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 March 31, 2004

[ ] 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 May 14, 2004 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, 2004 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

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 belief that a sale of the aircraft is the only feasible
means to raise cash to repay the entire Bond indebtedness; the likelihood that
the sales proceeds for the aircraft will not be sufficient to fully repay the
Bonds; the generation of future taxable income sufficient to realize the
benefits of the remaining deferred tax asset on the balance sheet; the
anticipated transfer of the assets to the Trustee in May 2004; 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 for off-lease aircraft; the anticipation that sales proceeds are
likely to be insufficient to repay the entire amount of the Bonds and that,
therefore, there will be no distribution with respect to the Preferred Stock;
are forward looking statements. While the Company believes that such statements
are accurate, actual results may differ due to the short-term market for used
turboprop aircraft; the condition and marketability of the aircraft in lessee's
possession at the time of sale of such aircraft; the costs for repair and
maintenance of returned aircraft; and future trends and results that cannot be
predicted with certainty. 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. All
forward-looking statements and risk factors included in this document are made
as of the date hereof, based on information available to the Company as of the
date hereof, and the Company assumes no obligation to update any forward-looking
statement or risk factor. You should consult the risk factors listed from time
to time in the Company's filings with the Securities and Exchange Commission.


<PAGE>







                                  JETFLEET III
                                  Balance Sheet
                                 March 31, 2004
                                    Unaudited
<TABLE>
<CAPTION>



                                     ASSETS
<S>  <C>                                                                                     <C>

Current assets:
     Cash                                                                                    $   4,434,110
     Deposits                                                                                    2,118,150
     Accounts receivable                                                                            95,970
Total current assets                                                                             6,648,230

Aircraft and aircraft engines under operating leases,
     net of accumulated depreciation of $1,687,890, held for sale                                3,765,940
Deferred rent receivable                                                                             5,560
Prepaid expenses                                                                                   103,070
                                                                                             -------------

Total assets                                                                                 $  10,522,800
                                                                                             =============

</TABLE>

<TABLE>
<CAPTION>

                      LIABILITIES AND SHAREHOLDERS' DEFICIT
<S>  <C>                                                                                     <C>

Current liabilities:
     Accounts payable                                                                        $      72,930
     Interest payable                                                                              152,120
     Prepaid rents                                                                                  35,000
     Security deposits                                                                             272,480
     Maintenance deposits                                                                        1,919,880
     Medium term secured bonds                                                                  11,076,350
                                                                                             -------------

Total current liabilities                                                                       13,528,760
                                                                                             -------------

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                                                                            (5,482,610)
Total shareholders' deficit                                                                    (3,005,960)
                                                                                             -------------

Total liabilities and shareholders' deficit                                                  $  10,522,800
                                                                                             =============

The accompanying notes are an integral part of this statement.
</TABLE>


<PAGE>





                                  JETFLEET III
                            Statements of Operations
                                    Unaudited

<TABLE>
<CAPTION>

                                                                                  For the Three Months Ended
                                                                                           March 31,
                                                                                     2004              2003
                                                                                     ----              ----
<S>  <C>                                                                        <C>              <C>

Revenues:

     Rent income                                                                $     349,740    $     340,990
     Gain on sale of aircraft                                                       1,377,620                -
     Other income                                                                      10,760            8,430
                                                                                -------------    -------------
                                                                                    1,738,120          349,420
                                                                                -------------    -------------


Expenses:

     Depreciation                                                                           -          174,380
     Amortization                                                                           -           57,150
     Interest                                                                         228,170          228,170
     Maintenance                                                                       51,490              760
     Insurance                                                                         22,220           60,050
     Professional fees and general and administrative                                  14,000            9,270
     Management fees                                                                   48,870           48,870
                                                                                -------------    -------------

                                                                                      364,750          578,650
                                                                                -------------    -------------

Income/(loss) before taxes                                                          1,373,370        (229,230)

Tax provision/(benefit)                                                                   800         (77,380)
                                                                                -------------    -------------

Net income/(loss)                                                               $   1,372,570    $   (151,850)
                                                                                =============    =============

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

Basic income/(loss) per common share                                            $        1.68    $      (0.19)
                                                                                =============    =============

</TABLE>

The accompanying notes are an integral part of these statements.





