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, 2000

[ ] 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 15, 2000 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 15,  2000 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.

                                  JETFLEET III
                                  Balance Sheet
                                 March 31, 2000
<TABLE>

                                     ASSETS
<S>                                                                                          <C>

Current assets:
     Cash                                                                                    $   1,069,000
     Deposits                                                                                      912,640
     Accounts receivable                                                                           106,070
     Rent receivable                                                                                48,970
                                                                                             -------------
Total current assets                                                                             2,136,680

Aircraft and aircraft engines under operating leases,
     net of accumulated depreciation of $1,934,940                                              11,261,300
Debt issue costs, net of accumulated
     amortization of $842,220                                                                      819,230
Deferred taxes                                                                                     165,420
Prepaid expenses                                                                                    12,100
                                                                                             -------------

Total assets                                                                                 $  14,394,730
                                                                                             =============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                                        $      11,680
     Interest payable                                                                              152,120
     Prepaid rents                                                                                  97,300
     Security deposits                                                                              88,800
     Maintenance deposits                                                                          785,650
     Taxes payable                                                                                   1,680
                                                                                             -------------
Total current liabilities                                                                        1,137,230

Medium-term secured bonds                                                                       11,076,350
                                                                                             -------------

Total liabilities                                                                               12,213,580
                                                                                             -------------

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                                                                              (295,500)
                                                                                             -------------
Total shareholders' equity                                                                       2,181,150
                                                                                             -------------

Total liabilities and shareholders' equity                                                   $  14,394,730
                                                                                             =============
</TABLE>


See accompanying notes.
<PAGE>


                                  JETFLEET III
                            Statements of Operations
<TABLE>
<CAPTION>


                                                           For the Three Months Ended March 31,
<S>                                                       <C>                       <C>
                                                              2000                      1999
                                                              ----                      ----
Revenues:

     Rent income                                          $     572,990             $     541,880
     Gain on sale of aircraft                                         -                    12,900
     Interest income                                             24,390                    23,490
                                                          -------------             -------------

                                                                597,380                   578,270
                                                          -------------             -------------


Expenses:

     Depreciation                                               158,220                   141,780
     Amortization                                                57,150                    57,150
     Interest                                                   228,170                   228,170
     Professional fees and general and administrative             3,110                     8,610
     Management fees                                             48,870                    48,870
                                                          -------------             -------------

                                                                495,520                   484,580
                                                          -------------             -------------

Income before taxes                                             101,860                    93,690

Tax provision                                                    31,010                       120
                                                          -------------             -------------

Net income/(loss)                                         $      70,850             $      93,570
                                                          =============             =============

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

Basic earnings/(loss) per common share                    $        0.09             $        0.11
                                                          =============             =============
</TABLE>


See accompanying notes.





<PAGE>

<TABLE>


                                  JETFLEET III
                            Statements of Cash Flows
<CAPTION>

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

                                                                       2000                  1999
                                                                       ----                  ----

Net cash provided by operating activities                         $      180,760        $     269,760

Investing activities:
     Proceeds from sale of aircraft                                            -            1,074,970
                                                                  --------------        -------------

Net increase in cash                                                     180,760            1,344,730

Cash, beginning of period                                                888,240            1,639,760
                                                                  --------------        -------------

Cash, end of period                                               $    1,069,000        $   2,984,490
                                                                  ==============        =============

Supplemental disclosures of cash flow information:
Cash paid during the period for:                                            2000                 1999
                                                                            ----                 ----
     Interest                                                     $      228,170        $     228,170
     Income taxes                                                          8,500                    -

</TABLE>

See accompanying notes.


<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements

1.       Summary of Significant Accounting Policies

         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 $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").

         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,  which are affiliates of JHC and which have  objectives
similar to the Company's.  Neal D. Crispin, the President of the Company,  holds
the same position  with JHC and JMC and owns a significant  amount of the common
stock of JHC.

         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, 2000,  the Company  maintained  $1,940,200 of its
cash balances in two money market funds held by regional  brokerage firms, which
are not federally insured.

