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

                                    FORM 10-K

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

For the fiscal year ended                 December 31, 2000
                         -------------------------------------------------------

                                       OR

[ ]       TRANSITION REPORT  PURSUANT TO  SECTION 13 OR 15(d) OF  THE SECURITIES
          EXCHANGE ACT OF 1934

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 Number)

    10172 Linn Station Road
     Louisville, Kentucky                                  40223
----------------------------------            ----------------------------------
    (Address of principal                               (Zip Code)
      executive offices)
                                 (502) 426-4800
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

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,  and (2) has been subject to such filing  requirements
for the past 90 days.
                                                    [X] Yes        [  ] 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 the 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.       [ ]


<PAGE>


                                TABLE OF CONTENTS
                                -----------------

                                     PART I
                                     ------

                                                                           Pages
                                                                           -----
Items 1. and 2.   Business and Properties                                  3-8

Item 3.           Legal Proceedings                                        8

Item 4.           Submission of Matters to a Vote of Security Holders      8

                                     PART II
                                     -------

Item 5.           Market for the Registrant's Limited Partnership
                     Interests and Related Partner Matters                 9

Item 6.           Selected Financial Data                                  10

Item 7.           Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                   11-17

Item 7A.          Quantitative and Qualitative Disclosures About
                     Market Risk                                           18

Item 8.           Financial Statements and Supplementary Data              19-32

Item 9.           Changes in and Disagreements with Accountants on
                     Accounting and Financial Disclosure                   33

                                    PART III
                                    --------

Item 10.          Directors and Executive Officers of the Registrant       34-35

Item 11.          Management Remuneration and Transactions                 35-36

Item 12.          Security Ownership of Certain Beneficial
                     Owners and Management                                 36-37

Item 13.          Certain Relationships and Related Transactions           37-38

                                     PART IV
                                     -------

Item 14.          Exhibits, Consolidated Financial Statement Schedules
                    and Reports on Form 8-K                                39-41

Signatures                                                                 42



                                        2


<PAGE>

                                     PART I
                                     ------

Items 1. and 2.       Business and Properties
                      -----------------------

Development of Business
-----------------------

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,
2000, the Partnership owned the following properties:

    *     Peachtree Corporate Center, a business park with approximately 189,000
          net rentable  square feet located in  Norcross,  Georgia,  a suburb of
          Atlanta. Acquired complete on January 26, 1983.

    *     NTS Center, an office complex with approximately  115,000 net rentable
          square  feet  located  in   Jeffersontown,   Kentucky,   a  suburb  of
          Louisville. Acquired complete on January 26, 1983.

    *     Plainview  Center,  an office  complex with  approximately  95,000 net
          rentable  square feet  located in  Jeffersontown,  Kentucky.  Acquired
          complete on February 15, 1983.

In the second  quarter of 1999,  Plainview  Plaza II was  renamed NTS Center and
Plainview Triad North was renamed Plainview Center.

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.

As of December  31,  2000,  the  Partnership's  properties  were  encumbered  by
mortgages as shown in the table below:


                               Interest        Maturity           Balance
Property                         Rate            Date           at 12/31/00
--------                         ----            ----           -----------

NTS Center                      6.89%          04/10/15    (1)   $6,182,848
Peachtree Corporate Center       N/A             N/A                N/A
Plainview Center             Prime - .25%      03/01/02          $2,533,305  (2)

(1)  Current monthly  principal  payments are based upon a 17-year  amortization
     schedule.  At  maturity,  the  mortgage  will have been repaid based on the
     current rate of amortization.

(2)  On May 9, 2000, the Partnership  increased the $2,000,000  mortgage payable
     to $3,500,000 and extended the maturity date from March 1, 2001 to March 1,
     2002. The note is secured by Plainview Center and bears interest at Prime -
     .25%.

Currently,  the  Partnership's  plans for  renovations  and other major  capital
expenditures  include tenant finish improvements  required by lease negotiations
at the Partnership's  properties.  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  the  improvements  are
determined  by the size of the space being  leased and whether the  improvements
are for a new tenant or incurred  because of a lease renewal.  The tenant finish
improvements



                                        3

<PAGE>

Development of Business - Continued
-----------------------------------

will be funded  by cash  flow  from  operations,  cash  reserves  or  additional
financing  where  necessary.  As of December 31,  2000,  the  Partnership  had a
commitment for approximately $35,000 for tenant finish improvements at Plainview
Center.  Subsequent to December 31, 2000, the Partnership  made a commitment for
approximately $95,000 for tenant finish improvements at Plainview Center.

During the third  quarter of 1997,  the  Partnership  received  notice  that one
tenant occupying approximately 65% of Plainview Center would vacate the property
at the end of the lease term, August 1998. The Partnership was able to negotiate
a  30-day  renewal  (through  September  30,  1998)  with  the  tenant  for  the
approximate  63,000 square feet that they leased.  The Partnership was also able
to  negotiate a renewal for  approximately  11,000  square feet of the  original
63,000 square feet through March 31, 1999.  Costs  associated  with this renewal
were not significant. As a result of this tenant vacating the remainder of their
space on March 31,  1999,  there has been,  and will  likely  continue  to be, a
protracted  period for the property to become fully  leased  again.  Substantial
funds, currently estimated to be approximately  $400,000,  will likely be needed
for leasing expenses; especially those needed to refinish space for new tenants.

At  Plainview  Center,  the  Partnership  renovated  the  common  areas  and the
building's  exterior.  These renovations were designed to make the property more
competitive  and enhance  its value.  The cost of the  renovations,  which began
during  1998  and  were  completed  during  the  fourth  quarter  of  1999,  was
approximately $1,000,000.

In August 1999, a portion of the vacant  space at  Plainview  Center,  discussed
above, was leased to a new tenant. The lease is for approximately  28,000 square
feet and has a term of five and one-half years. The tenant took occupancy of the
space during the fourth quarter of 1999. The Partnership incurred  approximately
$500,000 of tenant finish improvements resulting from this lease.