<PAGE>



                                  JETFLEET III
                            Statements of Cash Flows
                                    Unaudited
<TABLE>
<CAPTION>



                                                                       For the Three Months Ended
                                                                                March 31,
                                                                       2004                  2003
                                                                       ----                  ----
<S>                                                               <C>                   <C>


Net cash (used)/provided by operating activities                  $    (235,160)        $      13,810
                                                                  --------------        -------------

Investing activity -
     Proceeds from sale of aircraft                                    2,404,110                    -
                                                                  --------------        -------------
Net cash provided by investing activity                                2,404,110                    -
                                                                  --------------        -------------

Net increase in cash                                                   2,168,950               13,810

Cash, beginning of period                                              2,265,160            2,065,830
                                                                  --------------        -------------

Cash, end of period                                               $    4,434,110        $   2,079,640
                                                                  ==============        =============

Supplemental disclosures of cash flow information:
Cash paid during the period for:                                       2004                  2003
                                                                       ----                  ----
     Interest (net of amount capitalized)                         $      228,170        $     228,170
     Income taxes paid                                                         -                    -
</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"). Under the trust indenture governing the Bonds, there was a
provision to extend the maturity date of the Bonds 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, which has objectives similar to the Company's. JMC also acted as
manager for AeroCentury IV, Inc., a California corporation, which also had
objectives similar to the Company's. AeroCentury Corp. is an affiliate of JHC,
as was AeroCentury IV. 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.

         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 March 31, 2004, the Company maintained $6,225,550 of its
cash balances in three money market funds, 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. Depreciation is computed using the straight-line
method over each aircraft's estimated economic life to its estimated residual
value.

         In preparation for the sale of its aircraft, the Company obtained an
appraisal of its aircraft portfolio. Based on the projected net sales values for
the Company's aircraft, in September 2003, the Company recorded a provision for
impairment in value for S/N 13, S/N 106, S/N 696 and S/N 24, totaling
$5,505,000, and ceased recognizing depreciation on all aircraft.

         Impairment of Long-lived Assets

         In accordance with 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. For those assets on which an impairment is realized,
accumulated depreciation and impairment loss are netted against the original
cost basis and a new cost basis for such assets is then recorded on the balance
sheet. As discussed in Notes 3 and 4, the Company wrote down four of its assets
in September 2003.



<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 amortized such costs
through the original maturity date of the Bonds on November 1, 2003. The
remainder of any of the Initial Contribution and Reimbursement has been 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.

<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 46"), which was subsequently
revised in December 2003 ("FIN 46R"). FIN 46R 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 46R also requires disclosures about variable interest entities that a
company is not required to consolidate but in which it has a significant
variable interest. FIN 46R was applicable immediately to variable interest
entities created after January 31, 2003, and will be effective for all other
existing entities in financial statements for periods ending after December 15,
2004. Certain of the disclosure requirements apply in all financial statements
issued after December 31, 2003, regardless of when the variable interest entity
was established. The Company has no interest in any variable interest entity
and, therefore, the full adoption of FIN 46R had no effect on the Company's
consolidated financial condition or results of operations.

         SFAS 146, Accounting for Costs Associated with Exit or Disposal
Activities, was effective for exit or disposal activities that were initiated
after December 31, 2002. SFAS 146 addresses significant issues regarding the
recognition, measurement and reporting of costs that are associated with exit
and disposal activities, including restructuring activities that are currently
accounted for under EITF No. 94-3, Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). The provisions of EITF No. 94-3 shall
continue to apply for an exit activity initiated under an exit plan that meets
the criteria of EITF No. 94-3 prior to the adoption of SFAS 146. The effect of
adoption of SFAS 146 will change, on a prospective basis, the timing of when
restructuring charges are recorded from a commitment date approach to when the
liability is incurred. The adoption of this pronouncement had no effect on the
Company's financial statements.

