N-Q 1 ssfiiin-qmarch2007.htm SSF III N-Q MARCH 2007 SSF III N-Q March 2007
UNITED STATES
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)
 
527 MADISON AVENUE, SUITE 2600, 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) 319-6670
 
Date of fiscal year end:
DECEMBER 31, 2007
 
Date of reporting period:
MARCH 31, 2007
 
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.
 

 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair  
Shares
 
Common Stocks
 
Value 
         
 
   
Aerospace 0.10%
    
78,294
  
SPACEHAB, Inc.
$
46,193
         
   
Automotive Components 0.93%
    
22,371
  
Rush Enterprises, Inc. - Class A
  
429,747
         
   
Biotechnology 6.30%
    
39,575
  
Combinatorx, Inc.
  
276,629
86,027
  
Medivation, Inc.
 
1,622,469
35,587
  
Metabasis Therapeutics, Inc.
  
261,564
22,952
  
Opexa Therapeutics, Inc.
  
95,021
66,829
  
Sangamo BioSciences, Inc.
  
454,437
105,110
  
Tapestry Pharmaceuticals, Inc.
  
195,505
       
2,905,625
         
   
Building Materials 0.93%
    
30,358
  
Comfort Systems USA, Inc.
  
363,689
22,600
  
Viceroy Homes, Ltd. (Canada)
  
59,119
300
  
WFI Industries, Ltd. (Canada)
  
5,721
       
428,529
         
   
Business Services 0.03%
    
15,600
  
Utix Group, Inc.
  
14,040
         
   
Casino - Services 0.49%
    
59,823
  
Full House Resorts, Inc.
  
226,729
         
   
Chemicals 1.01%
    
40,500
  
KMG Chemicals, Inc.
  
465,750
         
   
Communication Equipment - Software 2.33%
    
1,335,957
  
ION Networks, Inc.
 
106,877
48,048
  
PC-Tel, Inc.
  
488,648
10,000
  
RIT Technologies, Ltd. (Israel)
  
17,600
180,869
  
Vertical Communication, Inc.
  
162,782
330,340
  
Vertical Communication, Inc. (Restricted)
  
297,306
       
1,073,213
         
   
Communication Products - Equipment 1.03%
    
84,438
  
Centillium Communications, Inc.
  
163,081
173,207
  
NMS Communications Corporation
  
311,773
       
474,854
         
   
Computer Equipment 0.43%
    
23,603
  
Optimal Group, Inc. (Canada)
  
198,029
         
 
 
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair  
Shares
 
Common Stocks (Continued)
 
Value 
         

   
Computer Peripherals 0.37%
    
12,399
  
Printronix, Inc.
$
171,726
         
   
Computer Services - Software 14.59%
    
10,082
  
Acorn Factor, Inc.
  
50,108
107,388
  
ClickSoftware Technologies, Ltd. (Israel)
  
342,568
15,000
  
CryptoLogic, Inc. (Canada)
 
375,000
302,600
  
Excapsa Software, Inc. (Canada) (Illiquid)
  
68,196
430,000
  
Interplay Entertainment Corporation (Restricted)
  
-
36,698
  
LocatePlus Holdings Corporation (Restricted)
  
7,707
781,677
  
Motive, Inc.
  
2,774,953
108,645
  
Net Perceptions, Inc.
 
271,613
71,032
  
Phoenix Technologies, Ltd.
  
443,950
110,505
  
Primal Solutions, Inc.
  
7,735
137,133
  
Quovadx, Inc.
  
349,689
18,700
  
Radware, Ltd. (Israel)
  
252,450
84,589
  
Salary.com, Inc.
  
941,475
76,225
  
SumTotal Systems, Inc.
  
608,275
20,546
  
SupportSoft, Inc.
  
115,879
238,778
  
Unify Corporation
  
124,165
       
6,733,763
         
   
Computer Systems 1.62%
    
76,108
  
Adept Technology, Inc.
 
589,837
31,165
  
Performance Technologies, Inc.
  
156,137
       
745,974
         
   
Consumer Products 0.35%
    
106,000
  
Varsity Group, Inc.
  
