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 March 31, 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 May 14, 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 May 14, 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
                                 March 31, 1999


                                     ASSETS
<S>                                                                                         <C>

Current assets:
     Cash                                                                                    $   2,984,490
     Deposits                                                                                      246,500
     Accounts receivable                                                                             1,150
     Rent receivable                                                                                33,000
                                                                                             -------------
Total current assets                                                                             3,265,140

Aircraft and aircraft engines under operating leases,
     net of accumulated depreciation of $1,340,270                                               9,055,910
Debt issue costs, net of accumulated
     amortization of $613,610                                                                    1,047,840
Other assets                                                                                         6,410
                                                                                             -------------

Total assets                                                                                 $  13,375,300
                                                                                             =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                                        $      11,500
     Interest payable                                                                              152,120
     Prepaid rents                                                                                  64,960
     Maintenance deposits                                                                          247,920
                                                                                             -------------
Total current liabilities                                                                          476,500

Medium-term secured bonds                                                                       11,076,350

Total liabilities                                                                               11,552,850

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                                                                              (654,200)
                                                                                             -------------
Total shareholders' equity                                                                       1,822,450
                                                                                             -------------

Total liabilities and shareholders' equity                                                   $  13,375,300
                                                                                             =============

</TABLE>

See accompanying notes.





<PAGE>

<TABLE>
<CAPTION>


                                  JETFLEET III
                            Statements of Operations


                                                           For the Three Months Ended March 31,
<S>                                                      <C>                       <C>

                                                              1999                      1998
Revenues:

     Rent income                                          $     541,880             $     569,310
     Gain on sale of aircraft                                    12,900                         -
     Interest income                                             23,490                    10,470
                                                          -------------             -------------

                                                                578,270                   579,780
                                                          -------------             -------------


Expenses:

     Depreciation                                               141,780                   150,270
     Amortization                                                57,150                    57,150
     Interest                                                   228,170                   358,320
     Professional fees and general and administrative             8,610                     7,190
     Management fees                                             48,870                    48,870
                                                          -------------             -------------

                                                                484,580                   621,800
                                                          -------------             -------------

Income/(loss) before taxes                                       93,690                  (42,020)

Provision for income taxes                                          120                         -
                                                          -------------             -------------

Net income/(loss)                                         $      93,570             $    (42,020)
                                                          =============             =============

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

Basic earnings/(loss) per common share                    $        0.11             $      (0.05)
                                                          =============             =============

</TABLE>

See accompanying notes.





<PAGE>

<TABLE>
<CAPTION>


                                  JETFLEET III
                            Statements of Cash Flows

                                                                  For the Three Months Ended March 31,
<S>                                                               <C>                   <C>

                                                                       1999                  1998

Net cash provided by operating activities                         $      269,760        $     190,580

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

Net increase in cash                                                   1,344,730              190,580

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

Cash, end of period                                               $    2,984,490        $     730,200
                                                                  ==============        =============

Supplemental  disclosures of cash flow information:  
Cash paid during the period for:
     Interest                                                     $      228,170        $     358,320
     Income taxes                                                              -                    -
</TABLE>


See accompanying notes.


<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                 March 31, 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 March 31, 1999 and  statements  of
operations  and cash flows for the three  months  ended  March 31, 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
                                 March 31, 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 March 31,  1999,  the  Company
maintained  $3,134,480  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 March 31, 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 quarter 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 is subject to a  120-month  lease  with the  seller.  The lessee
provided  notice to terminate the lease on November 30, 1998,  but  subsequently
extended the lease through May 7, 1999. Management is currently negotiating with
the sub-lessee, an Australian carrier, regarding its continued use of S/N 13.

         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.



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                 March 31, 1999


2.       Aircraft and Aircraft Engines Under Operating Leases (continued)

         Aircraft and Aircraft Engines Leases (continued)

         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 a Scottish regional airline.

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 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 are as follows:

         Current tax provision:
                  Federal                                         $           0
                  State                                                     121 
                                                                  --------------
                  Current tax provision                                     121 
                                                                  --------------

         Deferred tax provision:
                  Federal                                                 31,270
                  State                                                   30,589
                                                                  --------------
                  Deferred tax provision                                  61,859
                  Valuation Allowance                                   (61,859)
                                                                  --------------

         Total provision for income taxes                         $         121
                                                                  =============

         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                  $      31,856
         State taxes net of federal benefit                               1,280
         State franchise taxes                                              121
         Tax rate differences                                            28,723
         Valuation allowance                                            (61,859)
                                                                  --------------
         Total provision for income taxes                         $         121
                                                                  =============



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                 March 31, 1999


4.       Income taxes (continued)

         Temporary   differences  and   carryforwards   which  gave  rise  to  a
significant  portion of deferred tax assets and liabilities as of March 31, 1999
are as follows:

         Deferred tax assets:
                  Net operating loss                              $     455,784
                  Maintenance reserves                                   45,241
                  Prepaid rent                                           22,975
                  State franchise taxes                                     272
                  Amortization of organizational costs                      116 
                                                                  --------------
                           Subtotal                                     524,388
                           Valuation allowance                         (231,916)
                                                                  --------------
                           Net deferred tax assets                $     292,472
         Deferred tax liability:
                  Depreciation on aircraft                             (292,472)

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

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




<PAGE>



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

Capital Resources and Liquidity

At the end of March  1999,  the  Company had cash  balances  of  $2,984,490  and
deposits of $246,500.  The  Company's  cash  balances were held for the interest
payment made to the Unitholders in May 1999, for normally recurring expenses and
for investment in additional Income Producing Assets.

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 May 1999 and November 2001. Leases expiring during the remainder of 1999
include  those for S/N 13 and S/N AC-621.  Management  is currently  negotiating
with the  sub-lessee  of S/N 13 regarding  its  continued use of S/N 13, and the
lessee of S/N AC-621 has agreed to extend its lease to August 31, 1999. 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  quarter of 1999  versus a net loss in the first
quarter of 1998 (see Results of  Operations,  below).  This effect was partially
offset by an increase in accounts  receivable and rent receivable and a decrease
in the amount of prepaid rent and maintenance reserves collected from lessees at
March 31, 1999 compared to 1998.

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 $93,570 or $0.11 per share and net loss of
1998, respectively.

Rental income decreased by approximately  $27,000 during 1999 as a result of the
sale of an aircraft  during  October  1998 and the sale of S/N 3611 during March
1999.  Interest income  increased by  approximately  $13,000 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 an aircraft.

Depreciation  decreased by approximately $8,000 from year to year as a result of
the sale of two aircraft  during October 1998 and March 1999.  Interest  expense
decreased by approximately  $130,000 during 1999 due to the decrease in the rate
payable on the Company's Bonds from 12.94% to 8.24%, effective November 1, 1998.




<PAGE>



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.

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  attendant  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.



<PAGE>



Leases with foreign  lessees are subject to risks  related to the economy of the
country or region that 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 aircraft 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.

Year 2000 Considerations. Management of the Company has directed its information
technology ("IT") manager to require any software or hardware  purchased for use
by the Company 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 the Company's IT system is based on a
"MacOS" system,  the Company'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.  The Company  believes that there
should not be any material  costs in connection  with such a study.  The Company
has been  consulting  with all the  manufacturers  of its  leased  equipment  to
confirm Year 2000  compliance.  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.

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.  Furthermore,  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.

The Company's  essential  functions  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 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,  banking  institutions.  The Company 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 May 14, 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 May 17,
1999.

Signature                                  Title

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