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

                                    FORM 10-Q

[x]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                    For quarterly period ended March 31, 2003

[  ]     TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(D) OF THE
         SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                         Commission File Number: 0-20671

               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
            ---------------------------------------------------------
             (Exact name of registrant as specified in its charter)
                                Texas 75-2533518
            ---------------------------------------------------------
           (State or other jurisdiction of (I.R.S. Employer I.D. No.)
                     incorporation or organization)

      8080 North Central Expressway, Dallas, Texas                75206-1857
            ---------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)

                                  214-891-8294
            ---------------------------------------------------------
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant  was required to file such reports,  and (2) has been subject to such
filing requirements for the past 90 days. Yes __x__ No _____

       4,351,418 shares of common stock were outstanding at May 14, 2002.

The Registrant's  Registration  Statement on Form N-2 was declared  effective by
the Securities and Exchange Commission on May 6, 1994.

                                        1





                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
Renaissance Capital Growth & Income Fund III, Inc.
Statements of Assets and Liabilities
(Unaudited)

         Assets                                 December 31,2002   March 31,2003

Cash and cash equivalents                       $10,968,001        $20,185,505
Investments at fair value, cost of $32,918,344
   and $34,779,568 December 31,2002 and
   March 31, 2003, respectively                  39,459,243         35,259,273
Interest and dividends receivable                    28,409            418,407
Prepaid expenses                                     40,068             21,575
                                                -----------       ------------
                                                $50,495,721        $55,884,760
                                                ===========        ===========

                           Liabilities and Net Assets

Liabilities:
   Due to broker (Note 3)                         9,001,163         19,003,991
   Accounts payable                                  12,106             20,932
   Accounts payable - affiliate                     223,386            372,169
                                                -----------        -----------
                                                  9,236,655         19,397,092
                                                -----------        -----------
Commitments and contingencies

Net assets:
Common stock, $1 par value; authorized
   20,000,000 shares; 4,561,618 issued;
   4,351,418 shares outstanding                   4,561,618          4,561,618
Additional paid-in-capital                       35,642,954         35,642,954
Treasury stock at cost, 209,900 shares at
   December 31, 2002 , and at March 31, 2003     (1,734,966)        (1,734,966)
Distributable earnings                           (3,751,440)        (2,461,643)
Net unrealized appreciation of investments        6,540,900            479,705
                                                 -----------        ----------
   Net assets, equivalent to $9.48 and $8.38
            per share at December 31, 2002
            March 31, 2003, respectively         41,259,066         36,487,668
                                                 ----------         ----------
                                                $50,495,721        $55,884,760
                                                ===========        ===========

See accompanying notes to financial statements.

                                        2





               Renaissance Capital Growth & Income Fund III, Inc.
                            Schedules of Investments
                                   (unaudited)

                                                    March 31, 2003
                                ------------------------------------------------
                                  Interest    Due               Fair    % of Net
                                    Rate      Date     Cost    Value      Assets
Eligible Portfolio Investments -
  Convertible Debentures and
   Promissory Notes

Active Link Communications, Inc. -
 Convertible bridge note (2)     12.00  09/30/03  $   41,480 $    41,480   0.11
 Convertible note (2)             8.00  09/30/03     125,000     125,000   0.34
 Convertible note (2)             8.00  09/30/03     250,000     250,000   0.69

Business Process Outsourcing -
 Convertible debenture (1)(3)    12.00  08/31/03      98,000     100,001   0.27

Dexterity Surgical, Inc. -
 Convertible debenture (2)        9.00  12/19/04    1,316,282   1,066,282  2.92

EDT Learning, Inc. -
 Convertible redeemable note (2) 12.00  03/29/12      500,000     500,000  1.37

Integrated Security Systems, Inc. -
 Promissory notes (4)             8.00  09/05/03      325,000     325,000  0.89

Laserscope -
 Convertible debenture (2)        8.00  02/11/07    1,500,000   4,621,320 12.67

Simtek Corporation -
 Convertible debenture (2)        7.50  06/28/09    1,000,000   1,000,000  2.74
                                                   ----------  ---------- -----

                                                  $ 5,155,762 $ 8,029,083 22.00%
                                                  -----------   --------- -----


                                        3





               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                    March 31, 2003
                                ------------------------------------------------
                                  Interest    Due               Fair    % of Net
                                    Rate      Date     Cost    Value      Assets



Other Portfolio Investments -
 Convertible Debentures and
   Promissory Notes

CareerEngine Network, Inc. -
 Convertible debenture (2)       12.00  03/31/10  $   250,000 $   250,000  0.69

Interpool, Inc. -
 Convertible debenture (2)        9.25  12/27/22      375,000     375,000  1.02
                                                  -----------  ---------- -----

                                                  $   625,000  $  625,000  1.71%
                                                  -----------  ---------- -----



(1)  Valued at fair value as determined by the Investment Adviser (Note 6).
(2)  Restricted securities - securities that are not fully registered and freely
     tradeable.
(3)  Securities in a privately owned company.
(4)  Securities that have no provision  allowing  conversion into a security for
     which there is a public market.
(5)  Includes Miscellaneous Securities, securities of privately owned companies,
     securities with no conversion feature, and securities for which there is no
     market.


                                        4


               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)




                                                       March 31, 2003
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares      Cost       Value           Assets
Eligible Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

Bentley Pharmaceuticals, Inc. -
  Common stock                     400,000  $   500,000  $ 3,175,920       8.70

CaminoSoft Corp. -
  Common stock                   1,750,000    4,000,000      883,575       2.42
  Common stock   (2)               708,333      875,000      289,575       0.79

Dexterity Surgical, Inc. -
  Preferred stock - A (2)              500      500,000            0       0.00
  Preferred stock - B (2)              500      500,000            0       0.00
  Common stock (2)                 260,000      635,000            0       0.00

eOriginal, Inc. -
  Series A, preferred stock  (3)    10,680    4,692,203      770,380       2.11
  Series B, preferred stock (3)     25,646      620,329    1,849,928       5.07
  Series C, preferred stock  (3)    28,929      699,734    2,086,741       5.72

Fortune Natural Resources Corp. -
  Common stock                   1,262,394      500,500       87,484       0.24

Gasco Energy, Inc. -
  Common stock  (2)                250,000      250,000       76,900       0.21

Integrated Security Systems, Inc. -
  Common stock                     393,259      215,899       70,079       0.19
  Common stock - PIK (2)           194,707       47,178            0       0.00
  Series D, preferred stock (2)    187,500      150,000       40,500       0.11
  Series F, preferred stock (2)  2,714,945      542,989      542,989       1.49
  Series G, preferred stock (2) 18,334,755    3,666,951    3,666,951      10.06




                                        5





               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                       March 31, 2003
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares      Cost       Value           Assets


Eligible Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

JAKKS Pacific, Inc. -
  Common stock                      59,847      357,088      613,815       1.68

Poore Brothers, Inc. -
  Common stock (2)               2,016,357    2,078,170    3,835,520      10.52

Simtek Corp. -
  Common stock  (2)              1,000,000      195,000      150,400       0.41

ThermoView Industries, Inc. -
  Common stock                     134,951      497,832       60,121       0.16

Miscellaneous Securities                          2,165      179,432       0.49
                                            -----------  -----------     ------

                                            $21,526,042  $18,380,313      50.37%
                                            -----------  -----------      ------

(1)  Valued at fair value as determined by the Investment Adviser (Note 6).
(2)  Restricted securities - securities that are not fully registered and freely
     tradeable.
(3)  Securities in a privately owned company.
(4)  Securities that have no provision  allowing  conversion into a security for
     which there is a public market.
(5)  Included Miscellaneous Securities, securities of privately owned companies,
     securities with no conversion feature, and securities for which there is no
     market.


