of the sale of an
aircraft  during  October  1998,  the sale of S/N 3611 during March 1999 and the
one-month  off-lease  period  for S/N 13  during  the  second  quarter  of 1999.
Interest income increased by approximately $37,000 and $24,000 for the six month
and three month  periods,  respectively,  in 1999 because the Company had higher
cash  balances  in 1999 as a result of the  aircraft  sales in October  1998 and
March 1999.  During 1999, the Company  recognized a gain in connection  with the
sale of S/N 3611.

Depreciation  decreased  by  approximately  $27,000 and  $18,000  during the six
months and three  months ended June 30, 1999 versus 1998 as a result of the sale
of two aircraft,  discussed above.  Interest expense  decreased by approximately
$261,000 and $130,000  during the six months and three months of 1999 due to the
decrease  in the rate  payable  on the  Company's  Bonds  from  12.94% to 8.24%,
effective November 1, 1998.

Factors that May Affect Future Results

General Economic Conditions. The market for used aircraft has been cyclical, and
usually  reflects  economic  conditions  and  the  strength  of the  travel  and
transportation  industry.  At any time,  the  market  for used  aircraft  may be
adversely  affected by such factors as airline  financial  difficulties,  higher
fuel costs, and improved availability and economics of new replacement aircraft.

An adverse change in the global air travel  industry,  however,  could result in
reduced  carrier revenue and excess capacity and increase the risk of failure of
some weaker regional air carriers.  While the Company  believes that with proper
asset and lessee  selection  the impact of such  changes on the  Company  can be
reduced,  there is no  assurance  that the  Company's  business  will escape the
effects of such a global downturn,  or a regional  downturn in an area where the
Company has placed a significant amount of its assets.

Reliance on JMC. All management of the Company is performed by JMC pursuant to a
management  agreement between JMC and the Company.  The 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.

Ownership  Risks.  Most of the  Company's  portfolio is leased  under  operating
leases,  where the terms of the leases do not take up the entire  useful life of
an asset. The Company's  ability to recover its purchase  investment in an asset
subject  to an  operating  lease is  dependent  upon the  Company's  ability  to
profitably  re-lease or re-sell the asset  after the  expiration  of the initial
lease term. Some of the factors that have an impact on the Company's  ability to
re-lease or re-sell include  worldwide  economic  conditions,  general  aircraft
market  conditions,  regulatory  changes  that  may  make an  asset's  use  more
expensive or preclude use unless the asset is modified, changes in the supply or
cost of aircraft equipment and technological  developments which cause the asset
to become obsolete.  In addition, a successful investment in an asset subject to
an operating  lease depends in part upon having the asset returned by the lessee
in serviceable  condition as required under the lease.  If the Company is unable
to remarket or sell its aircraft equipment on favorable terms when the operating
lease for such equipment expires,  the Company's business,  financial condition,
cash flow,  ability to service debt and results of operation  could be adversely
affected.

Lessee Credit Risk. If a lessee defaults upon his 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  recent  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.



<PAGE>



International  Risks. The Company's  portfolio  includes leases with foreign air
carriers.  Leases with foreign lessees,  however, 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 engine 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
remains  strong.  On the other hand,  a foreign  economy may remain  strong even
though the domestic U.S. economy is 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 makes 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.

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.

Casualties,   Insurance  Coverage.  The  Company,  as  owner  of  transportation
equipment, could be held liable for injuries or damage to property caused by its
assets. Though some protection may be provided by the United States Aviation Act
with  respect  to its  aircraft  assets,  it is 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.  Though the Company may carry
insurance or require a lessee to insure  against a risk,  some risks of loss may
not be insurable.  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.

Leasing  Risks.  The  Company's  successful  negotiation  of  lease  extensions,
re-leases  and sales may be critical  to its  ability to achieve  its  financial
objectives,  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
re-lease or re-sell  equipment at acceptable  rates may depend on the demand and
market  values at the time of re-lease or re-sale.  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 re-sale
value of many types of older  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.

Risks Related to Regional Air Carriers. Because the Company has concentrated its
existing  leases on leases to  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 carrier. 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
results in a generally higher lease rate on aircraft, but may entail higher risk
of default or lessee bankruptcy.