161,120
         
   
Diagnostics 0.30%
    
45,010
  
Curagen Corporation
  
138,631
       
138,631
         
   
Electronic Components 2.12%
    
137,082
  
American Technology Corporation
  
545,586
12,051
  
Frequency Electronics, Inc.
  
131,597
73,125
  
Interlink Electronics, Inc.
  
230,344
147,711
  
Tvia, Inc.
 
70,901
       
978,428
         
         
 
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair  
Shares
 
Common Stocks (Continued)
 
Value 
         

   
Electronic Equipment 2.05%
    
460,277
  
Capstone Turbine Corporation
$
487,894
198,705
  
Iteris Holdings, Inc.
  
457,021
       
944,915
         
   
Electronic Instruments 2.76%
    
1,005
 
Axsys Technologies, Inc.
 
15,859
42,132
 
Image Sensing Systems, Inc.
 
741,102
38,723
 
Metretek Technologies, Inc.
 
516,565
 
 
 
 
1,273,526
 
 
 
    
   
Electronic Semiconductor 1.25%
    
133,375
  
Kopin Corporation
  
450,807
84,082
  
PSi Technologies Holdings, Inc. (Philippines)
 
127,805
       
578,612
         
   
Energy - Oil & Gas 1.33%
    
27,129
  
Willbros Group, Inc. (Panama)
  
611,488
         
   
Energy - Technology 1.02%
    
253,101
  
Catalytica Energy Systems, Inc.
  
364,465
86,161
  
Quantum Fuel Systems Technologies Worldwide, Inc.
  
105,116
       
469,581
         
   
Financial Services - Miscellaneous 0.49%
    
43,474
  
MicroFinancial Incorporated
  
225,195
         
   
Gold Mining 0.55%
    
205,536
  
MK Resources Company (Illiquid)
  
252,809
         
   
Healthcare Services 0.87%
    
28,968
  
U.S. Physical Therapy, Inc.
  
403,234
         
   
Healthcare - Specialized Products & Services 1.52%
    
32,282
  
American Dental Partners, Inc.
  
701,488
         
   
Housing - Construction 1.43%
    
69,965
 
Modtech Holdings, Inc.
 
219,690
34,612
 
U.S. Home Systems, Inc.
 
441,303
 
 
 
 
660,993
 
 
 
    
   
Information Services 1.32%
    
141,187
  
Guideline, Inc.
  
155,306
439,600
  
Pfsweb, Inc.
  
452,788
       
608,094
         
   
Insurance 1.62%
    
77,541
  
AmCOMP, Inc.
  
749,046
         
         
 
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair  
Shares
 
Common Stocks (Continued)
 
Value 
         

   
Internet Commerce 2.42%
    
164,491
 
Corillian Corporation
$
820,810
99,100
 
Youbet.com, Inc.
 
297,300
 
 
 
 
1,118,110
 
 
 
 
 
 
 
Medical Devices & Equipment 8.11%
 
 
48,204
 
Natus Medical Incorporated
 
856,585
109,516
 
Orthovita, Inc.
 
319,787
104,522
 
Precision Optics Corporation, Inc.
 
41,809
21,685
 
Quidel Corporation
 
260,220
51,469
 
Regeneration Technologies, Inc.
 
373,150
151,263
 
Sonic Innovations, Inc.
 
1,278,172
1,750,683
 
World Heart Corporation (Canada)
 
612,739
 
 
 
 
3,742,462
 
 
 
 
 
 
 
Medical Instruments 0.71%
 
 
27,790
 
Caprius, Inc.
 
24,455
58,766
 
Electro-Optical Sciences, Inc.
 
302,645
 
 
 
 
327,100
 
 
 
 
 
 
 
Oil Equipment 0.00%
 
 
650
 
Beluga Composites Corporation
 
-
 
 
 
 
 
 
 
Online Services 0.80%
 
 
17,230
 
The Knot, Inc.
 
370,962
 
 
 
 
 
 
 
Paper - Packaging 1.44%
 
 
47,850
 
Chase Packaging Corporation
 
2,393
98,300
 
Pope & Talbot, Inc.
 
