SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-KSB
(Mark One)
[ X ] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 For the fiscal year ended December 31, 1999
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from to
Commission File Number: 33-84336-LA
JetFleet III
(Name of small business issuer in its charter)
California 94-3208983
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1440 Chapin Avenue, Suite 310
Burlingame, California 94010
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (650) 340-1880
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the Issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes X
No
Check if there no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained herein, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Revenues for the issuer's most recent fiscal year: $2,202,520
On March 10, 2000 the aggregate market value of the voting and non voting Common
equity held by non-affiliates (computed by reference to the price at which the
common equity was sold) was $0.
As of March 10, 2000 the Issuer has 815,200 Shares of Common Stock and 195,465
Shares of Series A Preferred Stock outstanding.
Documents Incorporated by Reference: None
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
PART I
Item 1. Business.
Business of the Company
JetFleet III (the "Company") was incorporated in the state of California on
August 23, 1994 ("Inception"). The Company was formed solely for the purpose of
offering up to $20,000,000 in $1,000 Series A Units, each Unit consisting of one
$850 Bond, maturing on November 1, 2003, and 15 shares of Preferred Stock (the
"Offering"). Capitalized terms not defined in this report are defined in the
Prospectus for the Offering and are incorporated herein by reference to the
Prospectus.
All of the Company's outstanding common stock is owned by JetFleet Holding Corp.
("JHC"), a California corporation formed in January 1994. In May 1998, JetFleet
Management Corp., the sole shareholder of the Company was renamed JetFleet
Holding Corp. The rights and obligations under the management agreement between
the Company and JHC were assigned by JHC to its newly-created wholly-owned
subsidiary named "JetFleet Management Corp." ("JMC"). JMC also manages
AeroCentury Corp., a Delaware corporation, and AeroCentury IV, Inc., a
California corporation, which are affiliates of JHC and which have objectives
similar to the Company's. Neal D. Crispin, the President of the Company, holds
the same position with JHC and JMC and owns a significant amount of the common
stock of JHC.
The directors of the Company are Neal D. Crispin, Chairman and Edwin S.
Nakamura, Director. The officers of the Company are Neal D. Crispin, President
and Secretary, Marc J. Anderson, Senior Vice President and Chief Operating
Officer and Frank Duckstein, Vice President.
The Company received Securities and Exchange Commission ("SEC") clearance for
the Offering on September 27, 1995. Between September 1995 and June 1997, the
Company raised $13,031,000 in the Offering. The Bonds bore interest at 12.94%
from issuance through October 31, 1998, and thereafter, a variable rate,
adjusted annually on November 1, equal to the one-year United States Treasury
bill rate plus 200 basis points, but not less than 8.24%. The current interest
rate payable on the Bonds is 8.24%, and the next adjustment date is November 1,
2000. The Company may prepay all or a portion of the outstanding principal of
the Bonds at any time beginning November 1, 1998. The Preferred Stock was issued
for $10 per share and is entitled to receive 50% in the aggregate, of any
remaining proceeds after (1) the Preferred Stock has been redeemed at $10 per
share and (2) the Common Stock has been redeemed at $1 per share. A dividend can
only be paid on the Common Stock if a dividend has also been paid on each share
of Preferred Stock in any amount equal to ten times the per-share dividend paid
on the Common Stock.
The proceeds of the Offering have been used to purchase Income Producing Assets
("Income Producing Assets"). These assets consist of aircraft and aircraft
engines subject to operating leases.
The revenue generated from the Income Producing Assets is used to fund interest
payments on the Bonds, reinvestment in additional Income Producing Assets and,
after November 1, 2001, deposits to a sinking fund account established to
facilitate repayment of principal of the Bonds on their maturity (or such
earlier time if the Company decides to make prepayments on the principal of the
Bonds). At the maturity date of the Bonds, the Company will pay off the
outstanding principal using proceeds of the resale of the Company's Income
Producing Assets, the funds in the Sinking Fund Account and/or proceeds of
third-party lender refinancing. When the Company repays the entire Bond
indebtedness, it may also, with such approval of its shareholders as required
under California law, dissolve and liquidate all of its assets. Any remaining
liquidation proceeds would be distributed to the Preferred Shareholders up to
the amount of their liquidation preference, then to the Common Shareholders in
an amount equal to $1.00 per share. Residual proceeds, if any, would be
distributed equally between the Preferred Shareholders, as a class, and the
Common Shareholders, as a class.
Aircraft and Aircraft Engines
The Company owns a deHavilland DHC-8-100, serial number 13 ("S/N 13"), a Pratt &
Whitney JT8D-9A aircraft engine, serial number 674267 ("S/N 674267"), three
deHavilland DHC-6-300 aircraft ("S/Ns 646, 751 and 696"), a Fairchild Metro III
SA-227-AC, Serial No. AC-621 ("S/N AC-621"), a Shorts SD3-60, serial number S/N
3656 ("S/N 3656"), a 50% undivided interest in a Shorts SD3-60, serial number
S/N 3676 ("S/N 3676"), a 33% interest in a deHavilland DHC-6, serial number 668
("S/N 668") and a Saab 340A, serial number 24 ("S/N 24").
<PAGE>
The Company invested approximately $2,800,000, including reimbursement for
chargeable acquisition costs and acquisition fees of approximately $127,230, in
aircraft assets during 1999. The Company did not acquire any aircraft during
1998. During 1999, the Company sold its Shorts SD3-60, serial number 3611 ("S/N
3611") and recognized a gain of approximately $12,900 and its 50% interest in a
Fairchild Metro II SA-226-TC, serial number TC-370, and recognized a gain of
$30,830 in connection with the sale.
S/N 13 was re-leased in June 1999 to the same sub-lessee, an Australian carrier,
for a one-year term.
S/N 674267 is an engine used on a McDonnell Douglas DC-9 aircraft and is subject
to a 60-month lease with the seller ending in November 2001. S/N 674267 is
subleased by the seller to a Mexican-based regional carrier.
S/Ns 646, 751 and 696 are subject to similar 36-month leases, expiring in July
2001, with a U.S. regional carrier.