         Aircraft and Aircraft Engines Under Operating Leases

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

         Organization and Offering Costs

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

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

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



<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements

1.       Summary of Significant Accounting Policies (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.

         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

         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"),  a 50%  undivided  interest  in a Shorts  SD3-60,
serial  number S/N 3676 ("S/N  3676"),  a 33% interest in a  deHavilland  DHC-6,
serial number 668 ("S/N 668") and a Saab 340A,  serial number 24 ("S/N 24"). The
Company did not purchase any aircraft during the first three months of 2000.

         S/N 13 was re-leased in June 1999 to the same sub-lessee, an Australian
carrier,  for a one-year term. The Company is in discussions with the sub-lessee
regarding  its option to exercise a one-year  extension of the lease at the same
rent.

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

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

         S/N  AC-621 was leased to a  regional  carrier in North  America  for a
six-month  term,  expiring in April 2000. The lessee  extended the lease to July
2000.




<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements

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

         Aircraft and Aircraft Engines Leases (continued)

         At the time of purchase,  S/N 3656 and S/N 3676 were subject to similar
48-month  leases,  expiring in July 2001, with a British  regional  airline.  On
February  24,  2000,  the  lessee  of  these  two  30-seat  aircraft  filed  for
reorganization.   The  lessee  is   continuing  to  operate,   and,   under  the
reorganization  plan,  the lessee has agreed to continue  leasing  S/N 3676,  in
which the  Company  owns a 50%  interest,  on a month to month basis at the same
rent.  The lessee has also agreed to begin paying monthly  maintenance  reserves
based on the hours  flown.  The  Company is in the  process of  identifying  any
unfunded maintenance reserves related to the  pre-reorganization  period related
to  both  aircraft  for  which  it  will  submit  an  unsecured   claim  to  the
reorganization  administrator.  The  lessee  plans to return  S/N 3656,  and the
Company is negotiating a lease with another regional  airline,  headquartered in
Ireland, for the lease of this aircraft.

         S/N 668 is subject to a 60-month lease  expiring,  in July 2004, with a
regional carrier in Colombia.

         S/N 24 is subject to a lease, expiring in October 2002, with a regional
carrier in North America.

3.       Medium-Term Secured Bonds

         The Company raised $13,031,000  through the Offering from November 1995
to June 1997.  Each  $1,000 Unit  subscribed  in the  offering  included an $850
medium-term  secured bond maturing on November 1, 2003.  The Bonds bore interest
at an annual rate of 12.94% through October 31, 1998 and, thereafter, a variable
rate,  adjusted  annually  on November 1, equal to the  one-year  United  States
Treasury  bill rate  plus 2%,  but not less than  8.24%.  Based on the  one-year
Treasury  bill rate on October 31, 1998 and  October  31,  1999,  the Bonds bear
interest at the rate of 8.24% per annum for the periods November 1, 1998 through
October 31, 1999 and November 1, 1999 through October 31, 2000.  Interest is due
and  payable on a quarterly  basis,  in arrears,  on the first  business  day of
February,   May,  August  and  November.   The  carrying  amount  of  the  Bonds
approximates fair value.

4.       Income Taxes

         The items comprising income tax expense are as follows:
<TABLE>
<CAPTION>

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

                                                                                           2000           1999
                                                                                           ----           ----
         Current tax provision
              Federal                                                               $           -    $            -
              State                                                                         1,680             1,080
                                                                                    -------------    --------------
              Current provision                                                             1,680             1,080
                                                                                    -------------    --------------

         Deferred tax provision
              Federal                                                                      32,140          (18,250)
              State                                                                       (3,100)           (2,360)
                                                                                    -------------    --------------
              Deferred tax provision                                                       29,040          (20,610)
              Change in valuation allowance                                                     -            20,610
                                                                                    -------------    --------------
                  Subtotal                                                                 29,040                 -
                                                                                    -------------    --------------

         Total provision for income taxes                                           $      30,720    $        1,080
</TABLE>


