-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D65n4SIOv+bjYMRjIDPry3kApFlY9N/HvY4i97BwgPGsRBWDwC99Ms7F3qepqWik dBgUTErypuMHWaoV0k885g== 0000914248-05-000031.txt : 20051128 0000914248-05-000031.hdr.sgml : 20051128 20051128122001 ACCESSION NUMBER: 0000914248-05-000031 CONFORMED SUBMISSION TYPE: N-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051128 DATE AS OF CHANGE: 20051128 EFFECTIVENESS DATE: 20051128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SPECIAL SITUATIONS FUND III L P CENTRAL INDEX KEY: 0000914248 IRS NUMBER: 133737427 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-Q SEC ACT: 1940 Act SEC FILE NUMBER: 811-08110 FILM NUMBER: 051227697 BUSINESS ADDRESS: STREET 1: 153 E 53 ST 51ST FL CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128325300 MAIL ADDRESS: STREET 1: 153 EAST 53RD STREET 51ST FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 N-Q 1 ssfnqsept2005.htm SSF III FORM N-Q SEPT. 2005 SSF III Form N-Q Sept. 2005

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number
811-08110
 
SPECIAL SITUATIONS FUND III, L.P.
(Exact name of registrant as specified in charter)
 
153 EAST 53RD STREET, 55TH FLOOR, NEW YORK, NEW YORK
10022
(Address of principal executive offices)
(Zip code)
 
Allen Levithan, Esq.
Lowenstein Sandler, PC
65 Livingston Avenue
Rosedale, NJ 07068-1791
(Name and address of agent for service)
 
Registrant’s telephone number, including area code
(212) 207-6500
 
Date of fiscal year end:
DECEMBER 31, 2005
 
Date of reporting period:
SEPTEMBER 30, 2005
 
 
Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5
(SS 239.24 and 274.5 of this chapter), to file reports with the Commission not later than 60 days after the close of the first and third fiscal quarters,
pursuant to rule 30b-1 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing
the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection
of information under the clearance requirements of 44 U.S.C. § 3507.



Item 1.  Schedule of Investments.
 

 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
         
   
SEPTEMBER 30, 2005
    

 
       
Fair
Shares
 
Common Stocks
  
Value
         
   
Aerospace 0.20%
    
971,600
  
SPACEHAB, Incorporated (a)
$
1,117,340
         
   
Automotive Components 2.44%
    
1,448,909
  
Amerigon Incorporated (a)
  
8,476,118
322,300
  
Rush Enterprises, Inc. - Class A
  
4,924,744
       
13,400,862
         
   
Biotechnology 1.54%
    
1,915,275
  
Ciphergen Biosystems, Inc.
  
3,543,259
967,742
  
Medivation, Inc. (Restricted)
  
1,500,000
415,600
  
Metabasis Therapeutics, Inc.
  
2,422,948
2,036,195
  
Xcyte Therapies, Inc. (a)
  
977,373
       
8,443,580
         
   
Biotechnology - Drug Delivery 0.63%
    
1,439,592
  
Aradigm Corporation
  
1,540,363
296,817
  
DepoMed, Inc.
  
1,923,374
       
3,463,737
         
   
Building Materials 0.30%
    
123,222
  
L.B. Foster Company
  
1,632,691
         
   
Business Services 0.18%
    
268,550
  
Intraware, Inc.
  
993,637
         
   
Communication Equipment - Software 3.80%
    
2,238,077
  
Artisoft, Inc. (a)
  
3,088,546
4,098,966
  
Artisoft, Inc. (Restricted) (a)
  
4,667,083
37,378
  
Avid Technology, Inc.
  
1,547,449
3,511,499
  
ION Networks, Inc. (a)
  
491,609
758,524
  
MetaSolv, Inc.
  
2,480,373
635,223
  
PC-Tel, Inc.
  
5,971,096
1,926,881
  
Visual Networks, Inc. (a)
  
2,639,827
       
20,885,983
         
   
Communication Products - Equipment 3.30%
    
461,128
  
Centillium Communications, Inc.
  
1,738,453
2,047,483
  
NMS Communications Corporation
  
7,575,687
253,400
  
RADVision, Ltd. (Israel)
  
3,463,978
162,750
  
Telular Corporation
 
637,980
1,472,518
  
Tut Systems, Inc.
  