S/N AC-621 was returned by the original lessee during October 1999, after
extending the lease from its original expiration date of May 31, 1999. S/N
AC-621 has been re-leased to a regional carrier in North America for a term of
six months and the lessee has expressed interest in a short term extension
beyond the initial six month term.
S/N 3656 and S/N 3676 are subject to similar 48-month leases, expiring in July
2001, with a British regional airline.
S/N 668 is subject to a 60-month lease expiring, in July 2004, with a regional
carrier in Colombia.
S/N 24 is subject to a lease, expiring in October 2002, with a regional carrier
in North America.
Factors that May Affect Future Results
Ability to Repay Bonds. The Company's ability to repay the Bonds at their
maturity date is dependent in part upon reinvestment of excess cash flows in
additional Income Producing Assets. To the extent that the Company realizes less
than anticipated lease rentals due to lessee rental defaults, early termination
of leases, or lower than expected remarketing proceeds during the term of the
Bonds, this may result in lower than expected excess cash flow available for
reinvestment in additional Assets. As a result, the Company's ability to repay
the Bonds in full at maturity may be negatively affected by such events even if
the Company is able to meet its scheduled interest payments.
The Company's ability to repay the Bonds at their maturity date is also
dependent in part upon its ability to refinance the Bonds or sell its aircraft
portfolio at a price sufficient to retire the outstanding Bond principal. If due
to the risks described below in the risk factors entitled "Ownership Risks" and
"Leasing Risks", the values of the Company's aircraft portfolio are in a
depressed state at the maturity date of the Bonds, the Company may be unable to
repay the entire Bond indebtedness on the maturity date.
Concentration of Leases. The Company owns 100% of one, and 50% of a second,
aircraft leased to a British regional carrier, which in the aggregate represents
16% of the Company's monthly revenue. The lessee has recently filed for
reorganization. The lessee is continuing to operate, and under the
reorganization plan, an agreement will be reached regarding the status of those
aircraft.
General Economic Conditions. The market for used aircraft has been cyclical, and
usually reflects economic conditions and the strength of the travel and
transportation industry. At any time, the market for used aircraft may be
adversely affected by such factors as airline financial difficulties, higher
fuel costs, and improved availability and economics of new replacement aircraft.
An adverse change in the global air travel industry, however, could result in
reduced carrier revenue and excess capacity and increase the risk of failure of
some weaker regional air carriers. While the Company believes that with proper
asset and lessee selection the impact of such changes on the Company can be
reduced, there is no assurance that the Company's business will escape the
effects of such a global downturn, or a regional downturn in an area where the
Company has placed a significant amount of its assets.
Reliance on JMC. All management of the Company is performed by JMC pursuant to a
management agreement between JMC and the Company. The Board of Directors does,
however, have ultimate control and supervisory responsibility over all aspects
of the Company and does owe fiduciary duties to the Company and its
stockholders. In addition, while JMC may not owe any fiduciary duties to the
Company by virtue of the management agreement, the officers of the Company are
also officers or employees of JMC, and in that capacity owe fiduciary duties to
the Company and the stockholders by virtue of holding such offices. Although the
Company has taken steps to prevent such conflicts, such conflicts of interest
arising from such dual roles may still occur.
Ownership Risks. All of the Company's portfolio is leased under operating
leases, where the terms of the leases do not take up the entire useful life of
an asset. The Company's ability to recover its purchase investment in an asset
subject to an operating lease is dependent upon the Company's ability to
profitably re-lease or sell the asset after the expiration of the initial lease
term. Some of the factors that have an impact on the Company's ability to
re-lease or sell include worldwide economic conditions, general aircraft market
conditions, regulatory changes that may make an asset's use more expensive or
preclude use unless the asset is modified, changes in the supply or cost of
aircraft equipment and technological developments which cause the asset to
become obsolete. In addition, a successful investment in an asset subject to an
operating lease depends in part upon having the asset returned by the lessee in
serviceable condition as required under the lease. If the Company is unable to
remarket its aircraft equipment on favorable terms when the operating lease for
such equipment expires, the Company's business, financial condition, cash flow,
ability to service debt and results of operation could be adversely affected.
Lessee Credit Risk. If a lessee defaults upon its obligations under a lease, the
Company may be limited in its ability to enforce remedies. Most of the Company's
lessees are small domestic and foreign regional passenger airlines, which may be
even more sensitive to airline industry market conditions than the major
airlines. As a result, the Company's inability to collect rent under a
significant lease or to repossess equipment in the event of a default by a
lessee could have a material adverse effect on the Company's revenue. If a
lessee that is a certified U.S. airline is in default under the lease and seeks
protection under Chapter 11 of the United States Bankruptcy Code, under Section
1110 of the Bankruptcy Code, the Company would be automatically prevented from
exercising any remedies for a period of 60 days. By the end of the 60 day
period, the lessee must agree to perform the obligations and cure any defaults,
or the Company would have the right to repossess the equipment. This procedure
under the Bankruptcy Code has been subject to significant recent litigation,
however, and it is possible that the Company's enforcement rights may still be
further adversely affected by a declaration of bankruptcy by a defaulting
lessee.
International Risks. The Company's portfolio includes leases with foreign air
carriers. Leases with foreign lessees may present somewhat different credit
risks than those with domestic lessees.
Foreign laws, regulations and judicial procedures may be more or less protective
of lessor rights as those which apply in the United States. The Company could
experience collection problems related to the enforcement of its lease
agreements under foreign local laws and the remedies in foreign jurisdictions.
The protections potentially offered by Section 1110 of the Bankruptcy Code would
not apply to non-U.S. carriers, and applicable local law may not offer similar
protections. Certain countries do not have a central registration or recording
system with which to locally establish the Company's interest in equipment and
related leases. This could add difficulty in recovering an aircraft in the event
that a foreign lessee defaults.