663,525
 
 
 
 
665,918
 
 
 
 
 
 
 
Practice Management 0.84%
 
 
26,068
 
IntegraMed America, Inc.
 
389,717
 
 
 
 
 
 
 
Restaurant 1.50%
 
 
71,761
 
Buca, Inc.
 
394,685
69,507
 
Monterey Gourmet Foods, Inc.
 
297,490
 
 
 
 
692,175
 
 
 
 
 
 
 
Retail 2.04%
 
 
37,704
 
1-800 CONTACTS, INC.
 
633,427
32,997
 
Bakers Footwear Group, Inc.
 
299,613
33,737
 
Odimo Incorporated
 
8,434
 
 
 
 
941,474
 
 
      
         
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair
 
Shares
 
Common Stocks (Continued)
 
Value 
         

   
Semiconductor 2.65%
    
65,077
  
CEVA, Inc.
$
470,507
232,900
  
NeoMagic Corporation
  
752,267
       
1,222,774
         
   
Semiconductor Equipment 4.20%
   
55,321
  
HI/FN, Inc.
  
335,799
27,152
  
Integral Vision, Inc.
  
13,848
109,215
  
Nova Measuring Instruments, Ltd. (Israel)
  
309,078
56,274
  
Tegal Corporation
 
261,674
58,821
  
Ultra Clean Holdings, Inc.
 
1,017,603
       
1,938,002
         
   
Services 1.90%
   
49,337
  
Collectors Universe, Inc.
  
691,212
13,638
  
OPNET Technologies, Inc.
 
184,249
       
875,461
         
   
Technology - Miscellaneous 2.83%
   
108,445
  
iPass, Inc.
  
545,478
87,284
  
Intermap Technologies Corp. (Canada)
 
453,877
334,761
  
Supercom, Ltd. (Israel)
  
307,980
       
1,307,335
         
   
Telecom Equipment 1.42%
   
54,043
  
COMARCO, Inc.
 
491,791
189,908
  
Peco II, Inc.
 
163,321
       
655,112
         
   
Telecom Services 2.07%
   
348,027
  
Multiband Corporation
  
170,533
69,810
  
WPCS International Incorporated
 
784,664
       
955,197
         
   
Telecommunications 0.97%
    
360,122
  
Emrise Corporation
  
446,551
         
   
Therapeutics 3.15%
    
365,691
  
Anadys Pharmaceuticals, Inc.
  
1,451,793
         
   
Toys 0.01%
    
983
  
Corgi International, Ltd. (China) (ADR)
 
4,720
         
   
Transportation 0.02%
    
9,638
  
Velocity Express Corporation
  
10,602
         
   
Vitamins 1.51%
    
100,000
  
Omega Protein Corporation (Restricted)
  
698,000
         
   
Total Common Stocks 87.73% (cost $33,804,865)
  
40,484,797
         
         
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair
 
Shares
 
Preferred Stocks
 
Value 
         

   
Business Services 0.20%
    
24
  
UTIX Group, Inc. convertible
$
83,077
11,538
  
UTIX Group, Inc. convertible (Restricted)
  
10,384
       
93,461
         
   
Communications Equipment - Software 0.22%
    
100
  
Vertical Communications, Inc. convertible (Restricted)
  
100,000
 
 
 
 
 
 
 
Computer Services - Software 0.53%
 
 
42,750
 
Zhongpin, Inc. convertible (Restricted)
 
244,958
 
 
 
 
 
 
 
Data Security 0.55%
 
 
100,739
 
Verdasys, Inc. Series B convertible (Illiquid)
 
254,870
 
 
 
 
 
 
 
Electronic - Display 0.52%
 
 
549,484
 
E Ink Corporation (Restricted)
 
241,773
 
 
 
 
 
 
 
Medical Instruments 0.09%
 
 
1,612
 
Caprius, Inc. convertible
 
14,185
100
 
Caprius, Inc. convertible (Restricted)
 
25,000
 
 
 
 
39,185
 
 
 
 
 
 
 