<PAGE>



                                  JETFLEET III
                          Notes to Financial Statements

4.       Income Taxes (continued)

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

         Income tax expense at statutory federal income tax rate                    $      34,630    $     (17,880)
         State taxes net of federal benefit                                                 1,930           (2,730)
         State franchise taxes                                                                  -             1,080
         Tax rate differences                                                             (5,840)                 -
         Change in valuation allowance                                                          -            20,610
                                                                                    -------------    --------------
         Total provision for income taxes                                           $      30,720    $        1,080
                                                                                    =============    ==============

         Temporary   differences  and   carryforwards   which  gave  rise  to  a
significant  portion of deferred tax assets and liabilities as of March 31, 2000
are as follows:

         Deferred tax assets:
              Net operating loss                                                    $     305,420
              Maintenance deposits                                                        238,960
              Prepaid rent                                                                 34,930
              State franchise taxes                                                           270
              Amortization of organization costs                                               70
                                                                                    -------------
                  Subtotal                                                                579,650
                  Valuation allowance                                                           -
                                                                                    -------------
                  Net deferred tax assets                                                 579,650
         Deferred tax liability -
              Depreciation of aircraft                                                  (414,230)
                                                                                    -------------
                                                                                    $     165,420
</TABLE>

         The Company  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 2000
and 1999, the Company accrued a total of $48,870 and $48,870,  respectively,  in
management fees due JMC.

         JMC may receive an acquisition  fee for locating assets for the Company
and a  remarketing  fee in  connection  with the sale of the  Company's  assets,
provided  that  such fees are not more than the  customary  and usual  fees that
would be paid to an unaffiliated party for such a transaction.  The total of the
Aggregate  Purchase Price plus the acquisition fee cannot exceed the fair market
value of the asset based on  appraisal.  JMC may also receive  reimbursement  of
Chargeable  Acquisition Expenses incurred in connection with a transaction which
are payable to third  parties.  Because the  Company did not  purchase  aircraft
during the first quarters of 2000 or 1999, it did not pay any  acquisition  fees
or Chargeable Acquisitions Expenses to JMC.

         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 quarters of 2000 or 1999.


<PAGE>




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

Forward-Looking Statements

Certain statements  contained in this report and, in particular,  the discussion
regarding the Company's beliefs, plans, objectives,  expectations and intentions
regarding:  generation of future  taxable  income to realize the benefits of the
remaining  deferred  tax  assets  on  the  balance  sheet  are  forward  looking
statements.  While the Company  believes that such statements are accurate,  the
Company's business is dependent upon general economic  conditions,  particularly
those that  affect the demand for  turboprop  aircraft  and  engines,  including
competition for turboprop and other aircraft,  a favorable  outcome with respect
to the aircraft  leased to the defaulting  British  regional air carrier and the
Company's  claim with respect  thereto,  and future trends and results cannot be
predicted with certainty.  The Company's actual results could differ  materially
from those  discussed in such  forward  looking  statements.  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.

Capital Resources and Liquidity

At March 31, 2000,  the Company had cash balances of $1,069,000  and deposits of
$912,640. The Company's cash balances were held for the interest payment made to
the Unitholders in May 2000, for normally  recurring expenses and for investment
in additional Income Producing Assets.

Since  Inception,  the  Company's  funds  have  come in the  form of an  initial
contribution  from JMC,  proceeds from the Offering and rental  revenue from the
Income Producing Assets purchased using those proceeds.  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 while 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 July 2000 and July 2004.  Leases  expiring during 2000 include those for
S/N AC-621 and S/N 13.  Management  is currently  negotiating  extensions of the
leases for both of these aircraft.

As  discussed  in Item 1, the  interest  rate on the  Bonds was  12.94%  through
October  31,  1998 and is 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 on October
31, 1998 and October 31, 1999,  the Bonds bear interest at the rate of 8.24% per
annum for the periods  November 1, 1998 through October 31, 1999 and November 1,
1999 through October 31, 2000.