Leases with foreign lessees are subject to risks related to the economy of the
country or region in which such lessee is located even if the U.S. economy
remains strong. On the other hand, a foreign economy may remain strong even
though the domestic U.S. economy does not. A foreign economic downturn may occur
and impact a foreign lessee's ability to make lease payments, even though the
U.S. and other economies remain stable. Furthermore, foreign lessees are subject
to risks related to currency conversion fluctuations. Although the Company's
current leases are all payable in U.S. dollars, in the future, the Company may
agree to leases that permit payment in foreign currency, which would subject
such lease revenue to monetary risk due to currency fluctuations. Even with
dollar-denominated lease payment provisions, the Company could still be affected
by a devaluation of the lessee's local currency which would make it more
difficult for a lessee to meet its dollar-denominated lease payments, increasing
the risk of default of that lessee, particularly if that carrier's revenue is
primarily derived in the local currency.
Competition. The Company has many competitors in the aircraft leasing industry,
including leasing companies, banks and other financial institutions and aircraft
leasing partnerships. The market is highly competitive. Most of the Company's
competitors have substantially greater financial and other resources than the
Company.
Casualties, Insurance Coverage. The Company, as owner of transportation
equipment, could be held liable for injuries or damage to property caused by its
assets. Though some protection may be provided by the United States Aviation Act
with respect to its aircraft assets, it is not clear to what extent such
statutory protection would be available to the Company and such act may not
apply to aircraft operated in foreign countries. Though the Company may carry
insurance or require a lessee to insure against a risk, some risks of loss may
not be insurable. An uninsured loss with respect to the Equipment or an insured
loss for which insurance proceeds are inadequate, would result in a possible
loss of invested capital in and any profits anticipated from such equipment.
Leasing Risks. The Company's successful negotiation of lease extensions,
re-leases and sales may be critical to its ability to achieve its financial
objectives, and will involve a number of substantial risks. Demand for lease or
purchase of the assets depends on the economic condition of the airline industry
which is in turn highly sensitive to general economic conditions. Ability to
remarket equipment at acceptable rates may depend on the demand and market
values at the time of remarketing. The market for used aircraft is cyclical, and
generally, but not always, reflects economic conditions and the strength of the
travel and transportation industry. The demand for and value of many types of
older aircraft in the recent past has been depressed by such factors as airline
financial difficulties, increased fuel costs, the number of new aircraft on
order and the number of older aircraft coming off lease. The Company's
concentration in a limited number of airframe and aircraft engine types
(generally, turboprop equipment) subjects the Company to economic risks if those
airframe or engine types should decline in value. The recent introduction of
"regional jets" to serve on short routes previously thought to be economical
only for turboprop aircraft operation could decrease the demand for turboprop
aircraft, while at the same time increasing the supply of used turboprop
aircraft. This could result in lower lease rates and values for the Company's
turboprop aircraft.
Risks Related to Regional Air Carriers. Because the Company has concentrated its
existing leases on leases to regional air carriers, it will be subject to
certain risks. First, lessees in the regional air carrier market include a
number of companies that are start-up, low capital, low margin operations.
Often, the success of such carriers is dependent upon arrangements with major
trunk carriers, which may be subject to termination or cancellation by such
major carrier. This market segment is also characterized by low entry costs, and
thus, there is strong competition in this industry segment from start-ups as
well as major airlines. Thus, leasing transactions with these types of lessees
results in a generally higher lease rate on aircraft, but may entail higher risk
of default or lessee bankruptcy.
Year 2000 Considerations. Because all administrative and management functions of
the Company are carried out by its management company, JMC, JMC's readiness for
Year 2000 has determined the Company's status. JMC has reported to the Company
that it did not experience any problems with the Year 2000 event, and does not
anticipate any in the coming year. Lessees of the Company have not appeared to
be materially affected by the Year 2000, and, to date, the Company's business
with all lessees appears unaffected by Year 2000. The Company has not incurred
and does not anticipate any costs related to the Year 2000 issue.
Item 2. Properties
The Company does not own or lease any real property, plant or materially
important physical properties other than equipment under operating lease as set
forth in Item 1.
The Company maintains its principal office at 1440 Chapin Avenue, Suite 310,
Burlingame, California, 94010. All office facilities are provided by JMC without
reimbursement by the Company.
Item 3. Legal Proceedings.
The Company is not involved in any legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Common Equity and Related Stockholder Matters.
General
There is no established trading market for the Units and their constituent
securities (collectively, the "Securities"), and none of the Securities are
listed on any securities exchange.
Number of Security Holders
Approximate number of holders of Series A
Units ("Unitholders") as of March 10, 2000: 800
Dividends
The Company has not declared a dividend on either the Preferred Stock or Common
Stock since Inception. The Company is not permitted to pay any dividends on the
Common Stock unless the shares of Preferred Stock also receive a per share
dividend equal to ten times the per share dividend paid to the Common Stock. The
Company intends to retain earnings, if any, to finance the development and
expansion of its business. In accordance with the Indenture under which the
Bonds were issued, dividends may not be paid until the Bonds are repaid in full.
Item 6. Management's Discussion and Analysis or Plan of Operation.
Capital Resources and Liquidity
At the end of 1999, the Company had cash balances of $888,240 and deposits of
$822,160. The Company's cash balances were held for the interest payment made to
the Unitholders in February 2000, for normally recurring expenses and for
investment in additional Income Producing Assets.
Since Inception, the Company's funds have come in the form of an initial
contribution from JMC, proceeds from the Offering and rental revenue from the
Income Producing Assets purchased using those proceeds. The Company's liquidity
will vary in the future, increasing to the extent cash flows from operations
exceed expenses, and decreasing as interest payments are made to the Unitholders
and to the extent expenses exceed cash flows from leases.
The Company's primary use of its operating cash flow is interest payments to its
Unitholders. Excess cash flow, after payment of interest and operating expenses
is held for investment in additional Income Producing Assets. Since the Company
has acquired Income Producing Assets which are subject to triple net leases (the
lessee pays operating and maintenance expenses, insurance and taxes), the
Company does not anticipate that it will incur significant operating expenses in
connection with ownership of its Income Producing Assets as long as they remain
on lease.
The Company currently has available adequate reserves to meet its immediate cash
requirements. The leases for the Company's aircraft expire at varying times
between April 2000 and July 2004. Leases expiring during 2000 include those for
S/N AC-621 and S/N 13.