                                        6



               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                       March 31, 2003
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares      Cost       Value           Assets

Other Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

AirNet Systems, Inc. -
  Common stock  (2)                 75,000  $   318,750  $   170,033       0.47

Bentley Pharmaceuticals, Inc. -
  Common stock                     135,879      246,325    1,078,852       2.96

Canterbury Consulting Group, Inc. -
  Common stock                      28,572      193,473       28,003       0.08

Capital Senior Living Corp -
  Common stock                      57,100      146,335      166,761       0.46

Creative Host Services, Inc. -
  Common stock                       4,830        7,921        8,416       0.02

Daisytek International, Inc. -
  Common stock                     149,600      649,934      287,322       0.79

Dave & Busters, Inc. -
  Common stock                     100,000      653,259      895,950       2.45

Dwyer Group, Inc. -
  Common stock                     675,000    1,966,632    2,873,475       7.87

EDT Learning, Inc. -
  Common stock                      48,266       27,033       17,202       0.05



                                        7





               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                       March 31, 2003
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares      Cost       Value           Assets

Other Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

Flamel Technologies, SA -
  Common stock                      20,000       86,213      141,570       0.39

Gasco Energy, Inc. -
  Common stock                      68,125       48,767       36,420       0.10

I-Flow Corporation -
  Common stock                     100,000      254,038      249,480       0.68

Inet Technologies, Inc. -
  Common stock                      96,600      530,338      564,241       1.55

Medical Action Industries, Inc. -
  Common stock                      10,000      112,490      106,920       0.29

Nautilus Group, Inc. -
  Common stock                      25,000      400,626      352,935       0.97

Precis, Inc. -
  Common stock                     100,700    1,025,047      324,002       0.89

Stonepath Group, Inc. -
  Common stock (2)                 200,000      270,000      267,720       0.73



                                        8






               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                       March 31, 2003
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares      Cost       Value           Assets
Other Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

US Home Systems, Inc. -
  Common stock                     110,000      535,587      655,578       1.80

Miscellaneous Securities                              0            0       0.00
                                            -----------   -----------     -----

                                           $  7,472,768  $ 8,224,880      22.55%
                                           ------------  ------------     ------

                                            $34,779,568  $35,259,273      96.63%
                                            ===========  ===========      ======

Allocation of Investments -
  Restricted Shares, Unrestricted Shares,
  and Other Securities

Restricted Securities   (2)                 $15,386,800  $17,269,670      47.33%
Unrestricted Securities                     $12,955,337  $12,678,121      34.74%
Other Securities  (5)                       $ 6,437,431  $ 5,311,482      14.56%


(1)  Valued at fair value as determined by the Investment Adviser (Note 6).
(2)  Restricted securities - securities that are not fully registered and freely
     tradeable.
(3)  Securities in a privately owned company.
(4)  Securities that have no provision  allowing  conversion into a security for
     which there is a public market.
(5)  Includes Miscellaneous Securities, securities of privately owned companies,
     securities with no conversion feature, and securities for which there is no
     market.

                                        9



               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                               December 31, 2002
                                ------------------------------------------------
                                  Interest    Due               Fair    % of Net
                                    Rate      Date     Cost    Value      Assets

Eligible Portfolio Investments -
  Convertible Debentures and
   Promissory Notes

Active Link Communications, Inc. -
 Convertible bridge note (2)      12.00  09/30/03 $    41,480  $   41,789  0.10
 Convertible note (2)              8.00  09/30/03     125,000     126,000  0.31
 Convertible note (2)              8.00  09/30/03     250,000     252,000  0.61

Business Process Outsourcing -
 Convertible debenture (1)(3)     12.00  08/31/03      98,000     100,000  0.24

Dexterity Surgical, Inc. -
 Convertible debenture (2)         9.00  12/19/04   1,316,282   1,066,282  2.58

EDT Learning, Inc. -
 Convertible redeemable note (2)  12.00  03/29/12     500,000     500,000  1.21

eOriginal, Inc. -
 Promissory note  (3)             12.00  12/31/02   1,139,683   1,139,683  2.76

Integrated Security Systems, Inc. -
 Promissory notes (4)              8.00  09/05/03     325,000     325,000  0.79

Laserscope -
 Convertible debenture (2)         8.00  02/11/07   1,500,000   5,026,000 12.18

Simtek Corporation -
 Convertible debenture (2)         7.50  06/28/09   1,000,000   1,000,000  2.42
                                                   ----------   --------- ------

                                                  $ 6,295,445 $ 9,576,754 23.21%
                                                  ----------- ----------- ------


                                       10


               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                               December 31, 2002
                                ------------------------------------------------
                                  Interest    Due               Fair    % of Net
                                    Rate      Date     Cost    Value      Assets




Other Portfolio Investments -
 Convertible Debentures and
   Promissory Notes

CareerEngine Network, Inc. -
 Convertible debenture (2)        12.00  03/31/10 $   250,000 $   250,000  0.61

Interpool, Inc. -
 Convertible debenture (2)         9.25  12/27/22     375,000     375,000  0.91
                                                  ----------- -----------  -----
                                                  $   625,000 $   625,000  1.51%
                                                  ----------- ----------- ------



(1)  Valued at fair value as determined by the Investment Adviser (Note 6).
(2)  Restricted securities - securities that are not fully registered and freely
     tradeable.
(3)  Securities in a privately owned company.
(4)  Securities that have no provision  allowing  conversion into a security for
     which there is a public market.
(5)  Included Miscellaneous Securities, securities of privately owned companies,
     securities with no conversion feature, and securities for which there is no
     market.


