UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   -----------

                                   FORM 10-QSB

_X_     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
        ACT OF 1934

                  For the quarterly period ended March 31, 1998

                                       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 0-16615
                                                -------

                   PHOENIX LEASING CASH DISTRIBUTION FUND III,
                        A CALIFORNIA LIMITED PARTNERSHIP
--------------------------------------------------------------------------------
                                   Registrant

           California                                     68-0062480
-------------------------------               ----------------------------------
     State of Jurisdiction                    I.R.S. Employer Identification No.


2401 Kerner Boulevard, San Rafael, California                   94901-5527
--------------------------------------------------------------------------------
      Address of Principal Executive Offices                     Zip Code

       Registrant's telephone number, including area code: (415) 485-4500
                                                           --------------

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
preceding requirements for the past 90 days.

                       Yes   X                     No
                           -----                      -----

516,716 Units of Limited  Partnership  Interest were outstanding as of March 31,
1998.

Transitional small business disclosure format:

                       Yes                         No   X
                           -----                      -----

                                  Page 1 of 11


<PAGE>



                          Part I. Financial Information
                          Item 1. Financial Statements
                   PHOENIX LEASING CASH DISTRIBUTION FUND III,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                 (Amounts in Thousands Except for Unit Amounts)
                                   (Unaudited)
                                                      March 31,    December 31,
                                                        1998           1997
                                                        ----           ----
ASSETS

Cash and cash equivalents                             $ 1,995        $ 3,072

Accounts receivable (net of allowance for
    losses on accounts receivable of $76 and
    $73 at March 31, 1998 and December 31,
    1997, respectively)                                   136            192

Notes receivable (net of allowance for losses
   on notes receivable of $604 at March 31,
   1998 and December 31, 1997)                             44             45

Equipment on operating leases and held for
    lease (net of accumulated depreciation of
    $4,180 and $10,017 at March 31, 1998 and
    December 31, 1997, respectively)                     --             --

Cable systems, property and equipment (net of
    accumulated  depreciation of $593 and $521
    at March 31, 1998 and December 31, 1997,
    respectively)                                       3,031          3,086

Cable subscriber lists (net of accumulated
    amortization of $428 and $380 at March 31,
    1998 and December 31, 1997, respectively)           1,088          1,135

Investment in joint ventures                              314            310

Other assets                                               39             48
                                                      -------        -------

     Total Assets                                     $ 6,647        $ 7,888
                                                      =======        =======

LIABILITIES AND PARTNERS' CAPITAL

Liabilities

   Accounts payable and accrued expenses              $   620        $   608
                                                      -------        -------

     Total Liabilities                                    620            608
                                                      -------        -------

Partners' Capital

   General Partner                                        (18)           (18)

   Limited Partners, 600,000 units authorized,
     528,151 units issued and 516,662 units
     outstanding at March 31, 1998 and December
     31, 1997                                           6,045          7,298
                                                      -------        -------

     Total Partners' Capital                            6,027          7,280
                                                      -------        -------

     Total Liabilities and Partners' Capital          $ 6,647        $ 7,888
                                                      =======        =======

        The accompanying notes are an integral part of these statements.


                                        2

<PAGE>





                   PHOENIX LEASING CASH DISTRIBUTION FUND III,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (Amounts in Thousands Except for Per Unit Amounts)
                                   (Unaudited)

                                                              Three Months Ended
                                                                   March 31,
                                                               1998        1997
                                                               ----        ----
INCOME
   Cable subscriber revenue                                    $  420     $  415
   Rental income                                                   70        152
   Equity in earnings from joint ventures, net                     11         12
   Gain on sale of securities                                     --         151
   Other income                                                    31         61
                                                               ------       ----

     Total Income                                                 532        791
                                                               ------       ----

EXPENSES
   Depreciation and amortization                                  119        102
   Cable system operations                                        231        229
   Lease related operating expenses                                 9         13
   Management fees to General Partner and affiliate                22         30
   Reimbursed administrative costs to General Partner              31         45
   Legal expense                                                   41         25
   General and administrative expenses                             41         36
                                                               ------     ------

     Total Expenses                                               494        480
                                                               ------     ------

NET INCOME                                                     $   38     $  311
                                                               ======     ======


NET INCOME PER LIMITED PARTNERSHIP UNIT                        $  .07     $  .60
                                                               ======     ======

DISTRIBUTIONS PER LIMITED PARTNERSHIP UNIT                     $ 2.50     $22.50
                                                               ======     ======

ALLOCATION OF NET INCOME:
     General Partner                                            $  --     $    2
     Limited Partners                                              38        309
                                                               ------     ------

                                                               $   38     $  311
                                                               ======     ======

        The accompanying notes are an integral part of these statements.


