<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
                                -----------------







                        Commission file number: 333-80537

                        TRANSITION AUTO FINANCE III, INC.
        (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)



               TEXAS                                    75-2822804
      (State of incorporation)           (I.R.S. employer identification number)


  8144 Walnut Hill Lane, SUITE 680,
            DALLAS, TEXAS                                 75231
(Address of principal executive offices)                (Zip code)



                 Issuer's telephone number, including area code:  (214) 360-9966

Check 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 past
12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes   [X]    No   [ ]


State the number of shares outstanding of each of the issuer's classes of Common
equity, as of the latest practicable date: As March 31, 2003, the issuer' had
1,000 shares of common stock

    TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMS (CHECK ONE): YES [ ] NO [X]


================================================================================
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                                   FORM 10-QSB

                      FOR THE QUARTER ENDED MARCH 31, 2003

<TABLE>
<CAPTION>
                                                                       Page No.
                                                                       --------
<S>                                                                    <C>
PART I.     FINANCIAL INFORMATION

      ITEM 1.     Financial Statements

            Balance Sheets...................................................3
              March 31, 2003 (Unaudited) and December 31, 2002

            Statements of Income (Unaudited).................................5
             Quarter ended March 31, 2003 and March 31, 2002

            Statements of Cash Flows (Unaudited).............................6
              Three Months ended March 31, 2003 and March 31, 2002

            Notes to Consolidated Financial Statements (Unaudited)...........7

      ITEM 2.     Management's Discussion and Analysis of
                  Financial Condition and Results of Operations.............11

PART II.    OTHER INFORMATION

      ITEM 1.     Legal Proceedings.........................................12

      ITEM 2.     Changes in Securities and Use of Proceeds.................13

      ITEM 3.     Defaults Upon Senior Securities...........................13

      ITEM 4.     Submission of Matters to a Vote of Security Holders.......13

      ITEM 5.     Other Information.........................................13

      ITEM 6.     Exhibits and Reports on Form 8-K..........................13


      Signatures  ..........................................................14
</TABLE>



      In the Opinion of management, all adjustments necessary to a fair
statement of the results for interim periods presented have been reflected in
these financial statements.



                                       2
<PAGE>
                          PART I. FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS

                        TRANSITION AUTO FINANCE III, INC.

                                 BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                                       3 months ended         FYE
                                                          3/31/2003       12/31/2002
                                                         (unaudited)     (See Note 1)
                                                       ---------------   ------------
<S>                                                    <C>               <C>
CURRENT ASSETS
  Cash and cash equivalents                              $   878,393      $   383,300
  Other Assets                                                 1,708            6,710
 Accounts receivable                                         380,964          310,316
  Vehicles held for sale
                                                             306,620          304,538
                                                         -----------      -----------
      Total Current Assets                                 1,567,685        1,004,864
PROPERTY, at cost
  Vehicles leased                                          4,011,824        4,711,054
  Less accumulated depreciation                           (1,331,390)      (1,274,022)
                                                         -----------      -----------
      Net Property                                         2,680,434        3,437,032
                                                         -----------      -----------
OTHER ASSETS
  Debt issuance costs, net of amortization of $480,879
and $440,137                                                 285,194          325,936
  Due from Associates                                         20,620           20,620
                                                         -----------      -----------
      Total Other Assets                                     305,814          346,556
                                                         -----------      -----------


TOTAL ASSETS                                             $ 4,553,933      $ 4,788,452
                                                         ===========      ===========
</TABLE>



See accompanying notes to financial statements.



                                       3
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                           BALANCE SHEETS (Continued)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)



<TABLE>
<CAPTION>
                                              3 Months Ended          FYE
                                                 3/31/2003         12/31/2002
CURRENT LIABILITIES                             (Unaudited)       (See Note 1)
                                              --------------      ------------
<S>                                           <C>                 <C>
  Accounts Payable and Accrued liabilities      $    66,885        $    67,666
  Current portion of deferred revenue               279,485            228,155
                                                -----------        -----------
        Total Current Liabilities                   346,370            295,821
OTHER LIABILITIES
  Due to affiliate                                   26,084              2,700
  Deferred revenue                                  109,656            258,972
  Investor notes payable                          6,786,000          6,786,000
                                                -----------        -----------
      Total Other Liabilities                     6,921,740          7,047,672
TOTAL LIABILITIES                                 7,268,110          7,343,493
                                                -----------        -----------
STOCKHOLDERS' EQUITY (DEFICIT)
   Common stock, $.10 par value, 1,000 shares
     authorized, issued and outstanding                 100                100
   Additional paid-in capital                           900                900
   Retained earnings (deficit)                   (2,715,177)        (2,556,041)
                                                -----------        -----------
       Total Stockholders' Equity (Deficit)      (2,714,177)        (2,555,041)
                                                -----------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   (DEFICIT)                                    $ 4,553,933        $ 4,788,452
                                                ===========        ===========
</TABLE>

