<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-K

(Mark One)

         X       ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

        ____     For the fiscal year ended    December 31, 1995

                                           OR

                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                 For the Transition period from_______ to_______

                          Commission file number    0-11176

                              NTS-PROPERTIES III
             (Exact name of registrant as specified in its charter)

              Georgia                               61-1017240
              -------                           -----------------
  (State or other jurisdiction of                (I.R.S. Employer
  incorporation or organization)                 Identification No.)



   10172 Linn Station Road
   Louisville, Kentucky 40223                          40223
---------------------------------              --------------------
(Address of principal executive                      (Zip Code)
offices)

Registrant's telephone number, including area code:      (502) 426-4800
                                                         ---------------

Securities registered pursuant to Section 12(b) of the Act:

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                          Limited Partnership Interests
                                (Title of Class)

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

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

Exhibit Index: See Page 34

Total Pages: 37


<PAGE>



                                TABLE OF CONTENTS


                                                                      Pages

                                     PART I

Items 1 and 2    Business and Properties                                3-9
Item 3           Legal Proceedings                                        9
Item 4           Submission of Matters to a Vote
                   of Security Holders                                    9
          

                                     PART II

Item 5           Market for the Registrant's Limited Partnership
                   Interests and Related Partner Matters                 10
Item 6           Selected Financial Data                                 11
Item 7           Management's Discussion and Analysis of
                   Financial Condition and Results of
                   Operations                                         12-18
Item 8           Financial Statements and Supplementary
                   Data                                               19-29
Item 9           Changes in and Disagreements with
                   Accountants on Accounting and
                   Financial Disclosure                                  30


                                    PART III

Item 10          Directors and Executive Officers of
                   the Registrant                                     30-31
Item 11          Management Remuneration and Transactions                31
Item 12          Security Ownership of Certain Beneficial
                   Owners and Management                                 32
Item 13          Certain Relationships and Related
                   Transactions                                       32-33


                                     PART IV

Item 14          Exhibits, Financial Statement Schedules
                   and Reports on Form 8-K                            34-36


Signatures                                                               37



                                      - 2 -

<PAGE>



                                     PART I

Items 1. and 2.  Business and Properties

General

NTS-Properties III (the "Partnership") is a limited partnership  organized under
the laws of the state of  Georgia  on June 24,  1982.  The  general  partner  is
NTS-Properties  Associates,  a Georgia limited  partnership.  As of December 31,
1995, the Partnership owned the following properties:

        -  Peachtree  Corporate  Center,  a  business  park  with  approximately
           192,000 net  rentable  square feet located in  Norcross,  Georgia,  a
           suburb of Atlanta. Acquired complete on January 26, 1983.

        -  Plainview Plaza II, an office complex with approximately  113,000 net
           rentable square feet located in Jeffersontown,  Kentucky, a suburb of
           Louisville. Acquired complete on January 26, 1983.

        -  Plainview  Triad North, an office complex with  approximately  89,000
           net rentable square feet located in Jeffersontown, Kentucky.
           Acquired complete on February 15, 1983.

The  Partnership has a fee title interest in the above  properties.  The General
Partner  believes that the  Partnership's  properties are adequately  covered by
insurance.

Plainview Plaza II is encumbered by a permanent mortgage payable to an insurance
company.  The  outstanding  balance at  December  31, 1995 was  $2,464,619.  The
mortgage is payable in monthly installments of $32,335 which includes principal,
interest and property taxes.  The mortgage bears a fixed interest rate of 9.125%
and is due November 1, 1998. The outstanding principal balance at maturity based
on the current rate of amortization will be $2,140,539.

The  Partnership's  properties  are  encumbered  by a  mortgage  payable  to  an
insurance  company.  The loan is secured by a first mortgage on Plainview  Triad
North and Peachtree Corporate Center with a second mortgage behind the holder of
the  permanent  mortgage  on  Plainview  Plaza II.  The  outstanding  balance at
December  31,  1995  was   $4,500,000.   The  mortgage  is  payable  in  monthly
installments  of $35,187 which includes  interest and repair escrow.  As part of
the loan  agreement,  the Partnership is required to place in escrow $6,500 each
month.  The  Funds  will  be  released  as  the  heating,  ventilating  and  air
conditioning  ("HVAC") system and asphalt paving at Peachtree  Corporate  Center
are  replaced.  The  mortgage  bears a  variable  interest  rate  which  adjusts
quarterly to 60 basis  points over the 10-year  treasury  bill rate.  At no time
will the rate exceed 11.65% or be less than 7.65% per annum. The current rate at
December  31, 1995 is 7.65%.  The total  amount of the loan is due June 1, 2001.
The mortgage is closed to  prepayment  for the first year.  Beginning the second
year through the end of year five,  prepayment  is allowed based on a 2% penalty
on the  outstanding  balance.  Starting year six, no prepayment  penalty will be
charged.

Currently,  the  Partnership's  plans for  renovations  and other major  capital
expenditures   include   tenant  finish   improvements   as  required  by  lease
negotiations at the Partnership's  properties.  Changes to current tenant finish
improvements are a typical part of any lease negotiation. Improvements generally
include a revision to the current floor plan to  accommodate  a tenant's  needs,
new  carpeting  and paint  and/or  wallcovering.  The  extent  and cost of these
improvements   are  determined  by  the  size  of  the  space  and  whether  the
improvements are for a new tenant or incurred because of a lease renewal. Tenant
finish  improvements  will be funded by cash flow from  operations  and/or  cash
reserves.  As of December 31, 1995, the Partnership had no material  commitments
for tenant finish improvements.

                                      - 3 -

<PAGE>



Items 1. and 2.  Business and Properties

General - Continued

Subsequent  to  December  31,  1995,  the  Partnership   made  a  commitment  of
approximately  $95,000 for tenant finish improvements at Plainview Plaza II as a
result of a lease renewal and  expansion.  The expansion  increases the tenant's
current leased space of approximately  48,000 square feet by approximately 5,400
square  feet and the renewal  extends  the lease for five years.  The project is
expected to be completed  during the second quarter of 1996. The source of funds
for this  project  is  expected  to be cash flow  from  operations  and/or  cash
reserves.

The  Partnership's  plans for renovations  and other major capital  expenditures
also include the replacement of the HVAC system at Peachtree  Corporate  Center.
The HVAC system at Peachtree  Corporate Center is designed in such a manner that
each suite's system is separate in structure;  therefore,  individual  units are
replaced only as needed.  Effective  July 1995, new leases and lease renewals at
Peachtree  Corporate  Center require the tenant to maintain and replace the HVAC
system in the leased space beginning one year from the date of occupancy.  As of
December 31,  1995,  approximately  16% of the center's  tenants were subject to
this lease provision. The Partnership is escrowing cash monthly to fund the HVAC
system replacements at Peachtree Corporate Center. (See the discussion regarding
the repair escrow on page 3.) The balance in the escrow  account at December 31,
1995 was $381,871.

At Plainview Plaza II, the Partnership's renovation plans include the remodeling
of common area lobbies. The project is to include an upgrade of current restroom
facilities,   improvement  of  handicap  restroom  facilities,  new  carpet  and
wallcoverings.  The project is anticipated  to cost  approximately  $250,000.  A
portion of this  project was  completed  during the first and second  quarter of
1995  at a  cost  of  approximately  $93,000.  As  of  December  31,  1995,  the
Partnership had no commitments for the remaining renovation. The source of funds
for this  project  is  expected  to be cash flow  from  operations  and/or  cash
reserves.

At Plainview Plaza II, the  Partnership  also expects to renovate and update the
exterior of the property  during 1996.  The  renovation  is designed to make the
property more  competitive and enhance its value.  The project is anticipated to
cost approximately  $900,000. The General Partner of the Partnership anticipates
that the  project  will be funded with a  combination  of debt  financing,  cash
reserves and cash flow from  operating  activities.  As of December 31, 1995, no
commitments had been made in connection with this project.

The  Partnership  had no other material  commitments for renovations and capital
improvements at December 31, 1995 than those previously discussed.

The  Partnership  is engaged  solely in the  business  of owning  and  operating
commercial  real estate.  A  presentation  of  information  concerning  industry
segments is not applicable.

The current  business of the Partnership is consistent with the original purpose
of the  Partnership  which was to acquire,  own and operate  Plainview Plaza II,
Peachtree   Corporate  Center  and  Plainview  Triad  North.  The  Partnership's
properties are in a condition suitable for their intended use.

The Partnership  intends to hold the Properties until such time as sale or other
disposition   appears  to  be   advantageous   with  a  view  to  achieving  the
Partnership's  investment objectives or it appears that such objectives will not
be met. In deciding  whether to sell a Property,  the Partnership  will consider
factors such as potential capital appreciation, cash flow and Federal income tax
considerations, including possible adverse Federal income

                                      - 4 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

General - Continued

tax consequences to the Limited Partners. The General Partner of the Partnership
is currently  exploring the marketability of certain of its properties,  and has
not yet determined if any of the properties might be sold in the next 12 months.

Plainview Plaza II

Except as indicated in the table below and on page 6, base annual  rents,  which
include the cost of utilities,  currently range from $11.88 to $15.85 per square
foot.  The average base annual rental as of December 31, 1995 was  approximately
$13.39 per square  foot.  Office space is  ordinarily  leased for between one to
five years with the  majority of current  leases  providing  for five year terms
(1).  Current  leases  terminate  between  1996 and 2004 and provide for renewal
options of between one and five years at rates which are based upon increases in
the consumer  price index and/or are negotiated  between lessor and lessee.  All
leases  provide for tenants to  contribute  toward the payment of  increases  in
common area maintenance expenses, insurance, utilities and real estate taxes. As
of December 31, 1995,  there were 11 tenants  leasing  office space  aggregating
approximately  92,000  square  feet of  rentable  area.  The  tenants who occupy
Plainview  Plaza  II  are  professional  service-oriented   organizations.   The
principal occupations/professions practiced include real estate, architecture, a
payroll  processing center and management  offices for a regional grocery chain.
Two tenants  lease more than 10% of  Plainview  Plaza II's  rentable  area:  The
Kroger Company (42.5%) and NTS Development  Company, an affiliate of the general
partner  (20.5%).  The lease  agreement  with NTS  Development  Company  expired
February  1996 and provided  for a base rental of $13.50 per square foot.  It is
anticipated  that this lease will be renewed at current market rates.  The lease
terms between the Partnership  and NTS  Development  Company will be on terms no
less  favorable  than those which could be obtained from an  unaffiliated  third
party. The occupancy levels as of December 31 were 82% (1995),  88% (1994),  83%
(1993), 83% (1992) and 92% (1991).

The following table contains approximate data concerning the leases in effect on
December 31, 1995.