4,741,508
       
18,157,606
         
   
Computer Equipment 1.36%
    
362,500
  
Optimal Group, Inc. (Canada)
  
7,496,500
         
         
         
 
    
 
    
         
 
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005

       
Fair
Shares
 
Common Stocks (Continued)
 
Value
         
   
Computer Peripherals 0.66%
    
248,305
 
Immersion Corporation
$
1,740,618
120,000
 
Printronix, Inc.
 
1,878,000
 
 
    
3,618,618
         
   
Computer Services - Software 9.78%
    
221,331
  
Aptimus, Inc.
  
3,087,567
1,977,456
  
ClickSoftware Technologies, Ltd. (Israel) (a)
  
3,223,253
416,747
  
CryptoLogic, Inc. (Canada)
 
7,318,077
1,573,957
  
Net Perceptions, Inc. (a)
  
1,196,207
178,255
  
Nuance Communications, Inc.
  
950,099
1,114,903
  
ONYX Software Corporation (a)
  
4,013,651
434,227
  
Palm Source, Inc.
  
7,837,797
652,900
  
Phoenix Technologies, Ltd.
  
4,916,337
1,251,365
  
Primal Solutions, Inc.
  
312,841
1,711,802
  
Quovadx, Inc.
  
5,186,760
249,384
  
Stellent, Inc.
  
2,137,221
979,642
  
SumTotal Systems, Inc.
  
4,770,856
767,850
  
SupportSoft, Inc.
  
3,869,964
2,738,150
  
Unify Corporation (a)
  
1,013,115
187,580
  
Witness Systems, Inc.
  
3,918,546
       
53,752,291
         
   
Computer Systems 2.63%
    
934,674
  
Adept Technology, Inc. (a)
  
7,524,126
388,100
  
Performance Technologies, Incorporated
  
2,774,915
650,553
  
SeaChange International, Inc.
  
4,137,517
       
14,436,558
         
   
Consumer Services 1.75%
    
500,000
  
Kenexa Corporation
  
6,260,000
581,818
  
OneTravel Holdings, Inc. (a)
  
3,374,544
       
9,634,544
         
   
Data Security 0.71%
    
700,401
  
Entrust, Inc.
  
3,922,246
         
   
Electronic Components 2.28%
    
726,458
  
American Technology Corporation
  
3,704,936
298,700
  
Frequency Electronics, Inc.
  
3,255,830
2,564,502
  
Tvia, Inc. (a)
  
5,564,969
       
12,525,735
         
   
Electronic Equipment 0.87%
    
1,782,205
  
Iteris Holdings, Inc. (a)
  
4,794,131
         
         
         
         
   
 
    
         
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 
 
       
Fair
Shares
 
Common Stocks (Continued)
 
Value
         
   
Electronic Instruments 1.14%
    
120,000
 
Axsys Technologies, Inc.
$
2,353,200
296,735
 
Image Sensing Systems, Inc. (a)
 
3,275,954
133,998
 
Metretek Technologies, Inc.
 
629,790
 
 
 
  
6,258,944
         
   
Electronic Semiconductor 1.57%
    
538,200
  
Kopin Corporation
  
3,740,490
1,263,200
  
PSi Technologies Holdings, Inc. (Philippines) (a)
  
1,250,568
581,062
  
Parkervision, Inc.
 
3,654,880
       
8,645,938
         
   
Energy - Oil & Gas 0.83%
    
19,300
  
Core Laboratories, N.V. (Netherlands)
  
622,618
250,000
  
Willbros Group, Inc. (Panama)
  
3,962,500
       
4,585,118
         
   
Energy - Technology 2.35%
    
839,836
  
Catalytica Energy Systems, Inc.
  
1,175,770
632,227
  
Hoku Scientific, Inc.
  
6,764,829
1,203,715
  
Quantum Fuel Systems Technologies Worldwide, Inc.
  
4,935,232
       
12,875,831
         
   
Entertainment 1.16%
    
379,500
  
DTS, Inc.
  