      Note 1: The balance sheet at December 31, 2002, as presented, is derived
      from the audited financial statements at that date.

      See accompanying notes to financial statements.



                                       4
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                              STATEMENTS OF INCOME

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  Quarter Ended    Quarter Ended
                                                  March 31, 2003   March 31, 2002
                                                  --------------   --------------
<S>                                               <C>              <C>
REVENUES
  Vehicle monthly lease payments                     $ 320,259        $ 421,838
   Amortization of down payments                       103,291          174,027
                                                     ---------        ---------
        Total Revenues                                 423,550          595,865
                                                     ---------        ---------
OPERATING EXPENSES
  Operating costs                                       23,651          113,200
  General and administrative                            15,136           39,465
  Depreciation and amortization                        239,749          312,081
  Impairment loss                                          -0-              -0-
                                                     ---------        ---------
        Total Operating Expenses                       278,536          464,746
                                                     ---------        ---------
Operating Income (Loss)                                145,014          131,119
                                                     ---------        ---------
OTHER INCOME (EXPENSE)
Investment income                                          742              184
Other income (expense)                                      18               39
Interest expense                                      (186,766)        (186,703)
Loss on sale of inventory                             (118,144)        (109,088)
                                                     ---------        ---------
       Total Other Income (Expense)                   (304,150)        (295,568)
                                                     ---------        ---------
Provision for Federal
Income Taxes                                               -0-              -0-
                                                     ---------        ---------
Net Loss                                             $(159,136)       $(164,449)
                                                     =========        =========
Loss per share (basic and diluted)                   $  159.14        $  164.45
                                                     =========        =========
</TABLE>




      See accompanying notes to financial statements.



                                       5
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                            STATEMENTS OF CASH FLOWS

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  3 Months Ended    3 Months Ended
                                                  March 31, 2003    March 31, 2002
                                                  --------------    --------------
<S>                                               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                             $(159,136)       $(164,449)
Adjustments to reconcile net income to net
cash provided by
  operating activities:
     Depreciation and amortization                     239,749          312,081
     Amortization of down payments                    (103,291)        (174,027)
     Impairment loss                                       -0-              -0-
     Provision for allowance for doubtful accounts         753              -0-
     (Gain) loss on sale of property                   118,144          109,088
Net changes in operating assets and
liabilities:
     Accounts receivable                               (70,648)         (18,064)
    Other Assets                                         5,002            2,583
    Accrued liabilities                                   (782)          70,503
     Deferred revenue                                    5,306          157,970
                                                     ---------        ---------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES                                              35,097          295,685
                                                     ---------        ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of fixed assets                                -0-         (704,515)
   Cash proceeds from sale of property                 436,612          327,565
                                                     ---------        ---------
NET CASH (USED) BY INVESTING ACTIVITIES               (436,612)        (376,950)
                                                     ---------        ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net advances (payments) to affiliates                23,384           15,173
   Debt issuance costs                                     -0-              -0-
   Proceeds from notes payable                             -0-              -0-
                                                     ---------        ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES
                                                        23,384           15,173
                                                     ---------        ---------
NET INCREASE (DECREASE) IN CASH                        495,093          (66,092)
CASH AND CASH EQUIVALENTS, beginning of period         383,300          181,867
                                                     ---------        ---------
CASH AND CASH EQUIVALENTS, end of period             $ 878,393        $ 115,775
                                                     =========        =========
CASH PAID DURING THE YEAR FOR
   Interest                                          $ 186,729        $ 186,764
                                                     =========        =========
   Income taxes                                      $     -0-        $     -0-
                                                     =========        =========
</TABLE>



      See accompanying notes to financial statements.

      NON-CASH INVESTING ACTIVITIES
      Vehicles with a net book value of $2,082 were reclassified from vehicles
      leased to vehicles held for resale as of March 31, 2003.