         SFAS 150, Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equities, addresses how to classify and
measure certain financial instruments with characteristics of both liabilities
(or an asset in some circumstances) and equity. SFAS 150 requirements apply to
issuers classification and measurement of freestanding financial instruments,
including those that comprise more than one option or forward contract. It
requires that all instruments with characteristics of both liabilities and
equity be classified as a liability and remeasured at fair value on each
reporting date. SFAS 150 was effective immediately for all financial instruments
entered into or modified after May 31, 2003, and for the first interim period
beginning after June 15, 2003 for all other instruments. The adoption of SFAS
150 had no impact on the Company's financial statements.




<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

2.       Going Concern

         The Company's Medium Term Secured Bonds in the aggregate amount of
$11,076,350 are due on April 30, 2004. The Company does not have enough current
resources to pay the principal and interest on these Bonds by the due date, and
does not have any other viable refinancing plan in place. Therefore management
believes that a sale of the Company's aircraft portfolio is the only feasible
means to raise cash to apply towards the Bond obligations. This matter raises
substantial doubt as to the Company's ability to continue as a going concern. In
October 2003, management obtained an appraisal of the value of each aircraft and
has been soliciting buyers for the aircraft. Since the Company's aircraft
portfolio serves as collateral for the Bond obligations, the Company has agreed
with the Trustee to transfer title to the Company's unsold aircraft upon
maturity of the Bonds. After the transfer, the Trustee will assume
responsibility to manage the aircraft and collect sale and lease proceeds to
apply toward repayment of the Bond obligations. It is likely that even if the
aircraft are sold quickly by the Trustee, the total amount of sales proceeds
received, when combined with the Company's cash holdings, will not be sufficient
to repay the entire amount of the Bonds. Other than the recording of the
provision for impairment of $5,505,000 (see Note 3), the financial statements do
not include any other adjustments that might result from the outcome of this
uncertainty.

3.       Aircraft and Aircraft Engines Under Operating Leases

         At March 31, 2004, the Company owned 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 three months of 2004 because, in accordance with the
trust indenture, the Company's excess cash flow is being held for deposit to a
sinking fund account.

         In January 2004, the Company sold a deHavilland DHC-8-100, serial
number 13 ("S/N 13") and recorded a gain, including maintenance reserves
retained, of $1,377,630.

         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.

         S/N 696 is leased to a carrier in the United Kingdom through April
2004. In March 2004, the lessee for S/N 696 notified the Company of its
intention to extend the lease for two additional years, through April 30, 2006.
As discussed in Note 7, the lease was extended in April 2004.

         S/N 24 was re-delivered to the Company in November 2002 after
expiration of the lease. Although the Company had signed a term sheet for the
re-lease of this aircraft, the potential lessee decided not to take delivery of
the aircraft. The Company has been seeking sale possibilities for S/N 24.

         In preparation for the sale of its aircraft, the Company obtained an
appraisal of its aircraft portfolio. Based on the projected net sales values for
the Company's aircraft, in September 2003, the Company recorded a provision for
impairment in value for S/N 13, S/N 106, S/N 696 and S/N 24, totaling
$5,505,000, and ceased recognizing depreciation on all aircraft. As discussed in
Note 7, title to the Company's unsold aircraft will be transferred to the
Trustee and the Trustee will be responsible for selling such aircraft.



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

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

         As of March 31, 2004, minimum future lease rent payments receivable
under noncancelable leases were as follows:

         Year                          Amount

         2004                       $     908,500
         2005                             391,500
         2006                              78,000
                                    -------------
                                    $   1,378,000
                                    =============

4.       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 April 30, 2004.