Management is currently negotiating extensions of the leases for both of these
aircraft.
As discussed in Item 1, the interest rate on the Bonds was 12.94% through
October 31, 1998 and is a variable rate thereafter, calculated annually on
November 1. The variable rate is equal to the higher of (i) 2% plus the annual
yield rate on one-year U.S. Treasury Bills on the last business day of October
of that year or (ii) 8.24%. Based on the one-year Treasury bill rate on October
31, 1998 and October 31, 1999, the Bonds bear interest at the rate of 8.24% per
annum for the periods November 1, 1998 through October 31, 1999 and November 1,
1999 through October 31, 2000.
1999 versus 1998
The increase in cash flow from operations was due primarily to the Company
having net income during 1999 versus a net loss in 1998 (see Results of
Operations, below) and the collection of prepaid rent and maintenance reserves
from lessees. This effect was partially offset by an increase in rent
receivable, accounts receivable and cash classified as deposits in 1999.
The increase in cash flow used by investing activities was due to the Company's
purchases of the undivided interests in S/N 668 and S/N 24 during July 1999 and
August 1999, respectively, which were partially offset by the sale of S/N 3611
during March 1999. There were no cash flows from financing activities during
1999 or 1998 because the Offering terminated during June 1997.
Results of Operations
The Company recorded net income of $381,420 or $0.47 per share and a net loss of
($53,680) or ($0.07) per share for the years ended December 31, 1999 and 1998,
respectively.
1999 versus 1998
Rental income decreased by approximately $177,000 during 1999 versus 1998 as a
result of the sale of aircraft during October 1998 and March 1999, and the
one-month off-lease period for S/N 13 during the second quarter of 1999. This
decrease was partially offset by the purchases of the undivided interests in
aircraft in July and August 1999. Interest income increased by approximately
$48,000 in 1999 because the Company had higher cash balances as a result of the
aircraft sales in October 1998 and March 1999. During 1999, the Company
recognized a gain in connection with the sale of S/N 3611.
Depreciation decreased by approximately $20,000 during 1999 versus 1998 as a
result of the sale of two aircraft during October 1998 and March 1999. This
effect was only partially offset by the depreciation expense incurred as a
result of the aircraft purchases during July and August 1999. Interest expense
decreased by approximately $434,000 in 1999 due to the decrease in the rate
payable on the Company's Bonds from 12.94% to 8.24%, effective November 1, 1998.
Professional fees increased by approximately $58,000 during 1999 versus 1998 due
to legal fees incurred in connection with the sale of S/N 3611 and the re-lease
of S/N 13 and S/N AC-621.
The Company recognized a tax benefit during 1999 as a result of reducing the
valuation allowance of its deferred tax assets. The Company reduced the
valuation allowance because it had operating income during 1999 and expects to
have income in future years. Consequently, the Company expects to utilize its
deferred tax assets that exceed its deferred tax liabilities.
Item 7. Financial Statements.
(a) Financial Statements and Schedules
(1) Financial statements for JetFleet III:
Report of Independent Auditors, Vocker Kristofferson
and Co. Balance Sheet as of December 31, 1999
Statements of Operations for the Years Ended December
31, 1999 and 1998 Statements of Changes in
Shareholders' Equity for the Years Ended
December 31, 1999 and 1998
Statements of Cash Flows for the Years Ended
December 31, 1999 and 1998
Notes to Financial Statements
(2) Schedules:
All schedules have been omitted since the required
information is presented in the financial statements
or is not applicable.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Stockholders
of JetFleet III
We have audited the accompanying balance sheet of JetFleet III, a California
corporation, as of December 31, 1999 and the related statements of operations,
shareholders' equity and cash flows for the years ended December 31, 1999 and
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of JetFleet III at December 31,
1999 and the related statements of operations, shareholders' equity and cash
flows for the years ended December 31, 1999 and 1998, in conformity with
generally accepted accounting principles.
VOCKER KRISTOFFERSON AND CO.
February 29, 2000
San Mateo, California
<PAGE>
<TABLE>
JETFLEET III
Balance Sheet
December 31, 1999
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 888,240
Deposits 822,160
Accounts receivable 61,900
Rent receivable 68,850
-------------
Total current assets 1,841,150
Aircraft and aircraft engines under operating leases,
net of accumulated depreciation of $1,776,720 11,419,520
Debt issue costs, net of accumulated
amortization of $785,070 876,380
Deferred taxes 194,450
Prepaid expenses 12,960
-------------
Total assets $ 14,344,460
=============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C>
Current liabilities:
Accounts payable $ 23,900
Interest payable 152,120
Prepaid rents 97,890
Security deposits 88,800
Maintenance deposits 786,890
Taxes payable 8,210
-------------
Total current liabilities 1,157,810
Medium-term secured bonds 11,076,350
Total liabilities 12,234,160
Preferred stock, no par value,
300,000 shares authorized, 195,465
issued and outstanding 1,661,450
Common stock, no par value,
1,000,000 shares authorized, 815,200
issued and outstanding 815,200
Accumulated deficit (366,350)
-------------
Total shareholders' equity 2,110,300
-------------
Total liabilities and shareholders' equity $ 14,344,460
=============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
JETFLEET III
Statements of Operations
<CAPTION>
For the Year Ended December 31,
<S> <C> <C>
1999 1998
Revenues:
Rent income $ 2,086,380 $ 2,262,990
Gain on sale of aircraft 12,900 30,830
Interest income 103,240 54,570
------------- -------------
2,202,520 2,348,390
------------- -------------
Expenses:
Depreciation 578,220 597,500
Amortization 228,620 228,620
Interest 912,690 1,346,510
Professional fees and general and administrative 91,420 32,890
Management fees 195,470 195,470
------------- -------------
2,006,420 2,400,990
------------- -------------
Income/(loss) before taxes 196,100 (52,600)
Tax (benefit)/provision (185,320) 1,080
------------- -------------
Net income/(loss) $ 381,420 $ (53,680)
============= =============
