UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



(Mark
One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended September 30,
2012



OR



[  ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from ________ to ___________



Commission file number: 0-23908



WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.



|California                               |  | 33-0531301         
|---------------------------------------- |  | -------------------
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                         |  |                    
|17782 Sky Park Circle                    |  |                    
|Irvine, CA                               |  | 92614-6404         
|(Address of principal executive offices) |  | (Zip Code)         



(714) 662-5565

(Telephone number)



Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
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 [  ]



Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).



Yes [X]   No [  ]



Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act. (Check one):



Large accelerated filer [  ]   Accelerated filer [  ]   Non-accelerated
filer [X]   Smaller reporting company [  ]



Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]   No [X]
















WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



INDEX TO FORM 10-Q



For the Quarterly Period Ended September
30, 2012





|PART
    I. FINANCIAL INFORMATION |                                                                                                 
|--------------------------------- | ------------------------------------------------------------------------------------------------
|                                  |                                                                                                 
|                                  | Item 1. Financial Statements                                                                    
|                                  |                                                                                                 
|                                  | Condensed Balance SheetsAs of September 30, 2012 and
March 31, 2012                             
|                                  |                                                                                                 
|                                  | Condensed Statements of OperationsFor the Three and Six
Months Ended September 30, 2012 and 2011
|                                  |                                                                                                 
|                                  | Condensed Statement of Partners’ DeficitFor the Six Months
Ended September 30, 2012             
|                                  |                                                                                                 
|                                  | Condensed Statements of Cash FlowsFor the Six Months
Ended September 30, 2012 and 2011          
|                                  |                                                                                                 
|                                  | Notes to Condensed Financial Statements                                                         
|                                  |                                                                                                 
|                                  | Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   
|                                  |                                                                                                 
|                                  | Item 3.Quantitative and Qualitative Disclosures about
Market Risks                              
|                                  |                                                                                                 
|                                  | Item 4.Controls and Procedures                                                                  
|                                  |                                                                                                 
|PART II. OTHER INFORMATION        |                                                                                                 
|                                  |                                                                                                 
|                                  | Item 1. Legal Proceedings                                                                       
|                                  |                                                                                                 
|                                  | Item 1A.  Risk Factors                                                                          
|                                  |                                                                                                 
|                                  | Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds                            
|                                  |                                                                                                 
|                                  | Item 3.  Defaults Upon Senior Securities                                                        
|                                  |                                                                                                 
|                                  | Item 4.  Mine Safety Disclosures                                                                
|                                  |                                                                                                 
|                                  | Item 5.  Other Information                                                                      
|                                  |                                                                                                 
|                                  | Item 6. Exhibits                                                                                
|                                  |                                                                                                 
|                                  | Signatures                                                                                      



2









WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



CONDENSED BALANCE SHEETS

(Unaudited)



|                                                                                                        |  | September 30,
    2012 |            |   | March 31, 2012 |  
|------------------------------------------------------------------------------------------------------- |  | ---------------------- | ---------- | - | -------------- | -
|                                                                                                        |  |                        |            |   |                |  
|ASSETS                                                                                                  |  |                        |            |   |                |  
|                                                                                                        |  |                        |            |   |                |  
|Cash                                                                                                    |  | $                      | 45,998     |   |                | $
|Other assets                                                                                            |  |                        | 6,838      |   |                |  
|Investments in Local Limited Partnerships, net (Note 2)                                                 |  |                        | -          |   |                |  
|                                                                                                        |  |                        |            |   |                |  
|Total Assets                                                                                            |  | $                      | 52,836     |   |                | $
|                                                                                                        |  |                        |            |   |                |  
|LIABILITIES AND PARTNERS’ DEFICIT                                                                       |  |                        |            |   |                |  
|                                                                                                        |  |                        |            |   |                |  
|Liabilities:                                                                                            |  |                        |            |   |                |  
|Prepaid disposition proceeds                                                                            |  |                        | -          |   |                |  
|Accrued fees and expenses due to General Partner and
    affiliates (Note 3)                            |  | $                      | 1,599,254  |   |                | $
|                                                                                                        |  |                        |            |   |                |  
|Total Liabilities                                                                                       |  |                        | 1,599,254  |   |                |  
|                                                                                                        |  |                        |            |   |                |  
|                                                                                                        |  |                        |            |   |                |  
|Partners’ Deficit:                                                                                      |  |                        |            |   |                |  
|General Partner                                                                                         |  |                        | (185,596   | ) |                |  
|Limited Partners (30,000 Partnership Units authorized; 18,000 Partnership Units issued and outstanding) |  |                        | (1,360,822 | ) |                |  
|                                                                                                        |  |                        |            |   |                |  
|Total Partners’ Deficit                                                                                 |  |                        | (1,546,418 | ) |                |  
|                                                                                                        |  |                        |            |   |                |  
|Total Liabilities and Partners’ Deficit                                                                 |  | $                      | 52,836     |   |                | $