Transportation 0.04%
 
 
9,272
 
Velocity Express Corporation 6% convertible
 
17,895
 
 
 
 
 
 
 
Total Preferred Stocks 2.15% (cost $904,071)
 
992,142
 
 
 
 
 

Principal
    
Fair  
Amount
  
Corporate Debt
 
 Value

   
Computer Peripherals 0.85%
    
$ 306,246
 
Immersion Corporation 5% convertible, due 12/22/09
$
393,128
         
   
Computer Services - Software 0.30%
    
$ 11,000
 
Primal Solutions, Inc. 5%, due 3/31/08
  
11,000
$ 68,000
 
Unify Corporation 11.25% convertible, due 10/31/10 (Restricted)
  
68,000
$ 17,600
 
Unify Corporation 11.25% convertible, due 10/31/11 (Restricted)
 
17,600
$ 40,000
 
Unify Corporation Revolv. Credit 10.5%, due 10/31/10 (Restricted)
 
40,000
       
136,600
         
   
Consumer Products 0.26%
    
$ 120,886
 
Rockford Corporation 4.5% convertible, due 6/11/09
 
120,886
         
   
Technology - Miscellaneous 0.07%
    
$ 33,000
 
Supercom, Ltd. 8% convertible, due 3/31/2007 (Israel) (Restricted)
 
33,000
         
   
Total Corporate Debt 1.48% (cost $596,732)
  
683,614
         
         
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair
 
Warrants
  
Warrants
 
Value 
         

   
Biotechnology 0.25%
    
96,038
  
La Jolla Pharmaceutical Company 12/14/10
$
51,861
3,847
  
Metabasis Therapeutics, Inc. 9/30/10
  
6,809
142,000
  
Opexa Therapeutics, Inc. 4/13/11
  
9,940
100,000
  
Tapestry Pharmaceuticals, Inc. 4/6/11
  
48,000
       
116,610
         
   
Biotechnology - Drug Delivery 0.00%
    
16,790
  
Aradigm Corporation 11/10/07
  
-
         
   
Building Materials 0.35%
    
200,000
  
American Mold Guard, Inc. Class A
  
76,000
200,000
  
American Mold Guard, Inc. Class B
  
84,000
       
160,000
         
   
Business Services 0.03%
    
1,500,000
  
UTIX Group, Inc. 1/13/11
  
15,000
1,731
  
UTIX Group, Inc. (Restricted) 11/9/11
  
-
       
15,000
         
   
Communication Equipment - Software 0.00%
    
3,614
 
Vertical Communications, Inc. 12/16/08 (Restricted)
 
-
9,523
 
Vertical Communications, Inc. 9/28/15 (Restricted)
 
-
94,340
 
Vertical Communications, Inc. 12/1/16 (Restricted)
 
-
 
 
 
 
-
 
 
 
 
 
 
 
Communication Products - Equipment 0.00%
 
 
34,453
 
Superconductor Technologies, Inc. 9/26/07
 
-
59,336
 
Tut Systems, Inc. 7/22/10
 
-
 
 
 
 
-
 
 
 
 
 
 
 
Computer Peripherals 0.06%
 
 
6,105
 
Cambridge Display Technology, Inc. 12/22/10 (United Kingdom)
 
8,120
6,538
 
Immersion Corporation 12/23/09 
 
19,483
 
 
 
 
27,603
 
 
 
 
 
 
 
Computer Services - Software 0.02%
 
 
805,910
 
LocatePlus Holding Corporation 7/8/10 (Restricted)
 
-
55,000
 
Primal Solutions, Inc. 3/31/11
 
1,650
74,914
 
Unify Corporation 4/26/09
 
8,241
53,600
 
Unify Corporation 10/31/12 (Restricted)
 
-
25,683
 
Zhongpin, Inc. 1/30/11 (Restricted)
 
-
 
 
 
 
9,891
 
 
 
    
         
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair
 
Warrants
  
Warrants (Continued)
 
Value 
         

   
Computer Systems 0.15%
    
134,321
 
Adept Technology, Inc. 11/18/08
$
69,847
 
 
 
 
 
 
 