On May 9, 2000,  the  Partnership  increased the  $2,000,000  mortgage  payable,
secured by Plainview  Center,  to $3,500,000 and extended the maturity date from
March 1, 2001 to March 1,  2002.  These  additional  funds  will be used to meet
leasing  expenses  at  Plainview  Center  and NTS Center  and  leasing  and roof
replacement  expenses at Peachtree  Corporate  Center.  The Peachtree  Corporate
Center roof replacement is expected to cost approximately  $500,000 and is to be
complete in 2001.

On July 17, 2000, the Partnership made a commitment for  approximately  $257,000
for  tenant   improvements  at  Plainview  Center.  On  November  1,  2000,  the
improvements  expanded the space of a current  tenant by 19,000  square feet and
was  funded by the  $1,500,000  increase  in the  mortgage  payable  secured  by
Plainview  Center.  This expansion  increased the occupancy of Plainview  Center
from 49% to 68%.

Financial Information About Industry Segments
---------------------------------------------

The  Partnership  is  presently  engaged  solely in the  business  of owning and
operating  commercial  real estate.  A presentation  of  information  concerning
industry  segments  is not  applicable.  See  Part  II,  Item  8 -  Note  10 for
information regarding the Partnership's operating segments.




                                        4


<PAGE>

Narrative Description of Business
---------------------------------

General
-------

The current  business of the Partnership is consistent with the original purpose
of the Partnership which was to acquire,  own and operate NTS Center,  Peachtree
Corporate Center and Plainview  Center.  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 tax consequences to
the limited partners.

NTS Center
----------

As of  December  31,  2000,  there  were  seven  tenants  leasing  office  space
aggregating  approximately  109,000  square feet of the net rentable area at NTS
Center.  All leases  provide  for  tenants to  contribute  toward the payment of
increases in common area  maintenance  expenses,  insurance,  utilities and real
estate   taxes.   The   tenants   who  occupy   NTS   Center  are   professional
service-orientated    organizations.   The   principal   occupations/professions
practiced include real estate, telecommunications, and grocery chain management.
Three tenants individually lease more than 10% of NTS Center's rentable area.

The following  table contains  approximate  data  concerning the major leases in
effect on December 31, 2000:

                                          Square Feet          Current Annual
                       Year of              and % of             Rental per
                      Expiration        Net Rentable Area       Square Foot
                      ----------        -----------------       -----------

Major Tenant (1):
      1                  2004            20,368 (17.7%)           $14.50
      2                  2003            16,937 (14.7%)           $12.00
      3                  2004            53,435 (46.4%)           $10.43 (2)

(1)  Major  tenants  are  those  that  individually  occupy  10% or  more of the
     rentable square footage.
(2)  In  accordance  with  the  lease  agreement,  the  tenant  pays  their  own
     electricity and cleaning costs thus the base rent is below market.

Plainview Center
----------------

As of  December  31,  2000,  there  were  eight  tenants  leasing  office  space
aggregating  approximately  63,600  square  feet  of the  net  rentable  area at
Plainview  Center.  All leases  provide  for  tenants to  contribute  toward the
payment of increases in common area maintenance expenses,  insurance,  utilities
and real estate taxes.  The tenants who occupy Plainview Center are professional
service-orientated organizations. The principal occupation/professions practiced
include healthcare and a victim  notification  service.  One tenant individually
leases more than 10% of Plainview Center's rentable area.





                                        5


<PAGE>

Plainview Center - Continued
----------------------------

The following  table  contains  approximate  data  concerning the major lease in
effect on December 31, 2000:


                                          Square Feet         Current Annual
                         Year of            and % of            Rental per
                        Expiration      Net Rentable Area       Square Foot
                        ----------      -----------------       -----------

Major Tenant (1):
     1                    2007            47,109 (49.5%)           $14.41

(1)  Major  tenants  are  those  that  individually  occupy  10% or  more of the
     rentable square footage.

Peachtree Corporate Center
--------------------------

As of December 31, 2000,  there were 46 tenants  leasing  office,  warehouse and
storage space aggregating  approximately 157,000 square feet of the net rentable
area at Peachtree Corporate Center. All leases provide for tenants to contribute
toward the payment of increases in common area maintenance expenses,  insurance,
utilities  and real estate  taxes.  The tenants who occupy  Peachtree  Corporate
Center  are  professional  service-  orientated  organizations.   The  principal
occupation/profession  practiced is sales-related services. There are no tenants
at Peachtree Corporate Center who individually lease 10% or more of the rentable
square footage.

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


                                            Plainview        Peachtree
                          NTS Center         Center       Corporate Center
                          ----------         ------       ----------------

Federal tax basis        $ 9,786,719       $ 7,783,370      $10,026,558
Realty tax rate               .01072            .01072           .03141
Annual realty taxes      $    72,578       $    41,497      $   100,879

Depreciation for book purposes is computed using the  straight-line  method over
the  estimated  useful  lives  of the  assets  which  are  6-30  years  for land
improvements,  5-30  years  for  buildings  and  improvements,  3-27  years  for
amenities and the applicable lease term for tenant improvements.

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,  amenities  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, 2000, 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 the leasing for each property.





                                        6


<PAGE>

Management of Properties
------------------------

NTS Development Company, an affiliate of 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,  NTS
Development  Company  establishes  rental  policies  and rates and  directs  the
marketing   activity  of  leasing  personnel.   NTS  Development   Company  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,  NTS Development  Company received a fee totaling
$169,549 for the year ended  December 31, 2000.  The fee is equal to 5% of gross
revenues from the Partnership's properties.

In addition,  the agreement  requires the  Partnership to purchase all insurance
relating to the managed properties,  to pay the direct out-of-pocket expenses of
NTS  Development  Company 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  NTS  Development  Company  for  the  salaries,
commissions,  fringe  benefits,  and  related  employment  expenses  of  on-site
personnel.

The term of the agreement  between NTS  Development  Company and the Partnership
was initially for five years,  and thereafter for succeeding  one-year  periods,
unless cancelled.  The agreement is subject to cancellation by either party upon
60-days  written  notice.  As of December 31, 2000, the management  agreement is
still in effect.

Working Capital Practices
-------------------------

Information  about the  Partnership's  working capital  practices is included in
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations in Part II, Item 7.