Weighted average common shares outstanding 815,200 815,200
============= =============
Basic earnings/(loss) per common share $ 0.47 $ (0.07)
============= =============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
JETFLEET III
Statements of Shareholders' Equity
For the Years Ended December 31, 1999 and 1998
<S> <C> <C> <C> <C>
Total
Preferred Common Accumulated Shareholders'
Stock Stock Deficit Equity
Balance, December 31, 1997 $ 1,661,450 $ 815,200 $ (694,090) $ 1,782,560
Net loss for the period - - (53,680) (53,680)
------------- ------------- ------------ -------------
Balance, December 31, 1998 1,661,450 815,200 (747,770) 1,728,880
Net income for the period - - 381,420 381,420
------------- ------------- ------------- -------------
Balance, December 31, 1999 $ 1,661,450 $ 815,200 $ (366,350) $ 2,110,300
============= ============= ============= =============
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
JETFLEET III
Statements of Cash Flows
<CAPTION>
For the Year Ended December 31,
<S> <C> <C>
1999 1998
Operating activities:
Net income/(loss) $ 381,420 $ (53,680)
Adjustments to reconcile net income/(loss) to net
cash provided by operating activities:
Depreciation 578,220 597,500
Amortization 228,620 228,620
Gain on sale of aircraft (12,900) (30,830)
Change in operating assets and liabilities:
Deposits (577,760) (136,490)
Rent receivable (44,290) 24,340
Accounts receivable (61,900) 19,880
Deferred taxes (194,450) -
Other assets (12,060) 64,100
Accounts payable 9,650 (3,180)
Prepaid rents 40,210 -
Security deposits 88,800 -
Interest payable - (86,760)
Maintenance deposits 541,790 117,310
Taxes payable 8,210 -
-------------- -------------
Net cash provided by operating activities 973,560 740,810
-------------- -------------
Investing activities:
Purchase of interests in aircraft (2,800,050) -
Proceeds from sale of aircraft 1,074,970 359,330
-------------- -------------
Net cash (used)/provided by investing activities (1,725,080) 359,330
-------------- -------------
Net (decrease)/increase in cash (751,520) 1,100,140
Cash, beginning of period 1,639,760 539,620
-------------- -------------
Cash, end of period $ 888,240 $ 1,639,760
============== =============
Supplemental disclosures of cash flow information:
Cash paid during the period for: 1999 1998
---- ----
Interest (net of amount capitalized) $ 912,690 $ 1,433,280
Income taxes 920 1,080
</TABLE>
See accompanying notes.
<PAGE>
JETFLEET III
Notes to Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
JetFleet III (the "Company") was incorporated in the state of
California on August 23, 1994 ("Inception"). The Company was formed solely for
the purpose of acquiring Income Producing Assets. The Company offered up to
$20,000,000 in $1,000 Series A Units (the "Offering") consisting of $850 of
bonds maturing on November 1, 2003 (the "Bonds") and $150 of preferred stock
(the "Preferred Stock") pursuant to a prospectus dated September 27, 1995 (the
"Prospectus").
All of the Company's outstanding common stock is owned by JetFleet
Holding Corp. ("JHC"), a California corporation formed in January 1994. In May
1998, JetFleet Management Corp., the sole shareholder of the Company was renamed
JetFleet Holding Corp. The rights and obligations under the management agreement
between the Company and JHC were assigned by JHC to its newly-created
wholly-owned subsidiary named "JetFleet Management Corp." ("JMC"). JMC also
manages AeroCentury Corp., a Delaware corporation, and AeroCentury IV, Inc., a
California corporation, which are affiliates of JHC and which have objectives
similar to the Company's. Neal D. Crispin, the President of the Company, holds
the same position with JHC and JMC and owns a significant amount of the common
stock of JHC.
Cash and Cash Equivalents/Deposits
The Company considers highly liquid investments readily convertible
into known amounts of cash, with original maturities of 90 days or less, as cash
equivalents. Deposits represent cash balances held related to maintenance
reserves and security deposits and generally are subject to withdrawal
restrictions. As of December 31, 1999, the Company maintained $1,709,130 of its
cash balances in two money market funds held by regional brokerage firms, which
are not federally insured.
Aircraft and Aircraft Engines Under Operating Leases
The Company's interests in aircraft are recorded at cost, which include
acquisition costs (see Note 2). Depreciation is computed using the straight-line
method over each aircraft's estimated economic life to its estimated residual
value.
As the Company has substantial amounts of long-lived assets that are
potentially subject to impairment, FAS 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of" has been applied
for the year ending December 31, 1999. Long-lived assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. If the sum of the expected future
undiscounted cash flows is less than the carrying amount of the asset, a loss is
recognized for the difference between the fair value and the carrying value of
the asset. There were no write-downs required during 1999.
Organization and Offering Costs
Pursuant to the terms of the Prospectus, the Company paid an
Organization and Offering Expense Reimbursement to JHC in cash in an amount up
to 2.0% of Aggregate Gross Offering Proceeds for reimbursement of certain costs
incurred in connection with the organization of the Company and the Offering
(the "Reimbursement").
<PAGE>
JETFLEET III
Notes to Financial Statements
1. Summary of Significant Accounting Policies (continued)
Organization and Offering Costs (continued)
JHC contributed $450,000 of the total it paid for organization and
offering expenses as a common stock investment in the Company (the "Initial
Contribution"). The Company issued 450,000 shares of common stock to JHC in
return for the Initial Contribution. To the extent that JHC incurred expenses in
excess of the 2.0% cash limit, such excess expenses were repaid to JHC in the
form of Common Stock issued by the Company at a price of $1.00 per share (the
"Excess Stock"). The amount of Excess Stock that the Company issued was limited
according to the amount of Aggregate Gross Offering Proceeds raised by the
Company.
The Company capitalized the portions of both the Reimbursement paid and
the Initial Contribution related to the Bonds (85%) and amortizes such costs
over the life of the Bonds (approximately eight years). The remainder of any of
the Initial Contribution and Reimbursement is deducted from shareholders'
equity.