Major Tenants:

                                                    Current Base
                                  Sq. Ft. and      Annual Rental
                                    % of Net      and % of Gross
                      Year of       Rentable        Base Annual         Renewal
      Name          Expiration        Area            Rental            Options
      ----          ----------        ----            ------            -------

The Kroger Company     2004(2)   48,018 (42.5%) $439,764 (43.4%)(3)  3 Five-Year
NTS Development
 Company               1996      23,160 (20.5%) $312,660 (30.9%)     1 One-Year


(1)    Excluding  the Kroger  Company  lease.  The  current  lease term is for a
       period of five years and two months. The Kroger Company has been a tenant
       of Plainview Plaza II since 1979. See note (2) for additional information
       regarding the Kroger Company's lease.
(2)    During 1995, the Partnership negotiated a five-year renewal and expansion
       with the Kroger  Company.  The renewal  extends the lease to December 31,
       2004  and the  expansion  is for  5,417  square  feet.  Occupancy  of the
       expansion is expected in the second quarter of 1996.
(3)    The Kroger Company lease provides that they pay their own electricity and
       cleaning costs and thus the base rent is below $11.88 per square foot.



                                      - 5 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

Plainview Plaza II - Continued

Other Tenants:

                                               Current Base
                             Sq. Ft. and       Annual Rental
                               % of Net        and % of Gross
      No. of      Year of      Rentable         Base Annual         Renewal
      Tenants   Expiration       Area              Rental           Options
      -------   ----------       ----              ------           -------

         5         1996      9,069 ( 8.0%)  $ 95,352 ( 9.4%)(1)  2 Three-Year
         2         1997      3,063 ( 2.7%)  $ 37,176 ( 3.7%)     None
         1         1998      3,771 ( 3.3%)  $ 45,816 ( 4.5%)     None
       None        1999           --                --                --
         1         2000      5,145  (4.6%)  $ 81,564 ( 8.1%)     3 One-Year

(1)    Included is a 2,950 square foot tenant  whose base rent is below  $11.88.
       The tenant  currently  pays $6.78 per square  foot as a result of a lease
       renegotiation.

Plainview Triad North

Base annual rentals,  which include the cost of utilities,  currently range from
$10.93 to $15.56 per square  foot.  The average  base rental as of December  31,
1995 was approximately $12.10 per square foot. Office space is ordinarily leased
for one to six years with the majority of current leases  providing for six year
terms.  Current leases  terminate  between 1996 and 1999. All leases provide for
tenants to contribute toward the payment of increases in common area maintenance
expenses,  insurance,  utilities and real estate taxes. As of December 31, 1995,
there were 7 tenants  leasing  office  space  aggregating  approximately  83,500
square feet of rentable area. The tenants who occupy  Plainview  Triad North are
professional     service-     oriented     organizations.      The     principal
occupations/professions  practiced include insurance,  healthcare and sales. One
tenant leases more than 10% of Plainview Triad North's rentable area: Aetna Life
Insurance  Company  (74.2%).  The occupancy  levels at the office building as of
December 31 were 93% (1995), 95% (1994), 91% (1993), 85% (1992) and 75% (1991).

The following table contains approximate data concerning the leases in effect on
December 31, 1995:

Major Tenant:
                                                       Current Base
                                     Sq. Ft. and      Annual Rental
                                      % of Net       and % of Gross
                        Year of       Rentable         Base Annual       Renewal
       Name           Expiration        Area             Rental          Options
       ----           ----------        ----             ------          -------

Aetna Life
 Insurance Company       1997      66,337 (74.2%)   $795,936 (78.8%)   None

Other Tenants:

                                                      Current Base
                                     Sq. Ft. and      Annual Rental
                                       % of Net      and % of Gross
      No. of           Year of        Rentable         Base Annual       Renewal
      Tenants         Expiration        Area             Rental          Options
      -------         ----------        ----             ------          -------

         2               1996       7,555 ( 8.4%)   $ 87,216 ( 8.6%)   2 90-Day
         1               1997       2,181 ( 2.4%)   $ 27,590 ( 2.7%)   None
         2               1998       5,760 ( 6.4%)   $ 73,767 ( 7.3%)   None
         1               1999       1,670 ( 1.9%)   $ 25,992 ( 2.6%)   None



                                      - 6 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

Peachtree Corporate Center

Base annual rentals,  which exclude the cost of utilities,  currently range from
$6.92 to $10.53 per square foot for office space, $3.46 to $5.10 per square foot
for warehouse space and $3.41 per square foot for mezzanine  storage space.  The
average  base annual  rental for all space  leased as of  December  31, 1995 was
$6.11 per square foot.  Office,  warehouse  and/or  mezzanine  storage  space is
ordinarily  leased for  between  one and six years with the  majority of current
leases providing for three year terms. Current leases terminate between 1996 and
2000.  All leases  provide  for  tenants  to  contribute  toward the  payment of
increases in common area maintenance expenses,  insurance and real estate taxes.
As of December 31, 1995,  there were 53 tenants  leasing  office,  warehouse and
storage  space  aggregating  approximately  167,000  (1) square feet of rentable
area,  none of which leased more than 10% of the business  park's rentable area.
The   tenants   who  occupy   Peachtree   Corporate   Center  are   professional
service-oriented organizations. The principal  occupations/professions practiced
include sales-related  services. The occupancy levels at the business park as of
December 31 were 89% (1995), 80% (1994), 82% (1993), 75% (1992) and 90% (1991).

The following table contains approximate data concerning the leases in effect on
December 31, 1995:

                                               Current Base
                               Sq. Ft. and     Annual Rental
                                 % of Net     and % of Gross
      No. of      Year of       Rentable        Base Annual           Renewal
      Tenants    Expiration       Area (2)        Rental              Options
      -------   -----------  --------------  ----------------       ---------

        16          1996     43,640 (23.0%)  $252,852 (24.8%)       None
        11          1997     33,460 (17.4%)  $191,568 (18.8%)       None
        20          1998     46,474 (23.9%)  $288,732 (28.1%)       None
         2          1999     17,941 ( 9.3%)  $105,924 (10.3%)       None
         4          2000     25,511 (13.3%)  $184,392 (18.0%)       None

(1)   Excludes approximately 3,300 square feet which is occupied by the business
      park's property management and leasing staff.
(2)   Rentable area includes only ground floor square feet (office and warehouse
      space).

Additional operating data regarding the Partnership's properties is furnished in
the following table.

                                                                      Peachtree
                            Plainview            Plainview            Corporate
                             Plaza II          Triad North             Center
                             --------          -----------             ------
Federal tax basis          $7,359,902           $6,940,972           $9,529,756
Realty tax rate                .01141               .01141               .03705
Annual realty taxes           $63,248              $49,245             $103,732

Depreciation for book purposes is computed using the  straight-line  method over
the  estimated  useful  lives of the  assets  which  are 5 - 30  years  for land
improvements, 30 years for buildings, 5 - 30 years for building improvements and
3 - 30 for  amenities.  The  estimated  realty  taxes on the  proposed  exterior
renovation at Plainview Plaza II is approximately  $9,000.  The estimated realty
taxes on all other planned renovations, primarily tenant improvements, would not
be material.

See Management's Discussion and Analysis of Financial Condition and Results
of Operations (Item 7.) for explanations regarding the fluctuations of
income and occupancy at the Partnership's properties.

                                      - 7 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

Competition

The  Partnership's  properties are subject to competition  from similar types of
properties  (including,  in  certain  areas,  properties  owned  or  managed  by
affiliates of the General  Partner) in the  respective  vicinities in which they
are located. Such competition is generally for the retention of existing tenants
or  for  new  tenants  when  vacancies  occur.  The  Partnership  maintains  the
suitability  and  competitiveness  of its  properties  primarily on the basis of
effective  rents and service  provided to  tenants.  Competition  is expected to
increase in the future as a result of the construction of additional properties.
As of December 31,  1995,  there are no  properties  under  construction  in the
respective  vicinities in which the properties are located.  The Partnership has
not  commissioned  a formal  market  analysis of  competitive  conditions in any
market  in which it owns  properties,  but  relies  upon  the  market  condition
knowledge of the employees of NTS  Development  Company who manage and supervise
leasing for each property.

Management of Properties

NTS Development Company, an affiliate of NTS Properties Associates,  the general
partner  of  the  Partnership,  directs  the  management  of  the  Partnership's
properties  pursuant  to a  written  agreement.  NTS  Development  Company  is a
wholly-owned subsidiary of NTS Corporation.  Mr. J. D. Nichols has a controlling
interest  in  NTS  Corporation  and  is a  general  partner  of  NTS  Properties
Associates.  Under  the  agreement,  the  Property  Manager  establishes  rental
policies and rates and directs the marketing activity of leasing  personnel.  It
also  coordinates the purchase of equipment and supplies,  maintenance  activity
and the selection of all vendors,  suppliers  and  independent  contractors.  As
compensation for its services,  the Property  Manager received  $161,638 for the
year ended  December 31, 1995. The fee is equal to 5% of gross revenues from the
Partnership's properties.

In addition,  the management  agreement requires the Partnership to purchase all
insurance relating to the managed  properties,  to pay the direct  out-of-pocket
expenses  of the  Property  Manager  in  connection  with the  operation  of the
properties,  including the cost of goods and materials used for and on behalf of
the  Partnership,  and to  reimburse  the  Property  Manager  for the  salaries,
commissions,  fringe  benefits,  and  related  employment  expenses  of  on-site
personnel.

The term of the Management  Agreement  between NTS  Development  Company and the
Partnership was for an initial term of five years, and thereafter for succeeding
one-year periods,  unless canceled.  The Agreement is subject to cancellation by
either  party upon sixty days  written  notice.  As of December  31,  1995,  the
Management Agreement is still in effect.

Conflict of Interest

Because the  principals of the general  partner and/or its affiliates own and/or
operate real estate  properties  other than those owned by the Partnership  that
are or could be in  competition  with the  Partnership,  potential  conflicts of
interest  exist.  Because the  Partnership  was organized and is operated by the
General  Partner,   these  conflicts  are  not  resolved  through  arm's  length
negotiations  but through the exercise of the General  Partner's  good  judgment
consistent  with its fiduciary  responsibility  to the Limited  Partners and the
Partnership's  investment  objectives  and  policies.  The  General  Partner  is
accountable  to the  Limited  Partners  as a  fiduciary  and  consequently  must
exercise  good faith and  integrity in handling  the  Partnership's  affairs.  A
provision has been made in the  Partnership  Agreement that the General  Partner
will not be liable to the Partnership except for acts or omissions  performed or
omitted fraudulently,

                                      - 8 -

<PAGE>



Items 1. and 2.  Business and Properties - Continued

Conflict of Interest - Continued

in bad faith or with negligence. In addition, the Partnership Agreement provides
for  indemnification  by the  Partnership  of the General  Partner for liability
resulting from errors in judgment or certain acts or omissions.  With respect to
these  potential  conflicts of interest,  the general partner and its affiliates
retain a free right to compete with the Partnership's  properties  including the
right to develop  competing  properties  now and in the  future,  in addition to
those existing properties which may compete directly or indirectly.