<PAGE>



Year 2000 Considerations. Because all administrative and management functions of
the Company are carried out by its management company,  JMC, JMC's readiness for
Year 2000 will determine the Company's  status.  JMC has reported to the Company
that it has directed its  information  technology  ("IT") manager to require any
software or hardware  purchased  for use by the  Company's  management to have a
warranty of Year 2000  compliance.  It has also directed its IT manager to study
any systems that may require Year 2000 remediation.

The IT  manager  has  determined  that,  because  JMC's IT  system is based on a
"MacOS" system,  JMC's internal  technology systems are ready for Year 2000, and
there  should  not be any  material  costs  associated  with  such  remediation.
Furthermore, the phone and internet systems have been warranted by their vendors
for Year 2000 compliance.  The Company's internal and administrative  operations
are  not  highly  dependent  on  any  other  advanced  technology  system,  and,
consequently,  management  believes  that the  Company's  exposure  to loss as a
result of Year 2000 issues in its internal and administrative  operations is not
significant.

Management  believes that the electronic systems used in the equipment leased by
the Company to lessees will not be materially affected by the Year 2000 and that
any  remediation  of the  technology  systems  embedded in the aircraft  that it
leases will not be a material  expense to the Company.  The Company has notified
all lessees of the Year 2000 problem and has requested information on the status
of each lessee's study and  remediation  plans. To date, all lessees (except for
two who have yet to respond) have reported Year 2000  compliance with respect to
the  aircraft  leased by the Company to the lessee.  The Company is following up
with those that have not responded, as well as each new additional lessee.

The Company has also been  consulting with all the  manufacturers  of its leased
equipment to confirm Year 2000 compliance, who have all indicated that they have
already notified or will shortly notify all lessee operators of their respective
Year 2000 issues.  Generally,  the type of used turboprop  aircraft owned by the
Company are not highly  dependent upon  date-sensitive  electronics,  unless the
lessee has added upgraded electronics to the aircraft.

In any event,  since the Company's  leases  generally  place all maintenance and
repair obligations on the lessees,  to the extent that the aircraft are on lease
when the Year 2000 problem is identified, it would generally be the lessee's and
not the  Company's  responsibility  to remediate  any Year 2000 problem with the
leased aircraft or additional upgraded electronics.

To the extent that a lessee has Year 2000 problems that significantly  adversely
affect its overall  financial  status,  such  material  problems  may affect the
lessee's operations and increase the risk of default by a lessee under its lease
with the Company.  The Company has also inquired with its lessees regarding Year
2000 compliance of its  administrative  and operational  activities.  It appears
responding  lessees are  generally  aware of the Year 2000 issue and have either
completed a plan or are in progress  toward  Year 2000  compliance.  There is no
assurance  that their  compliance  plans will be  successful,  however,  and the
Company is not independently  verifying any information provided by its lessees.
The Company continues to monitor its current lessees and each additional lessee.

Year 2000 issues may have a material impact on FAA operations and the operations
of certain air  carriers,  which in turn would  negatively  affect the  aircraft
industry in general.  This, of course,  may affect the business of the Company's
existing and potential lessees, and in turn, the Company.

The essential  functions of JMC and the Company are not  dependent  upon any key
third  party  vendors or  service  providers  related to the  leasing or finance
business, and consequently, the interruption of goods and services from any such
industry-specific  third party vendor or service  provider to JMC or the Company
is not likely to cause a material loss to the Company.  Of course, the Company's
ordinary  business  operation  is dependent  upon  vendors  that  provide  basic
services to  businesses  generally,  such as utility  companies,  phone and long
distance  companies,  courier  services and banking  institutions.  The Company,
through its  managment and JMC, is  monitoring  the Year 2000  readiness of such
providers.  Management believes that a temporary interruption in services to the
Company by these types of service  providers  caused by Year 2000 problems would
not cause material  losses to the Company.  An extended loss of these  services,
however,   could   adversely   affect  the  Company's   business  and  financial
performance. The Company has not yet made any contingency plans for the extended
loss of these basic services.




<PAGE>



                                   SIGNATURES


Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities  Act of
1934,  the  Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on August 16, 1999.

                                                     JETFLEET III

                                                    ====================
                                                By: /s/ Neal D. Crispin
                                                    Neal D. Crispin
                                            Title:  President

Pursuant to the requirements of the Securities Act of 1934, this report has been
signed  below by the  following  persons in the  capacities  indicated on August
16, 1999.

Signature                                  Title

/s/ Neal D. Crispin
====================                       President and Chairman of the
Neal D. Crispin                            Board of Directors of the Registrant
                                           Chief Financial Officer