The decrease in cash flow from operations from year to year was due primarily to
the Company  having  lower net income  during  2000 versus 1999 (see  Results of
Operations,  below), and an increase in cash classified as deposits and accounts
receivable.  This  effect  was  partially  offset  by  the  collection  of  rent
receivable from lessees and an increase in deferred taxes.

The  decrease  in cash flow  provided  by  investing  activities  was due to the
Company's  sale of an aircraft  during  March 1999 versus no such sales in 2000.
There were no cash flows from financing activities during the first three months
of 2000 or 1999 because the Offering terminated during June 1997.



<PAGE>



Results of Operations

The  Company  recorded  net income of $70,850 or $0.09 and  $93,570 or $0.11 per
share for the three months ended March 31, 2000 and 1999, respectively.

Rental income increased by  approximately  $31,000 during the first three months
of 2000  versus  the same  period  in 1999 as a result of the  purchases  of the
undivided  interests in aircraft in July and August 1999. This increase was only
partially offset by the sale of an aircraft during March 1999.  During 1999, the
Company recognized a gain in connection with the sale of S/N 3611.

Depreciation increased by approximately $16,000 during the first three months of
2000 versus 1999 as a result of the purchases  discussed above.  This effect was
only partially offset by the decrease in depreciation expense as a result of the
aircraft sold during March 1999.

Factors that May Affect Future Results

Concentration  of Leases.  The Company owns 100% of one aircraft (S/N 3656), and
50% of a second aircraft (S/N 3676) leased to a British regional carrier,  which
in the aggregate represent 16% of the Company's monthly revenue.  The lessee has
recently  filed for  reorganization  under U.K. law. The lessee is continuing to
operate,  and, under the reorganization  plan, the lessee has agreed to continue
leasing S/N 3676,  on a  month-to-month  basis at the same rent.  The lessee has
also agreed to begin paying monthly  maintenance  reserves for S/N 3676 based on
the hours flown. The lessee has suspended  payments on the second aircraft,  S/N
3656, and will return the aircraft to the Company.  The Company is negotiating a
lease with another regional airline,  headquartered in Ireland, for the lease of
S/N 3656.  It is likely that the Company  will incur costs  associated  with the
re-lease of this  aircraft;  however,  the Company  has not yet  determined  the
amount  of  such  costs.  The  Company  is in the  process  of  identifying  any
pre-reorganization claims, such as unfunded maintenance reserves or unpaid lease
rentals,  which will be submitted to the  administrators of the lessee, and will
be considered an unsecured  claim against the lessee.  It is unlikely,  however,
that the Company will recover the full amount of such claims from the lessee.

Ability  to Repay  Bonds.  The  Company's  ability  to repay  the Bonds at their
maturity  date is  dependent in part upon  reinvestment  of excess cash flows in
additional Income Producing Assets. To the extent that the Company realizes less
than anticipated lease rentals due to lessee rental defaults,  early termination
of leases,  or lower than expected  remarketing  proceeds during the term of the
Bonds or realizes significant unexpected expenses due to lessee defaults in rent
or other  obligations,  this may result in lower than expected  excess cash flow
available for  reinvestment  in additional  Assets.  As a result,  the Company's
ability to repay the Bonds in full at  maturity  may be  negatively  affected by
such events even if the Company is able to meet its scheduled interest payments.

The  Company's  ability  to  repay  the  Bonds at  their  maturity  date is also
dependent in part upon its ability to  refinance  the Bonds or sell its aircraft
portfolio at a price sufficient to retire the outstanding Bond principal. If due
to the risks described below in the risk factors entitled  "Ownership Risks" and
"Leasing  Risks",  the  values  of the  Company's  aircraft  portfolio  are in a
depressed state at the maturity date of the Bonds,  the Company may be unable to
repay the entire Bond indebtedness on the maturity date.

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

International  Risks. The Company's  portfolio  includes leases with foreign air
carriers.  Leases with foreign  lessees may present  somewhat  different  credit
risks than those with domestic lessees.

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

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

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

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




<PAGE>



                                   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 15, 2000.

                                                      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 15,
2000.

Signature                           Title

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