Assets Subject to Lien
The Company's obligations under the Bonds are secured by a security
interest in all of the Company's right, title and interest in the Income
Producing Assets acquired by the Company.
Income Taxes
The Company follows the liability method of accounting for income taxes
as required by the provisions of Statement of Financial Accounting Standards No.
109 - Accounting for Income Taxes.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
2. Aircraft and Aircraft Engines Under Operating Leases
Aircraft and Aircraft Engines
The Company owns a deHavilland DHC-8-100, serial number 13 ("S/N 13"),
a Pratt & Whitney JT8D-9A aircraft engine, serial number 674267 ("S/N 674267"),
three deHavilland DHC-6-300 aircraft ("S/Ns 646, 751 and 696"), a Fairchild
Metro III SA-227-AC, Serial No. AC-621 ("S/N AC-621"), a Shorts SD3-60, serial
number S/N 3656 ("S/N 3656"), a 50% undivided interest in a Shorts SD3-60,
serial number S/N 3676 ("S/N 3676"), a 33% interest in a deHavilland DHC-6,
serial number 668 ("S/N 668") and a Saab 340A, serial number 24 ("S/N 24").
During 1999, the Company purchased S/N 24 and the 33% interest in S/N
668. The remaining interest in S/N 668 is owned by AeroCentury IV. The interests
in the two aircraft were purchased for a total of approximately $2,800,000,
including acquisition costs. Also during 1999, the Company sold its Shorts
SD3-60, serial number 3611 ("S/N 3611") and recognized a gain of approximately
$12,900.
During 1998, the Company sold its 50% interest in a Fairchild Metro II
SA-226-TC, serial number TC-370 to the lessee. The Company recognized a gain of
approximately $30,830 in connection with the sale.
<PAGE>
JETFLEET III
Notes to Financial Statements
2. Aircraft and Aircraft Engines Under Operating Leases (continued)
Aircraft and Aircraft Engines Leases (continued)
S/N 13 was re-leased in June 1999 to the same sub-lessee, an Australian
carrier, for a one-year term.
S/N 674267 is used on a McDonnell Douglas DC-9 and is subject to a
60-month sublease, expiring in November 2001, between the seller and a Mexican
based regional carrier.
S/Ns 646, 751 and 696 are subject to similar 36-month leases,
expiring in July 2001, with a U.S. regional carrier.
S/N AC-621 is leased to a regional carrier in North America for a
six-month term, expiring in April 2000. The lessee has expressed interest in a
short term extension beyond the initial six month term.
S/N 3656 and S/N 3676 are subject to similar 48-month leases,
expiring in July 2001, with a British regional airline.
S/N 668 is subject to a 60-month lease expiring, in July 2004, with a
regional carrier in Colombia.
S/N 24 is subject to a lease, expiring in October 2002, with a regional
carrier in North America.
Detail of Investment
The following schedule provides an analysis of the Company's investment
in aircraft under operating leases and the related accumulated depreciation for
the years ended December 31, 1998 and 1999:
<TABLE>
<S> <C> <C> <C>
Accumulated
Cost Depreciation Net
Balance, December 31, 1997 $ 11,947,350 $ (761,600) $ 11,185,750
Additions - (597,500) (597,500)
Disposals (362,170) 33,680 (328,490)
------------ -------------- -------------
Balance, December 31, 1998 11,585,180 (1,325,420) 10,259,760
Additions 2,800,050 (578,220) 2,221,830
Disposals (1,189,000) 126,930 (1,062,070)
------------ -------------- -------------
Balance, December 31, 1999 $ 13,196,230 $ (1,776,710) $ 11,419,520
============ ============== =============
</TABLE>
<PAGE>
JETFLEET III
Notes to Financial Statements
3. Operating Segments
The Company operates in one business segment, aircraft leasing, and
therefore does not present separate segment information for lines of business.
Approximately 40% and 32% of the Company's operating lease revenue was
derived from lessees domiciled in the United States during 1999 and 1998,
respectively. All leases relating to aircraft leased and operated
internationally are denominated and payable in U.S. dollars.
The table below sets forth geographic information about the Company's
operating leased aircraft equipment grouped by domicile of the lessee:
<TABLE>
<CAPTION>
Operating Lease Revenue Net Book Value of Operating Leased Assets
For the Year Ended December 31, December 31,
<S> <C> <C> <C> <C> <C>
Country 1999 1998 1999 1998
------- ---- ---- ---- ----
United States $ 829,180 $ 730,350 $ 5,402,130 $ 3,140,840
Australia 617,550 720,000 3,689,770 3,888,690
United Kingdom 440,960 656,640 1,371,450 2,567,600
Other 198,690 156,000 956,170 662,630
------------- ------------- ------------- -------------
$ 2,086,380 $ 2,262,990 $ 11,419,520 $ 10,259,760
============= ============= ============= =============
</TABLE>
For the year ended December 31, 1999, the Company had four significant
customers, which accounted for 23%, 19%, 17% and 12%, respectively of lease
revenue. For the year ended December 31, 1998, the Company had three significant
customers, which accounted for 22%, 17% and 12%, respectively, of lease revenue.
As of December 31, 1999, minimum future lease rent payments receivable
under noncancelable leases were as follows:
<TABLE>
<S> <C> <C>
Year Amount
2000 $ 1,987,190
2001 1,114,020
2002 464,100
2003 89,100
2004 44,550
-------------
$ 3,698,960
=============
</TABLE>
4. Medium-Term Secured Bonds
The Company raised $13,031,000 through the Offering from November 1995
to June 1997. Each $1,000 Unit subscribed in the offering included an $850
medium-term secured bond maturing on November 1, 2003. The Bonds bore interest
at an annual rate of 12.94% through October 31, 1998 and, thereafter, a variable
rate, adjusted annually on November 1, equal to the one-year United States
Treasury bill rate plus 2%, but not less than 8.24%. Based on the one-year
Treasury bill rate on October 31, 1998 and October 31, 1999, the Bonds bear
interest at the rate of 8.24% per annum for the periods November 1, 1998 through
October 31, 1999 and November 1, 1999 through October 31, 2000. Interest is due
and payable on a quarterly basis, in arrears, on the first business day of
February, May, August and November. The carrying amount of the Bonds
approximates fair value.
