<PAGE>
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, 1997
/ / 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 0-20081
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP III
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
California 77-0129484
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
440 Mission Court, Suite 250, Fremont, California
94539
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 656-1855
N/A
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
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 _CK_ No __
<PAGE>
Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP III
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 2,478,450 $ 2,342,441
Investments in equity securities 1,999,476 13,321,925
------------- ------------
Total assets $ 4,477,926 $15,664,366
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accrued management fee $ 62,500 $ 204,670
Accrued expenses and other liabilities 79,910 80,438
------------- ------------
Total liabilities 142,410 285,108
------------- ------------
Contingencies
Partners' capital
Unitholders (40,934 units issued and outstanding) 2,742,770 8,312,200
General partner 312,491 931,316
Unrealized gain on investments in equity securities 1,280,255 6,135,742
------------- ------------
Total partners' capital 4,335,516 15,379,258
------------- ------------
Total liabilities and partners' capital $ 4,477,926 $15,664,366
------------- ------------
------------- ------------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
2
<PAGE>
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP III
(a limited partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------------- -------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
REVENUES
Gain on sale of investments in equity
securities $7,090,925 $3,621,513 $1,404,674 $ --
Interest and other income 89,720 33,994 33,921 7,013
Royalty income -- 216,665 -- --
---------- ---------- ---------- ----------
7,180,645 3,872,172 1,438,595 7,013
---------- ---------- ---------- ----------
EXPENSES
Management fee 471,840 614,010 62,500 204,670
Write-down of investments in equity
securities 295,000 -- -- --
General and administrative 94,449 77,381 41,799 26,430
---------- ---------- ---------- ----------
861,289 691,391 104,299 231,100
---------- ---------- ---------- ----------
Net income (loss) $6,319,356 $3,180,781 $1,334,296 $ (224,087)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
ALLOCATION OF NET INCOME (LOSS)
Unitholders $5,687,420 $2,862,703 $1,200,866 $ (201,678)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
General partner $ 631,936 $ 318,078 $ 133,430 $ (22,409)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss) per unit $ 138.94 $ 69.93 $ 29.34 $ (4.93)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
- -----------------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
UNREALIZED
GENERAL GAIN ON
UNITHOLDERS PARTNER INVESTMENTS TOTAL
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Partners' capital--December 31, 1996 $8,312,200 $ 931,316 $6,135,742 $15,379,258
Net income 5,687,420 631,936 -- 6,319,356
Distributions (11,256,850) (1,250,761) -- (12,507,611)
Change in unrealized gain on
investments in equity securities -- -- (4,855,487 ) (4,855,487)
----------- ----------- ----------- -----------
Partners' capital--September 30, 1997 $2,742,770 $ 312,491 $1,280,255 $ 4,335,516
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
3
<PAGE>
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP III
(a limited partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
----------------------------
<S> <C> <C>
1997 1996
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest and other income received $ 89,720 $ 33,994
Management fee paid (614,010) (614,010)
General and administrative expenses paid (94,977) (79,870)
Royalty income received -- 216,665
Cash received for other asset -- 216,669
------------ -----------
Net cash used in operating activities (619,267) (226,552)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of investments in equity securities 13,321,537 3,660,056
Purchase of investments in equity securities (58,650) --
------------ -----------
Net cash provided by investing activities 13,262,887 3,660,056
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions (12,507,611) (3,638,578)
------------ -----------
Net increase (decrease) in cash and cash equivalents 136,009 (205,074)
Cash and cash equivalents at beginning of period 2,342,441 480,692
------------ -----------
Cash and cash equivalents at end of period $ 2,478,450 $ 275,618
------------ -----------
------------ -----------
RECONCILIATION OF NET INCOME TO NET CASH
USED IN OPERATING ACTIVITIES
Net income $ 6,319,356 $ 3,180,781
------------ -----------
Adjustments to reconcile net income to net cash used in operating
activities:
Gain on sale of investments in equity securities (7,090,925) (3,621,513)
Write-down of investments in equity securities 295,000 --
Changes in:
Accrued management fee (142,170) --
Accrued expenses and other liabilities (528) (2,489)
Other asset -- 216,669
------------ -----------
Total adjustments (6,938,623) (3,407,333)
------------ -----------
Net cash used in operating activities $ (619,267) $ (226,552)
------------ -----------
------------ -----------
- ----------------------------------------------------------------------------------------------------
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES
1997
On June 2, 1997, Cell Genesys Corporation acquired Somatix Therapy Corporation. As a result, the
Partnership received 111,265 shares of Cell Genesys Corporation common stock or 0.385 shares for
each of its 289,000 shares of Somatix Therapy Corporation common stock.