      NON-CASH INVESTING ACTIVITIES
      Vehicles with a net book value of $219,935 were reclassified from vehicles
      leased to vehicles held for resale as of March 31, 2002.



                                       6
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                          NOTES TO FINANCIAL STATEMENTS

NOTE 1:     BUSINESS ACTIVITY

            Transition Auto Finance III, Inc. (the Company) is a Texas
            corporation organized May 26, 1999. The Company was established to
            purchase motor vehicles and automobile lease contracts, collecting
            and servicing automobile lease contracts and remarketing motor
            vehicles upon termination of their leases. Transition Leasing
            Management, Inc. (Transition Leasing) owns 100% of the Company's
            common stock.

NOTE 2:     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            CASH AND CASH EQUIVALENTS

                  For purposes of the statement of cash flows, the Company
                  considers all highly liquid investments with a maturity of
                  three months or less when purchased to be cash equivalents.

                  The Company maintains cash balances at financial institutions
                  in Dallas, Texas. Accounts at these institutions are insured
                  by the Federal Deposit Insurance Corporation up to $100,000.
                  The Company has not experienced any losses in such accounts
                  and believes it is not exposed to any significant credit risk
                  on cash and cash equivalents.

            REVENUE

                  The vehicles are leased to individuals under leases with terms
                  ranging from thirty-six to forty-eight months. The leases are
                  considered to be operating leases. At the end of the lease
                  period, the lessee may purchase the equipment at the
                  contractual residual value plus any other outstanding items
                  due. Monthly lease payments are recognized as revenue in the
                  month that the payments are due. The vehicle leases require a
                  down payment from the lessee at the inception of the lease.

                  The down payments are initially recorded as deferred revenue
                  and then recognized as income over the term of the leases on a
                  straight-line basis.

            ACCOUNTS RECEIVABLE

                  The Company provides for uncollectible accounts receivable
                  using the allowance method of accounting for bad debts. Under
                  this method of accounting, a provision for uncollectible
                  accounts is charged to earnings. The allowance account is
                  increased or decreased based on past collection history and
                  management's evaluation of accounts receivable. All amounts
                  considered uncollectible are charged against the allowance
                  account and recoveries of previously charged-off accounts are
                  added to the allowance.



                                       7
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2:     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



      VEHICLES HELD FOR SALE

            Vehicles held for sale are leased vehicles in which the lease term
            has expired or that have been repossessed. Vehicles held for sale
            are valued at the lower of cost or fair value. The cost is the net
            book value of the vehicle after it has been returned to the Company
            either through repossession or early termination of the lease.
            Generally these vehicles will be released or sold at auction by the
            Company with in a year.

      PROPERTY

            Property consists of leased vehicles, which are stated at cost less
            accumulated depreciation. Depreciation is provided in amounts
            sufficient to relate the cost of depreciable assets to operations
            over their estimated service lives using the straight-line-method.
            Leased vehicle depreciation is calculated over the term of the
            vehicle lease, using the cost of the vehicle less the estimated
            residual value of the vehicle at the end of the lease. Present
            leases have terms ranging from thity-six to forty-eight months.

      OTHER ASSETS

            Other assets include debt issuance costs incurred in connection with
            the Company's offering of securities filed with the Securities and
            Exchange Commission. These costs are being amortized, on a
            straight-line basis, over the term of the debt securities which
            mature on December 31, 2004.

      DEFERRED REVENUE

            Deferred revenue consists of down payments made by lessees at the
            inception of the lease. The down payments are amortized over the
            lease term. Lease terms range from thirty-six to forty-eight months.

      FAIR VALUE OF FINANCIAL INSTRUMENTS

            Fair values of financial instruments are estimated to approximate
            the related book value, unless otherwise indicated, based on market
            information available to the Company.



                                       8
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 2:     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            (CONTINUED)

      USE OF ESTIMATES

            In preparing the Company's financial statements, management is
            required to make estimates and assumptions that affect the reported
            amounts of assets and liabilities, the 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 differ from these estimates.

      CONCENTRATION OF CREDIT RISK

            A majority of the lessees are residents of the Dallas/Fort Worth
            Metroplex. Vehicles are used as collateral for leases.

NOTE 3:     INCOME TAXES

            The Company is a corporation subject to federal and state income
            taxes. The Company and its parent intend to file a consolidated tax
            return. Each company in the consolidated group determines its
            taxable income or loss, on a separate company basis, and the
            consolidated tax liability is allocated to each company with taxable
            income in proportion to the total of the taxable income amounts.