6,390,780
         
   
Gold Mining 0.57%
    
2,550,300
  
MK Resources Company (a)
  
3,136,869
         
   
Healthcare Services 1.34%
    
66,218
  
IntegraMed America, Inc.
  
793,954
359,766
  
U.S. Physical Therapy, Inc.
  
6,533,350
       
7,327,304
         
   
Healthcare - Specialized Products & Services 1.30%
    
210,000
  
American Dental Partners, Inc.
  
7,123,200
         
         
   
Housing - Construction 0.71%
    
160,527
  
Modtech Holdings, Inc.
  
1,560,322
412,086
  
U.S. Home Systems, Inc.
  
2,348,890
       
3,909,212
         
   
Household Furniture - Appliances 0.27%
    
2,612,500
 
Chitaly Holdings Limited (Hong Kong)
 
1,489,125
         
   
Insurance 0.00%
    
200
  
Renaissance Acceptance Group, Inc.
  
-
         
         
         
     
         
 
 
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 
 
       
Fair
Shares
 
Common Stocks (Continued)
 
Value
         
   
Information Services 0.69%
    
774,748
 
EDGAR Online, Inc. (a)
$
1,851,648
1,658,882
 
FIND/SVP, Inc. (a)
 
1,924,303
 
 
 
 
3,775,951
 
 
 
 
 
 
 
Internet Commerce 0.72%
 
 
914,800
 
Corillian Corporation
 
2,927,360
173,425
 
Youbet.com, Inc.
 
993,725
 
 
 
 
3,921,085
 
 
 
 
 
 
 
Medical Devices & Equipment 10.89%
 
 
1,081,814
 
ATS Medical, Inc.
 
4,002,712
332,738
 
Applied Imaging Corporation (a)
 
445,037
121,247
 
Given Imaging, Ltd. (Israel)
 
2,928,115
297,231
 
Laserscope, Inc.
 
8,375,969
2,278,848
 
Micro Therapeutics, Inc. (a)
 
12,738,766
495,070
 
Natus Medical Incorporated
 
6,025,002
864,489
 
Orthovita, Inc.
 
3,700,013
1,296,978
 
Precision Optics Corporation, Inc. (a)
 
635,519
508,924
 
Quidel Corporation
 
4,814,421
377,784
 
Regeneration Technologies, Inc.
 
3,086,495
480,000
 
Regeneration Technologies, Inc. (Restricted)
 
3,921,600
594,310
 
Sonic Innovations, Inc.
 
2,629,227
6,278,932
 
World Heart Corporation (Canada) (a)
 
6,467,300
 
 
 
 
59,770,176
 
 
 
 
 
 
 
Medical - Drugs 0.83%
 
 
800,000
 
Advanced Life Sciences Holdings, Inc.
 
3,976,000
243,054
 
Corgentech, Inc.
 
573,607
 
 
 
 
4,549,607
 
 
 
 
 
 
 
Medical Instruments 0.40%
 
 
344,827
 
Caprius, Inc. (a)
 
827,585
74,124
 
NuVasive, Inc.
 
1,389,084
 
 
 
 
2,216,669
 
 
 
 
 
 
 
Online Services 3.47%
 
 
1,717,050
 
The Knot, Inc. (a)
 
19,042,084
 
 
 
 
 
 
 
Paper - Packaging 0.00%
 
 
593,749
 
Chase Packaging Corporation
 
-
 
 
 
 
 
 
 
Pharmaceutical Products 1.18%
 
 
253,267
 
Axcan Pharma, Inc. (Canada)
 
3,272,209
383,864
 
Indevus Pharmaceuticals, Inc.
 
1,105,528
500,000
 
Isis Pharmaceutical, Inc. (Restricted)
 
2,125,000
 
 
 
 
6,502,737
 
 
 
    
         
         
   
 
    
         
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005

       
Fair
Shares
  
Common Stocks (Continued)
 
Value
         
   
Restaurant 1.26%
   
712,998
  
Buca, Inc.
$
4,327,898
651,499
  
Monterey Gourmet Foods, Inc.
 
2,612,511
       
6,940,409
         
   
Retail 5.50%
   
173,303
  
1-800 CONTACTS, INC.
 