                                       11




               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                  December 31, 2002
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares       Cost      Value           Assets

Eligible Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

Bentley Pharmaceuticals, Inc. -
  Common stock                      400,000 $   500,000  $ 3,187,800       7.73

CaminoSoft Corp. -
  Common stock                    1,750,000   4,000,000    1,559,250       3.78
  Common stock   (2)                708,333     875,000      549,250       1.33

Dexterity Surgical, Inc. -
  Preferred stock - A (2)               500     500,000            0       0.00
  Preferred stock - B (2)               500     500,000            0       0.00
  Common stock (2)                  260,000     635,000            0       0.00

eOriginal, Inc. -
  Series A, preferred stock  (5)      6,000   1,500,000      794,000       1.92
  Series B-1, preferred stock (5)     1,785     392,700    1,426,215       3.46
  Series B-3, preferred stock  (5)      447     107,280      357,153       0.87
  Series C-1, preferred stock  (5)    2,353   2,000,050    2,000,050       4.85

Fortune Natural Resources Corp. -
  Common stock                    1,262,394     500,500       81,235       0.20

Gasco Energy, Inc. -
  Common stock  (2)                 250,000     250,000      112,150       0.27

Integrated Security Systems, Inc. -
  Common stock                      393,259     215,899       93,438       0.23
  Common stock - PIK (2)            104,787      28,319       23,640       0.06
  Series D, preferred stock (2)     187,500     150,000       54,000       0.13
  Series F, preferred stock (2)   2,714,945     542,989      612,492       1.48
  Series G, preferred stock (2)  18,334,755   3,666,951    4,086,321       9.90



                                       12





               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                   December 31, 2002
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares       Cost      Value           Assets
Eligible Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

JAKKS Pacific, Inc. -
  Common stock                       59,847 $   357,088  $   798,078       1.93

Poore Brothers, Inc. -
  Common stock (2)                2,016,357   2,078,170    4,669,485      11.32

Simtek Corp. -
  Common stock  (2)               1,000,000     195,000      150,400       0.36

ThermoView Industries, Inc. -
  Common stock                      134,951     497,832      120,241       0.29

Miscellaneous Securities                          2,165      462,349       1.12
                                            -----------   ----------      ------

                                            $19,494,943  $21,137,547      51.23%
                                            ----------   -----------      ------

(1)  Valued at fair value as determined by the Investment Adviser (Note 6).
(2)  Restricted securities - securities that are not fully registered and freely
     tradeable.
(3)  Securities in a privately owned company.
(4)  Securities that have no provision  allowing  conversion into a security for
     which there is a public market.
(5)  Included Miscellaneous Securities, securities of privately owned companies,
     securities with no conversion feature, and securities for which there is no
     market.


                                       13



               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                   December 31, 2002
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares       Cost      Value           Assets

Other Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

AirNet Systems, Inc. -
  Common stock  (2)                  75,000 $   318,750  $    296,860      0.72

Bentley Pharmaceuticals, Inc. -
  Common stock                      259,979     535,168    2,071,902       5.02

Canterbury Consulting Group, Inc. -
  Common stock                      200,000     193,473       51,480       0.12

Capital Senior Living Corp -
  Common stock                       44,500     110,975      112,340       0.27

Creative Host Services, Inc. -
  Common stock                        4,830       7,921        9,085       0.02

Daisytek International, Inc. -
  Common stock                       49,600     507,639      389,395       0.94

Dave & Busters, Inc. -
  Common stock                      100,000     653,259      856,350       2.08

Dwyer Group, Inc. -
  Common stock                      675,000   1,966,632    2,559,397       6.20

EDT Learning, Inc. -
  Common stock                       48,266      27,033       14,335       0.03

I-Flow Corporation -
  Common stock                      100,000     254,038      154,440       0.37




                                       14



               Renaissance Capital Growth & Income Fund III, Inc.
                      Schedules of Investments (continued)
                                   (unaudited)
                                                   December 31, 2002
                                  ----------------------------------------------
                                                         Fair           % of Net
                                  Shares       Cost      Value           Assets

Other Portfolio Investments -
 Common Stock, Preferred Stock,
  and Miscellaneous Securities

Inet Technologies, Inc. -
  Common stock                       75,000  $   367,434   $    452,925    1.10

Precis, Inc. -
  Common stock                      100,700    1,025,047        550,305    1.33

US Home Systems, Inc. -
  Common stock                      110,000      535,587        601,128    1.46

Miscellaneous Securities                               0              0    0.00
                                             -----------    -----------   ------
                                             $ 6,502,956    $ 8,119,942   19.68%
                                             -----------    -----------   ------

                                             $32,918,344    $39,459,243   95.64%
                                             ===========    ===========   ======

Allocation of Investments -
  Restricted Shares, Unrestricted Shares,
  and Other Securities

Restricted Securities   (2)                  $15,097,941     $19,191,669  46.52%
Unrestricted Securities                      $12,255,525     $13,663,124  33.12%
Other Securities  (5)                        $ 5,564,878     $ 6,604,450  16.01%


(1)  Valued at fair value as determined by the Investment Adviser (Note 6).
(2)  Restricted securities - securities that are not fully registered and freely
     tradeable.
(3)  Securities in a privately owned company.
(4)  Securities that have no provision  allowing  conversion into a security for
     which there is a public market.
(5)  Includes Miscellaneous Securities, securities of privately owned companies,
     securities with no conversion feature, and securities for which there is no
     market.

                                       15





               Renaissance Capital Growth & Income Fund III, Inc.
                            Statements of Operations
                                   (Unaudited)

                                                   Three Months Ended March 31

                                                  2002                     2003
                                                  ----                     ----
Income:
   Interest                                 $     92,675            $   260,532
   Dividend Income                                18,510              1,106,009
                                            ------------            -----------
                                                 111,185              1,366,541
                                            ------------            -----------

Expenses:
   General and administrative                     87,323                 75,048
   Incentive fee                                       -                166,163
   Interest expense                               29,656                 10,033
   Legal and professional fees                    66,131                 58,165
   Management fees                               244,481                162,977
                                            ------------            -----------
                                                 427,591                472,386
                                            ------------            -----------

         Net investment income (loss)           (316,406)               894,155

Realized and unrealized gain (loss) on investments:
   Net unrealized appreciation (depreciation)
      on investments                           4,791,032             (6,061,196)
   Net realized loss (gain) on investments    (3,375,228)               830,815
                                              -----------           -----------

         Net gain (loss) on investments        1,415,804             (5,230,381)
                                             -----------            ------------

         Net income (loss)                    $1,099,398            $(4,336,226)
                                              ==========            ============

Net income (loss) per share                   $     0.25            $     (1.00)
                                              ==========            ============






See accompanying notes to financial statements.