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements
</TABLE>
4
<PAGE>
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP III
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(Unaudited)
A. General
These financial statements have been prepared without audit. In the opinion
of management, the financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly the financial
position of PruTech Research and Development Partnership III (the 'Partnership')
as of September 30, 1997, the results of its operations for the nine and three
months ended September 30, 1997 and 1996 and its cash flows for the nine months
ended September 30, 1997 and 1996. However, the operating results for the
interim periods may not be indicative of the results expected for the full year.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1996.
Certain balances for prior periods have been reclassified to conform with the
current financial statement presentation.
B. Investments
Investments in marketable equity securities available-for-sale include the
following:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------------------------------------------ ------------------------------------------------------
Gross unrealized Carrying Gross unrealized Carrying
Shares Cost basis gains value Shares Cost basis gains value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------- ------------------------------------------------------
Creative
BioMolecules,
Inc.-Common
Stock 54,484 $178,296 $ 407,407 $ 585,703 509,382 $1,666,928 $ 3,617,910 $ 5,284,838
Kopin
Corporation-
Common Stock 45,116 337,470 767,879 1,105,349 537,333 4,019,255 2,361,582 6,380,837
Cell Genesys
Corporation-
Common Stock 39,165 203,455 104,969 308,424 -- -- -- --
Somatix Therapy
Corporation-
Common Stock -- -- -- -- 500,000 1,500,000 156,250 1,656,250
---------- ---------------- ------------- ---------- ---------------- ------------
$719,221 $1,280,255 $ 1,999,476 $7,186,183 $ 6,135,742 $ 13,321,925
---------- ---------------- ------------- ---------- ---------------- ------------
---------- ---------------- ------------- ---------- ---------------- ------------
</TABLE>
The gross unrealized gains would be allocated 90% to the Unitholders and 10%
to R&D Funding Corp (the 'General Partner') if realized at September 30, 1997;
however, there is no assurance that the Partnership would receive these amounts
in the event of the sale of its position in these securities.
Creative BioMolecules, Inc.
During the first quarter of 1997, the Partnership sold 441,898 shares of
Creative BioMolecules, Inc. common stock with a cost basis of $1,446,000
resulting in a gain of $3,573,000, and the Partnership exercised its option to
purchase 6,900 shares of Creative BioMolecules, Inc. common stock at an exercise
price of $8.50 per share for a total cost of $59,000. During the third quarter
of 1997, the Partnership sold 19,900 shares of Creative BioMolecules, Inc.
common stock with a cost basis of $101,000 resulting in a gain of $89,000.
Between October 1, 1997 and November 7, 1997, the Partnership sold 30,000 shares
of Creative BioMolecules, Inc. common stock as discussed in Note E.
Kopin Corporation
During the first quarter of 1997, the Partnership sold 173,189 shares of
Kopin Corporation common stock with a cost basis of $1,295,000 resulting in a
gain of $1,002,000. During the second quarter of 1997, the
5
<PAGE>
Partnership sold 219,274 shares of Kopin Corporation common stock with a cost
basis of $1,640,000 resulting in a gain of $1,208,000. During the third quarter
of 1997, the Partnership sold 99,754 shares of Kopin Corporation common stock
with a cost basis of $746,000 resulting in a gain of $1,230,000. Between October
1, 1997 and November 7, 1997, the Partnership sold 27,473 shares of Kopin
Corporation common stock as discussed in Note E.