See accompanying notes to condensed financial
statements





F-1







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



CONDENSED STATEMENTS OF OPERATIONS



For the Three and Six Months Ended September
30, 2012 and 2011

(Unaudited)



|                                           |  | 2012         |         |   | 2011       |  
|------------------------------------------ |  | ------------ | ------- | - | ---------- | -
|                                           |  | Three Months |         |   | Six Months |  
|                                           |  |              |         |   |            |  
|Distribution income                        |  | $            | -       |   |            | $
|Reporting fees                             |  |              | -       |   |            |  
|                                           |  |              |         |   |            |  
|Total operating income                     |  |              | -       |   |            |  
|                                           |  |              |         |   |            |  
|Operating expenses:                        |  |              |         |   |            |  
|Asset management fees (Note 3)             |  |              | 14,693  |   |            |  
|Legal and accounting fees                  |  |              | 7,698   |   |            |  
|Outsourcing expenses                       |  |              | 3,125   |   |            |  
|Mailing expenses                           |  |              | 981     |   |            |  
|Other                                      |  |              | 458     |   |            |  
|                                           |  |              |         |   |            |  
|Total operating expenses                   |  |              | 26,955  |   |            |  
|                                           |  |              |         |   |            |  
|Loss from operations                       |  |              | (26,955 | ) |            |  
|                                           |  |              |         |   |            |  
|Gain on sale of Local Limited Partnerships |  |              | 41,109  |   |            |  
|                                           |  |              |         |   |            |  
|Interest income                            |  |              | 5       |   |            |  
|                                           |  |              |         |   |            |  
|Net income (loss)                          |  | $            | 14,159  |   |            | $
|                                           |  |              |         |   |            |  
|Net income (loss) allocated to:            |  |              |         |   |            |  
|General Partner                            |  | $            | 142     |   |            | $
|                                           |  |              |         |   |            |  
|Limited Partners                           |  | $            | 14,017  |   |            | $
|                                           |  |              |         |   |            |  
|Net income (loss) per Partnership Unit     |  | $            | 1       |   |            | $
|                                           |  |              |         |   |            |  
|Outstanding weighted Partnership Units     |  |              | 18,000  |   |            |  



See accompanying
notes to condensed financial statements





F-2







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



CONDENSED STATEMENT OF PARTNERS’ DEFICIT



For the Six Months Ended September 30, 2012

(Unaudited)



|                                        |  | General |          |   | Limited  |   |            |       | 
|--------------------------------------- |  | ------- | -------- | - | -------- | - | ---------- | ----- | 
|                                        |  | Partner |          |   | Partners |   |            | Total | 
|                                        |  |         |          |   |          |   |            |       | 
|Partners’ deficit at March 31, 2012     |  | $       | (186,156 | ) |          | $ | (1,416,229 | )     | 
|                                        |  |         |          |   |          |   |            |       | 
|Net income                              |  |         | 560      |   |          |   | 55,407     |       | 
|                                        |  |         |          |   |          |   |            |       | 
|Partners’ deficit at September 30, 2012 |  | $       | (185,596 | ) |          | $ | (1,360,822 | )     | 



See accompanying notes to condensed financial
statements



F-3







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



CONDENSED STATEMENTS OF CASH FLOWS



For the Six Months Ended September 30, 2012
and 2011

(Unaudited)



|                                                                                                                                                                                               |  | 2012 |          |   | 2011 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | -
|Cash flows from operating activities:                                                                                                                                                          |  |      |          |   |      |  
|Net income                                                                                                                                                                                     |  | $    | 55,967   |   |      | $
|Adjustments to reconcile net income to net cash used in operating activities:                                                                                                                  |  |      |          |   |      |  
|Decrease in other assets                                                                                                                                                                       |  |      | 11,712   |   |      |  
|Gain on sale of Local Limited Partnerships                                                                                                                                                     |  |      | (121,751 | ) |      |  
|Decrease in accrued fees and expenses due to General Partner and affiliates                                                                                                                    |  |      | (85,213  | ) |      |  
|                                                                                                                                                                                               |  |      |          |   |      |  
|Net cash used in operating activities                                                                                                                                                          |  |      | (139,285 | ) |      |  
|                                                                                                                                                                                               |  |      |          |   |      |  
|Cash flows from investing activities:                                                                                                                                                          |  |      |          |   |      |  
|Net proceeds from sale of Local Limited Partnerships                                                                                                                                           |  |      | 77,301   |   |      |  
|                                                                                                                                                                                               |  |      |          |   |      |  
|Net cash provided by investing activities                                                                                                                                                      |  |      | 77,301   |   |      |  
|                                                                                                                                                                                               |  |      |          |   |      |  
|Net decrease in cash                                                                                                                                                                           |  |      | (61,984  | ) |      |  
|                                                                                                                                                                                               |  |      |          |   |      |  
|Cash, beginning of period                                                                                                                                                                      |  |      | 107,982  |   |      |  
|                                                                                                                                                                                               |  |      |          |   |      |  
|Cash, end of period                                                                                                                                                                            |  | $    | 45,998   |   |      | $
|                                                                                                                                                                                               |  |      |          |   |      |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                                                                                                                              |  |      |          |   |      |  
|                                                                                                                                                                                               |  |      |          |   |      |  
|Taxes paid                                                                                                                                                                                     |  | $    | -        |   |      | $
|                                                                                                                                                                                               |  |      |          |   |      |  
|NON-CASH INVESTING AND FINANCING ACTIVITIES                                                                                                                                                    |  |      |          |   |      |  
|Gain on sale of Local Limited Partnerships was increased and accrued fees and expenses due to the General Partner and affiliates was decreased for sales proceeds paid directly to Associates. |  | $    | 19,450   |   |      | $



See accompanying notes to condensed financial
statements



F-4







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES



General



The accompanying
condensed unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the instructions to Form 10-Q for quarterly reports under Section
13 or 15(d) of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended September 30, 2012 are not necessarily indicative of the results that may be expected
for the fiscal year ending March 31, 2013. For further information, refer to the financial statements and footnotes thereto included
in the Partnership’s annual report on Form 10-K for the fiscal year ended March 31, 2012.



Organization



WNC California Housing Tax Credits III, L.P.
(the “Partnership”), is a California Limited Partnership formed under the laws of the State of California on October
5, 1992 and began operations on July 19, 1993. The Partnership was formed to acquire limited partnership interests in other limited
partnerships (“Local Limited Partnerships”) which own multi-family or senior housing complexes (“Housing Complexes”)
that are eligible for Federal low income housing tax credits (“Low Income Housing Tax Credits”). The local general
partners (the “Local General Partners”) of each Local Limited Partnership retain responsibility for maintaining, operating
and managing the Housing Complexes. Each Local Limited Partnership is governed by its agreement of limited partnership (the “Local
Limited Partnership Agreement”).