                                       16





               Renaissance Capital Growth & Income Fund III, Inc.
                       Statement of Changes in Net Assets
                                   (Unaudited)

                                                  Three Months Ended March 31

                                                      2002              2003
                                                      ----              ----

From operations:
   Net investment income (loss)                $    (316,406)        $  894,155
   Net realized gain (loss) on investments        (3,375,228)           830,815
   Increase (decrease) in unrealized appreciation
     on investments                                4,791,032         (6,061,196)
                                                 -----------       ------------
   Net increase (decrease) in net
     assets resulting from
            operations                             1,099,398         (4,336,226)
                                                 -----------       ------------

From distributions to stockholders:
   Common dividends from net investment income             -           (435,172)
                                                 -----------        ------------
   Net decrease in net assets resulting from
            distributions                                  -           (435,172)
                                                 -----------        ------------


  Total increase (decrease) in net assets          1,099,398         (4,771,398)

Net assets:
   Beginning of period                            54,537,508         41,259,066
                                                 -----------        -----------
   End of period                                 $55,636,906        $36,487,668
                                                 ===========        ===========









See accompanying notes to financial statements.

                                       17





               Renaissance Capital Growth & Income Fund III, Inc.
                             Statement of Cash Flows
                           Three Months ended March 31
                                                         2002           2003
                                                         ----           ----
Cash flows from operating activities:
   Net income (loss)                                 $ 1,099,398    $(4,336,226)
   Adjustments to reconcile net income to
      net cash provided by (used in) operation
      activities:
         Net unrealized (appreciation)
            depreciation on investments               (4,791,032)     6,061,196
         Net realized (gain) loss on investments       3,375,228       (830,815)
         (Increase) decrease in interest and dividends
             receivable                                   34,868       (389,998)
         (Increase) decrease in other assets               6,398         18,493
         Increase (decrease) in accounts payable          20,104          8,826
         Increase (decrease) in accounts
                payable - affiliate                      (10,831)       148,783
         Increase (decrease) in other liabilities     (1,498,458)    10,002,828
                                                     ------------   -----------
            Net cash provided by (used in) operating
                   activities                         (1,764,325)    10,683,087
                                                      -----------    ----------

Cash flows from investing activities:
         Purchase of investments                      (1,400,230)    (2,150,073)
         Proceeds from sale of investments               924,512      1,119,662
         Repayment of debentures and notes                31,935              -
                                                     -----------    ------------
            Net cash provided by (used in) investing
                  activities                            (443,783)    (1,030,411)
                                                     -----------    ------------

Cash flows from financing activities:
   Cash dividends                                              -       (435,172)
                                                     -----------   -------------

         Net cash used in financing activities                 -       (435,172)
                                                     -----------   -------------

Net increase (decrease) in cash and cash equivalents  (2,208,108)   $ 9,217,504
Cash and cash equivalents at beginning of the period  27,125,926     10,968,001
                                                     -----------    -----------
Cash and cash equivalents at end of the period       $24,917,818    $20,185,505
                                                     ===========    ===========

Cash paid during the period for interest             $    29,656    $    10,033
Cash paid during the period for income/excise taxes  $         0    $         0

Noncash investing activities:

During the quarter  ended March 31,  2002,  the Fund  received  common  stock in
     settlement of amounts due from interest and dividends totaling $9,308.
During the quarter  ended March 31,  2003,  the Fund  received  common  stock in
     settlement of amounts due for interest and dividends totaling $891,417. See
     accompanying notes to financial statements.

                                       18




               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
                          Notes to Financial Statements
                                 March 31, 2003

(1)  Organization and Business Purpose

     Renaissance  Capital  Growth & Income Fund III,  Inc.  (the Fund),  a Texas
     corporation,  was formed on  January  20,  1994.  The Fund seeks to achieve
     current income and capital appreciation potential by investing primarily in
     unregistered  equity investments and convertible issues of small and medium
     size companies which are in need of capital and which  Renaissance  Capital
     Group,  Inc.  (Investment  Adviser)  believes  offers the  opportunity  for
     growth. The Fund is a non-diversified closed-end investment company and has
     elected  to  be  treated  as  a  business  development  company  under  the
     Investment Company Act of 1940, as amended (1940 Act).

(2)  Summary of Significant Accounting Policies

     (a)  Valuation of Investments

          Portfolio  investments  are  stated at quoted  market or fair value as
          determined by the Investment  Adviser (Note 6). The securities held by
          the  Fund  are  primarily   unregistered  and  their  value  does  not
          necessarily  represent  the amounts  that may be  realized  from their
          immediate sale or disposition.

     (b)  Other

          The Fund records  security  transactions  on the trade date.  Dividend
          income  is  recorded  on the  ex-dividend  date.  Interest  income  is
          recorded as earned on the accrual basis.

     (c)  Cash and Cash Equivalents

          The Fund  considers all highly liquid debt  instruments  with original
          maturities of three months or less to be cash equivalents.


                                       19




               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
                          Notes to Financial Statements
                                 March 31, 2003

     (d)  Federal Income Taxes

          The Fund has elected the special  income tax  treatment  available  to
          "regulated  investment  companies"  ("RIC") under  Subchapter M of the
          Internal  Revenue Code (IRC) in order to be relieved of federal income
          tax on that part of its net  investment  income and  realized  capital
          gains that it pays out to its  shareholders.  The Fund's  policy is to
          comply  with  the  requirements  of the IRC  that  are  applicable  to
          regulated investment companies. Such requirements include, but are not
          limited to certain  qualifying  income  tests,  asset  diversification
          tests and  distribution  of  substantially  all of the Fund's  taxable
          investment income to its shareholders.  It is the intent of management
          to comply with all IRC  requirements  as they  pertain to a RIC and to
          distribute all of the Fund's taxable  investment  income and long-term
          capital gains within the defined  period under the IRC to qualify as a
          RIC.  Failure to qualify  as a RIC would  subject  the Fund to federal
          income tax as if the Fund were an  ordinary  corporation,  which could
          result in a substantial  reduction in the Fund's net assets as well as
          the amount of income available for distribution to shareholders.

     (e)  Net Income per Share

          Net  income  per  share is based on the  weighted  average  of  shares
          outstanding of 4,351,718 during the period.

     (f)  Use of Estimates

          The preparation of financial statements, in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and  assumptions  that affect the amounts
          and  disclosures  in the financial  statements.  Actual  results could
          differ from these estimates.

(3)  Due to Broker

     The  Fund  conducts  business  with one  prime  broker  for its  investment
     activities.  The  clearing and  depository  operations  for the  investment
     activities are performed pursuant to agreements with this prime broker. Due
     to broker  represents a margin loan payable to the prime  broker,  which is
     secured by investments in securities maintained with the prime broker. Cash
     and cash  equivalents  related to the margin  loan  payable are held by the
     prime  broker as  collateral  for the margin  loan.  The Fund is subject to
     credit  risk to the  extent  the prime  broker is  unable to  deliver  cash
     balances  or  securities,  or clear  security  transactions  on the  Fund's
     behalf. The Investment Adviser actively monitors the Fund's exposure to the
     broker and believes the  likelihood  of loss under those  circumstances  is
     remote.