Seasonal Operations
-------------------

The Partnership  does not consider its operations to be seasonal to any material
degree.

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 by and is operated by the
General  Partner,   these  conflicts  are  not  resolved   through   arms-length
negotiations,  but through the exercise of the General  Partner's good judgement
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,  in bad  faith  or  with  negligence.  In  addition,  the
partnership agreement provides for indemnification of the General Partner by the
Partnership for liability  resulting from errors in judgement or certain acts or
omissions. The General Partner and its affiliates retain a free right to compete
with the Partnership's properties including the right to develop

                                        7


<PAGE>

Conflict of Interest - Continued
--------------------------------

competing  properties  now  and in  the  future,  in  addition  to the  existing
properties which may compete directly or indirectly.

NTS Development  Company (the "Property  Manager"),  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.  See Part II, Item 8 - Note 8 for further  discussion of related party
transactions.

Governmental Contracts and Regulations
--------------------------------------

No portion of the Partnership's  business is subject to renegotiation of profits
or  termination  of  contracts  or  sub-contracts  at the election of the United
States Government.

Item 3.           Legal Proceedings
                  -----------------

None.

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

None.














                                        8
<PAGE>

                                     PART II
                                     -------

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

The  Partnership had 700 limited  partners as of February 28, 2001.  There is no
established  trading market for the limited  partnership  interests,  nor is one
likely to develop.  Cash distributions and allocations of income (loss) are made
as  described  in  Note  1D to the  Partnership's  2000  consolidated  financial
statements.

No  distributions  were paid during the years ended  December 31, 2000,  1999 or
1998.  Quarterly  distributions  are determined  based on current cash balances,
cash flow being  generated by  operations  and cash  reserves  needed for future
leasing costs, tenant finish costs and capital improvements.

Due to the fact that no  distributions  were made during 2000, 1999 or 1998, the
table which represents that portion of the distributions that represent a return
of capital on a Generally Accepted Accounting Principle basis has been omitted.
































                                        9


<PAGE>

Item 6.    Selected Financial Data
           -----------------------

Years ended December 31, 2000, 1999, 1998, 1997 and 1996.

<TABLE>
<CAPTION>


                                            2000           1999          1998         1997          1996
                                            ----           ----          ----         ----          ----

<S>                                    <C>          <C>           <C>            <C>           <C>

Total revenues                         $  3,480,110  $  3,228,662  $  3,698,431  $  3,426,290  $  3,265,631

Total expenses                           (3,785,957)   (3,923,458)   (3,426,517)   (3,291,720)   (3,076,384)
                                       ------------- ------------- ------------- ------------- -------------
Net income (loss) before extraordinary
  item                                     (305,847)     (694,796)      271,914       134,570       189,247
Extraordinary item                             --            --         (65,258)         --            --
                                       ------------- ------------- ------------- ------------- -------------

Net income (loss)                      $   (305,847) $   (694,796) $    206,656  $    134,570  $    189,247
                                       ============= ============= ============= ============= =============


Net income (loss) allocated to:
  General Partner                      $    (73,364) $    (78,012) $    (93,182) $   (104,636) $    (94,850)
  Limited partners                     $   (232,483) $   (616,784) $    299,838  $    239,206  $    284,097

Net income (loss) per limited
  partnership Unit                     $     (18.21) $     (46.54) $      21.64  $      17.00  $      19.70

Weighted average number of limited
  partnership Units                          12,769        13,253        13,855        14,072        14,418

Cumulative net income (loss)
  allocated to:
    General Partner                    $ (2,639,679) $ (2,566,315) $ (2,488,303) $ (2,395,121) $ (2,290,485)
    Limited partners                   $   (474,628) $   (242,145) $    374,639  $     74,801  $   (164,405)

Cumulative taxable income (loss)
  allocated to:
    General Partner                    $ (2,633,988) $ (2,689,375) $ (2,578,046) $ (2,737,694) $ (2,845,410)
    Limited partners                   $   (940,939) $   (974,971) $   (694,314) $   (851,088) $   (682,815)

Distributions declared:
  General Partner                      $      --     $      --     $     --      $     --      $      --
  Limited partners                     $      --     $      --     $     --      $     --      $    108,018

Cumulative distributions declared to:
  General Partner                      $    206,985  $    206,985  $    206,985  $    206,985  $    206,985
  Limited partners                     $ 11,349,845  $ 11,349,845  $ 11,349,845  $ 11,349,845  $ 11,349,845

At year end:
  Land, buildings and amenities, net   $ 11,000,173  $ 11,316,969  $ 10,219,334  $  9,828,962  $  9,428,016

  Total assets                         $ 11,948,281  $ 12,326,606  $ 11,170,156  $ 11,122,316  $ 10,975,886

  Mortgages payable                    $  8,716,153  $  8,073,856  $  6,656,145  $  6,734,603  $  6,859,637

</TABLE>

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

                                       10
<PAGE>


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

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  ("MD&A") is  structured  in four major  sections.  The first section
provides  information  related to  occupancy  levels and rental and other income
generated  by the  Partnership's  properties.  The  second  analyzes  results of
operations on a consolidated basis. The final sections address consolidated cash
flows and  financial  condition.  A  discussion  of  certain  market  risks also
follows. The MD&A should be read in conjunction with the consolidated  financial
statements in Item 8 and the cautionary statements below.

Results of Operations
---------------------

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

                                2000 (1)            1999             1998
                                --------            ----             ----

NTS Center                        95%               100%             100%
Plainview Center (2)              68%                48%              35%
Peachtree Corporate Center (3)    83%                84%              89%

(1)  With the  exception  of  Plainview  Center,  current  occupancy  levels are
     considered   adequate  to  continue  the  operation  of  the  Partnership's
     properties. See below for details.

(2)  The current  occupancy  level is the result of one tenant  vacating  52,000
     square feet on September 30, 1998 and 11,000 square feet on March 31, 1999.
     In the opinion of the General Partner of the  Partnership,  the year-ending
     occupancy  level is only a  temporary  situation  and does not  represent a
     permanent downward occupancy trend.

(3)  In the opinion of the General Partner of the  Partnership,  the decrease in
     year-ending  occupancy  is  only  a  temporary  fluctuation  and  does  not
     represent a permanent downward occupancy trend.