<PAGE>
JETFLEET III
Notes to Financial Statements
5. Income Taxes
The items comprising income tax expense are as follows:
<TABLE>
<S> <C> <C> <C>
1999 1998
Current tax provision
Federal $ - $ -
State 9,130 1,080
------------- --------------
Current provision 9,130 1,080
------------- --------------
Deferred tax provision
Federal 65,420 (18,250)
State 33,900 (2,360)
------------- --------------
Deferred tax provision 99,320 (20,610)
Change in valuation allowance (293,770) 20,610
------------- --------------
Subtotal (194,450) -
------------- --------------
Total (credit)/provision for income taxes $ (185,320) $ 1,080
============= ==============
</TABLE>
The total (credit)/provision for income taxes differs from the amount
which would be provided by applying the statutory federal income tax rate to
pretax earnings as illustrated below:
<TABLE>
<S> <C> <C> <C>
Income tax expense at statutory federal income tax rate $ 66,680 $ (17,880)
State taxes net of federal benefit 2,970 (2,730)
State franchise taxes 9,130 1,080
Tax rate differences 29,670 -
Change in valuation allowance (293,770) 20,610
------------- --------------
Total provision for income taxes $ (185,320) $ 1,080
============= ==============
</TABLE>
Temporary differences and carryforwards which gave rise to a
significant portion of deferred tax assets and liabilities as of December 31,
1999 are as follows:
<TABLE>
<S> <C> <C>
Deferred tax assets:
Net operating loss $ 333,400
Maintenance deposits 236,850
Prepaid rent 34,760
State franchise taxes 270
Amortization of organization costs 80
-------------
Subtotal 605,360
Valuation allowance -
-------------
Net deferred tax assets 605,360
Deferred tax liability -
Depreciation of aircraft (410,910)
$ 194,450
=============
</TABLE>
The Company anticipates generating adequate future taxable income to
realize the benefits of the remaining deferred tax assets on the balance sheet.
The Company's net operating losses may be carried forward for fifteen or twenty
years, depending on when they were created, and begin to expire in 2009.
<PAGE>
JETFLEET III
Notes to Financial Statements
6. Related Party Transactions
The Company's Income Producing Asset portfolio is managed and
administered under the terms of a management agreement with JMC. Under this
agreement, on the last day of each calendar quarter, JMC receives a quarterly
management fee equal to 0.375% of the Company's Aggregate Gross Proceeds
received through the last day of such quarter. In 1999 and 1998, the Company
accrued a total of $195,470 and $195,470, respectively, in management fees due
JMC.
JMC may receive an acquisition fee for locating assets for the Company
and a remarketing fee in connection with the sale of the Company's assets,
provided that such fees are not more than the customary and usual fees that
would be paid to an unaffiliated party for such a transaction. The total of the
Aggregate Purchase Price plus the acquisition fee cannot exceed the fair market
value of the asset based on appraisal. During 1999 and 1998, the Company paid
acquisition fees totaling $112,870 and $0, respectively, to JMC. JMC may also
receive reimbursement of Chargeable Acquisition Expenses incurred in connection
with a transaction which are payable to third parties. During 1999, the Company
reimbursed $3,040, $4,550 and $4,930 to JMC, AeroCentury IV and AeroCentury
Corp., respectively, for Chargeable Acquisition Expenses. No such expenses were
reimbursed during 1998 and no remarketing fees were paid during 1999 or 1998.
As discussed in Note 1, the Company reimbursed JHC for certain costs
incurred in connection with the organization of the Company and the Offering.
The Company made no such payments during 1999 or 1998.
7. Subsequent Event
On February 24, 2000, the lessee of two of the Company's 30-seat
aircraft filed for reorganization. The two aircraft are owned 100% and 50% by
the Company. The lessee is continuing to operate, and, under the reorganization
plan, an agreement will be reached regarding the status of those aircraft.
<PAGE>
Item 8. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.
General
Pursuant to a Management Agreement between the Company and JMC, JMC is
responsible for most management decisions, has responsibility for supervising
the Company's day-to-day operations, including compliance with legal and
regulatory requirements, and is responsible for cash management and
communications between the Company and the holders of Bonds and Preferred Stock.
The Management Agreement authorizes JMC, in its sole discretion, to acquire,
hold title to, sell, lease, re-lease or otherwise dispose of Income Producing
Assets or any interest therein, on behalf of the Company when and upon such
terms as JMC determines to be in the best interests of the Company, subject to
certain limitations set forth in the Prospectus.
The JMC Advisory Board has responsibilities including, but not limited to,
attendance at meetings of the Board of Directors and its committees in a
non-voting, advisory capacity, giving advice to the Directors and officers and
reviewing JMC's strategic plans, financial affairs and offering advice, analysis
and insight about them.
Directors and Officers
The directors, executive officers and key employees of the Company and JMC, each
of whom serves until his successor is elected and qualified, are as follows:
Name Position Held
Neal D. Crispin President and Chairman of the Board of
Directors of the Company and Chief
Financial Officer and Secretary of the
Company
Edwin S. Nakamura Director of the Company
Marc J. Anderson Senior Vice President of the Company
Frank Duckstein Vice President of the Company
Sidney F. Gage Member of JMC Credit Committee
Neal D. Crispin, age 54. Mr. Crispin is Chairman of the Board of Directors and
President of the Company. He is also President and a Director of ACY, JHC, JMC
and CMA Consolidated, Inc. ("CMA"). Prior to forming CMA in 1983, Mr. Crispin
was vice president-finance of an oil and gas company. Previously, Mr. Crispin
was a manager with Arthur Young & Co., Certified Public Accountants. Mr. Crispin
is the husband of Toni M. Perazzo, a Director and Officer of JHC, JMC and ACY.
He received a Bachelors degree in Economics from the University of California at
Santa Barbara and a Masters degree in Business Administration (specializing in
Finance) from the University of California at Berkeley. Mr. Crispin, a certified
public accountant, is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.