         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. In accordance with the trust indenture, in March 2004, the Company
deposited $3,500,000 to the sinking fund account. As of March 31, 2004, the
Company had an additional $934,000 available for deposit to the sinking fund,
interest payments on the Notes and operational expenses.

         As provided for in the trust indenture, the Company elected to extend
the maturity date of the Bonds to April 30, 2004. As discussed in Note 3, the
Company obtained an appraisal of its assets and recorded a provision for
impairment in value for four of its aircraft at September 30, 2003. The Company
sold one aircraft in January 2004. As discussed in Note 7, title to the
Company's unsold aircraft will be transferred to the Trustee and the Trustee
will be responsible for selling such aircraft. It is likely that the total
amount of sales proceeds received, when combined with the Company's cash
holdings, will not be sufficient to repay the entire amount of the Bonds.



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

5.       Income Taxes

         The items comprising income tax expense are as follows:

<TABLE>
<CAPTION>

                                                                                      For the Three Months Ended
                                                                                               March 31,
                                                                                          2004             2003
                                                                                          ----             ----
<S>      <C>  <C>                                                                   <C>              <C>

         Current tax provision/(benefit)
              Federal                                                               $           -    $            -
              State                                                                           800           (3,920)
                                                                                    -------------    --------------
              Current provision/(benefit)                                                     800           (3,920)
                                                                                    -------------    --------------

         Deferred tax provision/(benefit)
              Federal                                                                     466,670          (77,150)
              State                                                                           880             3,690
                                                                                    -------------    --------------
              Deferred tax provision/(benefit)                                            467,550          (73,460)
              Valuation allowance                                                       (467,550)                 -
                                                                                    -------------    --------------

         Total provision/(benefit) for income taxes                                 $         800    $     (77,380)
                                                                                    =============    ==============

</TABLE>


         The total provision/(benefit) 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:

<TABLE>
<CAPTION>


                                                                                      For the Three Months Ended
                                                                                               March 31,
                                                                                          2004             2003
                                                                                          ----             ----

<S>      <C>                                                                        <C>              <C>


         Income tax expense/(benefit) at statutory federal income tax rate          $     466,940    $     (77,940)
         State tax expense/(benefit) net of federal benefit                                   660             (240)
         Tax refunds                                                                            -           (4,720)
         Tax rate differences                                                                 750             5,520
         Valuation allowance                                                            (467,550)                 -
                                                                                    -------------    --------------
         Total provision for income taxes                                           $         800    $     (77,380)
                                                                                    =============    ==============

</TABLE>


<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements
                                    Unaudited

5.       Income Taxes (continued)

         Temporary differences and carryforwards which gave rise to a
significant portion of deferred tax assets and liabilities as of March 31, 2004
are as follows:

         Deferred tax assets:
              Depreciation and impairment on aircraft          $     759,000
              Maintenance deposits                                   653,680
              Net operating loss                                     450,130
              Prepaid rent and other                                  12,190
                                                               -------------
                  Subtotal                                         1,875,000
                  Valuation allowance                            (1,869,350)
                                                               -------------
                  Net deferred tax assets                              5,650
         Deferred tax liability -
              Unearned income                                        (5,650)
                                                               -------------
         Net deferred tax assets                               $           -
                                                               =============

         The Company does not expect to generate adequate future taxable income
to realize the benefits of the remaining deferred tax assets on the balance
sheet. Therefore, the Company has recognized a valuation allowance equal to the
net deferred tax asset. The Company's net operating losses of $1,320,000 may be
carried forward for twenty years and begin to expire in 2021.

6.       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, 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 2004 and 2003, the Company accrued a total
of $48,870 and $48,870, respectively, in management fees.