                                       20




               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
                          Notes to Financial Statements
                                 March 31, 2003


(4)  Management and Organization Fees

     The Investment  Adviser for the Fund is registered as an investment adviser
     under  the  Investment  Advisers  Act of 1940.  Pursuant  to an  Investment
     Advisory Agreement (the Agreement), the Investment Adviser performs certain
     services,   including   certain   management,   investment   advisory   and
     administrative  services  necessary  for  the  operation  of the  Fund.  In
     addition,  under the Agreement, the Investment Adviser is reimbursed by the
     Fund  for  certain   administrative   expenses.   A  summary  of  fees  and
     reimbursements paid by the Fund under the Agreement, the prospectus and the
     original offering document are as follows:

     o    The Investment  Adviser receives a management fee equal to a quarterly
          rate  of  0.4375%  (1.75%  annually)  of the  Fund's  Net  Assets,  as
          determined at the end of such quarter with each such payment to be due
          as of the last day of the calendar quarter. The Fund incurred $162,977
          and $244,481 for  management  fees during the quarter  ended March 31,
          2003, and March 31, 2002, respectively.  Amounts payable for such fees
          at March 31, 2003,  and March 31, 2002,  were  $162,977 and  $244,481,
          respectively, and are included in Accounts payable - affiliate.

     o    The Investment Adviser receives an incentive fee in an amount equal to
          20% of the Fund's realized capital gains in excess of realized capital
          losses of the Fund after  allowance for any unrealized  capital losses
          in excess of unrealized capital gains on the portfolio  investments of
          the Fund.  The incentive  fee is  calculated,  accrued,  and paid on a
          quarterly basis.  The Fund incurred  $166,163 during the quarter ended
          March 31, 2003,  for such  incentive fees and are included in Accounts
          payable - affiliate. The Fund did not incur any incentive fees for the
          quarter ended March 31, 2002.

     o    The Investment  Adviser was reimbursed by the Fund for  administrative
          expenses paid by the  Investment  Adviser on behalf of the Fund.  Such
          reimbursements were $11,293 and $13,244 during the quarter ended March
          31,  2003,  and March 31,  2002,  respectively,  and are  included  in
          general and administrative  expenses in the accompanying statements of
          operations.


                                       21




               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
                          Notes to Financial Statements
                                 March 31, 2003

(5)  Eligible Portfolio Companies and Investments

     (a)  Eligible Portfolio Companies.

          The Fund  invests  primarily  in  convertible  securities  and  equity
          investments of companies that qualify as Eligible Portfolio  Companies
          as defined in Section  2(a)(46) of the 1940 Act or in securities  that
          otherwise  qualify for  investment  as permitted  in Section  55(a)(1)
          through (5).  Under the provisions of the 1940 Act at least 70% of the
          fund's  assets,  as defined  under the 1940 Act,  must be  invested in
          Eligible Portfolio Companies.  In the event the Fund has less than 70%
          of its assets invested in eligible portfolio investments, then it will
          be prohibited from making non-eligible  investments until such time as
          the  percentage  of  eligible   investments   again  exceeds  the  70%
          threshold.

     (b)  Investments.

          Investments are carried in the statements of assets and liabilities as
          of December 31, 2002, and March 31, 2003, at fair value, as determined
          in  good  faith  by  the  Investment  Adviser.  The  convertible  debt
          securities held by the Fund generally have maturities between five and
          seven years and are convertible into the common stock of the issuer at
          a set conversion price at the discretion of the fund. The common stock
          underlying  these  securities is generally  unregistered and thinly to
          moderately traded but is not otherwise restricted. Generally, the Fund
          may register and sell such securities at any time with the Fund paying
          the costs of  registration.  Interest on  convertible  securities  are
          generally payable monthly.  The convertible debt securities  generally
          contain  embedded call options giving the issuer the right to call the
          underlying  issue.  In these  instances,  the  Fund  has the  right of
          redemption or conversion.  The embedded call option will generally not
          vest  until  certain  conditions  are  achieved  by the  issuer.  Such
          conditions  may require  that  minimum  thresholds  be met relating to
          underlying market prices, liquidity, and other factors.

(6)  Valuation of Investments

     On a quarterly basis,  Renaissance Group prepares a valuation of the assets
     of the  Fund  subject  to the  approval  of the  Board  of  Directors.  The
     valuation principles are as follows:

     o    Generally,  the guiding  principle for valuation is the application of
          objective  standards.  The objective  standards for determining market
          prices  and  applying  valuation  methodologies  will  govern  in  all
          situations except where a debt issuer is in default.

                                       22




               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
                          Notes to Financial Statements
                                 March 31, 2003


     o    Generally,  the fair value of debt securities and preferred securities
          convertible  into  common  stock  is the sum of (a) the  value of such
          securities  without  regard  to the  conversion  feature,  and (b) the
          value,  if any,  of the  conversion  feature.  The fair  value of debt
          securities without regard to conversion  features is determined on the
          basis of the terms of the debt security,  the interest yield,  and the
          financial  condition  of the  issuer.  The  fair  value  of  preferred
          securities without regard to conversion  features is determined on the
          basis of the terms of the preferred  security,  its dividend,  and its
          liquidation  and redemption  rights and absent  special  circumstances
          will  typically  be equal to the lower of cost or 120% of the value of
          the underlying common stock. The fair value of the conversion features
          of a  security,  if any,  are based on fair  values of the  derivative
          securities as of the relevant date less an allowance,  as appropriate,
          for costs of registration, if any, and selling expenses.

     o    Portfolio   investments  for  which  market   quotations  are  readily
          available and which are freely transferable are valued as follows: (i)
          securities  traded on a  securities  exchange  or the Nasdaq or in the
          over-the-counter  market  are valued at the  closing  price on, or the
          last trading day prior to, the date of valuation,  and (ii) securities
          traded in the over-the-counter market that do not have a closing price
          on, or the last trading day prior to, the date of valuation are valued
          at the average of the  closing bid and ask price for the last  trading
          day on,  or prior  to,  the date of  valuation.  Securities  for which
          market  quotations are readily  available but are restricted from free
          trading in the public securities  markets (such as Rule 144 stock) are
          valued by discounting  the value for the last trading day on, or prior
          to, the date of  valuation  to reflect  the  liquidity  caused by such
          restriction,  but taking into  consideration  the  existence,  or lack
          thereof,  of any contractual  right to have the securities  registered
          and freed from such trading restrictions.

     o    Because there is no independent and objective  pricing authority (i.e.
          a public  market) for  investments  in privately  held  entities,  the
          latest sale of equity  securities  by the entity  governs the value of
          the  enterprise.  This  valuation  method  causes the  Fund's  initial
          investment in the private entity to be valued at cost. Thereafter, new
          issuances of equity or equity-linked securities by a portfolio company
          will be used to  determine  enterprise  value as they will provide the
          most objective and independent  basis for determining the worth of the
          issuer.