NTS Development  Company,  the Property  Manager and an affiliate of the general
partner,  acts in a similar capacity for other  affiliated  entities in the same
geographic  region where the Partnership has property  interests.  The agreement
with the Property  Manager is on terms no less favorable to the Partnership than
those  which could be  obtained  from a third party for similar  services in the
same  geographical  region in which the properties are located.  The contract is
terminable by either party without penalty upon 60 days written notice.

There are no other  agreements or  relationships  between the  Partnership,  the
General Partner and its affiliates other than those previously described.

Employees

The  Partnership  has no  employees;  however,  employees of an affiliate of the
general  partner are  available  to perform  services for the  Partnership.  The
Partnership  reimburses  this  affiliate for the actual costs of providing  such
services.

Item 3.  Legal Proceedings

None.

Item 4.  Submission of Matters to a Vote of Security Holders

None.


                                      - 9 -

<PAGE>



                                     PART II

Item 5.      Market for Registrant's Limited Partnership Interests and Related
             Partner Matters

The Partnership had 1,148 limited  partners as of February 29, 1996. There is no
established  trading market for the limited  partnership  interests,  nor is one
likely to develop.

Cash distributions and allocations of net income (loss) are made as described in
Note 1C to the Partnership's  1995 financial  statements.  Annual  distributions
totalling $10.00 (1995) and $2.50 (1994) were paid per limited partnership unit.
The  Partnership  did  not  make  a cash  distribution  during  1993.  Quarterly
distributions  are determined  based on current cash  balances,  cash flow being
generated by operations and required cash reserves, as determined by the general
partner, for future leasing costs, tenant finish costs and capital improvements.
Distributions were paid quarterly as follows:


                                 1995                 1994                1993
                              ----------           ----------           -------

First quarter                  $ 2.50                $  --              $  --
Second quarter                   2.50                   --                 --
Third quarter                    2.50                   --                 --
Fourth quarter                   2.50                  2.50                --
                                -------                ------              ----
                               $10.00                $ 2.50             $  --
                                ======                ======              ====

The table below  presents  that portion of the  distributions  that  represent a
return of capital on a Generally  Accepted  Accounting  Principle  basis for the
years ended  December  31,  1995,  1994 and 1993.  The  General  Partner did not
receive a  distribution  during these years.  Distributions  were funded by cash
flow derived from operating activities.



                        Net Income                Cash
                          (Loss)              Distributions         Return of
                        Allocated               Declared             Capital
                        ---------               --------             -------

Limited Partners:
       1995             $ (86,496)               $ 154,125          $ 154,125
       1994               (97,062)                  39,000             39,000
       1993              (214,680)                      --                 --




                                     - 10 -

<PAGE>



Item 6.  Selected Financial Data

For the years ended December 31, 1995, 1994, 1993, 1992 and 1991.
<TABLE>

<CAPTION>

                                       1995               1994                1993                1992                 1991
                                    -----------       ------------        ------------        ------------         --------

<S>                                <C>                <C>                 <C>                 <C>                  <C>        
Total revenues                     $ 3,073,103        $ 2,960,275         $ 2,830,574         $ 2,739,725          $ 3,005,802

Total expenses                      (3,262,493)        (3,157,866)         (3,149,056)         (3,175,135)          (3,256,841)
                                    -----------        -----------         -----------         -----------          -----------

Net loss                           $  (189,390)       $  (197,591)        $  (318,482)        $  (435,410)         $  (251,039)
                                    ===========        ===========         ===========         ===========          ===========

Net loss allocated to:
 General partner                   $  (102,894)       $  (100,529)        $  (103,802)        $  (105,100)         $   (94,929)
 Limited partners                  $   (86,496)       $   (97,062)        $  (214,680)        $  (330,310)         $  (156,110)

Net loss per limited
 partnership unit                  $     (5.48)       $     (6.22)        $    (13.76)        $    (21.17)         $    (10.01)

Weighted average number
 of limited partnership
 units                                  15,495             15,600              15,600              15,600               15,600

Cumulative net income
 (loss) allocated to:
  General partner                  $(2,195,635)       $(2,092,741)        $(1,992,212)        $(1,888,410)         $(1,783,310)
  Limited partners                 $  (448,502)       $  (362,006)        $  (264,944)        $   (50,264)         $   280,046

Cumulative taxable
 income (loss) allocated to:
  General partner                  $(2,696,785)       $(2,545,416)        $(2,390,433)        $(2,232,893)         $(2,075,731)
  Limited partners                 $  (928,736)       $  (926,612)        $  (719,138)        $  (503,072)         $  (324,138)

Distributions declared:
 General partner                   $     --           $     --            $     --            $     --             $     --
 Limited partners                  $   154,125        $    39,000         $     --            $   234,000          $   468,000

Cumulative distributions
 declared:
  General partner                  $   206,985        $   206,985         $   206,985         $   206,985          $   206,985
  Limited partner                  $11,241,827        $11,087,702         $11,048,702         $11,048,702          $10,814,702

At year end:
 Land, buildings and
  amenities, net                   $ 9,585,286        $10,242,936         $10,783,103         $11,530,785          $12,315,307

Total assets                       $11,120,854        $11,862,286         $12,011,140         $12,391,021          $13,327,837

Mortgages and Notes
 Payable                           $ 6,964,619        $ 7,060,749         $ 7,148,009         $ 7,227,933          $ 7,300,912

</TABLE>

The  above  selected  financial  data  should  be read in  conjunction  with the
financial  statements  and related notes  appearing  elsewhere in this Form 10-K
report.


                                     - 11 -

<PAGE>



Item 7.      Management's Discussion and Analysis of Financial Condition and
             Results of Operations

Results of Operations

The occupancy levels at the  Partnership's  properties as of December 31 were as
follows:


                                     1995             1994               1993
                                     ----             ----               ----

Plainview Plaza II                    82%              88%                83%
Plainview Triad North                 93%              95%                91%
Peachtree Corporate Center            89%              80%                82%

The rental and other income  generated by the  Partnership's  properties for the
years ended December 31 were as follows:



                                      1995               1994               1993
                                      ----               ----               ----

Plainview Plaza II              $1,098,934         $1,061,476         $1,060,013
Plainview Triad North           $  953,799         $  935,643         $  844,640
Peachtree Corporate Center      $  986,828         $  939,859         $  923,727

The 6% decrease in year-ending occupancy from 1994 to 1995 at Plainview Plaza II
can be attributed to five tenants, who had occupied  approximately 10,900 square
feet,  vacating at the end of the lease terms.  Partially  offsetting the tenant
move-outs is one new lease  totalling  approximately  3,800 square feet. The new
tenant took occupancy in June of 1995.  Average occupancy  increased from 83% in
1994 to 85% in 1995. The increase in rental and other income at Plainview  Plaza
II from 1994 to 1995 can be  attributed  to the  increase  in average  occupancy
during the year.

During 1995, the Partnership  negotiated a five-year  renewal and expansion with
The Kroger  Company,  a major tenant at Plainview  Plaza II. The renewal extends
the lease to December 31, 2004 and the expansion is for 5,417 square feet.  When
The Kroger Company takes occupancy of the additional  space (expected during the
second quarter of 1996), Plainview Plaza II will be 86% occupied.

The 5% increase in year-ending occupancy from 1993 to 1994 at Plainview Plaza II
can be attributed to two new leases totalling  approximately  5,600 square feet.
The new tenants took  occupancy  during  November (422 square feet) and December
(5,145 square feet) of 1994.  Average occupancy at Plainview Plaza II was 83% in
1994 and 1993.  The increase in rental and other income from 1993 to 1994 can be
attributed  to the  increase  in  occupancy  during  the fourth  quarter  and an
increase in pass through  expense  reimbursements.  Leases at Plainview Plaza II
provide for tenants to contribute toward the payment of increases in common area
maintenance expenses,  insurance,  utilities and real estate taxes. The increase
in  income  is  partially  offset  by  termination  penalty  income  in  1993 of
approximately  $12,000.  This was collected from an  approximately  3,600 square
foot  tenant who had,  in 1992,  vacated its suite prior to the end of the lease
term. The tenant had wanted to expand its existing space; however, no additional
space was available adjacent to their current

                                     - 12 -

<PAGE>



Results of Operations - Continued

location nor was there adequate contiguous space available in Plainview Plaza II
to meet their needs. As a result of these circumstances,  and in accordance with
a prior  agreement with the tenant,  the tenant was released from its obligation
upon payment of the termination penalty. There was no similar income in 1994.

Plainview Triad North's year-ending  occupancy decreased 2% from 1994 to 1995 as
a result of  move-outs by three  tenants  (occupied  approximately  2,900 square
feet) and the downsizing (3,900 square feet) of one tenant. Partially offsetting
the tenant move-outs and downsizing is a new lease totalling approximately 4,900
square feet. Average occupancy increased from 92% in 1994 to 94% in 1995. Rental
and other  income  increased  from 1994 to 1995 at  Plainview  Triad  North as a
result of the increase in average occupancy during the year.

Plainview Triad North's year-ending  occupancy increased 4% from 1993 to 1994 as
a result of four new leases  totalling  approximately  8,200  square feet all of
which  represent  expansions by current  tenants.  Partially  offsetting the new
leases are three  tenants,  who had  occupied  approximately  4,600 square feet,
vacating at the end of the lease terms.  Average  occupancy  at Plainview  Triad
North for the year  increased  from 88% in 1993 to 92% in 1994.  The increase in
rental and other income at Plainview Triad North from 1993 to 1994 is due to the
increase in average occupancy and an increase in rental rates.

Peachtree  Corporate Center's  year-ending  occupancy  increased 9% from 1994 to
1995 due to 19 new leases  totalling  approximately  44,000 square feet. Of this
total,  approximately  11,000 square feet represents  expansions by five current
tenants.  Partially  offsetting the new leases are 10 tenant move-outs totalling
approximately 27,000 square feet. Approximately 15,600 square feet of this total
represents  five tenants who vacated and ceased making rental payments in breach
of the lease terms due to  bankruptcies.  Accrued income  associated  with these
leases of approximately $11,000 was written off as uncollectible.  The remaining
11,400 square feet  represents  five tenants who vacated at the end of the lease
terms.  Average  occupancy at Peachtree  Corporate  Center increased from 84% in
1994 to 89% in 1995.