3,249,431
453,000
  
Bakers Footwear Group, Inc. (a)
 
6,795,000
639,041
  
EZCORP, Inc. (a)
 
10,262,998
453,045
  
Gaiam, Inc.
 
4,675,424
227,250
  
Gander Mountain Company
 
2,042,977
542,152
  
Odimo Incorporated
 
802,331
418,309
  
PC Mall, Inc.
 
2,392,727
       
30,220,888
         
   
Semiconductor 0.06%
    
65,899
  
CEVA, Inc.
  
341,357
         
   
Semiconductor Equipment 3.39%
   
504,400
  
HI/FN, Inc.
  
2,799,420
282,012
  
Nanometrics Incorporated
 
3,299,540
1,303,516
  
Nova Measuring Instruments, Ltd. (Israel) (a)
 
2,867,735
1,495,200
  
Tegal Corporation (a)
  
986,832
6,720,185
  
Tegal Corporation (Restricted) (a)
  
4,368,120
1,400,209
  
Trikon Technologies, Inc. (Great Britain) (a)
  
2,380,355
325,263
  
Ultra Clean Holdings, Inc.
 
1,945,073
       
18,647,075
         
   
Services 1.41%
   
539,385
  
Collectors Universe, Inc. (a)
 
6,850,189
108,676
  
OPNET Technologies, Inc.
 
915,052
       
7,765,241
         
   
Technology - Miscellaneous 2.36%
   
813,100
  
IPASS, Inc.
  
4,374,478
1,083,044
  
Intermap Technologies Corp. (Canada)
 
5,312,656
918,855
  
Kintera, Inc.
  
2,802,508
577,829
  
Supercom, Ltd.
 
502,711
       
12,992,353
         
   
Telecom Equipment 1.26%
   
671,838
  
COMARCO, Inc. (a)
 
5,509,072
999,954
  
Peco II, Inc.
 
1,439,934
       
6,949,006
         
   
Telecom Services 1.73%
   
468,600
  
Spectralink Corporation
  
5,974,650
534,617
  
WPCS International Incorporated (a)
 
3,533,818
       
9,508,468
         
         
   
 
    
 
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 

       
Fair
Shares
  
Common Stocks (Continued)
 
Value
         
   
Telecommunications 0.83%
   
634,312
  
Arbinet-thexchange, Inc.
$
4,567,046
         
   
Therapeutics 2.32%
   
457,205
  
Critical Therapeutics, Inc.
 
4,306,871
245,408
  
Dyax Corp.
  
1,371,830
1,684,211
  
Memory Pharmaceuticals Corp. (Restricted) (a)
  
3,200,001
431,507
  
Pharmacyclics, Inc.
 
3,892,193
       
12,770,895
         
   
Transportation 0.99%
   
339,200
 
Excel Maritime Carriers, Ltd. (Bermuda)
 
5,447,552
2,500
 
Velocity Express Corporation
 
8,125
 
 
 
 
5,455,677
 
 
 
 
 
 
 
Total Common Stocks 82.95%
 
455,955,104
 
 
      
         
       
Fair
Shares
  
Preferred Stocks
  
Value
         
   
Data Security 0.58%
    
1,250,000
  
Verdasys, Inc. Series B convertible (Restricted)
$
3,160,000
         
   
Transportation 0.18%
    
304,682
 
Velocity Express Corporation 6% convertible
 
990,216
 
 
 
 
 
 
 
Total Preferred Stocks 0.76%
 
4,150,216
 
 
 
 
 
Principal
 
 
 
Fair
Amount
 
Corporate Bonds
 
Value
 
 
 
 
 
 
 
Communications Equipment - Software 0.76%
 
 
$4,195,151
 
Visual Networks, Inc. 5% convertible, due 12/31/07 (Restricted) (a)
$
4,195,151
 
 
 
 
 
 
 
Computer Peripherals 0.69%
 
 
3,800,000
 
Immersion Corporation 5% convertible, due 12/23/09
 
3,800,000
 
 
 
 
 
 
 
Computer Services - Software 0.46%
 
 
2,500,000
 
LocatePlus Holding Corporation 3% convertible, due 11/5/05 (Restricted)
 
2,500,000
€ 2,100,000
 
Titus Interactive 2%, due 7/1/05 (France)
 