Consumer Products 0.01%
 
 
5,713
 
Rockford Corporation 6/11/09
 
2,742
 
 
 
 
 
 
 
Electronic Components 0.13%
 
 
32,422
 
American Technology Corporation 8/6/10
 
54,145
14,450
 
American Technology Corporation 7/18/09
 
6,358
 
 
 
 
60,503
 
 
 
 
 
 
 
Electronic Equipment 0.11%
 
 
175,438
 
Capstone Turbine Corporation 1/23/12
 
45,614
11,246
 
Iteris Holdings, Inc. B 9/28/11
 
3,374
 
 
 
 
48,988
 
 
 
 
 
 
 
Electronic Semiconductor 0.08%
 
 
6,447
 
ParkerVision, Inc. 3/10/10
 
36,619
 
 
 
 
 
 
 
Energy - Technology 0.03%
 
 
10,692
 
Arotech Corporation 6/30/08
 
-
4,680
 
Arotech Corporation 12/31/08
 
-
34,146
 
Quantum Fuel Systems, Inc. 4/27/14
 
11,951
 
 
 
 
11,951
 
 
 
 
 
 
 
Information Services 0.01%
 
 
48,355
 
Guideline, Inc. 5/10/09
 
2,418
 
 
 
 
 
 
 
Medical Devices & Equipment 0.00%
 
 
9,210
 
Orthovita, Inc. 6/26/08
 
829
536,190
 
World Heart Corporation 9/22/08 (Canada)
 
-
 
 
 
 
829
 
 
 
 
 
 
 
Medical Information Systems 0.00%
 
 
177,300
 
LifeRate Systems, Inc. 11/14/07
 
-
 
 
 
 
 
 
 
Medical Instruments 0.03%
 
 
222,320
 
Caprius, Inc. 2/15/10
 
12,783
4,477
 
Caprius, Inc. 2/16/11
 
1,716
31,250
 
Caprius, Inc. 2/27/12 (Restricted)
 
-
 
 
 
 
14,499
 
 
 
 
 
 
 
Semiconductor Equipment 0.02%
 
 
60,250
 
Tegal Corporation 7/14/10
 
1,807
270,793
 
Tegal Corporation 9/19/10
 
8,124
16,622
 
Trikon Technologies, Inc. 10/22/07 (United Kingdom)
 
-
 
 
 
  
9,931
         
         
 
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
     
Fair
 
Warrants
  
Warrants (Continued)
 
Value 
         

   
Technology - Miscellaneous 0.15%
    
75,316
  
Intermap Technologies Corp. 3/17/08 (Canada)
$
66,278
90,990
  
Supercom, Ltd. 12/9/10 (Israel)
  
40,036
8,250
  
Supercom, Ltd. 11/19/11 (Israel) (Restricted)
  
-
       
106,314
         
   
Telecom Services 0.76%
    
12,152
  
GoAmerica, Inc. 12/19/08
  
243
705,171
  
WPCS International Incorporated 11/16/09
 
352,585
       
352,828
         
   
Telecommunications 0.00%
    
6,431
  
Q Comm International, Inc. 6/24/08
  
129
         
   
Therapeutics 0.07%
    
12,868
  
Critical Therapeutics, Inc. 6/6/10
 
4,890
47,506
  
Memory Pharmaceuticals Corp. 9/22/10
  
26,796
       
31,686
         
   
Total Warrants 2.34% (cost $12,762)
  
1,078,388
         
   
TOTAL INVESTMENTS (cost $35,318,340) 93.70%
$
43,238,941
         
         

       
Fair
Shares
  
Securities Sold Short
  
Value

   
Biotechnology 0.00%
    
220
  
Memory Pharmaceuticals Corporation
  
370
         
   
TOTAL SECURITIES SOLD SHORT (proceeds $1,027) 0.00%
  
370
         
         
 
 
All percentages are relative to Partners' Capital. 
    