            The Company has a deferred tax asset as of $678,000 as of December
            31, 2002 (primarily from net operating loss carryforward), which has
            been completely offset by recognition of a valuation allowance.

            The Company has a net operating loss (NOL) carryforward of
            approximately $2,349,000 as of December 31, 2002. The Company's NOL
            carryforward expires between December 31, 2020 and 2022.

NOTE 4:     INVESTOR NOTES PAYABLE

            The Company has issued $6,786,000 of fixed rate redeemable
            asset-backed notes (Investor Notes) as of March 31, 2003 and
            December 31, 2002.

            These Investor Notes were issued pursuant to a public offering on
            Form SB-2 under the Securities Act of 1933. The Investor Notes bear
            interest at the rate of 11%. Interest is payable monthly on the 15th
            day of each month.



                                       9
<PAGE>
                        TRANSITION AUTO FINANCE III, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Continued)

NOTE 4:     INVESTOR NOTES PAYABLE (CONTINUED)

            The Investor Notes were issued at various times during 2001 and
            2000, however the maturity date for all of the Investor Notes is
            December 31, 2004. The Investor Notes are collateralized by the
            following:

                  1.    Automobile contracts for the leasing of new or late
                        model automobiles.

                  2.    The leased vehicles.


            The following table represents Investor Notes outstanding at
            December 31, 2002 and March 31, 2003:

<TABLE>
<CAPTION>
Origination Date         Number of Notes      Note Amount
----------------         ---------------      -----------
<S>                      <C>                  <C>
February 2000                    53           $  827,000
March 2000                      136            1,453,000
April 2000                       57              622,000
May 2000                         35              354,000
June 2000                        37              427,000
July 2000                        53              722,000
August 2000                      40              332,000
September 2000                   28              290,000
October 2000                     33              311,000
November 2000                    59              509,000
December 2000                    72              644,000
January 2001                     30              295,000
                                              ----------
                                              $6,786,000
                                              ==========
</TABLE>

NOTE 5:     RELATED PARTIES

            The Company has entered into a Servicing Agreement with Transition
            Leasing. Transition Leasing will be entitled to a servicing fee of
            $20 per month per contract and a payment of $150 per contract
            purchased. Transition Leasing will receive, as a marketing fee,
            57.5% of the down payment made by the customers with respect to
            contracts it originates. Transition Leasing will receive from the
            Company a Releasing Fee of 57.5% of the down payment with respect to
            a new contract following repossession of a leased vehicle. The
            Company paid Transition Leasing $349,800 in 2002 and $22,300 in the
            Quarter ending March 31, 2003 for servicing, documentation and
            marketing fees. The Company has a receivable from Transition Leasing
            at December 31, 2002 and March 31, 2003 for $20,620. The Company has
            a payable to an affiliate for $2,700 at December 31, 2002 and
            $26,084 at March 31, 2003.



                                       10
<PAGE>
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS



      The following discussions and analysis relates to factors that have
affected the operating results of the Company for the quarter ended March 31,
2003. The balance sheet at December 31, 2002, as presented, is derived from the
audited financial statements at that date.

General.

      As of March 31, 2003, the Company had sold $6,786,000 of its 11%
Redeemable Secured Notes and had 188 active leases with a net book value of
$2,418,681.

Results of Operations: Three months ended March 31, 2003, compared to three
months ended March 31, 2002.

      For the three months ended March 31, 2003, the company had received
monthly contract lease payments of $320,259 and amortization of down payments of
$103,921. This compares to contract lease payments of $421,838 and amortization
of down payments of $174,027 for the same period in 2002. The decrease in
monthly contract lease payments for the first quarter of 2003 was primarily the
result of fewer active leases for the 2003 period.

      Operating costs including general and administrative expenses were $38,787
for the three-month period ended March 31, 2003. This compares to $152,665 for
the same period in 2002. The decrease in operating expenses for the first
quarter of 2003, compared to the same period for 2002, was due to lower
marketing fees in the 2003 quarter.

      Depreciation and amortization was $239,749 for the three months ended
March 31, 2003, compared to $312,081 for the first quarter of 2002.

      Interest expense for the three months ended March 31, 2003, was $186,766
compared to $186,703 for the same period in 2002.