-
 
 
 
 
2,500,000
 
 
 
 
 
 
 
Computer Systems 0.75%
 
 
$1,875,000
 
3D Systems Corporation 6% convertible, due 11/30/13
 
4,094,437
 
 
 
 
 
 
 
Consumer Products 0.27%
 
 
1,500,000
 
Rockford Corporation 4.5% convertible, due 6/11/09
 
1,500,000
 
 
 
 
 
 
 
Total Corporate Bonds 2.93%
 
16,089,588
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 

       
Fair
Warrants
 
Warrants
 
Value
 
 
 
 
 
 
 
Biotechnology 0.02%
 
 
413,400
 
Alliance Pharmaceutical Corp. 10/30/06
$
4,134
43,000
 
Discovery Laboratories, Inc. 9/19/10
 
58,480
4,819
 
Dov Pharmaceutical, Inc. 6/2/09
 
39,949
 
 
 
 
102,563
 
 
 
 
 
 
 
Biotechnology - Drug Delivery 0.18%
 
 
398,733
 
Aradigm Corporation 3/10/07
 
47,848
208,333
 
Aradigm Corporation 11/10/07
 
6,249
210,648
 
DepoMed, Inc. 4/21/08
 
950,022
 
 
 
 
1,004,119
 
 
 
 
 
 
 
Communication Equipment - Software 0.03%
 
 
1,140,000
 
Artisoft, Inc. 9/30/06 (a)
 
68,400
118,161
 
Artisoft, Inc. 9/28/15 (Restricted) (a)
 
-
44,842
 
Artisoft, Inc. 12/16/08 (Restricted) (a)
 
-
586,600
 
ION Networks, Inc. 2/14/07 (a)
 
11,732
1,147,058
 
ION Networks, Inc. 3/31/10 (a)
 
68,823
 
 
 
 
148,955
 
 
 
 
 
 
 
Communication Products - Equipment 0.07%
 
 
57,861
 
Superconductor Technologies, Inc. 3/10/07
 
578
427,500
 
Superconductor Technologies, Inc. 9/26/07
 
8,550
736,259
 
Tut Systems, Inc. 7/22/10
 
390,217
 
 
 
 
399,345
 
 
 
 
 
 
 
Computer Peripherals 0.02%
 
 
81,121
 
Immersion Corporation 12/23/09 
 
95,723
 
 
 
 
 
 
 
Computer Services - Software 0.02%
 
 
862,500
 
Interplay Entertainment Corp. 3/29/06
 
-
10,000,000
 
LocatePlus Holding Corporation 7/8/10 (Restricted)
 
-
929,560
 
Unify Corporation 4/26/09 (a)
 
74,365
 
 
 
 
74,365
 
 
 
 
 
 
 
Computer Systems 0.17%
 
 
1,666,700
 
Adept Technology, Inc. 11/18/08 (a)
 
916,685
 
 
 
 
 
 
 
Consumer Products 0.02%
 
 
70,889
 
Rockford Corporation 6/11/09
 
122,638
 
 
 
 
 
 
 
Consumer Services 0.08%
 
 
2,327,272
 
OneTravel Holdings, Inc. 4/14/10 (a)
 
442,182
 
 
 
 
 
 
 
Electronic Components 0.04%
 
 
216,176
 
American Technology Corporation 1/18/06
 
17,294
179,303
 
American Technology Corporation 7/18/09
 
195,440
 
 
 
 
212,734
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 
 
 
 
 
Fair
Warrants
 
Warrants (Continued)
  
Value
         
   
Electronic Equipment 0.15%
    
708,350
 
Iteris Holdings, Inc. B 8/16/07 (a)
$
835,853
 
 
 
 
 
 
 
Electronic Semiconductor 0.02%
 
 
80,000
 
Parkervision, Inc. 3/10/10
 
129,600
 
 
      
   
Energy - Technology 0.00%
    
132,667
  
Arotech Corporation 6/30/08
  
9,287
58,075
  
Arotech Corporation 12/31/08
  
2,904
       
12,191
         
   
Information Services 0.02%
    
150,000
 
EDGAR Online, Inc. 1/8/06 (a)
 