The increase in rental and other income at Peachtree  Corporate Center from 1994
to 1995 is due to an  increase  in  average  occupancy  during  1995.  Peachtree
Corporate  Center  receives  rental income from the leasing of both office space
and warehouse  space.  Office space rents for  approximately  $8.00 to $9.00 per
square  foot  compared to $3.50 to $4.50 per square  foot for  warehouse  space.
Rental and other income also  increased  from 1994 to 1995 because  office space
occupied (at a correspondingly  higher rental rate) as a percentage of the total
square feet occupied has increased in 1995 as compared to 1994.  The increase in
rental and other income is partially  offset by an increase in the provision for
doubtful accounts.

Peachtree  Corporate  Center's  occupancy  decreased  2% from  1993 to 1994 as a
result of move-outs by 14 tenants who had occupied  approximately  34,000 square
feet.  Approximately  16,300 square feet of the total move-outs  represent eight
tenants  who vacated and ceased  making  rental  payments in breach of the lease
terms due to bankruptcies.  Accrued income  associated with these leases was not
significant.  15,600  square feet of the total  move-outs are the result of five
tenants who vacated at the end of the lease terms.  The  remaining  2,200 square
feet  represents  a tenant who  exercised  a  termination  option.  There was no
accrued  income  associated  with this lease.  Partially  offsetting  the tenant
move-outs are 11 new leases totalling approximately 27,000 square feet, of which
approximately  15,000 square feet represent  expansions by five current tenants.
Average  occupancy at Peachtree  Corporate  Center increased from 78% in 1993 to
84% in 1994.


                                     - 13 -

<PAGE>



Results of Operations - Continued

The increase in rental and other income at Peachtree  Corporate Center from 1993
to 1994 is due to an  increase  in  average  occupancy  during  1994.  Peachtree
Corporate  Center  receives  rental income from the leasing of both office space
and warehouse  space.  Office space rents for  approximately  $8.50 to $9.50 per
square  foot  compared to $4.00 to $4.50 per square  foot for  warehouse  space.
Another factor contributing to the increase in rental and other income from 1993
to 1994 is an increase in rent  received from the rental of service space due to
an increase in the amount of service  space leased in 1994 over 1993.  Partially
offsetting  the increase in rental income from 1993 to 1994 is a decrease in the
average  rental rate  realized from office space leased and a decrease in common
area expense reimbursements from tenants.  Tenants at Peachtree Corporate Center
reimburse  the  Partnership  for  common  area  expenses  as part  of the  lease
agreements.  The decrease in common area expense reimbursements is a result of a
decrease in operating expenses at the property, principally property taxes, from
1992 to 1993,  and due to the large number of new leases  signed at the property
which are not subject to the charge until the end of the calendar year following
the commencement of their lease.

In cases of tenants who cease making rental  payments or abandon the premises in
breach of their lease,  the Partnership  pursues  collection  through the use of
collection  agencies or other remedies  available by law when practical.  In the
case  of  tenants  who  vacated  Peachtree  Corporate  Center  as  a  result  of
bankruptcy,  the  Partnership  has taken legal action when it was thought  there
could be a possible  collection.  There have been no funds recovered as a result
of these actions. As of December 31, 1995, there were no on-going cases.

Current  occupancy  levels are considered  adequate to continue the operation of
the Partnership's properties without the need for any additional financing.

Interest and other income includes  interest income earned from investments made
by the Partnership  with excess cash and from funds escrowed for the replacement
of the heating,  ventilating  and air  conditioning  ("HVAC") system and asphalt
paving at Peachtree  Corporate  Center (see the Liquidity and Capital  Resources
section  for a further  discussion  of these  Escrow  Funds).  The  increase  in
interest income in 1995 as compared to 1994 and in 1994 as compared to 1993 is a
result of an increase in interest  earned on the Escrow Funds and an increase in
excess cash available for investment.

Operating  expenses  decreased  from 1994 to 1995 as a result of decreased  snow
removal costs at Plainview Plaza II and Plainview Triad North, decreased utility
costs at Triad North,  and decreased  repair and maintenance  costs at Peachtree
Corporate Center.  Partially  offsetting the decrease in operating expenses from
1994 to 1995 is an increase in landscape replacement costs and exterior building
repairs at Peachtree Corporate Center.

Operating  expenses  increased  from  1993  to 1994  primarily  as a  result  of
increased  utility and snow removal  costs at Plainview  Plaza II and  Plainview
Triad North due to the extreme  winter weather  experienced  in 1994,  increased
heating and air  conditioning  repair  costs and  janitorial  costs at Plainview
Triad North and increased exterior painting,  roof repairs and landscaping costs
at Peachtree  Corporate Center.  Partially  offsetting the increase in operating
expenses from 1993 to 1994 is a decrease in janitorial  costs at Plainview Plaza
II.

The increase in operating expenses - affiliated from 1994 to 1995 is a result of
increased property management  salaries at all of the Partnership's  properties.
Operating  expenses - affiliated are expenses incurred for services performed by
employees of NTS Development Company, an affiliate of the General Partner.

                                     - 14 -

<PAGE>



Results of Operations - Continued

The  decrease in operating  expenses - affiliated  from 1993 to 1994 is due to a
decrease  in  leasing  salaries  at  all  of the  Partnership's  properties.  In
addition,  property  management salaries decreased at Peachtree Corporate Center
and Plainview Plaza II. Partially  offsetting the decrease in operating expenses
- affiliated from 1993 to 1994 is an increase in property management salaries at
Plainview Triad North.

The 1995  write-off  of  unamortized  building  and tenant  improvements  can be
attributed to Peachtree Corporate Center (tenant and building  improvements) and
Plainview   Plaza  II  (building   improvements).   Changes  to  current  tenant
improvements are a typical part of any lease negotiation. Improvements generally
include a revision to the current floor plan to  accommodate  a tenant's  needs,
new  carpeting  and  paint  and/or  wallcovering.   In  order  to  complete  the
renovation,  it is sometimes  necessary to replace  improvements  which have not
been fully  depreciated.  This  results in a  write-off  of  unamortized  tenant
improvements.  The write-off of unamortized  building  improvements at Peachtree
Corporate Center is the result of exterior building  renovations.  The write-off
of unamortized  building  improvements  at Plainview Plaza II is the result of a
common  area lobby  renovation.  The  renovation  included an upgrade of current
restroom facilities, improvement of handicap restroom facilities, new carpet and
wallcoverings.  The write-off  represents the cost of previous renovations which
had not been fully depreciated.

The 1994  write-off of  unamortized  tenant  improvements  can be  attributed to
Peachtree  Corporate  Center and Plainview  Triad North.  The 1993  write-off of
unamortized tenant improvements was not significant.

Interest expense has remained fairly constant from 1993 to 1994 and from 1994 to
1995. See the Liquidity and Capital  Resources  section of this item for details
regarding the Partnership's debt.

Management  fees are  calculated as a percentage of cash  collections;  however,
revenue  for  reporting  purposes  is on the  accrual  basis.  As a result,  the
fluctuations  of revenues  between  years will differ from the  fluctuations  of
management fee expense.

Real estate taxes  remained  fairly  constant from 1994 to 1995. The increase in
real estate taxes from 1993 to 1994 is a result of an increase in the assessment
for  Plainview  Triad  North  and  an  increase  in  tax  rates  at  all  of the
Partnership's properties. Partially offsetting the increase in real estate taxes
from 1993 to 1994 is a decrease in the  assessment  for Plainview  Plaza II. The
assessment at Peachtree Corporate Center was unchanged from 1993 to 1994.

Professional and  administrative  expenses remained fairly constant from 1994 to
1995. The decrease in professional and administrative expenses from 1993 to 1994
is the result of reduced outside legal fees.

The change in professional and administrative expenses - affiliated from 1994 to
1995 was not significant.  Professional and administrative expenses - affiliated
are expenses  incurred for  services  performed by employees of NTS  Development
Company, an affiliate of the General Partner.

The increase in professional and administrative  expenses - affiliated from 1993
to 1994 was primarily the result of increased accounting salaries.

Depreciation and  amortization  increased from 1994 to 1995 due to approximately
$564,000 of new assets  (principally  tenant  improvements and lobby renovation)
being  placed  in  service.  This  is  partially  offset  by a  portion  of  the
Partnership's  assets having become fully depreciated.  Depreciation is computed
using the straight-line method over the estimated

                                     - 15 -

<PAGE>



Results of Operations - Continued

useful  lives of the  assets  which are 5 - 30 years for land  improvements,  30
years for buildings, 5 - 30 years for building improvements and 3 - 30 years for
amenities.  The aggregate cost of the  Partnership's  properties for Federal tax
purposes is approximately $24,000,00.

Depreciation  and  amortization  decreased from 1994 to 1993 due to a portion of
the  Partnership's  assets  having become fully  depreciated.  This is partially
offset by approximately $307,000 of new assets (principally tenant improvements)
being placed in service.

Liquidity and Capital Resources

The  Partnership had cash flow from  operations of $1,055,054  (1995),  $789,379
(1994) and $773,488 (1993).  These funds, in conjunction with cash on hand, were
used to make a 1%  (annualized)  distribution  of  $154,125  in 1995  and a .25%
(annualized)  distribution of $39,000 in 1994. The annualized  distribution rate
is calculated as a percent of the initial equity.  The limited partners received
100% of these  distributions.  The Partnership did not make a cash  distribution
during the 12 months  ended  December  31, 1993 or during the nine months  ended
September  30, 1994.  The  Partnership  determined  it necessary to  temporarily
suspend cash  distributions  until  adequate  cash  reserves for future  leasing
costs,  tenant  finish and other  capital  improvements  were  established,  and
sufficient  cash was being  generated from  operations  which,  in  management's
opinion,  warranted a cash  distribution.  Cash reserves (which are unrestricted
cash and  equivalents  and investment  securities as shown on the  Partnership's
balance  sheet as of  December  31) were  $729,939,  $734,203  and  $444,495  at
December 31, 1995, 1994 and 1993, respectively.

As of December 31, 1995, the Partnership had a mortgage  payable to an insurance
company in the amount of $4,500,000. The mortgage bears a variable interest rate
which adjusts  quarterly to 60 basis points over the 10-year treasury bill rate.
At no time will the rate  exceed  11.65% or be less than  7.65% per  annum.  The
current  rate at  December  31,  1995 was 7.65%.  The loan is secured by a first
mortgage on Plainview Triad North and Peachtree  Corporate  Center with a second
position behind the holder of the permanent  mortgage on Plainview Plaza II. The
unpaid balance of the loan is due June 1, 2001.