      Loss on sale of inventory for the quarter ended March 31, 2003, was
$118,144 compared to $109,088 for the first quarter of 2002. The increased loss
on sale of inventory was primarily due to the decrease in used car prices for
the 2003 period.

      The net loss for the quarter ended March 31, 2003, was $159,136 compared
to $164,449 for the same period in 2002.

      On June 30, 2002, Transition Auto Finance II, Inc. defaulted on $6,280,000
of its 11% Redeemable Secured Notes. Due to the recession and September 11
events, TAF II and TAF III experienced a larger than normal number of
repossessions. The amount of time necessary to reinvest TAF III proceeds from
repossessions substantially reduced the positive impact of leverage. Leverage in
this context is the ability to turn cash into performing assets by investing in
new leases. Due to the sinking fund trigger date, TAF II was prohibited from
reinvesting proceeds from sale of repossessions.

Extension of Reinvestment Period

      In an attempt to offset this loss of leverage in TAF III and to minimize
the possibility of a default, the Company requested that the Noteholders consent
to an amendment to the Indenture which would extend the reinvestment period from
December 31, 2002 to December 31, 2004. The Consent soliciation was approved by
a majority of the Noteholders and the Indenture was amended to reflect the
extended reinvestment period.

Liquidity and Capital Resources

      During the three months ended March 31, 2003, the Company received cash of
$436,612 in its investing activities and received $23,384 from its financing
activities. For the same period in 2002, the Company used $376,950 in its
investing activities and received $15,173 from its financing activities.

      The Company's only source of liquidity in the future will be from proceeds
from the sale of repossessed vehicles, early terminations, and its monthly lease
payments after interest and other allowed expenses.



                                       11
<PAGE>
      The Company's portfolio, which consisted of 459 leases, included 271
leases, which resulted in early terminations. The information on the Company's
experience with respect to early terminations is set forth below:

<TABLE>
<CAPTION>
                                                                       Vehicle                                   Total
                # of     Gross Cost    Misc.     Total       Down       Sale    Sales Tax Warranty  Marketing    Amount     Profit
              Contracts  Of Vehicle  Expenses  Payments    Payment     Amount     Credit   Rebate    Fee Paid   Received    (Loss)
              ---------  ----------  -------- ---------- ----------  ---------- --------- --------  ---------  ----------  --------
<S>           <C>        <C>         <C>      <C>        <C>         <C>        <C>       <C>       <C>        <C>         <C>
Repossession    215      $4,956,161  $122,764 $1,313,272 $  951,117  $2,658,863  $112,470  $49,624   $547,047  $4,538,299 ($540,626)
Early Payoff     56      $1,156,459  $    817 $  475,685 $  229,685  $  854,835  $ 32,444  $ 1,399   $131,876  $1,462,172  $304,896
                ---      ----------  -------- ---------- ----------  ----------  --------  -------   --------  ----------  --------
Total           271      $6,112,620  $123,581 $1,788,957 $1,180,802  $3,513,698  $144,914  $51,023   $678,923  $6,000,471 ($235,730)
</TABLE>

Note: The above results on early termination does not include any allowance
for interest expense


      This report contains various forward looking statements and information
that are based on management's belief as well as assumptions made by and
information currently available to management. Although the Company believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Such statements are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those expected. Among the key factors that may have a direct
bearing on the Company's operating results are fluctuations in the economy and
in the level of activity in the automobile and consumer finance industry, demand
for the Company's products, the impact of competition and interest rate
fluctuations.

PART II.    OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      The Company is not a party to any material legal proceedings, and no
material legal proceedings have been threatened by or, to the best of the
Company's knowledge, instituted against the Company.



                                       12
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

      (a) Not Applicable
      (b) Not Applicable
      (c) Not Applicable
      (d) The company applied 90% of the gross proceeds from the sale of the
      Notes to the purchase or acquisition of the Leased Vehicles and the
      contracts. The Company paid to the Underwriter sales commissions of 6% of
      the principal amount of the Notes sold by the Underwriter. Additionally,
      the Company reimbursed the Underwriter for certain expenses incurred in
      connection with its due diligence activities with regard to the Offering
      of 2% of the aggregate principal amount of the Notes sold. The Company
      also used 2% of the gross proceeds from the sale of the Notes to pay
      offering and organizational expenses, including filing and registration
      fees, legal fees of the Company's counsel, accounting fees, trustee's
      fees, escrow agent's fees, "blue sky" expenses and printing expenses.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

      No matters were submitted to a vote of the Company's sole stockholder
      during the first quarter of 2003.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Financial Statements

     The following financial statements are filed as a part of this Form 10-KSB:

         The Index to Financial Statements is set out in Item 7 herein.