                                        3

<PAGE>




                   PHOENIX LEASING CASH DISTRIBUTION FUND III,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in Thousands)
                                   (Unaudited)
                                                           Three Months Ended
                                                                March 31,
                                                           1998          1997
                                                           ----          ----
Operating Activities:
   Net income                                            $     38      $    311
   Adjustments to reconcile net income to net
     cash provided  by operating activities:
       Depreciation and amortization                          119           102
       Gain on sale of equipment                               (4)          (20)
       Equity in earnings from joint ventures, net            (11)          (12)
       Provision for losses on accounts receivable              4             4
       Gain on sale of securities                            --            (151)
       Decrease (increase) in accounts receivable              52            (7)
       Increase (decrease) in accounts payable and
         accrued expenses                                      12          (113)
       Decrease (increase) in other assets                      9           (11)
                                                         --------      --------

Net cash provided by operating activities                     219           103
                                                         --------      --------

Investing Activities:
   Principal payments, notes receivable                         1             4
   Proceeds from sale of equipment                              4            21
   Proceeds from sale of securities                          --             151
   Distributions from joint ventures                            7            33
   Cable systems, property and equipment                      (17)          (51)
                                                         --------      --------

Net cash provided (used) by investing activities               (5)          158
                                                         --------      --------

Financing Activities:
   Distributions to partners                               (1,291)      (11,624)
                                                         --------      --------

Net cash used by financing activities                      (1,291)      (11,624)
                                                         --------      --------

Decrease in cash and cash equivalents                      (1,077)      (11,363)

Cash and cash equivalents, beginning of period              3,072        15,591
                                                         --------      --------

Cash and cash equivalents, end of period                 $  1,995      $  4,228
                                                         ========      ========



        The accompanying notes are an integral part of these statements.


                                        4

<PAGE>




                   PHOENIX LEASING CASH DISTRIBUTION FUND III,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Note 1.       General.

         The accompanying  unaudited  condensed  financial  statements have been
prepared by the  Partnership in accordance  with generally  accepted  accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management,  all adjustments (consisting of normal
recurring  accruals)  considered  necessary  for a fair  presentation  have been
included. Although management believes that the disclosures are adequate to make
the information  presented not misleading,  it is suggested that these condensed
financial  statements be read in conjunction  with the financial  statements and
the notes included in the Partnership's  Financial Statement,  as filed with the
SEC in the latest annual report on Form 10-K.

         Phoenix  Concept  Cablevision  of  Indiana,  L.L.C.  , a  wholly  owned
subsidiary  of the  Partnership,  has entered into an Asset  Purchase  Agreement
dated March 20, 1998 to sell all or  substantially  all of its assets with a net
carrying value of $4.1 million at March 31, 1998 for  approximately  $6 million.
The sale will occur on or before June 30, 1998. Cash and cash equivalents,  bank
deposits or similar  cash items,  subscriber  deposits  and other  miscellaneous
items will be excluded from the sale.

Note 2.       Reclassification.

         Reclassification  - Certain  1997  amounts  have been  reclassified  to
conform to the 1998 presentation.

Note 3.       Income Taxes.

         Federal  and state  income tax  regulations  provide  that taxes on the
income  or loss of the  Partnership  are  reportable  by the  partners  in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.

Note 4.       Notes Receivable.

         Impaired Notes Receivable.  At March 31, 1998, the recorded  investment
in notes that are  considered  to be impaired was $648,000 for which the related
allowance for losses was $604,000.  The average recorded  investment in impaired
loans during the three  months  ended March 31, 1998 and 1997 was  approximately
$648,000 and $658,000, respectively.