         JMC may receive a remarketing fee in connection with the sale of the
Company's assets, provided that such fee is not more than the customary and
usual fee that would be paid to an unaffiliated party for such a transaction.
JMC may also receive reimbursement of Chargeable Acquisition Expenses incurred
in connection with a transaction which are payable to third parties. The Company
paid a remarketing fee of $153,450 to JMC in January 2004 in connection with the
sale of an aircraft. No such fees were paid in the first three months of 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 the first three months of 2004 or 2003.

7.       Subsequent events

         In April 2004, the lease for S/N 696 was extended for two years,
through April 30, 2006. The Company paid a remarketing fee of $13,330 to JMC in
connection with the extension.

         The Company did not have sufficient cash to fund the repayment of the
Bonds on the maturity date of April 30, 2004. The Company was, therefore, in
default under the Trust Indenture. In May 2004, the Trustee declared an "Event
of Default" under the Trust Indenture. Under the provisions of the Trust
Indenture, the Company and the Trustee have agreed to execute a transfer of
collateral, including the Company's cash balances. The transfer is expected to
be completed in May 2004, after which management of the aircraft portfolio and
repayment of the Company's Bond liabilities from the proceeds will be the
responsibility of the Trustee.


<PAGE>



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

Overview

The Company is a lessor of turboprop aircraft and engines which are used by
customers pursuant to triple net operating leases. The Company's profitability
and cash flow are dependent in large part upon its ability to acquire equipment,
obtain and maintain favorable lease rates on such equipment, and re-lease owned
equipment that comes off lease. The Company is subject to the credit risk of its
lessees, both as to collection of rent and to performance by the lessees of
obligations for maintaining the aircraft.

The Company's principal expenditures are for interest costs on its Bonds,
management fees, and maintenance of its aircraft assets. The most significant
non-cash expenses include accruals of maintenance costs in advance of their
payment and depreciation of aircraft.

Reported financial results are the result of significant estimates. Maintenance
expenses are estimated and accrued based upon utilization of the aircraft.
Depreciation is recognized based upon the estimated residual value of the
aircraft at the end of their estimated lives. Deviation from these estimates
could have substantial effect on the Company's cash flow and profitability.

Title to aircraft which remained unsold at the maturity date on April 30, 2004
will be transferred to the Trustee and the Trustee will be responsible for
selling such aircraft. Though the Trustee will seek sales opportunities for all
of its assets at or above appraised amounts, it is likely that the total amount
of sales proceeds received, when combined with the Company's cash holdings, will
not be sufficient to repay the entire amount of the Bonds. The Trustee may also
have to hold aircraft that it cannot sell right away, and therefore, until such
aircraft are eventually sold, the only proceeds that will be applied to the
Bonds may be net rental revenues.

Results of Operations

The Company recorded net income of $1,372,570 or $1.68 per share and a net loss
of ($151,850) or ($0.19) per share for the three months ended March 31, 2004 and
2003, respectively.

Rent income and other income were approximately the same in the first three
months of 2004 and 2003. Gain on sale of aircraft was approximately $1,378,000
higher in the first three months of 2004 than in the same period of 2003 due to
the sale of S/N 13 in January 2004.

Depreciation was approximately $174,000 lower in the three months ended March
31, 2004 versus the same period in 2003, because the Company has classified its
aircraft as held for re-sale and, therefore, did not record depreciation after
September 30, 2003. Amortization was approximately $57,000 lower in 2004 because
the Company's debt issue costs were fully amortized as of the original maturity
date of the Bonds, on November 1, 2003. Interest and management fees were the
same in both years.

Maintenance expense was approximately $51,000 higher in the three months ended
March 31, 2004 compared to the same period in 2003, primarily as a result of
work performed on S/N 13 to prepare it for sale.

Insurance expense was approximately $38,000 lower in the first quarter of 2004
compared to the first quarter of 2003 because S/N 13, which was sold in January
2004, was off lease and insured for all of the first quarter of 2003.
Professional fees and general and administrative expenses were approximately the
same in the first quarters 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 and
sales proceeds 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.