9,000
600,000
 
FIND/SVP, Inc. 5/10/09 (a)
 
114,000
 
 
 
 
123,000
         
   
Medical Devices & Equipment 0.03%
    
268,600
  
Applied Imaging Corporation 7/29/06 (a)
  
-
114,286
  
Orthovita, Inc. 6/26/08
  
93,714
47,476
  
SpectRx, Inc. 6/13/06
  
-
6,653,226
  
World Heart Corporation 9/22/08 (Canada) (a)
  
66,532
       
160,246
         
   
Medical Information Systems 0.00%
    
2,200,000
  
LifeRate Systems, Inc. 11/14/07 (a)
  
-
         
   
Medical Instruments 0.01%
    
2,758,620
 
Caprius, Inc. 2/15/10 (a)
 
62,069
 
 
 
 
 
 
 
Pharmaceutical Products 0.00%
 
 
125,000
 
Isis Pharmaceuticals, Inc. 8/23/10 (Restricted)
 
-
         
   
Semiconductor Equipment 0.02%
    
747,600
  
Tegal Corporation 7/14/10 (a)
  
74,760
3,360,092
  
Tegal Corporation 9/19/10 (Restricted) (a)
  
-
206,250
  
Trikon Technologies, Inc. 10/22/07 (Great Britain) (a)
  
14,437
       
89,197
         
   
Technology - Miscellaneous 0.19%
    
934,544
  
Intermap Technologies Corp. 3/17/08 (Canada)
 
1,028,002
         
   
Telecom Services 0.24%
    
150,780
  
GoAmerica, Inc. 12/19/08
  
1,507
8,750,000
  
WPCS International Incorporated 11/17/09 (a)
  
1,312,500
       
1,314,007
         
         
         
   
 
    
 
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 
 
       
Fair
Warrants
 
Warrants (Continued)
 
Value
         
         
   
Telecommunications 0.00%
    
79,800
  
Q Comm International, Inc. 6/24/08
$
18,354
         
   
Therapeutics 0.15%
    
159,672
  
Critical Therapeutics, Inc. 6/6/10
 
828,698
589,473
  
Memory Pharmaceuticals Corp. 9/22/10 (Restricted) (a)
  
-
       
828,698
         
   
Total Warrants 1.48%
  
8,120,526
         
         
   
TOTAL INVESTMENTS 88.12%
$
484,315,434
         
         
       
Fair
Shares
 
Securities Sold Short
 
Value
         
   
Specialized Services 0.09%
    
67,310
  
Flow International Corporation
$
519,633
         
         
   
TOTAL SECURITIES SOLD SHORT 0.09%
$
519,633
         
 
(a)
Affiliated issuer under the Investment Company Act of 1940, inasmuch
   
   
as the Fund owns more than 5% of the voting securities of the issuer.
    
         
 
All percentages are relative to Partners' Capital.
    
         
 
 
  All securities are non-income producing except for 3D Systems Corporation,    
 
 
  Chitaly Holdings Limited, CryptoLogic, Inc. Frequency Electronics, Inc.    
 
 
  Immersion Corporation, Printronix, Inc., Rockford Corporation, Spectralink    
 
 
  Corporation and Velocity Express Corporation.    
         
         
         
         
         
         
         
         
         
         
         
         
   
 
    
 
        
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 
 
 

 
 
 
 
 
% of
 
 
 
 
 