                                        5

<PAGE>



         The activity in the allowance for losses on notes receivable during the
three months ended March 31, is as follows:
                                                      1998             1997
                                                      ----             ----
                                                      (Amounts in Thousands)

         Beginning balance                         $     604        $     604
              Provision for losses                       -                -
              Write downs                                -                -
                                                   ---------        ---------
         Ending balance                            $     604        $     604
                                                   =========        =========

Note 5.       Net Income (Loss) and Distributions Per Limited Partnership Unit.

         Net income and distributions per limited partnership unit were based on
the limited  partners' share of net income and  distributions,  and the weighted
average number of units  outstanding of 516,662 and 516,716 for the three months
ended March 31, 1998 and 1997,  respectively.  For  purposes of  allocating  net
income  (loss)  and  distributions  to  each  individual  limited  partner,  the
Partnership  allocates  net  income  (loss)  and  distributions  based upon each
respective limited partner's net capital contributions.

Note 6.       Investment in Joint Ventures.

Equipment Joint Ventures

         The aggregate  combined  financial  information of the equipment  joint
ventures is presented as follows:

                                                  March 31,       December 31,
                                                    1998              1997
                                                    ----              ----
                                                  (Amounts in Thousands)

         Assets                                 $   1,096          $  1,055
         Liabilities                                  413               409
         Partners' Capital                            683               646

                                                      Three Months Ended
                                                           March 31,
                                                    1998              1997
                                                    ----              ----
                                                  (Amounts in Thousands)

         Revenue                                $     135          $    556
         Expenses                                      80               321
         Net Income                                    55               235










                                        6

<PAGE>



Foreclosed Cable Systems Joint Ventures

         The aggregate  combined  financial  information of the foreclosed cable
systems joint ventures is presented as follows:

                                                 March 31,        December 31,
                                                   1998               1997
                                                   ----               ----
                                                  (Amounts in Thousands)

         Assets                                 $   2,043          $  2,071
         Liabilities                                  507               519
         Partners' Capital                          1,536             1,552

                                                     Three Months Ended
                                                          March 31,
                                                   1998               1997
                                                   ----               ----
                                                  (Amounts in Thousands)

         Revenue                                $     253          $    245
         Expenses                                     269               277
         Net Loss                                     (16)              (32)




                                        7

<PAGE>



                   PHOENIX LEASING CASH DISTRIBUTION FUND III,
                 A CALIFORNIA LIMITED PARTNERSHIP AND SUBSIDIARY

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


Results of Operations

         Phoenix  Leasing  Cash  Distribution  Fund III,  a  California  limited
partnership and Subsidiary (the Partnership)  reported net income of $38,000 for
the three months ended March 31, 1998, as compared to net income of $311,000 for
the same period in 1997.  The $273,000  decrease in net income  during the three
months  ended  March 31,  1998,  as  compared  to the same  period  in 1997,  is
primarily  attributable  to the  absence  of a gain on sale  of  securities,  as
compared  to  $151,000  during  the same  period in 1997,  as well as an $82,000
decrease in rental income.

         The gain on sale of  securities  of $151,000 for the three months ended
March 31, 1997 was  attributable to the exercise and sale of stock warrants held
by the  Partnership.  The Partnership has been granted stock warrants as part of
its lease or financing  agreements with certain emerging growth  companies.  The
Partnership did not exercise and sell any stock warrants during the three months
ended March 31, 1998.

         Rental income  decreased  during the three months ended March 31, 1998,
compared to the same period in 1997.  This decrease is the result of a reduction
in the amount of equipment  owned by the  Partnership.  At March 31,  1998,  the
Partnership  owned equipment,  excluding the  Partnership's pro rata interest in
joint ventures,  with an aggregate original cost of $4.8 million, as compared to
$13 million at March 31, 1997.

         Because  the  Partnership  is in  it's  liquidation  stage,  it is  not
expected  that the  Partnership  will acquire any  additional  equipment for its
leasing activities or provide any further financing.  As a result, revenues from
leasing  and  financing  activities  are  expected to continue to decline as the
portfolio  is  liquidated.  The  Partnership  will  reach the end of its term on
December 31, 1998.  The  Subsidiary's  cable  operations  has become the primary
activity of the  Partnership.  Net income from cable operations were $53,000 for
the three months ended March 31, 1998.