<PAGE>


The leases for the Company's aircraft expire at varying times through April
2006.

The Company's primary use of its operating cash flow has been 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 incurred, 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. Although
the Company currently has available adequate reserves to meet any cash
requirements for off-lease aircraft, the Company does not expect that sales
proceeds obtained by the Trustee upon sale, when combined with cash holdings,
will be sufficient to repay the entire amount of the Bonds. See "Outlook,"
below. In accordance with the trust indenture, in March 2004, the Company
deposited $3,500,000 to the sinking fund account.

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 December 31, 2003. The rate remained at
8.24% through April 30, 2004.

The Company's cash flow from operations for the three months ended March 31,
2004 versus the same period in 2003 decreased by approximately $249,000. The
change in cash flow is a result of changes in several cash flow items during the
year, including principally the following:

Expenditures for maintenance and aircraft equipment

Expenditures for maintenance were approximately $230,000 more in the first three
months of 2004 versus the same period in 2003, primarily because of maintenance
performed to prepare S/N 24 for re-lease or sale and a deposit paid for the
Company's share, under the lease, of maintenance work to be performed on S/N
751.

Insurance premiums

Expenditures for aircraft insurance for off-lease aircraft were approximately
$20,000 higher during the first three months of 2004 as compared to the same
period in 2003, because insurance expense for the first quarter of 2003 was
accrued, but not paid until the second quarter of 2003.

Cash flow provided by investing activities was higher in the first three months
of 2004 versus the first three months of 2003 because the Company sold S/N 13 in
January 2004 versus no such sales in 2003. There were no cash flows from
financing activities during the first three months of 2004 or 2003 because the
Offering terminated during June 1997.

Outlook

As provided for in the trust indenture, the Company elected to extend the
maturity date of the Bonds to April 30, 2004. Although the Company had
previously anticipated obtaining bank financing secured by the Company's
portfolio, management was unable to find suitable financing sources for the
aircraft. Therefore, management decided that a sale of the aircraft portfolio
was the only feasible means to raise cash to apply toward the Bond obligations.
Therefore, management obtained a liquidation value appraisal for each of the
aircraft assets. S/N 13 was sold in January 2004. The five other aircraft in the
portfolio remained unsold as of the maturity date. The Company has agreed to
transfer title to the Company's unsold aircraft to the Trustee and, thereafter,
the Trustee will be responsible for selling such aircraft. Given the current
market for aircraft such as those owned by the Company, there is no assurance
that the Trustee will locate willing buyers, or if located, that the buyers will
pay a price for the asset at least equal to the appraised value. Further, the
Trustee may not be able to sell aircraft in the short term, and therefore, the
only proceeds distributable until a purchaser is found with respect to unsold
aircraft may be monthly net lease rentals. The Trustee may also experience
expenses in order to effectively remarket the aircraft, which would reduce net
proceeds to the Bondholders.

<PAGE>


As a result of the aircraft appraisals received by management, in September
2003, the Company recorded a provision for impairment in value, totaling
$5,505,000, for four of its aircraft. At March 31, 2004, the Bond indebtedness
exceeded the aggregate appraised value of the Company's remaining aircraft by
approximately $6,868,000. It is likely that the total amount of sales proceeds
received, when combined with the Company's cash holdings of approximately
$4,434,000 on March 31, 2004, will not be sufficient to repay the entire amount
of the Bonds. In addition, because the Bond indebtedness must be repaid before
any distributions can be made to the Preferred Shareholders, and there are no
other assets of the Company left to distribute to the Preferred Shareholders, it
is likely that the Preferred Shareholders will receive no distributions or
dividends with respect to their shares upon dissolution of the Company, which is
likely to occur later this year.