Somatix Therapy Corporation/Cell Genesys Corporation
During the first quarter of 1997, the Partnership sold 205,000 shares of
Somatix Therapy Corporation common stock with a cost basis of $615,000 resulting
in a loss of $98,000. At March 31, 1997, the General Partner concluded that an
impairment in value that was not temporary had occurred for the Partnership's
equity investment in Somatix Therapy Corporation. As a result, the value of the
Partnership's common stock was written down by $295,000. During the second
quarter of 1997, the Partnership sold 6,000 shares of Somatix Therapy
Corporation common stock with a cost basis of $12,000 resulting in no gain or
loss to the Partnership.
On June 2, 1997, Cell Genesys Corporation acquired Somatix Therapy
Corporation. As a result, the Partnership received 111,265 shares of Cell
Genesys Corporation common stock or 0.385 shares for each of its 289,000 shares
of Somatix Therapy Corporation common stock.
During the third quarter of 1997, the Partnership sold 72,100 shares of Cell
Genesys Corporation common stock with a cost basis of $375,000 resulting in a
gain of $86,000. Between October 1, 1997 and November 7, 1997, the Partnership
sold 20,400 shares of Cell Genesys Corporation common stock as discussed in Note
E.
C. Related Parties
The General Partner and its affiliates perform certain services for the
Partnership (for which they are reimbursed through the management fee) which
include, but are not limited to: accounting and financial management; registrar,
transfer and assignment functions; asset management; investor communications and
other administrative services. The Partnership also reimburses an affiliate of
the General Partner for printing services. The management fee and printing costs
were:
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
--------------------- --------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------
Management fee $471,840 $614,010 $62,500 $204,670
Printing 9,735 8,957 3,150 3,032
-------- -------- ------- --------
$481,575 $622,967 $65,650 $207,702
-------- -------- ------- --------
-------- -------- ------- --------
</TABLE>
Effective July 1, 1997, the General Partner reduced its management fee to the
greater of (a) $250,000 annually or (b) ten percent of the aggregate amount
received from the Partnership's royalty position in a treatment for Alzheimer's
disease with Forest Laboratories, Inc. after July 1, 1997 until the dissolution
and liquidation of the Partnership, not to exceed the aggregate management fee
payable under the terms of the Agreement of Limited Partnership ($818,680 per
annum).
Printing costs payable to an affiliate of the General Partner (which are
included in accrued expenses and other liabilities) as of September 30, 1997 and
December 31, 1996 were $6,851 and $4,943, respectively.
Prudential Securities Incorporated, an affiliate of the General Partner,
owned 724 units in the Partnership at September 30, 1997.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of the General Partner, for investment of
its available cash in short-term instruments pursuant to the guidelines
established by the Partnership Agreement.
The Partnership has engaged in research and development co-investment
projects with PruTech Research and Development Partnership, PruTech Research and
Development Partnership II and PruTech Project Development Partnership
(collectively, the 'PruTech R&D Partnerships'), for which R&D Funding Corp
serves as the general partner. The allocation of the co-investment projects'
profits or losses among the
6
<PAGE>
PruTech R&D Partnerships is consistent with the costs incurred to fund the
research and development projects.
D. Contingencies
On April 15, 1994, a multiparty petition captioned Mack et al. v. Prudential
Securities Incorporated et al. (Cause No. 94-17695) was filed in the 80th
Judicial District Court of Harris County, Texas, purportedly on behalf of
investors in the Partnership against the Partnership, the General Partner,
Prudential Securities Incorporated, The Prudential Insurance Company of America
and a number of other defendants. The petition alleges common law fraud and
fraud in the inducement and negligent misrepresentation in connection with the
offering of the Partnership; negligence and breach of fiduciary duty in
connection with the operation of the Partnership; civil conspiracy; and
violations of the federal Securities Act of 1933 (sections 11 and 12), and of
the Texas Securities and Deceptive Trade Practices statutes. The suit seeks,
among other things, compensatory and punitive damages, costs and attorneys'
fees.
The General Partner, Prudential Securities Incorporated and the Partnership
believe they have meritorious defenses to the complaint and are vigorously
defending themselves in this action. The claims of most plaintiffs have been
settled or dismissed. It is currently expected that the remaining claims will be
resolved shortly. The Partnership has not contributed to any settlement or paid
any costs of the litigation, nor is it anticipated that it will.