          There can be no assurance  that stated  market fair values for private
          equities will stay  constant,  or that future equity raises will value
          the  portfolio  company at levels  equal to or greater  than the prior
          equity financing for the issuer. As a result,  the Fund's valuation of
          a  privately  held  portfolio  company  may  be  subject  to  downward

                                       23




               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
                          Notes to Financial Statements
                                 March 31, 2003

          adjustment  that would directly  impact the Fund's net asset value and
          which  could  result in a  substantial  reduction  in the  fund's  net
          assets.

     o    Where a portfolio  company is in default on a debt  instrument held by
          the Fund, and no market exists for that instrument, the fair value for
          the  investment  is  determined  on the basis of appraisal  procedures
          established in good faith by the Investment Adviser. This type of fair
          value  determination  is  based  upon  numerous  factors  such  as the
          portfolio   company's  earnings  and  net  worth,  market  prices  for
          comparative  investments (similar securities in the market place), the
          terms of the  Fund's  investment,  and a  detailed  assessment  of the
          portfolio  company's  future  financial  prospects.  In the  event  of
          unsuccessful  operations by a portfolio company,  the appraisal may be
          based upon an estimated net realizable  value when that  investment is
          liquidated

          As of March 31,  2003,  and  December  31,  2002,  the net  unrealized
          appreciation   associated  with  investments  held  by  the  Fund  was
          $479,705,  and $6,540,900,  respectively.  For the periods ended March
          31, 2003, and December 31, 2002, the Fund had gross  unrealized  gains
          of $12,819,424 and  $13,970,011,  respectively,  and gross  unrealized
          losses of ($12,339,719) and ($7,429,111), respectively.

(7)  Restricted Securities

     As indicated  on the  statement of  investments  as of March 31, 2003,  and
     December 31, 2002,  the Fund holds  investments  in shares of common stock,
     the sale of which is restricted.  These  securities have been valued by the
     Investment Adviser after considering  certain pertinent factors relevant to
     the individual securities (note 5).

(8)  Purchase of Additional Shares

     In accordance with Fund guidelines,  certain shareholders  reinvested their
     dividends in the Fund.  The Fund issued no shares  during the periods ended
     March 31, 2003,  and December  31,  2002,  under the dividend  reinvestment
     plan.

(9)  Distributions to Shareholders

     During the periods  ended March 31, 2003,  and December 31, 2002,  the Fund
     distributed  $435,172 and $435,172,  respectively.  During the period ended
     March 31, 2002, the Fund made no cash distributions. At March 31, 2003, the
     Fund  had net  investment  income  in  excess  of the  amount  of the  cash
     distribution;  however,  the final tax characteristics of this distribution
     cannot be  determined  at this time.  The  cash distribution  made in  2002

                                       24




               RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
                          Notes to Financial Statements
                                 March 31, 2003

     represented  a tax  return  of  capital.  The  capital  loss  carryover  of
     ($3,429,593)  as of December 31, 2002, will expire in 2010. The tax cost of
     securities is identical to the book cost.

(10) Financial Highlights

     Selected  per  share  data and  ratios  for  each  share  of  common  stock
     outstanding throughout the three months ended March 31, 2002, and 2003, are
     as follows:

                                                         2002            2003
     Net asset value, beginning of period              $ 12.50         $  9.48
     Net investment income (loss)                      $ (0.07)        $  0.21
     Net realized and unrealized gain on investments   $  0.32         $ (1.21)
                                                       -------         -------
     Total return from investment operations           $  0.25         $ (1.00)
                                                       -------         -------
           Distributions:                              $  0.00         $  0.10
                                                       -------         -------
           Net asset value, end of period              $ 12.75         $  8.38
                                                       =======         =======

           Per share market value, end of period       $  9.19         $  6.75

           Portfolio turnover rate (quarterly)            0.25%           1.88%
           Quarterly return (a)                           2.80%         -14.12%
           Ratio to average net assets (quarterly) (b):
                    Net investment income (loss)          0.00%           2.30%
                    Expenses, excluding incentive fees    0.66%           0.78%
                    Expenses, including incentive fees    0.66%           1.22%

(a)  Quarterly  return (not  annualized)  was calculated by comparing the common
     stock price on the first day of the period to the common stock price on the
     last day of the period, in accordance with AICPA guidelines.

(b)  Average net assets have been computed based on quarterly valuations.

                                       25





ITEM 2:           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS.

Material Changes in Portfolio Investments

     The following portfolio  transactions are noted for the quarter ended March
31, 2003:

     Active Link Communications,  Inc. (OTC:ACVE)  Subsequent to March 31, 2003,
     the Company made a principal repayment on the convertible bridge note owned
     by the Fund of $44,240, reducing the balance outstanding on the bridge note
     to $19,023.  Also  subsequent  to March 31,  2003,  the  Company  fell into
     principal and interest  default on payments on all of the debt  obligations
     of the Company.  As a result of the default,  the Fund has placed a reserve
     equal to 50% of the par value of the  principal  amounts  of all  positions
     held by the Fund in the Company.

     Bentley Pharmaceuticals,  Inc. (AMEX:BNT) In the first quarter of 2003, the
     Fund  sold  124,100  shares of common  stock in the open  market  realizing
     proceeds of $1,119,661, representing a gain of $830,818. At March 31, 2003,
     the Fund  owned  535,879  shares of  Bentley  common  stock with a basis of
     $746,325 or $1.39 per share. The stock is freely tradeable.

     Capital  Senior Living Corp.  (NYSE:CSU) In the first quarter of 2003,  the
     Fund  purchased  an  additional  12,600  shares of common stock in the open
     market.  At March 31, 2003,  the Fund owned 57,100  shares of the Company's
     common stock having a basis of $146,335, or $2.56 per share. All shares are
     freely tradeable.

     DaisyTek  International,  Inc.  (NASDAQ:DZTK) In the first quarter of 2003,
     the Fund  purchased an additional  100,000  shares of the Company's  common
     stock in the open market.  At March 31, 2003, the Fund owned 149,600 shares
     of DZTK  common  stock with a basis of  $649,934,  or $4.34 per share.  The
     stock is freely tradeable.

     eOriginal Holdings, Inc. (Private) In the first quarter of 2003, eOriginal,
     Inc.,  went through a tax-free  reorganization  (the  "reorganization")  in
     which all the assets of  eOriginal,  Inc.,  were  transferred  to eOriginal
     Holdings, Inc. (the "Company"). As a result of the reorganization, the Fund
     exchanged  all of its  positions  in  eOriginal,  Inc.,  for the  following
     securities of the Company:  10,680 of Series A Convertible Preferred Stock;
     25,646 of Series B Convertible  Preferred Stock;  28,929 shares of Series C
     Convertible  Preferred  Stock;  2,302 Warrants to purchase shares of common
     stock  of  the  Company.  Each  series  of  Preferred  of  the  Company  is
     convertible  one for one into common stock of eOriginal  Holdings,  and the
     Warrants  have an exercise  price of $0.01 per share.  The implied value of
     the Company for purposes of the reorganization is $72.13 per share,  giving
     the Company an enterprise  value of $64.9 million and causing the Funds new
     total ownership in the Company to be valued at $4,873,079 as of the date of
     reorganization. As a result of the reorganization, the Fund's cost basis of


                                       26





     its entire  investment  in the Company was  increased  from  $5,139,713  to
     $6,012,435 due to the capitalization of accrued interest and dividends.