Factors that May Affect Future Results

Anticipated Event of Default; Ability to Maximize Returns. As discussed above,
in "Outlook," shortly after the maturity date of the Bonds, the Trustee, Wells
Fargo Bank Northwest, National Association, declared an Event of Default under
the Trust Indenture. The Company, pursuant to an agreement with the Trustee,
will transfer all of its assets to the Trustee, which were collateral for the
Bonds, for the benefit of the Bondholders in lieu of a judicial repossession
proceeding. The Company's assets securing the Indenture consist of the aircraft
portfolio and leases and all remaining cash held by the Company. The Trustee
will then have the responsibility to direct the disposition of the collateral
with the goal of maximizing value to the Bondholders. This could entail an
immediate or staged disposition of all the assets or retention of the assets on
lease for the benefit of the Bondholders, or a combination thereof. While the
Trustee is unlikely to realize sufficient proceeds to enable repayment of the
entire Note Indebtedness, its ability to maximize repayment to Bondholders will
depend on the risk factors described below, particularly those that affect asset
values of the Company's portfolio or reduce the cash proceeds that can be
applied toward the Bond indebtedness.

Further Deterioration of the Air Travel Industry. The Trustee's ability to make
a substantial repayment on the Bonds will depend upon its ability to locate
buyers and consummate sales transactions by that date. Based on the most recent
appraisals, it appears likely that the Trustee will be unable to repay the
entire Bond indebtedness out of the aircraft portfolio proceeds. Moreover, any
further weakening of the industry could cause the proceeds realized from the
sale of aircraft to be even less than suggested by the Company's recent
appraisal.

Unexpected Expenses. The Company anticipates that nearly all of the available
cash it currently holds will be combined with sales proceeds to repay the
Bondholder indebtedness. Unanticipated events such as changes in governmental
regulations or casualties could create obligations for the Trustee as lessor or
owner of the aircraft and require the Trustee to immediately use funds in order
to comply with such obligations. If there is an unanticipated expense with
respect to the operations or any of the aircraft that is not covered by the
lessee under its lease or by appropriate insurance, the Trustee 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 decrease in funds available to repay the Bondholder indebtedness
at maturity.

Ownership Risks. Factors that could affect the short term value of the aircraft
are crucial to the ability of the Trustee to maximize its repayment to the
Bondholders. As discussed above, industry conditions will be an important
determining factor in the potential proceeds realizable from their sale. 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 upon sale.

Inability to Sell Asset; Delay in Receiving Sale Proceeds. There is no assurance
that the Trustee will locate a willing buyer, or if one is located, that the
buyer will pay a price for the asset at least equal to the appraised value. The
Trustee could also determine that it is in the Bondholder's interest to retain
title to leased assets and collect rentals for distribution of proceeds, net of
Trustee expenses and aircraft operating and maintenance expenses not covered by
the lessee, to the Bondholders. In this case, the Bondholders could experience a
delay in receiving the full asset value of such retained asset until such time
as the Trustee deems it practicable and advisable to liquidate such on-lease
assets.

<PAGE>


Risks Related to Regional Air Carriers. Because the aircraft leases are all with
regional air carriers, the Company 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.

Lessee Credit Risk. If a lessee defaults upon its obligations under a lease, the
Trustee may be limited in its ability to enforce remedies. The Trustee's lessees
are small foreign regional passenger airlines, which may be even more sensitive
to airline industry market conditions than the major airlines. 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 Trustee 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
Trustee 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 Trustee'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 Trustee 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.

Leasing Risks. Demand for 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 prices 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
and remains 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.

International Risks. The aircraft 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 Trustee 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 Trustee'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. Even with dollar-denominated lease
payment provisions, the Trustee 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.



<PAGE>



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 consolidated 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 errors 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 consolidated 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

          10.1       Letter Agreement between JetFleet III and Wells Fargo
                     Bank, Northwest, as Indenture Trustee, dated April 8, 2004.

          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:    May 14, 2004            By:    /s/ Neal D. Crispin
                                        -------------------------------
                                        Neal D. Crispin

                                 Title: President, Chief Financial Officer