The general partner of the Partnership is WNC
Tax Credit Partners III, L.P. (the “General Partner”). WNC & Associates, Inc. (“Associates”) and Wilfred
N. Cooper Sr. are the general partners of the General Partner.The chairman and president
of Associates own all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through Associates
as the Partnership has no employees of its own.



The Partnership shall continue in full force
and effect until December 31, 2050 unless terminated prior to that date pursuant to the partnership agreement or law.



The financial statements include only activity
relating to the business of the Partnership, and do not give effect to any assets that the partners may have outside of their interests
in the Partnership, or to any obligations, including income taxes, of the partners.



Pursuant to a registration statement filed
with the Securities and Exchange Commission, on February 17, 1993, the Partnership commenced a public offering of 30,000 units
of limited partnership interest (“Partnership Units”) at a price of $1,000 per Partnership Unit. As of the close of the
public offering on July 22, 1994, a total of 17,990 Partnership Units representing $17,990,000 had been sold. During 1995, an additional
10 Partnership Units amounting to $10,000 was collected on subscriptions accepted and previously deemed uncollectible. The General
Partner has a 1% interest in operating profits and losses, taxable income and losses, in cash available for distribution from the
Partnership and Low Income Housing Tax Credits of the Partnership. The investors in the Partnership (“Limited Partners”)
will be allocated the remaining 99% of these items in proportion to their respective investments.



F-5







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES, continued



The proceeds from the disposition of any of
the Local Limited Partnership Housing Complexes will be used first to pay debts and other obligations per the respective Local
Limited Partnership Agreement. Any remaining proceeds will then be paid to the Partnership. The sale of a Housing Complex may be
subject to other restrictions and obligations. Accordingly, there can be no assurance that a Local Limited Partnership will be
able to sell its Housing Complex. Even if itdoes so, there can be no assurance that any significant
amounts of cash will be distributed to the Partnership.Should such distributions occur,
the Limited Partners will be entitled to receive distributions equal to their capitalcontributions and their return on
investment (as defined in the Partnership Agreement) and the General Partner would then be entitled to receive proceeds equal to
their capital contributions from the remainder. Any additional sale or refinancing proceeds will be distributed 90% to the Limited
Partners (in proportion to their respective investments) and 10% to the General Partner.



Risks and Uncertainties



An investment in the Partnership and the Partnership’s
investments in Local Limited Partnerships and their Housing Complexes are subject to risks. These risks may impact the tax benefits
of an investment in the Partnership, and the amount of proceeds available for distribution to the Limited Partners, if any, on
liquidation of the Partnership’s investments. Some of those risks include the following:



The Low Income Housing Tax Credits rules are
extremely complicated. Noncompliance with these rules results in the loss of future Low Income Housing Tax Credits and the fractional
recapture of Low Income Housing Tax Credits already taken. In most cases the annual amount of Low Income Housing Tax Credits that
an individual can use is limited to the tax liability due on the person’s last $25,000 of taxable income. The Local Limited
Partnerships may be unable to sell the Housing Complexes at a price which would result in the Partnership realizing cash distributions
or proceeds from the transaction. Accordingly, the Partnership may be unable to distribute any cash to its Limited Partners. Low
Income Housing Tax Credits may be the only benefit from an investment in the Partnership.



The Partnership has invested in a limited number
of Local Limited Partnerships. Such limited diversity means that the results of operation of each single Housing Complex will have
a greater impact on the Partnership. With limited diversity, poor performance of one Housing Complex could impair the Partnership’s
ability to satisfy its investment objectives. Each Housing Complex is subject to mortgage indebtedness. If a Local Limited Partnership
failed to pay its mortgage, it could lose its Housing Complex in foreclosure. If foreclosure were to occur during the first 15
years (the “Compliance Period”), the loss of any remaining future Low Income Housing Tax Credits, a fractional recapture
of prior Low Income Housing Tax Credits, and a loss of the Partnership’s investment in the Housing Complex would occur. The
Partnership is a limited partner or a non-managing member of each Local Limited Partnership. Accordingly, the Partnership will
have very limited rights with respect to management of the Local Limited Partnerships. The Partnership will rely totally on the
Local General Partners. Neither the Partnership’s investments in Local Limited Partnerships, nor the Local Limited Partnerships’
investments in Housing Complexes, are readily marketable. To the extent the Housing Complexes receive government financing or operating
subsidies, they may be subject to one or more of the following risks: difficulties in obtaining tenants for the Housing Complexes;
difficulties in obtaining rent increases; limitations on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of interests in Local Limited Partnerships; limitations on removal of Local General Partners; limitations
on subsidy programs; and possible changes in applicable regulations. Uninsured casualties could result in loss of property and
Low Income Housing Tax Credits and recapture of Low Income Housing Tax Credits previously taken. The value of real estate is subject
to risks from fluctuating economic conditions, including employment rates, inflation, tax, environmental, land use and zoning policies,
supply and demand of similar Housing Complexes, and neighborhood conditions, among others.



F-6







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued



The ability of Limited Partners to claim tax
losses from the Partnership is limited. The IRS may audit the Partnership or a Local Limited Partnership and challenge the tax
treatment of tax items. The amount of Low Income Housing Tax Credits and tax losses allocable to Limited Partners could be reduced
if the IRS were successful in such a challenge. The alternative minimum tax could reduce tax benefits from an investment in the
Partnership. Changes in tax laws could also impact the tax benefits from an investment in the Partnership and/or the value of the
Housing Complexes.