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


                                  2000 (1)          1999           1998
                                  --------          ----           ----

NTS Center                          96%             100%            98%
Plainview Center (2)                52%              30%            75%
Peachtree Corporate Center (3)      80%              84%            87%

(1)  With the  exception  of  Plainview  Center,  current  occupancy  levels are
     considered   adequate  to  continue  the  operation  of  the  Partnership's
     properties. See below for details.

(2)  The current  occupancy  level is the result of one tenant  vacating  52,000
     square feet on September 30, 1998 and 11,000 square feet on March 31, 1999.
     In the opinion of the General Partner of the  Partnership,  the year-ending
     occupancy  level is only a  temporary  situation  and does not  represent a
     permanent downward occupancy trend.

(3)  In the opinion of the General Partner of the  Partnership,  the decrease in
     year-ending  occupancy  is  only  a  temporary  fluctuation  and  does  not
     represent a permanent downward occupancy trend.

Rental and other income generated by the Partnership's  properties for the years
ended December 31, 2000, 1999 and 1998 were as follows:

                                  2000              1999              1998
                                  ----              ----              ----

NTS Center                    $ 1,481,121       $ 1,594,725       $ 1,484,593
Plainview Center              $   761,801       $   410,490       $ 1,045,951
Peachtree Corporate Center    $ 1,233,269       $ 1,211,827       $ 1,153,808




                                       11


<PAGE>

Results of Operations - Continued
---------------------------------

The following is an analysis of material  changes in results of  operations  for
the periods ending December 31, 2000,  1999 and 1998.  Items that did not have a
material  impact on  operations  for the periods  listed have been excluded from
this discussion.

Rental and other income increased  approximately  $251,000,  or 8%, in 2000. The
increase is primarily a result of an increase in average  occupancy at Plainview
Center.  The increase is partially offset by decreased  average occupancy at NTS
Center and decreased cost recovery income at Plainview Center.

Rental and other income decreased  approximately  $470,000, or 13%, in 1999. The
decrease is  primarily a result of a decrease in average  occupancy at Plainview
Center  following  the  move-out of one tenant who  previously  occupied  63,000
square  feet,  or 65%,  of the  building  (see  Part II,  Item 8 - Note 9).  The
decrease at Plainview  Center is partially  offset by  increased  cost  recovery
income at Peachtree Corporate Center and NTS Center.

Year-ending  occupancy  percentages represent occupancy only on a specific date;
therefore,  the above analysis considers average occupancy percentages which are
more representative of the entire year's results.

In cases of tenants who cease making rental  payments or abandon the premises in
breach of the lease terms, the Partnership pursues collection through the use of
collection  agencies or other remedies  available by law when  practical.  There
have  been no funds  recovered  as a result  of these  transactions  during  the
periods ended  December 31, 2000,  1999 or 1998. As of December 31, 2000,  there
were no on-going cases.

Operating expenses increased approximately $66,000, or 8%, in 1999, primarily as
a result of increased  repairs and maintenance  expenses at Peachtree  Corporate
Center and increased irrigation and building maintenance expenses at NTS Center.

Operating expenses - affiliated  decreased  approximately  $103,000,  or 21%, in
2000. The decrease is due primarily to decreased overhead costs allocated to the
Partnership  as a result of  personnel  status  changes.  Operating  expenses  -
affiliated  are expenses  incurred  for  services  performed by employees of NTS
Development Company, an affiliate of the General Partner.

Operating  expenses - affiliated  increased  approximately  $67,000,  or 16%, in
1999,   primarily  as  a  result  of  increased   leasing,   administrative  and
architectural  salaries at Peachtree  Corporate Center and Plainview Center. The
increase is partially offset by decreased architectural salaries at NTS Center.

The 1999 loss on  disposal  of assets is the  result of a loss on the  following
items: land improvements at Peachtree Corporate Center, building improvements at
NTS Center and Plainview Center and tenant improvements at Plainview Center. The
losses are the result of various property renovations including: resurfacing the
parking lot at Peachtree  Corporate  Center,  replacing  corridor  carpet at NTS
Center,  redesigning the lobby area at Plainview  Center and  accommodating  new
leases and improving the  marketability of vacant suites at Plainview Center. In
order to complete the  renovations,  it was  necessary  to replace  improvements
which were not fully depreciated.  The losses represent the costs of unamortized
assets which were replaced as a result of the renovations.



                                       12


<PAGE>

Results of Operations - Continued
---------------------------------

The 1998 loss on disposal of assets can primarily be  attributed to  renovations
of the common area lobbies, corridors and restrooms at NTS Center.

Interest expense increased  approximately $126,000, or 24%, in 2000 and $47,000,
or 10%, in 1999, as a result of the mortgage  payable for $2,000,000  secured by
Plainview  Center in March 1999,  which was increased to $3,500,000 in May 2000.
The note bears  interest at Prime  -.25%.  The  increase in interest  expense is
partially  offset  by  principal  payments  made on the  Partnership's  mortgage
secured by NTS Center.

Management  fees are  calculated as a percentage of cash  collections;  however,
revenue for reporting  purposes is recorded on the accrual  basis.  As a result,
the  fluctuations in revenue between years will differ from the  fluctuations of
management fees expense.  The approximate $12,000, or 8%, increase in management
fees in 2000, can be attributed to increased  occupancy and related  revenues at
Plainview Center. The approximate  $29,000,  or 16%, decrease in management fees
in 1999,  can be  attributed  to  decreased  occupancy  and related  revenues at
Plainview Center.

Professional and administrative  expenses decreased  approximately  $28,000,  or
26%, in 2000 and increased  approximately $35,000, or 47%, in 1999, primarily as
a result of costs incurred for legal fees related to the tender offers.

Professional and administrative  expenses - affiliated  increased  approximately
$18,000, or 17%, in 2000 and decreased  approximately  $29,000, or 22%, in 1999,
primarily  as a result of  changes in  accounting  personnel.  Professional  and
administrative  expenses -  affiliated  are  expenses  incurred for the services
performed by employees of NTS Development  Company,  an affiliate of the General
Partner.