     Flamel  Technologies,  SA  (Nasdaq:FLML)  In the first quarter of 2003, the
     Fund purchased 20,000 shares of the Company's shares in the open market for
     $86,213,  a cost of $4.31 per share. This is the Fund's initial  investment
     in Flamel and the stock is freely tradeable.

     Flamel  is  a   biopharmaceutical   company   principally  engaged  in  the
     development  of  two  polymer-based   delivery   technologies  for  medical
     applications.  Flamel's Medusa nano-  encapsulation  is designed to deliver
     therapeutic  proteins.  Micropump is a controlled release and taste-masking
     technology for the oral administration of small molecule drugs.

     Gasco Energy, Inc. (OTC:GASE) In the quarter ended March 31, 2003, the Fund
     purchased  68,125 shares of the  Company's  common stock in the open market
     for $48,767,  a basis of $0.72 per share. At March 31, 2003, the Fund owned
     the freely  tradeable  shares  previously  discussed in addition to 250,000
     shares at $1.00 per share or $250,000 which are  restricted,  but which may
     be sold  pursuant  to the  prospectus  delivery  requirements  of a "shelf"
     registration filed by the Company.

     Inet  Technologies  (Nasdaq:INTI)  In the first  quarter of 2003,  the Fund
     purchased an additional  21,600 shares of the Company's common stock in the
     open  market.  At March  31,  2003,  the Fund  owned  96,600  shares of the
     Company's common stock having a basis of $530,338, or $5.49 per share.

     Integrated Security Systems,  Inc. (OTC:IZZI) In the first quarter of 2003,
     the Fund  received  common  stock of the  Company  as  payment  in kind for
     interest on 8%  Promissory  Notes owned by the Fund as well as dividends on
     Series D Preferred  Stock owned by the Fund.  In total,  the Fund  received
     89,920  shares of IZZI having an imputed  cost of $18,859,  a rate of $0.21
     per share,  as payment in kind for  interest on the notes and  dividends on
     the Series D  Preferred.  The total number of shares owned by the Fund as a
     result of PIK  agreements  with the Company at March 31,  2003,  was194,707
     shares of the Company's  common stock having a basis of $47,178,  a rate of
     $0.24 per share.

     In addition to the PIK shares discussed previously,  at March 31, 2003, the
     Fund  owned  the  following:  $325,000  in  8%  Promissory  Notes  with  no
     conversion  feature;  $542,989 in Series F Preferred  convertible  into the
     Company's common stock at a rate of $0.20 per share; $3,666,951 in Series G
     Preferred convertible into common at a rate of $0.20 per share; $150,000 in
     Series D  Preferred  convertible  into common at a rate of $0.80 per share;
     393,259 shares of the Company's  common stock having a basis of $215,899 or
     $0.55 per share;  warrants  to  purchase  364,299  shares of the  Company's
     common  stock at $0.549 per share on or before  March 8, 2004;  warrants to
     purchase 312,500 shares of the Company's common stock at $0.80 per share on
     or before  October 2, 2003;  warrants  to  purchase  125,000  shares of the
     Company's  common  stock at $1.00 per share on or before  October 11, 2004;
     warrants to purchase  1,625,000  shares of the  Company's  common  stock at


                                       27





     $0.20 per share with term dates  ranging from  September  2006 to September
     2007; and options to purchase  41,034 shares of the Company's  common stock
     having  strike  prices  ranging  between $0.21 and $0.49 per share and term
     dates ranging from May 2006 to August 2007.

     Subsequent  to March 31,  2003,  the Fund  purchased a $100,000 8% one-year
     non-convertible  Promissory  Note.  As  additional  consideration  for  the
     investment, the Fund received five- year warrants to purchase the Company's
     common  shares at $0.20 per share.  In  addition,  subsequent  to March 31,
     2003, the Fund received an additional 13,297 shares of the Company's common
     stock as  payment in kind of $1,995 or $0.15 per share in  interest  due on
     promissory notes.

     Laserscope (Nasdaq:LSCP) At March 31, 2003, the Fund owned $1,500,000 in 8%
     Convertible Debentures of the Company having a conversion rate of $1.25 per
     share and options to purchase 30,000 common shares at $4.19.

     Subsequent to March 31, 2003, the Fund converted $100,000 of the debentures
     into 80,000 shares of the Company's common stock at $1.25 per share in lieu
     of six months' mandatory principal payments on the debentures.

     Medical Action Industries, Inc. (Nasdaq:MDCI) In the first quarter of 2003,
     the Fund made a new  investment  into the common  stock of  Medical  Action
     Industries,  Inc.,  by  purchasing  10,000  shares in the open  market  for
     $112,490, a rate of $11.25 per share.

     The Company develops,  manufactures,  markets, and distributes a variety of
     disposable surgical-related products.

     Nautilus Group, Inc. (NYSE:NLS) In the first quarter of 2003, the Fund made
     a new investment into the Company by purchasing 25,000 shares of its common
     stock in the open market for $400,626,  a rate of $16.03 per share. This is
     a new investment for the Fund.

     Nautilus is a marketer,  developer,  and manufacturer of branded health and
     fitness products sold under such names as Nautilus,  Bowflex,  Schwinn, and
     StairMaster.

     Stonepath  Group,  Inc.  (AMEX:STG) In the first quarter of 2003,  the Fund
     made a new investment by purchasing  200,000 shares of the Company's common
     stock in a  private  placement  at a rate of $1.35  per  share  for a total
     investment of $270,000.  The Fund's  securities are  unregistered,  but the
     Fund does have  registration  rights and the Company is working  toward the
     registration of the securities in the near term.

     Stonepath is a non-asset based provider of third-party  logistics services,
     offering  a full range of  time-definite  transportation  and  distribution
     solutions.  The Company  manages and arranges the domestic  movement of raw
     materials,  supplies,  components,  and finished goods, and also provides a
     broad range of value-added supply chain management services.


                                       28





Results of Operations for the Quarter Ended March 31, 2003

     For the quarter ended March 31, 2003, the Fund had net investment income of
     $894,155  compared  to net  investment  loss of  ($316,406)  for the  first
     quarter  of 2002.  This  change  was due in large  part to an  increase  in
     investment income from $111,185 for the first quarter of 2002 to $1,366,541
     for the comparable period of 2003. This increase was primarily attributable
     to the accrual of dividends receivable from eOriginal Holdings,  Inc., as a
     result of its reorganization and from Integrated Security Systems, Inc., on
     its Series F and G  Convertible  Preferred  Stock.  In  addition,  interest
     income  increased due to the reversal of reserves  against accrued interest
     income from eOriginal as part of the reorganization mentioned previously.