As of December  31,  1995,  the  Partnership  also had a mortgage  payable to an
insurance  company  in the  amount of  $2,464,619.  The  mortgage  bears a fixed
interest rate of 9.125% and is due November 1, 1998. The outstanding  balance at
maturity based on the current rate of amortization will be $2,140,539.

The General Partner of the Partnership is presently exploring the possibility of
refinancing  the  current  mortgages   payable   encumbering  the  Partnership's
properties.

The  primary  source of future  liquidity  and  distributions  is expected to be
derived from cash generated by the Partnership's  properties after adequate cash
reserves are established for future leasing and tenant finish costs.

The  majority  of  the  Partnership's   cash  flow  is  derived  from  operating
activities.  Cash  flows used in  investing  activities  are for  tenant  finish
improvements and reductions in accounts payable - construction and are funded by
operating activities.  Changes to current tenant improvements are a typical part
of any lease  negotiation.  Improvements  generally  include a  revision  to the
current  floor plan to  accommodate  a tenant's  needs,  new carpeting and paint
and/or wallcovering. The extent and cost of these improvements are determined by
the size of the space  and  whether  the  improvements  are for a new  tenant or
incurred  because of a lease  renewal.  Cash flows used in investing  activities
also include cash which is being

                                     - 16 -

<PAGE>



Liquidity and Capital Resources - Continued

escrowed for the  replacement of the HVAC system and asphalt paving at Peachtree
Corporate  Center and  purchases of investment  securities.  As part of its cash
management activities,  the Partnership has purchased Certificates of Deposit or
securities issued by the U.S. Government with initial maturities of greater than
three months to improve the return on its excess cash. The  Partnership  intends
to hold  the  securities  until  maturity.  Cash  flows  provided  by  investing
activities  are from the maturity of investment  securities.  Cash flows used in
financing activities include cash distributions,  principal payments on the $2.5
million  mortgage  payable and  repurchases of limited  partnership  Units.  The
Partnership does not expect any material changes in the mix and relative cost of
capital resources.

In the next 12 months,  the General Partner expects a demand on future liquidity
as a result of 86,803  square feet in leases  expiring  during  1996  (Plainview
Plaza II - 32,229  square feet,  Plainview  Triad North - 10,934 square feet and
Peachtree  Corporate  Center - 43,640  square  feet).  At this time,  the future
leasing  and tenant  finish  costs  which will be  required to renew the current
leases or obtain new tenants are unknown.  It is anticipated  that the cash flow
from  operations  and cash  reserves will be sufficient to meet the needs of the
Partnership.   As  of  December  31,  1995,  the  Partnership  had  no  material
commitments for tenant finish improvements.

The General Partner also anticipates a demand on future liquidity in the next 12
months, as a result of the Partnership's plans to complete the renovation of the
common area lobbies at Plainview  Plaza II. The project is to include an upgrade
of current restroom facilities, improvement of handicap restroom facilities, new
carpet and  wallcoverings.  The  project is  anticipated  to cost  approximately
$250,000.  A portion of this project was  completed  during the first and second
quarter of 1995 at a cost of approximately  $93,000. The cost of this project is
expected to be funded from cash  reserves and cash flow from  operations.  As of
December  31,  1995,  the  Partnership  had no  commitments  for  the  remaining
renovations.

A demand on future  liquidity is also anticipated as the General Partner expects
to  renovate  and update the  exterior  of the NTS  Plainview  Plaza II property
during 1996.  The  renovation is designed to make the property more  competitive
and  enhance  its  value.  The  project  is  anticipated  to cost  approximately
$900,000. The General Partner of the Partnership anticipates the project will be
funded with a combination  of debt  financing,  cash reserves and cash flow from
operating  activities.  As of December 31, 1995, no commitments had been made in
connection with this project.

On October 3, 1995, the Partnership  established an Interest  Repurchase Reserve
in the amount of $156,000 pursuant to Section 16.4 of the Partnership's  Amended
and Restated  Agreement of Limited  Partnership.  Under  Section  16.4,  limited
partners may request the Partnership to repurchase  their  respective  interests
(Units)  in  the  Partnership.   With  this  Interest  Repurchase  Reserve,  the
Partnership  was able to repurchase  750 Units at a price of $208 per Unit.  The
Partnership  notified the limited partners of the  establishment of the Interest
Repurchase   Reserve  and  the  opportunity  to  request  that  the  Partnership
repurchase Units at the established  price pursuant to a letter dated October 3,
1995.  Repurchased  Units were retired by the Partnership,  thereby reducing the
total number of Units  outstanding.  The Interest  Repurchase Reserve was funded
from cash reserves.

Subsequent to December 31, 1995, the Partnership  funded an additional  $100,000
to its  Interest  Repurchase  Reserve  which  will  enable  the  Partnership  to
repurchase up to an additional 480 Units at a price of $208 per Unit.


                                     - 17 -

<PAGE>



Liquidity and Capital Resources - Continued

Subsequent  to  December  31,  1995,  the  Partnership   made  a  commitment  of
approximately  $95,000 for tenant finish improvements at Plainview Plaza II as a
result of the lease renewal and expansion with The Kroger Company. The expansion
increases the tenant's current leased space of approximately  48,000 square feet
by  approximately  5,400 square feet and the renewal  extends the lease for five
years.  The  project is expected to be  completed  during the second  quarter of
1996.  The  source of funds for this  project is  expected  to be cash flow from
operations and/or cash reserves.

The table below  presents  that portion of the  distributions  that  represent a
return of capital on a Generally  Accepted  Accounting  Principle  basis for the
years ended  December  31,  1995,  1994 and 1993.  The  General  Partner did not
receive a  distribution  during these years.  Distributions  were funded by cash
flow derived from operating activities.


                           Net Income                Cash
                             (Loss)             Distributions          Return of
                           Allocated               Declared             Capital
                           ---------               --------             -------

Limited Partners:
       1995                $ (86,496)               $ 154,125          $ 154,125
       1994                  (97,062)                  39,000             39,000
       1993                 (214,680)                      --                 --

The following  describes the efforts being taken by the  Partnership to increase
the occupancy levels at the  Partnership's  properties.  At Peachtree  Corporate
Center in Norcross,  Georgia,  the  Partnership has an on-site leasing agent, an
employee of NTS Development  Company (an affiliate of the general partner),  who
makes calls to potential tenants, negotiates lease renewals with current tenants
and manages local  advertising with the assistance of NTS Development  Company's
marketing staff. The leasing and renewal negotiations for Plainview Plaza II and
Plainview  Triad  North  are  handled  by  leasing  agents,   employees  of  NTS
Development  Company,  located in Louisville,  Kentucky.  The leasing agents are
located in the same city as both commercial properties.  All advertising for the
Louisville properties is also coordinated by NTS Development Company's marketing
staff located in Louisville, Kentucky.

Leases at all the  Partnership's  properties  provide for tenants to  contribute
toward the payment of increases in common area maintenance expenses,  insurance,
utilities  and real  estate  taxes.  This lease  provision  should  protect  the
Partnership's operations from the impact of inflation and changing prices.


                                     - 18 -

<PAGE>



Item 8.  Financial Statements and Supplementary Data


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To NTS-Properties III:

We have  audited  the  accompanying  balance  sheets of  NTS-Properties  III, (a
Georgia  limited  partnership) as of December 31, 1995 and 1994, and the related
statements of operations,  partners' equity and cash flows for each of the three
years in the period ended December 31, 1995. These financial  statements and the
schedules  referred  to  below  are  the  responsibility  of  the  Partnership's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of  NTS-Properties  III as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 1995 in conformity
with generally accepted accounting principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The schedules included on pages 35 and 36
are  presented  for  purposes of  complying  with the  Securities  and  Exchange
Commission's  rules and are not part of the basic  financial  statements.  These
schedules have been subjected to the auditing  procedures  applied in the audits
of the basic  financial  statements  and, in our  opinion,  fairly  state in all
material  respects  the  financial  data  required  to be set forth  therein  in
relation to the basic financial statements taken as a whole.






                                                ARTHUR ANDERSEN LLP


Louisville, Kentucky
February 14, 1996


                                     - 19 -

<PAGE>
<TABLE>

<CAPTION>


                               NTS-PROPERTIES III

                                 BALANCE SHEETS

                        AS OF DECEMBER 31, 1995 AND 1994





                                                        1995             1994
                                                     -----------     ----------- 
ASSETS

<S>                                                  <C>             <C>        
Cash and equivalents                                 $   626,884     $   734,203
Cash and equivalents - restricted                        387,796         293,623
Investment securities                                    103,055            --
Accounts receivable, net of allowance
 for doubtful accounts of $90,332 (1995)
 and $53,828 (1994)                                      176,811         339,477
Land, buildings and amenities, net                     9,585,286      10,242,936
Other assets                                             241,022         252,047
                                                     -----------     -----------

  Total assets                                       $11,120,854     $11,862,286
                                                     ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Mortgages payable                                    $ 6,964,619     $ 7,060,479
Accounts payable - operations                             72,807          75,234
Accounts payable - construction                            1,907         152,093
Distributions payable                                     37,125          39,000
Security deposits                                         95,494          84,044
Other liabilities                                         13,171          16,190
                                                     -----------     -----------

                                                       7,185,123       7,427,040

Partners' equity                                       3,935,731       4,435,246
                                                     -----------     -----------

                                                     $11,120,854     $11,862,286
                                                     ===========     ===========
</TABLE>


The  accompanying  notes to financial  statements  are an integral part of these
statements.


                                     - 20 -

<PAGE>
<TABLE>
<CAPTION>



                                                         NTS-PROPERTIES III

                                                      STATEMENTS OF OPERATIONS

                                        FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993



                                                                            1995                    1994                     1993
                                                                         -----------             -----------             -----------
<S>                                                                     <C>                     <C>                     <C>     
Revenues:
 Rental income, net of provision for
  doubtful accounts of $68,680 (1995),
  $-0- (1994) and $33,647 (1993)                                        $ 2,717,965             $ 2,617,879             $ 2,505,585
 Rental income - affiliated                                                 312,660                 314,750                 315,009
 Interest and other income                                                   42,478                  27,646                   9,980
                                                                        -----------             -----------             -----------

                                                                          3,073,103               2,960,275               2,830,574

Expenses:
 Operating expenses                                                         673,969                 684,043                 613,730
 Operating expenses - affiliated                                            337,133                 308,897                 339,837
 Write-off of unamortized building and
  tenant improvements                                                        56,693                  11,572                   1,810
 Interest expense                                                           583,034                 589,200                 589,278
 Management fees                                                            161,638                 148,186                 142,213
 Real estate taxes                                                          216,225                 217,257                 207,145
 Professional and administrative
  expenses                                                                   56,384                  51,709                  68,143
 Professional and administrative
  expenses - affiliated                                                     141,552                 138,500                 135,071
 Depreciation and amortization                                            1,035,865               1,008,502               1,051,829
                                                                        -----------             -----------             -----------

                                                                          3,262,493               3,157,866               3,149,056
                                                                        -----------             -----------             -----------

    
Net loss                                                                $  (189,390)            $  (197,591)            $  (318,482)
                                                                        ===========             ===========             ===========

Net loss allocated to the limited
 partners                                                               $   (86,496)            $   (97,062)            $  (214,680)
                                                                        ===========             ===========             ===========


Net loss per limited partnership                                        $     (5.58)            $     (6.22)            $    (13.76)
                                                                        ===========             ===========             ===========
 unit

Weighted average number of limited
 partnership units                                                           15,495                  15,600                  15,600
                                                                        ===========             ===========             ===========

</TABLE>

The  accompanying  notes to financial  statements  are an integral part of these
statements.