Depreciation and amortization expense increased  approximately $174,000, or 16%,
in 2000 and approximately $51,000, or 5%, in 1999, as the result of assets being
placed in service. Assets placed in service are tenant improvements and building
and land  improvements  at all the  Partnership's  properties.  The  increase in
depreciation  and  amortization  expense is partially offset by a portion of the
Partnership's  assets  (primarily  tenant finish  improvements)  becoming  fully
depreciated.  Depreciation is computed using the  straight-line  method over the
estimated useful lives of the assets which are 6-30 years for land improvements,
5-30 years for  buildings  and  improvements,  3-27 years for  amenities and the
applicable  lease  term for  tenant  improvements.  The  aggregate  costs of the
Partnership's properties for federal tax purposes is approximately $27,617,578.

The 1998 write-off of unamortized loan costs (recorded as an extraordinary item)
relates to the loan costs associated with two mortgages of the Partnership.  The
unamortized  loan costs were  expensed due to the fact that the  mortgages  were
repaid on April 1, 1998, prior to their maturity  (November 1998 and June 2001),
as a result of a new mortgage loan obtained on April 1, 1998.






                                       13


<PAGE>

Consolidated Cash Flows and Financial Condition
-----------------------------------------------

Cash flows used in investing  activities are for tenant finish  improvements and
other capital  additions and are funded by operating  activities,  cash reserves
and financing  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 the maturity of investment securities. Cash flows used in financing
activities include principal payments on the mortgage payable, the repurchase of
limited  partnership  Units, cash reserved by the Partnership to fund the tender
offers  and the  addition  of loan  costs.  Cash  flows  provided  by  financing
activities  represent  the  utilization  of cash which has been  reserved by the
Partnership  for the  repurchase  of  limited  partnership  Units  and  proceeds
received  from  new  mortgage  loans  obtained  in  2000,  1999  and  1998.  The
Partnership does not expect any material changes in the mix and relative cost of
capital resources from those in 2000.

Cash flows provided by (used in):

                                               2000         1999         1998
                                               ----         ----         ----

Operating activities                      $   237,780  $ 1,058,433  $ 1,646,989

Investing activities                         (903,810)  (2,461,264)  (1,318,282)

Financing activities                          606,662    1,273,519     (361,803)
                                          ------------ ------------ ------------
     Net decrease in cash and equivalents $   (59,368) $  (129,312) $   (33,096)
                                          ============ ============ ============
Net cash provided by operating activities decreased  approximately  $821,000, or
78%,  in 2000.  The  decrease  was  primarily  driven by a decrease  in accounts
payable offset by increased income from operations before depreciation.

Net cash provided by operating activities decreased  approximately  $589,000, or
36%, in 1999.  The  decrease was  primarily  driven by a decrease in income from
operations before  depreciation as a result of decreased revenues from Plainview
Center, as well as net negative changes in various working capital accounts.

Net cash used in investing  activities  decreased  approximately  $1,557,000  in
2000,  as  compared  to  1999,  primarily  as  a  result  of  decreased  capital
expenditures.  Net cash used in  investing  activities  increased  approximately
$1,143,000  in 1999,  as  compared  to 1998,  as a result of  increased  capital
expenditures.











                                       14


<PAGE>

Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------

Net cash provided by financing  activities decreased  approximately  $667,000 in
2000,  as  compared  to 1999,  as a result of a decrease  in funds  drawn on the
mortgage  loan  obtained  March 2, 1999,  due to a decrease in  renovations  and
tenant finish  activity.  The decrease is partially  offset by a decrease in the
repurchase of limited partnership Units. The approximate  $1,635,000 increase in
net cash  provided by  financing  activities  in 1999,  as compared to 1998,  is
primarily the result of the new mortgage  loan  obtained  March 2, 1999, to fund
renovations at Plainview Center.

The Partnership indefinitely suspended distributions starting December 31, 1996,
as a result of the anticipated  decrease in occupancy at Plainview Center.  Cash
reserves  (which  consist  of  unrestricted  cash as shown on the  Partnership's
balance sheets as of December 31) were $45,164 and $104,532 at December 31, 2000
and 1999, respectively.

In the next 12  months,  the  General  Partner  expects  the  demand  on  future
liquidity to increase as a result of future leasing activity driven primarily by
the  decreased  occupancy  at Plainview  Center.  There has been and will likely
continue to be a protracted  period for Plainview  Center to become fully leased
again and substantial funds,  currently estimated to be approximately  $400,000,
will likely be needed for leasing expenses;  especially those needed to refinish
space for new tenants. As of December 31, 2000, the Partnership had a commitment
for approximately $35,000 for tenant finish improvements at Plainview Center.

The demand on future  liquidity will be managed by the General  Partner  through
funds from  operations or  additional  borrowings  secured by the  Partnership's
properties.  There can be no  guarantee  that such funds will be  available,  at
which time the General Partner will manage the demand on liquidity accordingly.

Subsequent  to  December  31,  2000,  the  Partnership  made  a  commitment  for
approximately $95,000 of tenant finish improvements at Plainview Center.

Due to the fact that no  distributions  were made during 2000, 1999 or 1998, the
table which represents that portion of the distribution  that represent a return
of capital on a Generally Accepted Accounting Principle basis has been omitted.

Pursuant to Section 16.4 of the Partnership's  Amended and Restated Agreement of
Limited Partnership,  the Partnership established an Interest Repurchase Reserve
in 1995.  During the years ended December 31, 1999 and 1998, the Partnership has
funded  $0 and  $75,000,  respectively,  to the  reserve.  For the  year  ending
December  31,  2000,  the  Partnership  has  funded $0 to the  reserve.  Through
September  30, 1998 (the  commencement  date of the  Partnership's  First Tender
Offer),  the  Partnership  had  repurchased a total of 1,830 Units,  outside the
First Tender Offer, for $393,240, at a price ranging from $208 to $250 per Unit.
The offering price per Unit was  established by the General  Partner in its sole
discretion  and  does  not  purport  to  represent  the  fair  market  value  or
liquidation  value of the  Units.  Repurchased  Units  have been  retired by the
Partnership,  thus  increasing  the  percentage  of ownership of each  remaining
limited partner investor.  The Interest  Repurchase Reserve was funded from cash
reserves. The balance in the reserve at December 31, 2000 was $0.