All of the Low Income Housing Tax Credits anticipated
to be realized from the Local Limited Partnerships have been realized. The Partnership does not anticipate being allocated any
Low Income Housing Tax Credits from the Local Limited Partnerships in the future.



No trading market for the Partnership Units
exists or is expected to develop. Limited Partners may be unable to sell their Partnership Units except at a discount and should
consider their Partnership Units to be a long-term investment. Individual Limited Partners will have no recourse if they disagree
with actions authorized by a vote of the majority of Limited Partners.



The Partnership currently has insufficient
working capital to fund its operations. Associates has agreed to continue providing advances sufficient enough to fund the operations
and working capital requirements of the Partnership through November 30, 2013.



Anticipated future and existing cash resources
of the Partnership are not sufficient to pay existing liabilities of the Partnership. However, substantially all of the existing
liabilities of the Partnership are payable to the General Partner and/or its affiliates. Though the amounts payable to the General
Partner and/or its affiliates are contractually currently payable, the Partnership anticipates that the General Partner and/or
its affiliates will not require the payment of these contractual obligations until capital reserves are in excess of the aggregate
of then existing contractual obligations and then anticipated future foreseeable obligations of the Partnership. The Partnership
would be adversely affected should the General Partner and/or its affiliates demand current payment of the existing contractual
obligations and or suspend services for this or any other reason.



Exit Strategy



The Compliance Period for a Housing Complex
is generally 15 years following construction or rehabilitation completion. Associates was one of the first in the industry to offer
syndicated investments in Low Income Housing Tax Credits. The initial programs have completed their Compliance Periods.



Upon the sale of a Local Limited Partnership
Interest or Housing Complex after the end of the Compliance Period, there would be no recapture of Low Income Housing Tax Credits.
A sale prior to the end of the Compliance Period could result in recapture if certain conditions are not met.



With that in mind, the General Partner is continuing
its review of the Housing Complexes. The review considers many factors, including extended use requirements (such as those due
to mortgage restrictions or state compliance agreements), the condition of the Housing Complexes, and the tax consequences to the
Limited Partners from the sale of the Housing Complexes.



F-7







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued



Upon identifying those Housing Complexes with
the highest potential for a successful sale, refinancing or syndication, the Partnership expects to proceed with efforts to liquidate
them. The objective is to maximize the Limited Partners’ return wherever possible and, ultimately, to wind down the Partnership.
Local Limited Partnership interests may be disposed of any time by the General Partner in its discretion. While liquidation of
the Housing Complexes continues to be evaluated, the dissolution of the Partnership was not imminent as of September 30, 2012.



Upon management of the Partnership identifying
a Local Limited Partnership for disposition, costs incurred by the Partnership in preparation for the disposition are deferred.
Upon the sale of the Local Limited Partnership interest, the Partnership nets the costs that had been deferred against the proceeds
from the sale in determining the gain or loss on sale of the Local Limited Partnership. Deferred disposition costs are included
in other assets on the condensed balance sheets.



As of March 31, 2012, the Partnership sold
its Local Limited Partnership Interest in Rosewood Apartments L.P., Venus Retirement Village, Ltd, Winters Investment Group, Parlier
Garden Apartments, L.P., Tahoe Pines Apartments, L.P., Candleridge Apartments of Perry L.P II, Nueva Sierra Vista Associates, L.P.,
Walnut – Pixley, L.P., Orosi Apartments, Ltd., and Memory Lane, L. P.



The following table reflects the 5 Local Limited
Partnership interests that were sold during the six months ended September 30, 2012. No distributions will be made to the Limited
Partners as a result of these dispositions. Each of the Local Limited Partnerships had completed its Compliance Period so there
is no risk of recapture to the investors in the Partnership.



|Local Limited Partnership           |  | Debt at
12/31/2011 |           |  | Appraisal
Value |   |           | Date of
Sale |  |  | Sales Price |  |  | Sales
Related
Expenses |        |  | Gain (loss)
on Sale |  
|----------------------------------- |  | ------------------ | --------- |  | --------------- | - | --------- | ------------ |  |  | ----------- |  |  | ---------------------- | ------ |  | ------------------- | -
|                                    |  |                    |           |  |                 |   |           |              |  |  |             |  |  |                        |        |  |                     |  
|Sun Manor, L.P.                     |  | $                  | 1,000,000 |  |                 | $ | 490,000   |              |  |  | 4/30/2012   |  |  | $                      | 30,000 |  |                     | $
|Almond Garden Apartments Associates |  |                    | 1,300,000 |  |                 |   | 740,000   |              |  |  | 5/1/2012    |  |  |                        | 35,000 |  |                     |  
|Buccaneer Villas, Limited           |  |                    | 1,379,000 |  |                 |   | 1,300,000 |              |  |  | 6/1/2012    |  |  |                        | 22,450 |  |                     |  
|Dallas County Housing, Ltd.         |  |                    | 580,000   |  |                 |   | 370,000   |              |  |  | 8/31/2012   |  |  |                        | 21,953 |  |                     |  
|Old Fort Limited Partnership        |  |                    | 1,201,000 |  |                 |   | 690,000   |              |  |  | 8/31/2012   |  |  |                        | 25,000 |  |                     |  



The
sales proceeds from the sale of Buccaneer Villas, Limited were paid directly to the General Partner or affiliates. As shown in
the table below, $19,450 was used to reimburse the General Partner or affiliates for accrued asset management fees. The remaining
$3,000 was returned to the Partnership’s reserves during the six months ended September 30, 2012.