     Exhibits

     The following exhibits are filed as exhibits to this report on Form 10-KSB:

         The information required is set forth in the Index to Exhibits
         accompanying this Form 10-QSB.

(b)  Reports on Form 8-K

         No reports on Form 8-K were filed during the three months ended March
         31, 2003



                                       13
<PAGE>
                                   SIGNATURES

      In accordance with section 13 or 15(d) of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                         TRANSITION AUTO FINANCE III, INC.
                                                   (Registrant)


Date: May 14, 2003                                /s/ Kenneth C. Lowe
                                         ---------------------------------------
                                                 Kenneth C. Lowe, President/
                                                 Chief Executive Officer

Date: May 14, 2003                                /s/ Kenneth C. Lowe
                                         ---------------------------------------
                                                 Kenneth C. Lowe, President/
                                                 Chief Operating Officer

Date: May 14, 2003                                /s/ Kenneth C. Lowe
                                         ---------------------------------------
                                                 Kenneth C. Lowe, President/
                                                 Chief Financial Officer



                                       14
<PAGE>
           CERTIFICATE OF CHIEF EXECUTIVE AND CHIEF FINANCIAL OFFICER

I, Kenneth C. Lowe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Transition Auto Finance
III (TAF III).

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.

3. Based on my knowledge, the financial statements and other financial
information included in this quarterly report fairly present, in all material
respects, the financial condition, results of operations and cash flows of TAF
III as of, and for, the periods presented in this quarterly report.

4. TAF III's other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in the Exchange
Act Rules 13a-14 and 15d-14) for TAF III and we have:

      a. designed such disclosure controls and procedures to ensure that
      material information relating to TAF III, including its consolidated
      subsidiaries, is made known to us by others within those entities,
      particularly during the period in which this quarterly report is being
      prepared;

      b.    evaluated the effectiveness of TAF III's disclosure controls and
      procedures as of a date within 90 days prior to the filing date of this
      quarterly report (the "Evaluation Date"); and

      c.    presented in this quarterly report our conclusions about the
      effectiveness of the disclosure controls and procedures based on our
      evaluation as of the Evaluation Date.

5. TAF III's other certifying officers and I have disclosed, based on our most
recent evaluation, to our auditors and TAF III's Board of Directors:

      a. all significant deficiencies in the design or operation of internal
      controls which could adversely affect TAF III's ability to record,
      process, summarize and report financial data and have identified for TAF
      III's auditors any material weaknesses in internal controls; and

      b.    any fraud, whether or not material, that involves management or
      other employees who have a significant role in TAF III's internal
      controls.

6. TAF III's other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: May 14, 2003

/s/ Kenneth C. Lowe
----------------------------
Kenneth C. Lowe,
Chief Executive and Chief Financial Officer


                                       15
<PAGE>
                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                DESCRIPTION
-------                               -----------
<S>       <C>
3.1       Articles of Incorporation of Transition Auto Finance III, Inc. *

3.2       Bylaws of Transition Auto Finance III, Inc. *

4.1       Form of Indenture between Transition Auto Finance III, Inc. and
          Trust Management, Inc., as Trustee ***

4.2       Form of Secured Note Due December 31, 2004 (included in Article Two
          of Indenture filed as Exhibit 4.1)

10.1      Form of Master Contract Purchase Agreement between Transition Auto
          Finance III, Inc. and Transition Leasing Management, Inc.**

10.2      Form of Servicing Agreement between Transition Leasing Management,
          Inc. and Transition Auto Finance III, Inc. **

99.1      Certification of Reporting Officer
</TABLE>


*    Incorporated by reference from Registration Statement on Form SB-2 of
     Transition Auto Finance III, Inc. Registration No. 333-80537, filed
     January 24, 2000.

**   Incorporated by reference from Amendment No. 1 to Registration Statement
     on Form SB-2 of Transition Auto Finance III, Inc.  Registration No.
     333-80537 filed January 24, 2000.

***  Incorporated by reference from Amendment No. 3 to Registration Statement
     on Form SB-2 of Transition Auto Finance III, Inc.  Registration No.
     333-80537 filed January 24, 2000.