                                       15


<PAGE>

Consolidated Cash Flows and Financial Condition - Continued
-----------------------------------------------------------

On  September  30,  1998,  the  Partnership  and ORIG , LLC, an affiliate of the
Partnership  (the  "Offerors"),  commenced  a tender  offer (the  "First  Tender
Offer") to purchase up to 1,000 of the Partnership's  limited  partnership Units
at a price  of $250  per  Unit as of the date of the  First  Tender  Offer.  The
initial  expiration  date of the First Tender  Offer was December 29, 1998,  and
this expiration date was  subsequently  extended through March 31, 1999. A total
of 1,160 Units were tendered and the Offerors  accepted all Units tendered.  The
Partnership  repurchased  500 Units and ORIG, LLC purchased 660 Units at a total
cost of $290,000 plus offering expenses.

On July 27, 1999, the Partnership and ORIG, LLC, an affiliate of the Partnership
(the "Offerors"), commenced a second tender offer (the "Second Tender Offer") to
purchase up to 1,000 of the Partnership's  limited  partnership Units at a price
of $250 per Unit.  The initial  expiration  date of the Second  Tender offer was
October 29, 1999 and this  expiration  date was  subsequently  extended  through
December 8, 1999. A total of 938 Units were  tendered and the Offerors  accepted
all Units.  The  Partnership  repurchased  500 Units and ORIG, LLC purchased 438
Units at a total cost of $234,500 plus offering expenses.

On September 21, 2000, the Partnership and ORIG, LLC (the "Offerors'), commenced
a third  tender offer (the "Third  Tender  Offer") to purchase up to 200 limited
partnership Units at a price of $250 per Unit as of the date of the Third Tender
Offer.  The expiration date of the offer was December 20, 2000. A total of 1,094
Units were  tendered,  pursuant  to the Third  Tender  Offer,  and the  Offerors
accepted all Units tendered. The Partnership repurchased 100 Units and ORIG, LLC
repurchased 994 Units at a total cost of $273,500 plus offering expenses.

Although the Offerors believe that each tender offer's price is appropriate, the
price per Unit may not equate to the fair market value or  liquidation  value of
the  Units,  and is less  than  the book  value  per Unit as of the date of each
tender offer.

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 NTS  Center and
Plainview  Center 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.






                                       16


<PAGE>

Cautionary Statements
---------------------

Some  of the  statements  included  in  Part  I,  Items  1 and 2,  Business  and
Properties  and  Part  II,  Item 7,  Management's  Discussion  and  Analysis  of
Financial  Condition  and  Results  of  Operations,  may  be  considered  to  be
"forward-looking  statements" since such statements relate to matters which have
not yet occurred.  For example,  phrases such as "the Partnership  anticipates,"
"believes" or "expects" indicate that it is possible that the event anticipated,
believed or expected may not occur. Should such event not occur, then the result
which  the  Partnership  expected  also may not  occur  or occur in a  different
manner, which may be more or less favorable to the Partnership.  The Partnership
does not  undertake  any  obligations  to  publicly  release  the  result of any
revisions to these  forward-looking  statements  that may be made to reflect any
future events or circumstances.

Any forward looking statements included in Management's  Discussion and Analysis
of Financial  Condition and Results of Operations,  or elsewhere in this report,
which reflect  management's best judgement based on factors known, involve risks
and uncertainties. Actual results could differ materially from those anticipated
in any forward-looking  statements as a result of a number of factors, including
but not  limited  to those  discussed  below.  Any  forward-looking  information
provided by the  Partnership  pursuant to the safe harbor  established by recent
securities legislation should be evaluated in the context of these factors.

The  Partnership's  liquidity,  capital  resources and results of operations are
subject to a number of risks and uncertainties including, but not limited to the
following:  the ability of the  Partnership  to achieve  planned  revenues;  the
ability of the Partnership to make payments due under its debt  agreements;  the
ability of the  Partnership  to negotiate  and  maintain  terms with vendors and
service providers for operating expenses;  competitive pressures from other real
estate companies,  including large commercial real estate  companies,  which may
affect the nature and viability of the Partnership's  business strategy;  trends
in the economy as a whole which may affect  consumer  confidence  and demand for
the  types of  rental  property  held by the  Partnership;  the  ability  of the
Partnership to predict the demand for specific rental properties; the ability of
the  Partnership  to  attract  and  retain  tenants;  availability  and costs of
management and labor  employed;  real estate  occupancy and  development  costs,
including   substantial  fixed  investment  costs  associated  with  renovations
necessary to obtain new tenants and retain existing  tenants;  and the risk of a
major  commercial  tenant  defaulting  on  its  lease  due  to  risks  generally
associated  with  real  estate,  many of which are  beyond  the  control  of the
Partnership,  including  general  or  local  economic  conditions,  competition,
interest rates, real estate tax rates, other operating expenses and acts of God.

At Plainview Center,  there has been and will likely continue to be a protracted
period for the  property  to become  fully  leased  again.  Failure to lease the
vacant space at Plainview Center may have an adverse effect on the Partnership's
operations. The extent of the impact on the Partnership is unknown at this time.










                                       17


<PAGE>

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk
            ----------------------------------------------------------

Our primary  market risk  exposure  with  regards to  financial  instruments  is
changes in interest  rates.  All of the  Partnership's  debt bears interest at a
fixed  rate  with  the  exception  of the  $3,500,000  note  payable  which  the
Partnership  obtained on May 9, 2000. At December 31, 2000, a  hypothetical  100
basis point increase in interest rates would  increase  interest  expense on the
variable rate mortgage by  approximately  $25,000 per year and decrease the fair
value of all debt approximately $326,000.








































                                       18


<PAGE>

Item 8.    Financial Statements and Supplementary Data
           -------------------------------------------

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------

To NTS-Properties III:

We have audited the accompanying  consolidated  balance sheets of NTS-Properties
III (a Georgia limited  partnership),  as of December 31, 2000 and 1999, and the
related  consolidated  statements  of  operations,  consolidated  statements  of
partners' equity and consolidated statements of cash flows for each of the three
years in the period  ended  December  31,  2000.  These  consolidated  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
consolidated financial statements and schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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 consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of NTS-Properties III
as of December 31, 2000 and 1999, and the results of its operations and its cash
flows for each of the three years in the period  ended  December  31,  2000,  in
conformity with accounting principles generally accepted in the United States.