F-8







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued



The following table
represents the anticipated use of the cash proceeds from the dispositions of the five Local Limited Partnerships during the
six  months ended September 30, 2012:



|Local Limited Partnership           |  | Cash Proceeds |        |  |  | Reimburse GP
or affiliates for
expenses |   |  | Payment of
accrued asset
management fees |   |        | Remaining cash
to remain in
reserves for
future expense | 
|----------------------------------- |  | ------------- | ------ |  |  | --------------------------------------- | - |  | ---------------------------------------- | - | ------ | ------------------------------------------------------- | 
|                                    |  |               |        |  |  |                                         |   |  |                                          |   |        |                                                         | 
|Sun Manor, L.P.                     |  | $             | 30,000 |  |  | $                                       | - |  |                                          | $ | 20,000 |                                                         | 
|Almond Garden Apartments Associates |  |               | 35,000 |  |  |                                         | - |  |                                          |   | 25,000 |                                                         | 
|Buccaneer Villas, Limited           |  |               | 22,450 |  |  |                                         | - |  |                                          |   | 19,450 |                                                         | 
|Dallas County Housing, Ltd.         |  |               | 21,953 |  |  |                                         | - |  |                                          |   | 20,953 |                                                         | 
|Old Fort Limited Partnership        |  |               | 25,000 |  |  |                                         | - |  |                                          |   | 22,000 |                                                         | 



As of September 30, 2012 the Local Limited
Partnership Interest in Almond View Apartments, Limited was identified to be sold to an affiliate of the Local General Partner.
The buyer offered $22,500 to purchase the Local Limited Partnership Interest. The funds will be placed into the Partnership’s
reserves and will be used to reimburse the General Partner or an affiliate operating expenses paid on the Partnership’s behalf.
Almond View was appraised for $1,300 and had a mortgage note balance of $2,912,000 as of December 31, 2011. The Partnership has
incurred $1,000 in appraisal expenses which will be netted against the proceeds from the sale in calculating the gain on the sale.
The Partnership’s investment balance is zero; therefore a gain of $21,500 will be recorded during the respective period.
No cash distribution will be made to the Limited Partners as a result of this sale. The Compliance Period has been completed therefore
there is no risk of recapture and investor approval is not required. The sale of the Local Limited Partnership is expected to close
on November 30, 2012.



Method
of Accounting for Investments in Local Limited Partnerships



The Partnership accounts for its investments
in Local Limited Partnerships using the equity method of accounting, whereby the Partnership adjusts its investment balance for
its share of the Local Limited Partnerships’ results of operations and for any contributions made and distributions received.
The Partnership reviews the carrying amount of an individual investment in a Local Limited Partnership for possible impairment
at least annually or whenever events or changes in circumstances indicate that the carrying amount of such investment may not be
recoverable. Recoverability of such investment is measured by the estimated value derived by management, generally consisting of
the sum of the remaining future Low Income Housing Tax Credits estimated to be allocable to the Partnership and the estimated residual
value to the Partnership. If an investment is considered to be impaired, the Partnership reduces the carrying value of its investment
in any such Local Limited Partnership. The accounting policies of the Local Limited Partnerships, generally, are expected to be
consistent with those of the Partnership. Costs incurred by the Partnership in acquiring the investments are capitalized as part
of the investment account and were amortized over 27.5 years (see Note 2).



F-9







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued



“Equity
in losses of Local Limited Partnerships” for the periods ended September 30, 2012 and 2011 has been recorded by the Partnership.Management’s estimate for the three and six-month periods is based on either actual unaudited results reported by
the Local Limited Partnerships or historical trends in the operations of the Local Limited Partnerships.Equity in losses of Local Limited Partnerships allocated to the Partnership are not recognized to the extent that the investment
balance would be adjusted below zero.If the Local Limited Partnerships report net income in future years, the Partnership
will resume applying the equity method only after its share of such net income equals the share of net losses not recognized during
the period(s) the equity method was suspended (see Note 2).



In accordance with the accounting guidance
for the consolidation of variable interest entities, the Partnership determines when it should include the assets, liabilities,
and activities of a variable interest entity (VIE) in its financial statements, and when it should disclose information about its
relationship with a VIE. The analysis that must be performed to determine which entity should consolidate a VIE focuses on control
and economic factors. A VIE is a legal structure used to conduct activities or hold assets, which must be consolidated by a company
if it is the primary beneficiary because it has (1) the power to direct the activities of the VIE that most significantly impact
the VIE’s economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant
to the VIE. If multiple unrelated parties share such power, as defined, no party will be required to consolidate the VIE. Further,
the guidance requires continual reconsideration of the primary beneficiary of a VIE.



Based on this guidance, the Local Limited Partnerships
in which the Partnership invests meet the definition of a VIE because the owners of the equity at risk in these entities do not
have the power to direct their operations. However, management does not consolidate the Partnership’s interests in these VIEs,
as it is not considered to be the primary beneficiary since it does not have the power to direct the activities that are considered
most significant to the economic performance of these entities. The Partnership currently records the amount of its investment
in these Local Limited Partnerships as an asset on its balance sheets, recognizes its share of partnership income or losses in
the statements of operations, and discloses how it accounts for material types of these investments in its financial statements.
The Partnership’s balance in investment in Local Limited Partnerships, plus the risk of recapture of tax credits previously recognized
on these investments, represents its maximum exposure to loss. The Partnership’s exposure to loss on these Local Limited Partnerships
is mitigated by the condition and financial performance of the underlying Housing Complexes as well as the strength of the Local
General Partners and their guarantee against credit recapture to the investors in the Partnership.



Distributions received by the Partnership are
accounted for as a reduction of the investment balance. Distributions received after the investment has reached zero are recognized
as income. As of September 30, 2012, all of the investment balances had reached zero.



Use of Estimates



The preparation of financial statements
in conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual
results could materially differ from those estimates.



F-10







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES, continued



Cash
and Cash Equivalents



The Partnership
considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.
As of September 30, 2012 and March 31, 2012, the Partnership had no cash equivalents.