E. Subsequent Events
Between October 1, 1997 and November 7, 1997, the Partnership sold 30,000,
27,473 and 20,400 shares of Creative BioMolecules, Inc. common stock, Kopin
Corporation common stock, and Cell Genesys Corporation common stock for
approximately $316,000, $646,000 and $189,000, respectively. These sales
resulted in gains of approximately $217,000, $441,000 and $83,000, respectively.
7
<PAGE>
PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP III
(a limited partnership)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
As of September 30, 1997, the Partnership had approximately $2,478,000 of
cash and cash equivalents which is an increase of approximately $136,000 as
compared to December 31, 1996. The increase in cash and cash equivalents was
primarily due to proceeds from the sales of certain investments in equity
securities as further discussed below reduced by the payment of distributions
and management fees.
As of September 30, 1997, the Partnership had approximately $719,000 invested
in equity securities with an aggregate market value which exceeded its cost.
Certain of these investments are in development stage companies which are more
speculative and higher in risk than other equity investments. Additionally, the
realization of this market value is further impacted by market volume capacity.
The amount to be distributed by the Partnership in future quarters will be based
on the extent to which the market value of its investments can be realized and
from the revenue stream from royalties and interest income. It is not expected
that the Partnership's eventual total distributions will equal the Unitholders
initial investments. The Partnership's royalty positions with Forest
Laboratories, Inc. and Creative BioMolecules, Inc. did not generate royalty
income for the Partnership during the nine months ended September 30, 1997 and
1996.
During the first quarter of 1997, the Partnership sold 441,898 shares of
Creative BioMolecules, Inc. common stock for $5,019,000, and the Partnership
exercised its option to purchase 6,900 shares of Creative BioMolecules, Inc.
common stock at an exercise price of $8.50 per share for a total cost of
$59,000. Also, during the first quarter of 1997, the Partnership sold 173,189
shares of Kopin Corporation common stock for $2,297,000, and 205,000 shares of
Somatix Therapy Corporation common stock for $517,000.
In February and March of 1997, the Partnership made distributions of
$4,548,222 and $3,411,167, respectively. Unitholders received a total of
$4,093,400 ($100 per unit) and $3,070,050 ($75 per unit) on these distributions,
respectively, and the General Partner received the remainder.
During the second quarter of 1997, the Partnership sold 219,274 shares of
Kopin Corporation common stock for $2,848,000, and 6,000 shares of Somatix
Therapy Corporation common stock for $12,000.
On June 2, 1997, Cell Genesys Corporation acquired Somatix Therapy
Corporation. As a result, the Partnership received 111,265 shares of Cell
Genesys Corporation common stock or 0.385 shares for each of its 289,000 shares
of Somatix Therapy Corporation common stock.
During the third quarter of 1997, the Partnership sold 19,900 shares of
Creative BioMolecules, Inc. common stock for $190,000, 99,754 shares of Kopin
Corporation common stock for $1,976,000, and 72,100 shares of Cell Genesys
Corporation common stock for $460,000.
During August 1997, the Partnership made a $4,548,222 distribution, of which
$4,093,400 ($100 per unit) was paid to the Unitholders, and the remainder to the
General Partner.
Between October 1, 1997 and November 7, 1997, the Partnership sold 30,000,
27,473, and 20,400 shares of Creative BioMolecules, Inc. common stock, Kopin
Corporation common stock, and Cell Genesys Corporation common stock for
approximately $316,000, $646,000, and $189,000, respectively.
Results of Operations
The Partnership's net income increased by approximately $3,139,000 and
$1,558,000 for the nine and three months ended September 30, 1997 as compared to
the same periods in 1996. These increases were primarily due to larger gains on
the sale of investments in equity securities and to a reduction in management
fees in 1997 versus 1996, offset, in part, by a 1997 write-down of the
Partnership's equity investment in Somatix Therapy Corporation and 1996 royalty
income from Kopin Corporation as discussed below.