     The increase in investment  income was  partially  offset by an increase in
     investment  expenses from $427,591 for the first period of 2002 to $472,386
     for  the  first  quarter  of  2003.  General  and  administrative  expenses
     decreased  for the first  quarter of 2003 to $75,048  from  $87,323 for the
     first  quarter of 2002, a decrease of 14.06%.  Interest  expense  decreased
     66.17%  from  $29,656  for the first  quarter  of 2002 to  $10,033  for the
     comparable  period of 2003.  Legal and  professional  fees  decreased  from
     $66,131 for the first  quarter of 2002 to $58,165 for the first  quarter of
     2003, a decrease of 12.05%.  Management fees decreased 33.33% from $244,481
     for the first quarter of 2002 to $162,977 for the comparable period of 2003
     as a result of lower market  values for  portfolio  investments  during the
     period.  These  increases in expenses  were offset by the  incentive fee on
     capital gains accrued in the first quarter of 2003.  There was no incentive
     fee in the first  quarter of 2002  because  there were no capital  gains in
     that period.

Liquidity and Capital Resources

     For the three months ended March 31, 2003, net assets decreased 11.56% from
     $41,259,065 at December 31, 2002, to  $36,487,669  at March 31, 2003.  This
     decrease is  primarily  attributable  to a decrease  in the net  unrealized
     appreciation  of  investments  from  $6,540,900  at December 31,  2002,  to
     $479,705 at March 31, 2003, and the cash  distribution  to  shareholders of
     $435,172 paid during the first quarter of 2003. This decrease was partially
     offset by the net  investment  income  discussed  previously and a realized
     gain in the  amount of  $830,818  on the  disposition  of a portion  of the
     Fund's position in Bentley Pharmaceuticals.

     At the end of the  first  quarter  of 2003,  the Fund had net cash and cash
     equivalents  of  $1,181,514   versus  net  cash  and  cash  equivalents  of
     $1,966,838  at  December  31,  2002.  The  Fund's  interest  and  dividends
     receivable  increased  from $28,409 at December  31,  2002,  to $418,407 at
     March  31,  2003,  primarily  due to the  dividend  accrued  on  Integrated
     Security Systems Series F & G Preferred Stock.  Prepaid expenses  decreased
     46.15% from  $40,069 at December  31,  2002,  to $21,575 at March 31, 2003,
     primarily  attributable  to quarterly  charges  against  prepaid  insurance
     amounts.


                                       29





     Accounts payable increased from $12,107 at December 31, 2002, to $20,932 at
     March 31, 2003, a 72.89%,  primarily  due to the first  quarter  accrual of
     custodial, auditing, and legal fees. Finally, accounts payable to affiliate
     increased  66.60% from  $223,386 at December 31, 2002, to $372,169 at March
     31, 2003,  due to the accrual of a first  quarter  incentive fee payable to
     the investment  adviser offset  partially by a reduction in management fees
     also payable to the investment adviser.

     Pending  investment  in  portfolio  investments,   funds  are  invested  in
     temporary cash accounts and in government securities. Government securities
     used  as  cash  equivalents  will  typically  consist  of  U.  S.  Treasury
     securities or other U. S. Government and Agency obligations having slightly
     higher yields and maturity dates of three months or less. These investments
     qualify for investment as permitted in Section  55(a)(1) through (5) of the
     1940 Act.


                                     PART II

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          99-1 Certification of Russell Cleveland, President and CEO

          99-2 Certification of Barbe Butschek, Chief Financial Officer

     (b)  Reports on Form 8-K

          None






                                       30





                                   SIGNATURES

Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the Fund
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
hereunto duly authorized.

                           RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.



May 15, 2003               ____________________________________________________
                                    Russell Cleveland, President and CEO
                                      (Principal Executive Officer)




May 15, 2003               ____________________________________________________
                                    Barbe Butschek, Chief Financial Officer
                                       (Principal Financial Officer)

                                       31





                                  CERTIFICATION

I, Russell Cleveland, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Renaissance  Capital
     Growth & Income Fund III, Inc.;

2.   Based on my  knowledge,  this  annual  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 annual report;

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

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

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material information relating to the registrant is made known to us by
          others,  particularly during the period in which this annual report is
          being prepared;

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

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

5.   The  registrant's  other  certifying  officers and I have  disclosed to the
     registrant's  auditors and to the audit committee of the registrant's board
     of directors:

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

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


                                       32





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




/S/  Russell Cleveland
Russell Cleveland
President and CEO
May 15, 2003

                                       33





                                  CERTIFICATION

I, Barbe Butschek, certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Renaissance  Capital
     Growth & Income Fund III, Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statements 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 annual report;

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

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

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material information relating to the registrant is made known to us by
          others,  particularly during the period in which this annual report is
          being prepared;

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

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

5.   The  registrant's  other  certifying  officers and I have  disclosed to the
     registrant's  auditors and to the audit committee of the registrant's board
     of directors:

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

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and


                                       34





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




/S/  Barbe Butschek
Barbe Butschek
Chief Financial Officer
May 15, 2003

                                       35





                                  EXHIBIT 99-1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     Pursuant  to 18 U.S.C.  ss.1350,  the  undersigned  officer of  Renaissance
Capital Growth & Income Fund III, Inc. (the  "Company"),  hereby  certifies,  to
such officer's  knowledge,  that the Company's Quarterly Report on Form 10-Q for
the  period  ended  March  31,  2003 (the  "Report"),  fully  complies  with the
requirements  of  Section  13(a) or  15(d),  as  applicable,  of the  Securities
Exchange Act of 1934 and that the  information  contained  in the Report  fairly
presents,  in all material  respects,  the  financial  condition  and results of
operations of the Company.


Dated: May 15, 2003                                  /S/  Russell Cleveland
                                                     Russell Cleveland
                                                     President & CEO




                                        1




                                  EXHIBIT 99-2

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     Pursuant  to 18 U.S.C.  ss.1350,  the  undersigned  officer of  Renaissance
Capital Growth & Income Fund III, Inc. (the  "Company"),  hereby  certifies,  to
such officer's  knowledge,  that the Company's Quarterly Report on Form 10-Q for
the  period  ended  March  31,  2003 (the  "Report"),  fully  complies  with the
requirements  of  Section  13(a) or  15(d),  as  applicable,  of the  Securities
Exchange Act of 1934 and that the  information  contained  in the Report  fairly
presents,  in all material  respects,  the  financial  condition  and results of
operations of the Company.


Dated:   May 15, 2003                                  /S/  Barbe Butschek
                                                            Barbe Butschek
                                                         Chief Financial Officer



                                        1