Reporting
Comprehensive Income



The Partnership
had no items of other comprehensive income for all periods presented.



Income Taxes



The Partnership has elected to be treated as
a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income,
deductions and tax credits are passed through to and are reported by its owners on their respective income tax returns.  The
Partnership’s federal tax status as a pass-through entity is based on its legal status as a partnership. Accordingly, the
Partnership is not required to take any tax positions in order to qualify as a pass-through entity. The Partnership is required
to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial
statements do not reflect a provision for income taxes and the Partnership has no other tax positions which must be considered
for disclosure.



Net
Loss Per Partnership Unit



Net loss per Partnership Unit includes no dilution
and is computed by dividing loss allocated to Limited Partners by the weighted average number of Partnership Units outstanding
during the period. Calculation of diluted net loss per Partnership Unit is not required.



Revenue Recognition



The Partnership is entitled to receive reporting
fees from the Local Limited Partnerships. The intent of the reporting fees is to offset (in part) administrative costs incurred
by the Partnership in corresponding with the Local Limited Partnerships. Due to the uncertainty of the collection of these fees,
the Partnership recognizes reporting fees as collections are made.



F-11







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 2 - INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS



As of September 30, 2012 and
March 31, 2012, the Partnership owns Local Limited Partnership interests in 3 and 8 Local Limited Partnerships, respectively. As
of September 30, 2012 and March 31, 2012, theseLocal Limited Partnership’s own one Housing Complex consisting
of an aggregate of 166 and 343 apartment units, respectively. The Local General Partners of the Local Limited Partnerships
manage the day to day operations of the entities. Significant Local Limited Partnership business decisions require approval
from the Partnership. The Partnership, as a Limited Partner, is generally entitled to 99%, as specified in the Local Limited
Partnership governing agreements, of the operating profits and losses, taxable income and losses, and Low Income Housing Tax
Credits of the Local Limited Partnerships.



Selected financial information for the six months ended September
30, 2012 and 2011 from the unaudited combined condensed financial statements of the Local Limited Partnerships in which the partnership
has invested is as follows:



COMBINED CONDENSED STATEMENTS OF OPERATIONS



|                                      |  | 2012 |          |   | 2011 |  
|------------------------------------- |  | ---- | -------- | - | ---- | -
|                                      |  |      |          |   |      |  
|Revenue                               |  | $    | 625,000  |   |      | $
|Expenses:                             |  |      |          |   |      |  
|Operating expenses                    |  |      | 469,000  |   |      |  
|Interest expense                      |  |      | 135,000  |   |      |  
|Depreciation and amortization         |  |      | 204,000  |   |      |  
|                                      |  |      |          |   |      |  
|Total expenses                        |  |      | 808,000  |   |      |  
|                                      |  |      |          |   |      |  
|Net loss                              |  | $    | (183,000 | ) |      |  
|                                      |  |      |          |   |      |  
|Net loss allocable to the Partnership |  | $    | (181,000 | ) |      | $
|                                      |  |      |          |   |      |  
|Net loss recorded by the Partnership  |  | $    | -        |   |      | $



Certain
Local Limited Partnerships have incurred significant operating losses and/or have working capital deficiencies. In the event these
Local Limited Partnerships continue to incur significant operating losses, additional capital contributions by the Partnership
may be required to sustain operations of such Local Limited Partnerships.



F-12







WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.

(A California Limited Partnership)



NOTES TO CONDENSED FINANCIAL STATEMENTS -
CONTINUED



For the Quarterly Period Ended September
30, 2012

(Unaudited)



NOTE 3 - RELATED PARTY TRANSACTIONS



Under the terms of the Partnership Agreement,
the Partnership has paid or is obligated to the General Partner or its affiliates for the following items:



| | (a) | An annual asset management fee equal to 0.5% of the invested
assets of thePartnership, as defined. “Invested Assets” means the sum
of the Partnership’s investment in Local Limited Partnerships and the Partnership’s allocable share of mortgage loans
on and other debts related to the Housing Complexes owned by such Local Limited Partnerships.Fees of $32,588 and $49,814
were incurred during the six months ended September 30, 2012 and 2011, respectively. The Partnership paid the General Partner and
its affiliates $134,903 and $416,586 of those fees during the six months ended September 30, 2012 and 2011, respectively.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Subordinated Disposition Fee. A subordinated disposition fee is an amount equal to 1% of the sales
price of real estate sold. Payment of this fee is subordinated to the Limited Partners receiving a preferred return of 16% through
December 31, 2003 and 6% thereafter (as defined in the Partnership Agreement) and is payable only if the General Partner or its
affiliates render services in the sales effort. No such fees were earned during the periods presented.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | The Partnership reimburses the General Partner or its affiliates for operating expenses incurred
by the Partnership and paid for by the General Partner or its affiliates on behalf of the Partnership. Operating expense reimbursements
were $37,101 and $40,290 during the six months ended September 30, 2012 and 2011, respectively.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The accrued fees and expenses
due to the General Partner and affiliates consist of the following at:



|                                                                                |  | September 30, 2012 |           |  | March 31, 2012 |  
|------------------------------------------------------------------------------- |  | ------------------ | --------- |  | -------------- | -
|                                                                                |  |                    |           |  |                |  
|Expenses paid by the General Partner or affiliates on behalf of the Partnership |  | $                  | 12,074    |  |                | $
|Asset management fee payable                                                    |  |                    | 1,587,180 |  |                |  
|Total                                                                           |  | $                  | 1,599,254 |  |                | $



The General Partner and/or
its affiliates do not anticipate that these accrued fees will be paid until such time as capital reserves are in excess of future
foreseeable working capital requirements of the Partnership.