During the nine months ended September 30, 1997, the Partnership recorded
gains on the sale of common stock totalling approximately $7,091,000, including
gains of $3,662,000 and $3,440,000 on the sale of common stock of Creative
BioMolecules, Inc. and Kopin Corporation, respectively. These gains
8
<PAGE>
compared to a gain of approximately $3,622,000 on the sale of 75,000 shares of
Forest Laboratories, Inc. common stock and 4,334 shares of Kopin Corporation
common stock during the first quarter of 1996.
Interest and other income increased by $56,000 and $27,000 for the nine and
three month periods ended September 30, 1997, respectively, as compared to the
same periods in 1996 due to higher amounts invested in short-term instruments
funded from 1997 sales of securities.
During the second quarter of 1996, the Partnership recorded $217,000 of
royalty income as part of an agreement in which the Partnership agreed to
transfer to Kopin Corporation its rights to certain technologies and royalties.
As a result of the above, the Partnership holds no technology or royalty
positions with Kopin Corporation and therefore, no further royalties will be
received by the Partnership from Kopin Corporation.
Management fees decreased by $142,000 for both the nine and three month
periods ended September 30, 1997 as compared to the same periods in 1996.
Effective July 1, 1997, the General Partner reduced its management fee to the
greater of (a) $250,000 annually or (b) ten percent of the aggregate amount
received from the Partnership's royalty position in a treatment for Alzheimer's
disease with Forest Laboratories, Inc. after July 1, 1997 until the disolution
and liquidation of the Partnership, not to exceed the aggregate management fee
payable under the terms of the Agreement of Limited Partnership ($818,680 per
annum).
At March 31, 1997, the General Partner concluded that an impairment in value
that was not temporary had occurred for the Partnership's equity investment in
Somatix Therapy Corporation. As a result, the value of the Partnership's common
stock was written down by $295,000.
General and administrative expenses increased by $17,000 and $15,000 for the
nine and three month periods ended September 30, 1997, respectively, as compared
to the same periods in 1996. These increases were due primarily to professional
and other costs incurred in 1997 in evaluating the orderly liquidation of the
Partnership.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings--This information is incorporated by reference to Note
D to the financial statements filed herewith in Item 1 of Part I of the
Registrant's Quarterly Report.
Item 2. Changes in Securities--None
Item 3. Defaults Upon Senior Securities--None
Item 4. Submission of Matters to a Vote of Security Holders--None
Item 5. Other Information--None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits--
PruTech Research and Development Partnership III Agreement of
Limited Partnership (incorporated by reference to Exhibit 3.1
included with Registrant's Form S-1 Registration Statement, File No.
33-6091, filed on June 3, 1986)
First Amendment to the Agreement of Limited Partnership of PruTech
Research and Development Partnership III (incorporated by reference
to Exhibit 3 included with Registrant's Annual Report on Form 10-K
filed March 28, 1992)
Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K--Registrant's Current Report on Form 8-K
dated September 17, 1997, as filed with the Securities and
Exchange Commission on September 30, 1997, relating to Item 2
regarding the sale of 55,900 shares of Kopin Corporation common
stock.
10
<PAGE>
SIGNATURES
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.
PruTech Research and Development Partnership III
By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Michael S. Hasley Date: November 13, 1997
----------------------------------------
Michael S. Hasley
President for the Registrant
By: R&D Funding Corp
A Delaware corporation, General Partner
By: /s/ Steven Carlino Date: November 13, 1997
----------------------------------------
Steven Carlino
Vice President and Chief Accounting
Officer for the Registrant
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for PruTech Research and
Development Partnership III and is qualified
in its entirety by reference to such
financial statements
</LEGEND>
<RESTATED>
<CIK> 0000794357
<NAME> PruTech Research and
Development Partnership III
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Sep-30-1997
<PERIOD-TYPE> 9-Mos
<CASH> 2,478,450
<SECURITIES> 1,999,476
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,477,926
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,477,926
<CURRENT-LIABILITIES> 142,410
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,335,516
<TOTAL-LIABILITY-AND-EQUITY> 4,477,926
<SALES> 0
<TOTAL-REVENUES> 7,180,645
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 861,289
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,319,356
<EPS-PRIMARY> 138.94
<EPS-DILUTED> 0
</TABLE>