                                                               - 21 -

<PAGE>
<TABLE>
<CAPTION>



                                                         NTS-PROPERTIES III

                                                   STATEMENTS OF PARTNERS' EQUITY

                                        FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993



                                                                           Limited                 General
                                                                          Partners                Partners                  Total
                                                                         -----------             -----------             -----------
<S>                                                                     <C>                     <C>                     <C>        
Balances at December 31, 1992                                           $ 4,501,034             $   489,285             $ 4,990,319
 Net loss                                                                  (214,680)               (103,802)               (318,482)
                                                                         -----------             -----------             -----------
Balances at December 31, 1993                                             4,286,354                 385,483               4,671,837
 Net loss                                                                   (97,062)               (100,529)               (197,591)
 Distributions declared                                                     (39,000)                   --                   (39,000)
                                                                         -----------             -----------             -----------
Balances at December 31, 1994                                             4,150,292                 284,954               4,435,246
 Net loss                                                                   (86,496)               (102,894)               (189,390)
 Distributions declared                                                    (154,125)                   --                  (154,125)
 Repurchase of limited partnership
  units                                                                    (156,000)                   --                  (156,000)
                                                                         -----------             -----------             -----------
Balances at December 31, 1995                                           $ 3,753,671             $   182,060             $ 3,935,731
                                                                         ===========             ===========             ===========

</TABLE>

The  accompanying  notes to financial  statements  are an integral part of these
statements.


                                                               - 22 -
<PAGE>

<TABLE>
<CAPTION>




                                                         NTS-PROPERTIES III

                                                      STATEMENTS OF CASH FLOWS

                                        FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993




                                                                                 1995                  1994                  1993
                                                                             -----------           -----------           -----------
<S>                                                                         <C>                   <C>                   <C>         
CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES
Net income                                                                  $  (189,390)          $  (197,591)          $  (318,482)
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Provision for doubtful accounts                                                68,680                  --                  33,647
  Accrued interest on investment securities                                      (1,402)                 --                    --
  Write-off of unamortized building and tenant
   improvements                                                                  56,693                11,572                 1,810
  Depreciation and amortization                                               1,035,865             1,008,502             1,051,829
  Change in assets and liabilities:
   Cash and equivalents - restricted                                             (5,925)                 --                    --
   Accounts receivable                                                           93,986               (27,490)                1,455
   Other assets                                                                  (9,460)               (7,141)               (3,555)
   Accounts payable - operations                                                 (2,427)                5,604                (3,337)
   Security deposits                                                             11,450                (7,053)                5,934
   Other liabilities                                                             (3,016)                2,976                 4,187
                                                                             -----------           -----------           -----------

  Net cash provided by operating activities                                   1,055,054               789,379               773,488
                                                                             -----------           -----------           -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and
 amenities                                                                     (414,426)             (454,758)             (285,475)
Increase in cash and equivalents - restricted                                   (88,248)              (92,123)              (78,000)
Increase (decrease) in accounts payable -                                      (150,186)              134,740                11,740
 construction
Purchases of investment securities                                             (401,461)                 --                    --
Maturities of investment securities                                             299,808                  --                    --
                                                                             -----------           -----------           -----------

  Net cash used in investing activities                                        (754,513)             (412,141)             (351,735)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash distributions                                                             (156,000)                 --                    --
Principal payments on mortgage payable                                          (95,860)              (87,530)              (79,924)
Repurchase of limited partnership units                                        (156,000)                 --                    --
                                                                             -----------           -----------           -----------

  Net cash used in financing activities                                        (407,860)              (87,530)              (79,924)

  Net increase (decrease) in cash and
   equivalents                                                                 (107,319)              289,708               341,829

CASH AND EQUIVALENTS, beginning of period                                       734,203               444,495               102,666
                                                                             -----------           -----------           -----------

CASH AND EQUIVALENTS, end of period                                         $   626,884           $   734,203           $   444,495
                                                                             ===========           ===========           ===========

Interest paid on a cash basis                                               $   585,825           $   587,803           $   589,886
                                                                             ===========           ===========           ===========

</TABLE>
The  accompanying  notes to financial  statements  are an integral part of these
statements.

                                                               - 23 -

<PAGE>



                               NTS-PROPERTIES III

                          NOTES TO FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993


1.     Significant Accounting Policies

       A)    Organization

             NTS-Properties  III (the  "Partnership")  is a limited  partnership
             organized  under the laws of the State of Georgia on June 24, 1982.
             The general partner is NTS-Properties Associates, a Georgia limited
             partnership.  The  Partnership  is in the  business  of owning  and
             operating commercial real estate.

       B)    Properties

             The Partnership owns and operates the following properties:

             -  Peachtree  Corporate Center, a business park with  approximately
                192,000 net rentable square feet located in Norcross, Georgia, a
                suburb of Atlanta.

             -  Plainview Plaza II, an office complex with approximately 113,000
                net rentable square feet located in Jeffersontown,  Kentucky,  a
                suburb of Louisville.

             -  Plainview  Triad North,  an office  complex  with  approximately
                89,000  net  rentable  square  feet  located  in  Jeffersontown,
                Kentucky.

       C)    Allocation of Net Income (Loss) and Cash Distributions

             Net Cash Receipts, as defined in the partnership agreement, will be
             distributed,  to the extent made available, to the limited partners
             in an amount  equal to the greater of 10% per year,  noncumulative,
             of their invested  capital or their pro rata share of such Net Cash
             Receipts, as defined in the partnership  agreement.  The balance of
             the Net Cash  Receipts,  as defined in the  partnership  agreement,
             would be available for  distribution  to the general  partner until
             the  general  partner has  received  its pro rata share of such Net
             Cash Receipts.  At such time as the limited  partners have received
             cash distributions  equal to their original capital  contributions,
             cash flow would be distributed 52% to the limited  partners and 48%
             to the general  partner.  In general,  operating  income and losses
             (exclusive of  depreciation)  are allocated to the limited partners
             and  the  general   partner  in  proportion  to  their   respective
             distributions  of cash. In no event,  however,  will the portion of
             any item of Partnership  income,  gain,  loss,  deduction or credit
             allocated to the general partner be less than 1%.

             Depreciation   of  the  assets  acquired  on  the  date  operations
             commenced  is  allocated  directly to the limited  partners and the
             general  partner  based  upon  their  respective  tax  basis in the
             property. Depreciation of assets subsequently acquired is allocated
             based on the  limited  partners'  interests  of 65% and the general
             partner's  interest  of  35%.  In the  accompanying  Statements  of
             Operations,  net loss was allocated 99% to the limited partners and
             1% to the general  partner net of the  effects of  depreciation  on
             contributed assets in accordance with the Partnership Agreement.


                                     - 24 -

<PAGE>



1.     Significant Accounting Policies - Continued

       D)    Tax Status

             The  Partnership  has received a ruling from the  Internal  Revenue
             Service  stating that the  Partnership  is  classified as a limited
             partnership   for  federal  income  tax  purposes.   As  such,  the
             Partnership makes no provision for income taxes. The taxable income
             or loss is passed through to the holders of interests for inclusion
             on their individual income tax returns.

             The reconciliation of net loss for financial statement purposes and
             for income tax reporting is as follows:


                                           1995           1994             1993
                                         ---------      ---------      ---------

Net loss                                $(189,390)     $(197,591)     $(318,482)
Items handled differently
for tax purposes:
  Depreciation                            (10,224)       (34,225)        (1,855)
  Write-off of unamortized
   building and tenant                    (90,300)      (158,028)       (91,154)
   improvements
  Rental income                            99,696         50,565         55,091
  Allowance for doubtful                   36,505        (23,376)       (17,206)
   accounts
  Other                                       219            198           --
                                         ---------      ---------      ---------

Taxable loss                            $(153,494)     $(362,457)     $(373,606)
                                         =========      =========      =========

       E)    Use of Estimates in the Preparation of Financial Statements

             The   preparation  of  financial   statements  in  conformity  with
             generally accepted  accounting  principles  requires  management to
             make estimates and assumptions  that affect the reported amounts of
             assets and  liabilities  and  disclosure of  contingent  assets and
             liabilities  at  the  date  of the  financial  statements  and  the
             reported  amounts of revenues  and  expenses  during the  reporting
             period. Actual results could differ from those estimates.

       F)    Cash and Equivalents - Restricted

             Cash and equivalents - restricted  represent escrow funds which are
             to be released as the  heating,  ventilating  and air  conditioning
             ("HVAC")  system and asphalt paving at Peachtree  Corporate  Center
             are  replaced  and funds which have been  escrowed  with a mortgage
             company for NTS Plainview  Plaza II's property  taxes in accordance
             with the loan agreements.

       G)    Investment Securities

             Investment  securities  represent  investments in  Certificates  of
             Deposit or securities  issued by the U. S.  Government with initial
             maturities  of  greater  than three  months.  The  investments  are
             carried at cost which  approximates  market value.  The Partnership
             intends to hold the  securities  until  maturity.  During 1995, the
             Partnership sold no investment  securities.  The following provides
             details regarding the investments held at December 31, 1995:

                                         Amortized      Maturity     Value At
                         Type              Cost           Date       Maturity
                         ----              ----           ----       --------

             Certificate of Deposit      $103,055       01/05/96     $103,140
                                          =======                     =======

             The  Partnership   held  no  investment   securities  with  initial
             maturities greater than three months during 1994 or 1993.

                                     - 25 -

<PAGE>



1.     Significant Accounting Policies - Continued

       H)    Basis of Property and Depreciation

             Land, buildings and amenities are stated at cost to the Partnership
             as determined by the historical cost of the property to the general
             partner for its interest and by the purchase  price of the property
             to  the   Partnership   for  the   limited   partners'   interests.
             Depreciation  is computed using the  straight-line  method over the
             estimated  useful lives of the assets which are 5-30 years for land
             improvements,  5-30 years for buildings and improvements and 3 - 30
             years for amenities.