F-13







Item 2.   Management’s Discussion and Analysis of Financial Condition
and Results of Operations



Forward-Looking Statements



With the exception of the discussion regarding
historical information, this “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and other discussions elsewhere in this Form 10-Q contain forward looking statements. Such statements are based on current expectations
subject to uncertainties and other factors which may involve known and unknown risks that could cause actual results of operations
to differ materially from those projected or implied. Further, certain forward-looking statements are based upon assumptions about
future events which may not prove to be accurate.



Risks and uncertainties inherent in forward
looking statements include, but are not limited to, the Partnership’s future cash flows and ability to obtain sufficient
financing, level of operating expenses, conditions in the Low Income Housing Tax Credit property market and the economy in general,
as well as legal proceedings. Historical results are not necessarily indicative of the operating results for any future period.



Subsequent written and oral forward looking
statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by cautionary
statements in this Form 10-Q and in other reports filed with the SEC.



The following discussion and analysis compares
the results of operations for the three and six months ended September 30, 2012 and 2011, and should be read in conjunction with
the condensed unaudited financial statements and accompanying notes included within this report.



Financial Condition



The Partnership’s assets at September
30, 2012 consisted of $46,000 in cash and $7,000 in other assets. Liabilities at September 30, 2012 consisted of $1,599,000 of
accrued fees and expenses due to General Partner and affiliates.



Results of Operations



Three Months Ended
September 30, 2012 Compared to Three Months Ended September 30, 2011.The Partnership’s net income for the three
months ended September 30, 2012 was $14,000, reflecting a increase of $47,000 from the $(33,000) net loss for the three
months ended September 30, 2011. The increase in net income was primarily due to an increase of $41,000 in gain on sale of
Local Limited Partnerships for the three months ended September 30, 2012. Two Local Limited Partnerships were sold during the
three months ended September 30, 2012 compared to no Local Limed Partnerships sold during the three months ended September
30, 2011. The Partnership is in the disposition phase but the number of dispositions and gains recorded will vary from period
to period depending on the economic conditions and the market for the properties in the specific locations. The reporting
fees also decreased by $(2,000) for the three months ended September 30, 2012. Local Limited Partnerships pay reporting fees
to the Partnership when the Local Limited Partnerships’ cash flow will allow for the payment. The mailing expenses
decreased by $2,000 for the three months ended September 30, 2012 due to the decrease in proxy mailings related to the
dispositions. There was a $(4,000) increase in legal and accounting fees for the three months ended September 30, 2012 due to
the timing of the accounting work performed. Additionally, there was an $7,000 decrease in asset management fees. These fees
are calculated based on the invested assets, which decreased due to the dispositions of Local Limited Partnerships in the
prior year.



3







Item 2.   Management’s Discussion and Analysis
of Financial Condition and Results of Operations, continued



Six Months Ended September
30, 2012 Compared to Six Months Ended September 30, 2011.The Partnership’s net income for the six months ended
September 30, 2012 was $56,000, reflecting a decrease of $(229,000) from the $285,000 net income for the six months ended
September 30, 2011. The decrease in net income was partially due to a$(233,000) decrease in gain on sale of Local Limited
Partnerships for the six months ended September 30, 2012. The Partnership is in the disposition phase but the number of
dispositions and gains recorded will vary from period to period depending on the economic conditions and the market for the
properties in the specific locations. There was also a $17,000 decrease in asset management fees for the six months ended
September 30, 2012. These fees are calculated based on the invested assets, which decreased due to the dispositions of Local
Limited Partnerships in the prior year. There was a $2,000 decrease in legal and accounting fees for the six months ended
September 30, 2012 due to the timing of the accounting work performed. The distribution income and reporting fees decreased
by $(15,000) and $(2,000), respectively, for the six months ended September 30, 2012. Local Limited Partnerships pay
distribution income and reporting fees to the Partnership when the Local Limited Partnerships’ cash flow will allow for
the payment. The mailing expenses decreased by $2,000 for the six months ended September 30, 2012 due to the decrease in
proxy mailings related to the dispositions.



Liquidity and Capital Resources



Six Months Ended
September 30, 2012 Compared to Six Months Ended September 30, 2011.The net cash used during
the six months ended September 30, 2012 was$(62,000) compared to net cash used during
the six months ended September 30, 2011 of$(78,000). For the six months ended September
30, 2012, there was a decrease of $301,000 in cash paid for accrued asset management fees in addition to a decrease of$(3,000)in
cash paid to the General Partner or an affiliate for reimbursements of operating expenses which were paid on behalf of the Partnership.
During the six months ended September 30, 2012, the Partnership received $77,000 in net cash proceeds from the disposition of two
of its Local Limited Partnerships compared to $355,000 of net sales proceeds received during the six months ended September 30,
2011.



During the six months
ended September 30, 2012 accrued payables, which consist primarily of asset management fees to the General Partner or affiliates,
decreased by $105,000. The General Partner does not anticipate that these accrued fees will be paid in full until such time as
capital reserves are in excess of future foreseeable working capital requirements of the Partnership.



The Partnership expects its future cash flows,
together with its net available assets at September 30, 2012, to be insufficient to meet all currently foreseeable future cash
requirements. Associates has agreed to continue providing advances sufficient enough to fund the operations and working capital
requirements of the Partnership through November 30, 2013.



Recent Accounting Changes



In June 2009, the Financial Accounting Standards
Board (“FASB”) issued an amendment to the accounting and disclosure requirements for the consolidation of VIEs. The
amended guidance modified the consolidation model to one based on control and economics, and replaced quantitative primary beneficiary
analysis with a qualitative analysis. The primary beneficiary of a VIE will be the entity that has (1) the power to direct the
activities of the VIE that most significantly impact the VIEs economic performance and (2) the obligation to absorb losses or receive
benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party
will be required to consolidate the VIE. Further, the amended guidance requires continual reconsideration of the primary beneficiary
of a VIE and adds an additional reconsideration event for determination of whether an entity is a VIE. Additionally, the amendment
requires enhanced and expanded disclosures around VIEs. This amendment was effective for fiscal years beginning after November
15, 2009. The adoption of this guidance on April 1, 2010 did not have a material effect on the Partnership’s financial statements.