Liquidity and Capital Resources

         The  Partnership's   primary  source  of  liquidity  comes  from  cable
subscriber revenues. As another source of liquidity, the Partnership has entered
into contractual obligations with lessees and borrowers for fixed payment terms,
has  investments in foreclosed  cable system joint  ventures and  investments in
leasing joint ventures.

         The net cash generated by operating  activities was $220,000 during the
three  months  ended March 31,  1998,  as  compared to $107,000  during the same
period in 1997. The increase in net cash generated by operating  activities is a
result of an increase in accounts payable and accrued expenses.

         As  previously  discussed,  the  Partnership  exercised  and sold stock
warrants  during  the three  months  ended  March  31,  1997.  As a result,  the
Partnership received proceeds from the sale of these securities of $151,000.

         As of March 31, 1998, the  Partnership  owned  equipment held for lease


                                        8

<PAGE>



with an  aggregate  original  cost of  $2,803,000  and a net  book  value of $0,
compared to $2,565,000 and $0,  respectively,  as of March 31, 1997. The General
Partner is actively  engaged,  on behalf of the Partnership,  in remarketing and
selling the Partnership's off-lease portfolio.

         The cash  distributed to limited partners during the three months ended
March 31,  1998 and 1997 was  $1,292,000  and  $11,624,000,  respectively.  As a
result,   the  cumulative  cash   distributions  to  the  limited  partners  are
$111,096,000 and $109,803,000 as of March 31, 1998 and 1997,  respectively.  The
General Partner did not receive cash distributions during the three months ended
March 31, 1998 and 1997. The General Partner has elected not to receive payment,
at this time,  for its share of the cash available for  distribution  due to its
negative  capital  account.  The  Partnership  will not be  making  any  further
distributions until its termination at which time a final distribution of excess
cash, if any, will be distributed.

         The first annual distribution was made on January 15, 1997. As a result
of the  sale of  certain  cable  television  systems  and the  settlement  of an
impaired note receivable  during 1996, the Partnership  included the excess cash
provided by these events in the January 15, 1997 distribution.

         As the Partnership's  asset portfolio  continues to decline as a result
of the on-going  liquidation  of assets,  it is expected that the cash generated
from  operations  will also decline.  Cash  generated from leasing and financing
operations  has been and is anticipated to continue to be sufficient to meet the
Partnership's  on-going  operational  expenses.  The  Partnership  will be fully
liquidated by its termination date of December 31, 1998.



                                        9

<PAGE>



                   PHOENIX LEASING CASH DISTRIBUTION FUND III,
                        A CALIFORNIA LIMITED PARTNERSHIP

                                 March 31, 1998

                           Part II. Other Information.


Item 1.     Legal Proceedings.  Inapplicable

Item 2.     Changes in Securities.  Inapplicable

Item 3.     Defaults Upon Senior Securities.  Inapplicable

Item 4.     Submission of Matters to a Vote of Securities Holders.  Inapplicable

Item 5.     Other Information.  Inapplicable

Item 6.     Exhibits and Reports on 8-K:

            a)  Exhibits:

                (27)       Financial Data Schedule

            b)  Reports on 8-K: None



                                       10

<PAGE>





                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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.

                                     PHOENIX LEASING CASH DISTRIBUTION FUND III,
                                         A CALIFORNIA LIMITED PARTNERSHIP
                                         --------------------------------
                                                  (Registrant)


    Date                     Title                              Signature
    ----                     -----                              ---------



May 13, 1998          Executive Vice President,           /S/ GARY W. MARTINEZ
--------------        Chief Operating Officer             --------------------
                      and a Director of                   (Gary W. Martinez)
                      Phoenix Leasing Incorporated 
                      General Partner              
                      


May 13, 1998          Chief Financial Officer,            /S/ HOWARD SOLOVEI
--------------        Treasurer and a Director of         --------------------
                      Phoenix Leasing Incorporated        (Howard Solovei)
                      General Partner               
                      


May 13, 1998          Senior Vice President,              /S/ BRYANT J. TONG
--------------        Financial Operations                --------------------
                      (Principal Accounting Officer)      (Bryant J. Tong)
                      and a Director of              
                      Phoenix Leasing Incorporated   
                      General Partner                
                                               











                                       11