Our audits were made for the  purpose of forming an opinion on the  consolidated
financial  statements  taken  as a whole.  The  schedules  included  on pages 40
through 41 are  presented  for purposes of  complying  with the  Securities  and
Exchange  Commission's  rules  and are not  part of the  consolidated  financial
statements.  These  schedules  have been  subjected to the  auditing  procedures
applied in our  audits of the  consolidated  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 consolidated  financial statements taken as
a whole.

                                                 ARTHUR ANDERSEN LLP

Louisville, Kentucky
March 9, 2001










                                       19


<PAGE>

 <TABLE>
                               NTS-PROPERTIES III
                               ------------------

                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------

                        AS OF DECEMBER 31, 2000 AND 1999
                        --------------------------------

<CAPTION>
                                                    2000             1999
                                                    ----             ----

<S>                                             <C>            <C>
ASSETS
------
Cash and equivalents                            $    45,164     $   104,532
Cash and equivalents - restricted                     4,923           8,073
Accounts receivable, net of allowance
  for doubtful accounts
  of $0 (2000) and $15,512 (1999)                   417,500         404,773
Land, buildings and amenities, net               11,000,173      11,316,969
Other assets                                        480,521         492,259
                                                -----------     -----------
     TOTAL ASSETS                               $11,948,281     $12,326,606
                                                ===========     ===========

LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgages payable                               $ 8,716,153     $ 8,073,856
Accounts payable                                    228,959         890,032
Security deposits                                   136,837         142,573
Other liabilities                                    21,029          43,995
                                                -----------     -----------
     TOTAL LIABILITIES                            9,102,978       9,150,456

COMMITMENTS AND CONTINGENCIES (Note 9)

PARTNERS' EQUITY                                  2,845,303       3,176,150
                                                -----------     -----------
     TOTAL LIABILITIES AND PARTNERS' EQUITY     $11,948,281     $12,326,606
                                                ===========     ===========
</TABLE>

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



















                                       20


<PAGE>
<TABLE>

                              NTS-PROPERTIES III
                               ------------------

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      -------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------

<CAPTION>
                                                     2000           1999           1998
                                                     ----           ----           ----

<S>                                            <C>            <C>             <C>
REVENUES
--------
Rental income, net of provision for
 doubtful accounts of $5,762 (2000),
 $19,081 (1999) and $1,943 (1998)               $ 3,165,834    $ 2,919,927    $ 3,386,729
Rental income - affiliated                          295,336        295,336        295,336
Interest and other income                            18,940         13,399         16,366
                                                ------------   ------------   ------------
     TOTAL REVENUES                               3,480,110      3,228,662      3,698,431

EXPENSES
--------
Operating expenses                                  928,655        948,995        882,594
Operating expense - affiliated                      377,126        479,799        412,338
Loss on disposal of assets                           11,230        332,333         48,108
Interest expense                                    650,428        523,950        477,263
Management fees                                     169,549        157,290        186,416
Real estate taxes                                   214,954        210,708        206,038
Professional and administrative expenses             81,067        109,381         74,514
Professional and administrative expenses
 - affiliated                                       122,258        104,227        133,297
Depreciation and amortization                     1,230,690      1,056,775      1,005,949
                                                ------------   ------------   ------------
    TOTAL EXPENSES                                3,785,957      3,923,458      3,426,517
                                                ------------   ------------   ------------
Net income (loss) before extraordinary item        (305,847)      (694,796)       271,914
Extraordinary item - write-off of unamortized
  loan costs                                           --             --          (65,258)
                                                ------------   ------------   ------------
Net income (loss)                               $  (305,847)   $  (694,796)   $   206,656
                                                ============   ============   ============
Net income (loss) allocated to
 the limited partners
  Income (loss) before extraordinary item       $  (232,483)   $  (616,784)   $   364,443
  Extraordinary item                                   --             --          (64,605)
                                                ------------   ------------   ------------
     Net income (loss)                          $  (232,483)   $  (616,784)   $   299,838
                                                ============   ============   ============
Net income (loss ) per limited partnership Unit
  Income (loss) before extraordinary item       $    (18.21)   $    (46.54)   $     26.30
  Extraordinary item                                   --             --            (4.66)
                                                ------------   ------------   ------------
Net income (loss)                               $    (18.21)   $    (46.54)   $     21.64
                                                ============   ============   ============

Weighted average number of Units                     12,769         13,253         13,855
                                                ============   ============   ============
</TABLE>

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






                                       21

<PAGE>

<TABLE>
                               NTS-PROPERTIES III
                               ------------------

                 CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY (1)
                 -----------------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------


<CAPTION>
                                             Limited         General
                                             Partners        Partner         Total
                                             --------        -------         -----

PARTNERS' EQUITY/(DEFICIT)
--------------------------
<S>                                       <C>            <C>            <C>
Balances at December 31, 1997             $ 4,006,716    $   (17,426)   $ 3,989,290

Net income (loss)                             299,838        (93,182)       206,656

Repurchase of limited partnership Units       (75,000)          --          (75,000)
                                          ------------   ------------   ------------
Balances at December 31, 1998               4,231,554       (110,608)     4,120,946

Net loss                                     (616,784)       (78,012)      (694,796)

Repurchase of limited partnership Units      (250,000)          --         (250,000)
                                          ------------   ------------   ------------
Balances at December 31, 1999               3,364,770       (188,620)     3,176,150

Net loss                                     (232,483)       (73,364)      (305,847)

Repurchase of limited partnership Units       (25,000)          --          (25,000)
                                          ------------   ------------   ------------
Balances at December 31, 2000             $ 3,107,287    $  (261,984)   $ 2,845,303
                                          ============   ============   ============
</TABLE>

(1)  For the periods  presented,  there are no  elements of other  comprehensive
     income as defined by the Financial Accounting Standards Board, Statement of
     Financial Accounting Standards Statement No. 130, "Reporting  Comprehensive
     Income."