4







Item 2.   Management’s Discussion and Analysis of Financial Condition
and Results of Operations, continued



In May 2011, the FASB issued
an update to existing guidance related to fair value measurements on how to measure fair value and what disclosures to
provide about fair value measurements. For fair value measurements categorized as level 3, a reporting entity should disclose
quantitative information of the unobservable inputs and assumptions, a description of the valuation processes and narrative
description of the sensitivity of the fair value to changes in unobservable inputs. This update is effective for interim and
annual periods beginning after December 15, 2011. The adoption of this update did not materially affect the
Partnership’s condensed financial statements.



Item 3.   Quantitative and Qualitative Disclosures
About Market Risks



NOT APPLICABLE



Item 4.   Controls and Procedures



|(a) |  | Disclosure controls and procedures
|--- |  | ----------------------------------



As
of the end of the period covered by this report, the Partnership’s General Partner, under the supervision and with the participation
of the Chief Executive Officer and Chief Financial Officer of Associates, carried out an evaluation of the effectiveness of the
Partnership’s “disclosure controls and procedures” as defined in Securities Exchange Act of 1934 Rule 13a-15
and 15d-15. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end
of the period covered by this report, the Partnership’s disclosure controls and procedures were not effective to ensure
that material information required to be disclosed in the Partnership’s periodic report filings with SEC is recorded, processed,
summarized and reported within the time period specified by the SEC’s rules and forms, consistent with the definition of
“disclosure controls and procedures” under the Securities Exchange Act of 1934.



The
Partnership must rely on the Local Limited Partnerships to provide the Partnership with certain information necessary to the timely
filing of the Partnership’s periodic reports. Factors in the accounting at the Local Limited Partnerships have caused delays
in the provision of such information during past reporting periods, and resulted in the Partnership’s inability to file
its periodic reports in a timely manner.



Once
the Partnership has received the necessary information from the Local Limited Partnerships, the Chief Executive Officer and the
Chief Financial Officer of Associates believe that the material information required to be disclosed in the Partnership’s
periodic report filings with SEC is effectively recorded, processed, summarized and reported, albeit not in a timely manner. Going
forward, the Partnership will use the means reasonably within its power to impose procedures designed to obtain from the Local
Limited Partnerships the information necessary to the timely filing of the Partnership’s periodic reports.



|(b) |  | Changes in internal controls
|--- |  | ----------------------------



There
were no changes in the Partnership’s internal control over financial reporting that occurred during the quarter ended September
30, 2012 that materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over
financial reporting.



5







|Part
    II. | Other
    Information                                                                      
|------------ | -------------------------------------------------------------------------------------------
|             |                                                                                            
|Item
    1.  | Legal
    Proceedings                                                                      
|             |                                                                                            
|             | NONE                                                                                       
|             |                                                                                            
|Item
    1A. | Risk
    Factors                                                                           
|             |                                                                                            
|             | No material changes in risk factors as previously disclosed in the Partnership’s Form 10-K.
|             |                                                                                            
|Item
    2.  | Unregistered
    Sales of Equity Securities and Use of Proceeds                            
|             |                                                                                            
|             | NONE                                                                                       
|             |                                                                                            
|Item
    3.  | Defaults
    Upon Senior Securities                                                        
|             |                                                                                            
|             | NONE                                                                                       
|             |                                                                                            
|Item
    4.  | Mine
    Safety Disclosures                                                                
|             |                                                                                            
|Item
    5.  | Other
    Information                                                                      
|             |                                                                                            
|             | NONE                                                                                       
|             |                                                                                            
|Item
    6.  | Exhibits                                                                                   



|31.1 |  | Certification of the Principal Executive Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.  (filed herewith)                                                                                                                                                                                                                                                                    
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|31.2 |  | Certification of the Principal Financial Officer pursuant to Rule 13a-14 and 15d-14, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.  (filed herewith)                                                                                                                                                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|32.1 |  | Section 1350 Certification of the Chief Executive Officer.  (filed herewith)                                                                                                                                                                                                                                                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|32.2 |  | Section 1350 Certification of the Chief Financial Officer.  (filed herewith)                                                                                                                                                                                                                                                                                                                                                                    
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|101  |  | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Balance Sheets at September 30, 2012 and March 31, 2012, (ii) the Condensed Statements of Operations for the three and six-month periods ended September 30, 2012 and September 30, 2011, (iii) the Condensed Statements of Cash Flows for the six months ended September 30, 2012 and September 30, 2011 and (iv) the Notes to Condensed Financial Statements.
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|     |  | Exhibits 32.1, 32.2 and 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934.                                                                                                              





6







Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



WNC CALIFORNIA HOUSING TAX CREDITS III, L.P.



By: WNC Tax Credit Partners III, L.P. General
Partner



|By:                                                             | /s/ Wilfred N. Cooper Jr. | 
|--------------------------------------------------------------- | ------------------------- | 
|                                                                |                          
|Wilfred N. Cooper, Jr.                                          |                          
|President and Chief Executive Officer of WNC & Associates, Inc.
|                                                                |                          
|Date: November 13, 2012                                         |                          



|By:                                                                | /s/ Melanie R. Wenk | 
|------------------------------------------------------------------ | ------------------- | 
|                                                                   |                    
|Melanie R. Wenk                                                    |                    
|Vice President – Chief Financial Officer of WNC & Associates, Inc.
|                                                                   |                    
|Date: November 13, 2012                                            |                    



7