         
 
 
All securities are non-income producing except for Collectors Universe, Inc., 
    
 
CryptoLogic, Inc., Immersion Corporation, KMG Chemicals, Inc., 
    
 
MicroFinancial Incorporated, Primal Solutions, Inc., Printronix, Inc., 
    
 
 
Rockford Corporation, Supercom, Ltd., Unify Corporation, Inc., Velocity 
    
 
Express Corporation, Vertical Communications, Inc. and WFI Industries, Ltd. 
    
         
         
 
 
 
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
% of
         
Partners'
Industry Concentration
    
Total
 
Capital
Aerospace
 
$
46,193
 
0.10
Automotive Components
 
 
429,747
 
0.93
Biotechnology
 
 
3,021,865
 
6.55
Biotechnology - Drug Delivery
 
 
-
 
0.00
Building Materials
 
 
588,529
 
1.28
Business Services
 
 
122,501
 
0.27
Casino - Services
 
 
226,729
 
0.49
Chemicals
 
 
465,750
 
1.01
Communication Equipment - Software
 
 
1,173,213
 
2.55
Communication Products - Equipment
 
 
474,854
 
1.03
Computer Equipment
 
 
198,029
 
0.43
Computer Peripherals
 
 
592,457
 
1.28
Computer Services - Software
 
 
7,125,212
 
15.44
Computer Systems
 
 
815,821
 
1.77
Consumer Products
 
 
284,748
 
0.62
Data Security
 
 
254,870
 
0.55
Diagnostics
 
 
138,631
 
0.30
Electronic Components
 
 
1,038,931
 
2.25
Electronic - Display
 
 
241,773
 
0.52
Electronic Equipment
 
 
993,903
 
2.16
Electronic Instruments
 
 
1,273,526
 
2.76
Electronic Semiconductor
 
 
615,231
 
1.33
Energy - Oil and Gas
 
 
611,488
 
1.33
Energy - Technology
 
 
481,532
 
1.05
Financial Services
 
 
225,195
 
0.49
Gold Mining
 
 
252,809
 
0.55
Healthcare Services
 
 
403,234
 
0.87
Healthcare - Specialized Products & Services
 
 
701,488
 
1.52
Housing - Construction
 
 
660,993
 
1.43
Information Services
 
 
610,512
 
1.33
Insurance
 
 
749,046
 
1.62
Internet Commerce
 
 
1,118,110
 
2.42
Medical Devices & Equipment
 
 
3,743,291
 
8.11
Medical Information Systems
 
 
-
 
0.00
Medical Instruments
 
 
380,784
 
0.83
Oil Equipment
 
 
-
 
0.00
 
 
 
 
 
 
 
 
 
 
    
 
SPECIAL SITUATIONS FUND III, L.P.
 		    
 
(A Limited Partnership)
 		    
         
 
  
PORTFOLIO OF INVESTMENTS
 		    
         
 
  
MARCH 31, 2007
 		    
         
% of
         
Partners'
Industry Concentration (Continued)
    
Total
 
Capital

Online Services
 
$
370,962
 
0.80
Paper - Packaging
 
 
665,918
 
1.44
Practice Management
 
 
389,717
 
0.84
Restaurant
 
 
692,175
 
1.50
Retail
 
 
941,474
 
2.04
Semiconductor
 
 
1,222,774
 
2.65
Semiconductor Equipment
 
 
1,947,933
 
4.22
Services
 
 
875,461
 
1.90
Technology - Miscellaneous
 
 
1,446,649
 
3.13
Telecom Equipment
 
 
655,112
 
1.42
Telecom Services
 
 
1,308,025
 
2.83
Telecommunications
 
 
446,680
 
0.97
Therapeutics
 
 
1,483,479
 
3.21
Toys
 
 
4,720
 
0.01
Transportation
 
 
28,497
 
0.06
Vitamins
 
 
698,000
 
1.51
 
 
 
 
 
 
 
 
 
 
 
 
TOTAL PORTFOLIO
 
$
43,238,571
 
93.70%
 
 
 
      
           
 
 
 

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

Separate certifications for the registrant’s principal executive officer and principal financial officer, as required by rule 30a-2(a) under the Investment Company Act of 1940, are attached as EX99.CERT.



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: June 7, 2007




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: June 7, 2007



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

Date: June 7, 2007