Partners'
Industry Concentration
 
 
Total
 
Capital
           
Aerospace
 
$
1,117,340
 
0.20
Automotive Components
 
 
13,400,862
 
2.44
Biotechnology
 
 
8,546,143
 
1.55
Biotechnology - Drug Delivery
 
 
4,467,856
 
0.81
Building Materials
 
 
1,632,691
 
0.30
Business Services
 
 
993,637
 
0.18
Communication Equipment - Software
 
 
25,230,089
 
4.59
Communication Products - Equipment
 
 
18,556,951
 
3.38
Computer Equipment
 
 
7,496,500
 
1.36
Computer Peripherals
 
 
7,514,341
 
1.37
Computer Services - Software
 
 
56,326,656
 
10.25
Computer Systems
 
 
19,447,680
 
3.54
Consumer Products
 
 
1,622,638
 
0.30
Consumer Services
 
 
10,076,726
 
1.83
Data Security
 
 
7,082,246
 
1.29
Electronic Components
 
 
12,738,469
 
2.32
Electronic Equipment
 
 
5,629,984
 
1.02
Electronic Instruments
 
 
6,258,944
 
1.14
Electronic Semiconductor
 
 
8,775,538
 
1.60
Energy - Oil and Gas
 
 
4,585,118
 
0.83
Energy - Technology
 
 
12,888,022
 
2.35
Entertainment
 
 
6,390,780
 
1.16
Gold Mining
 
 
3,136,869
 
0.57
Healthcare Services
 
 
7,327,304
 
1.34
Healthcare - Specialized Products & Services
 
 
7,123,200
 
1.30
Housing - Construction
 
 
3,909,212
 
0.71
Household Furniture - Appliances
 
 
1,489,125
 
0.27
Insurance
 
 
-
 
0.00
Information Services
 
 
3,898,951
 
0.71
Internet Commerce
 
 
3,921,085
 
0.72
Medical Devices & Equipment
 
 
59,930,422
 
10.91
Medical - Drugs
 
 
4,549,607
 
0.83
Medical Information Systems
 
 
-
 
0.00
Medical Instruments
 
 
2,278,738
 
0.41
Online Services
 
 
19,042,084
 
3.47
Paper - Packaging
 
 
-
 
0.00
Pharmaceutical Products
 
 
6,502,737
 
1.18
Restaurant
 
 
6,940,409
 
1.26
 
 
 
 
 
 
           
           
 
          
 
 
 
(A Limited Partnership)
         
PORTFOLIO OF INVESTMENTS
   
SEPTEMBER 30, 2005
 
 

 
 
 
 
 
% of
 
 
 
 
 
Partners'
Industry Concentration (Continued)
 
 
Total
 
Capital
           
Retail
 
$
30,220,888
 
5.50
Semiconductor
 
 
341,357
 
0.06
Semiconductor Equipment
 
 
18,736,272
 
3.41
Services
 
 
7,765,241
 
1.41
Specialized Services
 
 
(519,633)
 
(0.09)
Technology - Miscellaneous
 
 
14,020,355
 
2.55
Telecom Equipment
 
 
6,949,006
 
1.26
Telecom Services
 
 
10,822,475
 
1.97
Telecommunications
 
 
4,585,400
 
0.83
Therapeutics
 
 
13,599,593
 
2.47
Transportation
 
 
6,445,893
 
1.17
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL PORTFOLIO
 
$
483,795,801
 
88.03%
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
           
 
    
           
 


Item 2.  Controls and Procedures.

(a) Based on an evaluation of the registrant's disclosure controls and procedures as of a date within 90 days of the filing date of this report, the registrant’s principal executive and principal financial officers, or persons performing similar functions, concluded that the disclosure controls and procedures are effective.

(b) There were no significant changes in the registrant's internal control over financial reporting that occurred during the registrant's last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.

Item 3.  Exhibits

CERTIFICATION

I, Austin Marxe, certify that:

1. I have reviewed this report on Form N-Q of Special Situations Fund III, L.P.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the schedule of investments included in this report, fairly present in all material respects the investments of the registrant as of the fiscal quarter for which the report is filed;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 29, 2005   __/s/Austin Marxe__________________
Austin Marxe, Principal Executive Officer




CERTIFICATION


I, Rose M. Carling, certify that:

1. I have reviewed this report on Form N-Q of Special Situations Fund III, L.P.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the schedule of investments included in this report, fairly present in all material respects the investments of the registrant as of the fiscal quarter for which the report is filed;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.


Date: November 29, 2005   _/s/Rose M. Carling__________________
Rose M. Carling, Principal Financial Officer





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SPECIAL SITUATIONS FUND III, L.P.


By: __/s/ Austin Marxe_______________
Austin Marxe, Principal Executive Officer

Date: November 29, 2005


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By: _/s/ Austin Marxe_______________________
Austin Marxe, Principal Executive Officer

Date: November 29, 2005


By: __/s/Rose M. Carling ______________
Rose M. Carling, Principal Financial Officer

Date: November 29, 2005




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