             In March 1995,  the  Financial  Accounting  Standards  Board issued
             Statement  No.  121  (the   "Statement")   on  accounting  for  the
             impairment of long-lived assets, certain identifiable  intangibles,
             and goodwill  related to assets to be held and used.  The Statement
             also  establishes  accounting  standards for long-lived  assets and
             certain identifiable intangibles to be disposed of. The Partnership
             is required to adopt the  Statement  no later than January 1, 1996,
             although  earlier  implementation  is  permitted.  The Statement is
             required  to be  applied  prospectively  for  assets to be held and
             used.  The initial  application of the Statement to assets held for
             disposal is required to be reported as the  cumulative  effect of a
             change in accounting principle.

             The Partnership plans to adopt the Statement as of January 1, 1996.
             Based on a preliminary  review, the Partnership does not anticipate
             that any material adjustments will be required.

       I)    Rental Income and Deferred Leasing Commissions

             Certain of the  Partnership's  lease  agreements  are structured to
             include scheduled and specified rent increases over the lease term.
             For financial reporting  purposes,  the income from these leases is
             being  recognized  on a  straight-line  basis over the lease  term.
             Accrued income  connected with these leases is included in accounts
             receivable and totalled  $110,401 and $213,117 at December 31, 1995
             and 1994, respectively.  All commissions paid to leasing agents are
             deferred and  amortized on a  straight-line  basis over the term of
             the lease to which they apply.

       J)    Statements of Cash Flows

             For purposes of reporting cash flows, cash and equivalents  include
             cash on hand and short-term, highly liquid investments with initial
             maturities of three months or less.

2.     Concentration of Credit Risk

       NTS-Properties  III is a  limited  partnership  which  owns and  operates
       commercial  properties  in Norcross,  Georgia,  a suburb of Atlanta,  and
       Jeffersontown, Kentucky, a suburb of Louisville. Substantially all of the
       Partnership's  tenants are local  businesses or are businesses which have
       operations in the location in which they lease space.

3.     Interest Repurchase Reserve

       On October 3, 1995, the  Partnership  established an Interest  Repurchase
       Reserve  in the  amount  of  $156,000  pursuant  to  Section  16.4 of the
       Partnership's  Amended and  Restated  Agreement  of Limited  Partnership.
       Under  Section  16.4,  limited  partners may request the  Partnership  to
       repurchase their respective  interests  (Units) in the Partnership.  With
       this Interest Repurchase Reserve, the Partnership was able to

                                     - 26 -

<PAGE>



3.     Interest Repurchase Reserve - Continued

       repurchase  750  Units  at a price  of $208  per  Unit.  The  Partnership
       notified  the  limited  partners  of the  establishment  of the  Interest
       Repurchase  Reserve and the  opportunity to request that the  Partnership
       repurchase  Units at the  established  price  pursuant to a letter  dated
       October  3, 1995.  Repurchased  Units  were  retired by the  Partnership,
       thereby  reducing  the total  number of Units  outstanding.  The Interest
       Repurchase Reserve was funded from cash reserves.

       Subsequent  to December 31, 1995,  the  Partnership  funded an additional
       $100,000  to its  Interest  Repurchase  Reserve  which  will  enable  the
       Partnership  to repurchase  up to an  additional  480 Units at a price of
       $208 per unit.

4.     Land, Buildings and Amenities

       The  following   schedule  provides  an  analysis  of  the  Partnership's
       investment in property held for lease as of December 31:


                                            1995                 1994
                                        -----------          -----------

Land and improvements                   $ 4,411,387          $ 4,368,903
Buildings and improvements               19,296,603           19,201,379
Amenities                                   124,041              124,041
                                         ----------           ----------

                                         23,832,031           23,694,323

Less accumulated depreciation            14,246,745           13,451,387
                                         ----------           ----------

                                        $ 9,585,286          $10,242,936
                                         ==========           ==========

5.     Mortgages Payable

       Mortgages payable as of December 31 consist of the following:


                                                    1995                 1994
                                                -----------          ----------
Mortgage payable to an insurance
  company bearing  interest at 9.125%,
  maturing November 1, 1998, secured
  by land and building                          $ 2,464,619          $ 2,560,479

Mortgage payable to an insurance
  company maturing June 1, 2001,
  secured by land and  buildings,
  bearing a variable interest rate
  based on the 10-year treasury bill
  rate plus 60 basis points.  The rate
  is adjusted quarterly (not to exceed
  11.65% or be less than 7.65%).  The
  current rate at December 31, 1995
  is 7.65%                                        4,500,000            4,500,000
                                                 ----------           ----------
                                                $ 6,964,619          $ 7,060,479
                                                 ==========           ==========



                                     - 27 -

<PAGE>



5.     Mortgages Payable - Continued

       The $2,464,619  mortgage is payable in monthly  installments  of $32,335,
       which  includes   principal,   interest  and  property  tax  escrow.  The
       $4,500,000  mortgage is payable in monthly  installments of $35,187 which
       includes interest and repair escrow.  Scheduled maturities of debt are as
       follows:

             For the Years Ended December 31,                     Amount
             --------------------------------                  -----------
                               1996                            $   104,982
                               1997                                114,973
                               1998                              2,244,664
                               1999                                  --
                               2000                                  --
                            Thereafter                           4,500,000
                                                                 ---------

                                                               $ 6,964,619
                                                                 =========

       Based on the borrowing rates  currently  available to the Partnership for
       mortgages  with similar terms and average  maturities,  the fair value of
       long-term debt is approximately $7,450,000.

6.     Rental Income Under Operating Leases

       The  following  is  a  schedule  of  minimum   future  rental  income  on
       noncancellable operating leases as of December 31, 1995:

             For the Years Ended December 31,                   Amount
             --------------------------------                ---------
                                1996                         $ 2,436,182
                                1997                           1,793,115
                                1998                           1,042,234
                                1999                             740,668
                                2000                             129,953
                            Thereafter                             --
                                                              ----------
                                                             $ 6,142,152
                                                              ==========

7.     Related Party Transactions

       Property management fees of $161,638 (1995), $148,186 (1994) and $142,213
       (1993) were paid to NTS Development  Company, an affiliate of the general
       partner, pursuant to an agreement with the Partnership.  The fee is equal
       to 5% of gross revenues from the Partnership's properties. Also permitted
       by the  partnership  agreement,  NTS  Development  Company will receive a
       repair and  maintenance  fee equal to 5.9% of costs incurred which relate
       to capital improvements. The Partnership has incurred $25,498 and $28,759
       as a repair and  maintenance fee during the years ended December 31, 1995
       and 1994, respectively,  and has capitalized this cost as a part of land,
       buildings and amenities.  As permitted by the partnership agreement,  the
       Partnership  also was charged the following  amounts from NTS Development
       Company for the years  ended  December  31,  1995,  1994 and 1993.  These
       charges  include items which have been  expensed as operating  expenses -
       affiliated or professional and  administrative  expenses - affiliated and
       items which have been  capitalized as other assets or as land,  buildings
       and amenities. These charges were as follows:


                                           1995           1994          1993
                                         --------       --------      --------

         Leasing agents                  $124,826       $134,561      $171,705
         Administrative                   172,070        168,003       162,365
         Property manager                 214,574        178,648       175,022
         Other                              7,838         14,767        17,055
                                          -------        -------       -------
 
                                         $519,308       $495,979      $526,147
                                          =======        =======       =======


                                     - 28 -

<PAGE>



7.     Related Party Transactions - Continued

       During the years ended December 31, 1995,  1994 and 1993, NTS Development
       Company leased approximately 23,000 square feet of the available space in
       the Plainview  Plaza II property at a base rent of  approximately  $13.50
       per square foot. The Partnership has received  approximately  $315,000 in
       rental payments from NTS Development  Company during 1995, 1994 and 1993.
       The lease expires in February 1996.



                                     - 29 -

<PAGE>



Item 9.       Changes in and Disagreements with Accountants on Accounting and
              Financial Disclosure

None.

                                    PART III

Item 10.      Directors and Executive Officers of the Registrant

Because the Partnership is a limited  partnership and not a corporation,  it has
no  directors  or  officers  as  such.  Management  of  the  Partnership  is the
responsibility   of  the  general  partner,   NTS-Properties   Associates.   The
Partnership has entered into a management contract with NTS Development Company,
an affiliate of the general partner, to provide property management services.

The general partners of NTS-Properties Associates are as follows:

J. D. Nichols

Mr.  Nichols  (age  54)  is  the  managing  general  partner  of  NTS-Properties
Associates and is Chairman of the Board of NTS Corporation  (since 1985) and NTS
Development Company (since 1977).

L. C. Aroh

Mr. Aroh (age 64) has been an  independent  real estate  developer  for the past
eight years.  He is a partner in a number of real estate  developments  with the
principals of NTS Development Company.

NTS Capital Corporation

NTS Capital Corporation (formerly NTS Corporation) is a Kentucky corporation
formed in October 1979.  J. D. Nichols is Chairman of the Board and the sole
director of NTS Capital Corporation.

Alliance Realty Corporation

Alliance Realty Corporation was formed in September 1982, and is a wholly-
owned subsidiary of SN Alliance, Inc.  SN Alliance, Inc. is also the parent
corporation of Stifel, Nicolaus & Company, Inc. which acted as the Dealer
Manager in connection with the offering for the interests.

Gary D. Adams

Mr. Adams (age 49) is Senior Vice President of NTS Development Company.
Since joining the NTS organization in May 1977, Mr. Adams has been involved
in the development, construction and management of properties in the
southeast region.

A. Toni Rizzo

Mr.  Rizzo (age 48) joined  Abel  Construction  during  1995 as the  Director of
Business  Development.  From  1985 to 1995,  Mr.  Rizzo  was an  officer  of the
Hunnington Group and prior to 1985 was an employee of NTS Development Company.

The Manager of the Partnership's properties is NTS Development Company, the
executive officers and/or directors of which are Messrs. J. D. Nichols,
Richard L. Good and John W. Hampton.



                                     - 30 -

<PAGE>



Item 10.      Directors and Executive Officers of the Registrant - Continued

Richard L. Good

Mr. Good (age 56),  President and Chief  Operating  Officer of NTS  Corporation,
President  of  NTS  Development  Company  and  Chairman  of  the  Board  of  NTS
Securities, Inc., joined the Manager in January 1985. From 1981 through 1984, he
was Executive Vice President of Jacques-Miller, Inc., a real estate syndication,
property management and financial planning firm in Nashville, Tennessee.