Edwin S. Nakamura, age 62, Director. Mr. Nakamura holds a B.S. in Business from
San Francisco State University. A certified public accountant, Mr. Nakamura has
been the Chief Executive Officer and owner of U.S.A. Publishing, Inc. since
1981.
<PAGE>
Marc J. Anderson, age 63. Mr. Anderson is the Company's Senior Vice President
and is also Senior Vice President of JHC, JMC and ACY and a Director of ACY.
Prior to joining JMC in 1994, Mr. Anderson was an aviation consultant (1992 to
1994) and prior to that spent seven years (1985 to 1992) as Senior Vice
President-Marketing for PLM International, a transportation equipment leasing
company. He was responsible for the acquisition, modification, leasing and
remarketing of all aircraft. Prior to PLM, Mr. Anderson served as
Director-Contracts for Fairchild Aircraft Corp., Director of Aircraft Sales for
Fairchild SAAB Joint Venture, and Vice President, Contracts for SHORTS Aircraft
USA, Inc. Prior to that, Mr. Anderson was employed by several airlines in
various roles of increasing responsibility beginning in 1959.
Frank Duckstein, age 45. Mr. Duckstein is the Company's Vice President,
Remarketing. He holds the same position with JMC and ACY. Mr. Duckstein has been
in charge of market development for JMC since joining JMC 1995. From 1989 to
1995, Mr. Duckstein served as Director of Marketing for PLM International, a
transportation equipment leasing company. While at PLM, he was responsible for
sales and remarketing, market research and development, both domestically and
internationally, of PLM's corporate and commuter aircraft, as well as their
helicopter fleet. Previously, he was with the following international and
regional airlines operating within Europe and the U.S. with responsibility for
operation, market development and sales: Direct Air (Berlin, Germany); Air
Berlin (Berlin, Germany), and Aeroamerica (Berlin, Germany). Mr. Duckstein
attended the Technical University of Berlin, majoring in Economics.
Sidney F. Gage, age 56, Member of JMC Credit Committee. Mr. Gage has been a
partner of Gage & Baumgarten, a management consulting firm specializing in
strategic business planning, since 1990. Previously, he was Executive Vice
President and Director of Mission Resources, Inc., the managing general partner
of Mission Resource Partners, an oil and gas company listed on the American
Stock Exchange, and President of Mission Securities, Inc., its NASD
broker-dealer affiliate. He is a certified public accountant with degrees from
the University of Notre Dame and the Stanford University Graduate School of
Business. Mr. Gage has served as a consultant to the CMA Group of companies
since 1990.
Item 10. Executive Compensation.
The Company has no employees. The following is a summary of the compensation and
reimbursements paid to the parent of the Company and related parties by the
Company for the years ended December 31, 1998 and 1999.
Compensation
The Company's Income Producing Asset portfolio is managed and administered under
the terms of a management agreement with JMC. Under this agreement, on the last
day of each calendar quarter, JMC receives a quarterly management fee equal to
0.375% of the Company's Aggregate Gross Proceeds received through the last day
of such quarter. In 1999 and 1998, the Company paid a total of $195,470 and
$195,470, respectively, in management fees due JMC.
JMC may receive an acquisition fee for locating assets for the Company and a
remarketing fee in connection with the sale of the Company's assets, provided
that such fees are not more than the customary and usual fees that would be paid
to an unaffiliated party for such a transaction. The total of the Aggregate
Purchase Price plus the acquisition fee cannot exceed the fair market value of
the asset based on appraisal. During 1999 and 1998, the Company paid acquisition
fees totaling $112,870 and $0, respectively, to JMC. JMC may also receive
reimbursement of Chargeable Acquisition Expenses incurred in connection with a
transaction which are payable to third parties. During 1999, the Company
reimbursed $3,040, $4,550 and $4,930 to JMC, AeroCentury IV and AeroCentury
Corp., respectively, for Chargeable Acquisition Expenses. No such expenses were
reimbursed during 1998 and no remarketing fees were paid during 1999 or 1998.
The Company reimbursed JHC for certain costs incurred in connection with the
organization of the Company and the Offering. The Company made no such payments
during 1999 or 1998.
<PAGE>
Item 11. Security Ownership of Certain Beneficial
Owners and Management.
No person is known to the Company to be the beneficial owner of more than 5% of
the Units. No officer or director of JHC or JMC or any of its related parties
beneficially owns any Units.
JHC owns 100% of the issued and outstanding common stock of the Company. Mr.
Crispin, President of JHC, and Toni M. Perazzo, Vice President-Finance of JHC,
collectively own the majority of the issued and outstanding common stock of JHC,
including shares owned by CMA Consolidated, an affiliated company controlled by
Mr. Crispin. Marc J. Anderson, Senior Vice President of JMC owns approximately
1% of JHC's common stock.
Item 12. Certain Relationships and Related Transactions.
See Item 10, above.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K Filed in Last Quarter
None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized on March 10, 2000.
JETFLEET III
By: /s/ Neal D. Crispin
------------------------
Neal D. Crispin
Title: President
Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons in the capacities indicated on March 10,
2000.
Signature Title
/s/ Neal D. Crispin President and Chairman of the
- ---------------------- Board of Directors of the Registrant
Neal D. Crispin Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000930832
<NAME> JETFLEET III
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,710,400
<SECURITIES> 0
<RECEIVABLES> 130,750
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,841,150
<PP&E> 13,196,240
<DEPRECIATION> 1,776,720
<TOTAL-ASSETS> 14,344,460
<CURRENT-LIABILITIES> 1,157,810
<BONDS> 11,076,350
0
1,661,450
<COMMON> 815,200
<OTHER-SE> (366,350)
<TOTAL-LIABILITY-AND-EQUITY> 14,344,460
<SALES> 0
<TOTAL-REVENUES> 2,202,520
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,093,730
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 912,690
<INCOME-PRETAX> 196,100
<INCOME-TAX> (185,320)
<INCOME-CONTINUING> 381,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 381,420
<EPS-BASIC> 0.47
<EPS-DILUTED> 0.47
</TABLE>