John W. Hampton

Mr.  Hampton (age 46) is Senior Vice President of NTS  Development  Company with
responsibility  for all  accounting  operations.  Before  joining the Manager in
March 1991, Mr. Hampton was Vice President - Finance and Chief Financial Officer
of the  Sturgeon-Thornton-Marrett  Development  Company in  Louisville  for nine
years. Prior to that he was with Alexander Grant & Company CPA's. Mr. Hampton is
a Certified  Public  Accountant  and a graduate of the  University of Louisville
with a Bachelor of Science  degree in  Commerce.  He is a member of the American
Institute of CPA's and the Kentucky Society of CPA's.

Item 11.      Management Remuneration and Transactions

The officers and/or directors of the corporate general partner receive no direct
remuneration in such  capacities.  The Partnership is required to pay a property
management  fee based on gross rentals to NTS  Development.  The  Partnership is
also required to pay to NTS Development  company a repair and maintenance fee on
costs related to specific  projects.  Also,  NTS  Development  Company  provides
certain  other  services  to  the  Partnership.  See  Note  6 to  the  financial
statements which sets forth  transactions  with NTS Development  Company for the
years ended December 31, 1995, 1994 and 1993.

The general partner is entitled to receive cash distributions and allocations of
profits  and losses from the  Partnership.  Generally,  the  general  partner is
entitled to a 10% noncumulative annual return on its capital  contributions from
the cash  income  of the  Partnership  (after  payment  of a like  amount to the
limited  partners).  At such time as the limited  partners  have  received  cash
distributions  from all sources equal to their original  capital  contributions,
cash flow will be  distributed  52% to limited  partners  and 48% to the general
partner.  In no event,  however,  will the  portion  of any item of  Partnership
income, gain, loss, deduction or credit allocated to the general partner be less
than 1%.


                                     - 31 -

<PAGE>



Item 12.      Security Ownership of Certain Beneficial Owners and Management

The general partner is NTS-Properties Associates, a Georgia limited partnership,
10172 Linn Station Road, Louisville, Kentucky 40223. The partners of the general
partner and their total respective interests in
NTS-Properties Associates are as follows:

       J. D. Nichols
       10172 Linn Station Road                                            86.07%
       Louisville, Kentucky 40223

       L. C. Aroh
       10904 Old Bridge Place                                              8.64%
       Louisville, Kentucky 40223

       Gary D. Adams
       3300 University Boulevard, Suite 150                                1.26%
       Winter Park, Florida 32792

       A. Toni Rizzo
       515 Willowhurst Place                                               1.26%
       Louisville, Kentucky 40223

       NTS Capital Corporation
       10172 Linn Station Road                                             2.67%
       Louisville, Kentucky 40223

       Alliance Realty Corporation
       500 North Broadway     0.10%
       St. Louis, Missouri 63102

Item 13.      Certain Relationships and Related Transactions

Property management fees of $161,638  (1995),$148,186 (1994) and $142,213 (1993)
were paid to NTS  Development  Company,  an  affiliate  of the general  partner,
pursuant to an agreement with the  Partnership.  The fee is equal to 5% of gross
revenues from the  Partnership's  properties.  Also permitted by the partnership
agreement,  NTS  Development  Company will receive a repair and  maintenance fee
equal to 5.9% of costs  incurred  which  relate  to  capital  improvements.  The
Partnership  has incurred  $25,498 and $28,759 as a repair and  maintenance  fee
during  the  years  ended  December  31,  1995 and 1994,  respectively,  and has
capitalized this cost as a part of land,  buildings and amenities.  As permitted
by the partnership  agreement,  the  Partnership  also was charged the following
amounts from NTS Development Company for the years ended December 31, 1995, 1994
and 1993.  These  charges  include  items which have been  expensed as operating
expenses - affiliated or professional and  administrative  expenses - affiliated
and items which have been capitalized as other assets or as land,  buildings and
amenities. These charges were as follows:


                                   1995               1994              1993
                                 --------           --------          --------

Leasing agents                   $124,826           $134,561          $171,705
Administrative                    172,070            168,003           162,365
Property manager                  214,574            178,648           175,022
Other                               7,838             14,767            17,055
                                  -------            -------           -------

                                 $519,308           $495,979          $526,147
                                  =======            =======           =======


                                     - 32 -

<PAGE>



Item 13.  Certain Relationships and Related Transactions - Continued

During the years ended December 31, 1995, 1994 and 1993, NTS Development Company
leased  approximately 23,000 square feet of the available space in the Plainview
Plaza II property at a base rent of  approximately  $13.50 per square foot.  The
Partnership  has received  approximately  $315,000 in rental  payments  from NTS
Development  Company  during 1995,  1994 and 1993. The lease expires in February
1996.

There are no other reportable business  relationships  between the Partnership's
creditors,  customers,  and suppliers and officers of the Manager or the general
partner as of December 31, 1995.


                                     - 33 -

<PAGE>



                                     PART IV

Item 14.      Exhibits, Financial Statement Schedules, and Reports on Form 8-K

1.      Financial statements

        The financial  statements for the years ended  December 31, 1995,  1994,
        1993 together with the report of Arthur  Andersen LLP dated February 14,
        1996,  appear in Item 8. The  following  financial  statement  schedules
        should be read in conjunction with such financial statements.

2.      Financial statement schedules

        Schedules:                                                Page No.
        ----------                                                --------

        III - Real Estate and Accumulated Depreciation             35-36

        All other  schedules have been omitted  because they are not applicable,
        or not required,  or because the required information is included in the
        financial statements or notes thereto.

3.      Exhibits

        Exhibit No.                                               Page No.
        -----------                                               --------

         3.     Amended and Restated                                *
                Agreement and Certificate
                of Limited Partnership of
                NTS-Properties III

        10.     Management Agreement between                        *
                NTS Development Company and
                NTS-Properties III

        27.     Financial Data Schedule                          Included
                                                                 herewith

        *       Incorporated by reference to documents filed with the Securities
                and  Exchange  Commission  in  connection  with  the  filing  of
                Registration Statements on Form S-11 on June 25, 1982 (effective
                October 13, 1982) under Commission File No. 2-78152.

4.      Reports on Form 8-K

        Form 8-K,  dated October 3, 1995,  was filed to report the fact that the
        Partnership has established an Interest  Repurchase  Reserve pursuant to
        Section  16.4 of the  Partnership's  Amended and  Restated  Agreement of
        Limited Partnership.



                                     - 34 -

<PAGE>

<TABLE>
<CAPTION>


                                             NTS PROPERTIES III

                          SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                                          AS OF DECEMBER 31, 1995




                                                                                     Peachtree
                                                        Plainview      Plainview     Corporate
                                                         Plaza II     Triad North     Center        Total
                                                         --------     -----------     ------        -----
<S>                                                    <C>           <C>           <C>           <C>    
Encumbrances                                                (A)           (B)           (B)

Initial cost to partnership:
  Land                                                 $ 1,379,172   $ 1,217,886   $ 1,408,375   $ 4,005,433
  Buildings and improvements                             4,963,604     4,512,172     6,231,114    15,706,890

Cost capitalized subsequent to acquisition:
  Improvements                                           1,018,528     1,210,914     1,890,266     4,119,708
  Carrying costs                                              --            --            --            --

Gross amount at which carried December 31, 1995 (C):
  Land                                                 $ 1,478,820   $ 1,261,160   $ 1,671,407   $ 4,411,387
  Buildings and improvements                             5,882,484     5,679,812     7,858,348    19,420,644
                                                       -----------   -----------   -----------   -----------

  Total                                                $ 7,361,304   $ 6,940,972   $ 9,529,755   $23,832,031
                                                       ===========   ===========   ===========   ===========

Accumulated depreciation                               $ 4,552,781   $ 3,714,418   $ 5,979,546   $14,246,745
                                                       ===========   ===========   ===========   ===========

Date of construction                                       N/A           N/A           N/A

Date Acquired                                            01/83         02/83         01/83

Life at which depreciation in
 latest income statement is
 computed                                                  (D)           (D)           (D)


(A) First and second mortgage held by two insurance companies.

(B) First mortgage held by an insurance company.

(C) Aggregate cost of real estate for tax purposes is $23,832,032.

(D) Depreciation  is  computed  using  the  straight-line  method  over  the
    estimated  useful  lives of the  assets  which are 5 - 30 years for land
    improvements,  5 - 30 years for  buildings and  improvements  and 3 - 30
    years for amenities.
</TABLE>

                                                   - 35 -

<PAGE>



                               NTS-PROPERTIES III

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993



                                                  Real             Accumulated
                                                 Estate            Depreciation
                                                ------------        ------------
Balances at December 31, 1992                  $ 23,489,213        $ 11,958,428

Additions during period:
 Improvements                                       285,475                --
 Depreciation (a)                                      --             1,031,347

Deductions during period:
 Retirements                                       (226,061)           (224,251)
                                                ------------        ------------

Balances at December 31, 1993                    23,548,627          12,765,524

Additions during period:
 Improvements                                       454,958                --
 Depreciation (a)                                      --               983,352

Deductions during period:
 Retirements                                       (309,262)           (297,489)
                                                ------------        ------------

Balances at December 31, 1994                    23,694,323          13,451,387

Additions during period:
 Improvements                                       414,424                --
 Depreciation (a)                                      --             1,015,382

Deductions during period:
 Retirements                                       (276,716)           (220,024)
                                                ------------        ------------

Balances at December 31, 1995                  $ 23,832,031        $ 14,246,745
                                                ============        ============


(a)     The additions charged to accumulated  depreciation on this schedule will
        differ from the  depreciation and amortization on the Statements of Cash
        Flows due to the amortization of loan costs.


                                     - 36 -

<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  NTS-Properties III has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                                    NTS-PROPERTIES III
                                                       (Registrant)

                                     BY:   NTS-Properties Associates, General
                                           Partner,
                                           BY: NTS Capital Corporation,
                                               General Partner


                                              /s/ John W. Hampton
                                                  John W. Hampton
                                                  Senior Vice President



Date:      March 27     , 1996


Pursuant to the  requirements  of the Securities and Exchange Act of 1934,  this
Form  10-K has been  signed  below by the  following  persons  on  behalf of the
registrant in their capacities and on the date indicated above.

      Signature                                   Title
      ---------                                   -----



/s/ J. D. Nichols                  General Partner of NTS-Properties
    J. D. Nichols                  Associates and Chairman of the Board and
                                   Sole Director of NTS Capital Corporation

/s/ Richard L. Good                President of NTS Capital Corporation
    Richard L. Good


/s/ John W. Hampton                Senior Vice President of NTS Capital
    John W. Hampton                Corporation


The Partnership is a limited  partnership and no proxy material has been sent to
the limited partners.



                                                   - 37 -

<PAGE>