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



















                                       22


<PAGE>

<TABLE>
                               NTS-PROPERTIES III
                               ------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------

<CAPTION>

                                                              2000           1999         1998
                                                              ----           ----         ----

CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S>                                                      <C>           <C>           <C>
Net income (loss)                                        $  (305,847)  $  (694,796)  $   206,656
Adjustments to reconcile net income to net cash
 provided by operating activities:
   Provision for doubtful accounts                             5,762        19,081         1,943
   Write-off of uncollectible accounts receivable            (21,274)         --            --
   Accrued interest on investment securities                    --            --             923
   Loss on disposal of assets                                 11,230       332,333        48,108
   Write-off unamortized loan costs                             --            --          65,258
   Depreciation and amortization                           1,252,020     1,071,501     1,014,463
   Changes in assets and liabilities:
     Cash and equivalents - restricted                         3,150         6,277       270,249
     Accounts receivable                                       2,785      (239,527)       83,652
     Other assets                                            (20,271)     (119,971)      (38,906)
     Accounts payable                                       (661,073)      669,128        81,478
     Security deposits                                        (5,736)       43,962        (5,205)
     Other liabilities                                       (22,966)      (29,555)      (81,630)
                                                         ------------  ------------  ------------
     Net cash provided by operating activities               237,780     1,058,433     1,646,989
                                                         ------------  ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings and amenities                  (903,810)   (2,461,264)   (1,418,950)
Maturity of investment securities                               --            --         100,668
                                                         ------------  ------------  ------------
     Net cash used in  investing activities                 (903,810)   (2,461,264)   (1,318,282)
                                                         ------------  ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Increase in mortgage payable                                 977,071     1,646,234     6,800,000
Principal payments on mortgages payable                     (334,774)     (228,523)   (6,878,458)
Increase in loan costs                                       (10,635)      (19,192)      (83,345)
Repurchase of limited partnership Units                      (25,000)     (250,000)      (75,000)
Decrease (increase) cash and equivalents-restricted             --         125,000      (125,000)
                                                         ------------  ------------  ------------
    Net cash provided by (used in) financing activities      606,662     1,273,519      (361,803)
                                                         ------------  ------------  ------------
    Net decrease in cash and equivalents                     (59,368)     (129,312)      (33,096)

CASH AND EQUIVALENTS, beginning of year                      104,532       233,844       266,940
                                                         ------------  ------------  ------------
CASH AND EQUIVALENTS, end of year                        $    45,164   $   104,532   $   233,844
                                                         ============  ============  ============
Interest paid on a cash basis                            $   621,449   $   498,283   $   444,145
                                                         ============  ============  ============
</TABLE>


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



                                       23


<PAGE>

                               NTS-PROPERTIES III
                               ------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------

1.       Significant Accounting Policies
         -------------------------------

         A)         Organization and Consolidation Policy
                    -------------------------------------

                    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.

                    The consolidated  financial  statements include the accounts
                    of all wholly-owned  properties.  Intercompany  transactions
                    and balances have been eliminated.

         B)         Properties
                    ----------

                    The Partnership owns and operates the following properties:

                    *    Peachtree   Corporate  Center,  a  business  park  with
                         approximately  189,000 net rentable square feet located
                         in Norcross, Georgia, a suburb of Atlanta.

                    *    NTS  Center,  an  office  complex  with   approximately
                         115,000   net   rentable   square   feet   located   in
                         Jeffersontown, Kentucky, a suburb of Louisville.

                    *    Plainview Center, an office complex with  approximately
                         95,000   net   rentable    square   feet   located   in
                         Jeffersontown, Kentucky.

         C)         Changes in the Names of Properties Held by the Partnership
                    ----------------------------------------------------------

                    In the  second  quarter  of  1999,  Plainview  Plaza  II was
                    renamed  NTS Center and  Plainview  Triad  North was renamed
                    Plainview Center.

         D)         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, non-cumulative, 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 for all
                    periods presented in the accompanying consolidated financial

                                       24


<PAGE>


         D)         Allocation of Net Income (Loss) and Cash Distributions
                    ------------------------------------------------------
                    - Continued
                    -----------

                    statements.  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%.  Starting
                    December  31,  1996,  the   Partnership   has   indefinitely
                    interrupted distributions.

                    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 income (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.

         E)         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  the   Partnership   interests  for  inclusion  on  their
                    individual income tax returns.

                    A   reconciliation   of  net  income  (loss)  for  financial
                    statement  purposes  versus that for income tax reporting is
                    as follows:


                                                  2000        1999       1998
                                                  ----        ----       ----

                    Net income (loss)          $(305,847)  $(694,796) $ 206,656
                    Items handled differently
                      for tax purposes:
                     Depreciation                593,094     523,494    409,636
                     Write-off of unamortized
                      building and
                      tenant improvements        (61,355)   (231,592)  (116,602)
                     Rental income              (125,560)    (44,971)  (145,195)
                     Allowance for doubtful
                      accounts                   (15,512)     12,478    (39,001)
                     Other                         4,828      43,401        928
                                               ----------  ---------- ----------
                    Taxable income (loss)      $  89,648   $(391,986) $ 316,422
                                               ==========  ========== ==========

         F)         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.





                                       25


<PAGE>


         G)         Cash and Equivalents - Restricted
                    ---------------------------------

                    Cash and  equivalents  - restricted  represents  funds which
                    have been escrowed with a mortgage  company for NTS Center's
                    property taxes in accordance with the loan agreement.

         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 6-30 years for land improvements,  5-30
                    years  for  buildings  and  improvements,   3-27  years  for
                    amenities   and  the   applicable   lease  term  for  tenant
                    improvements.

                    Statement of  Financial  Accounting  Standards  ("SFAS") No.
                    121,  Accounting for the Impairment of Long-Lived Assets and
                    for   Long-Lived   Assets  to  be  Disposed  Of,   specifies
                    circumstances  in which  certain  long-lived  assets must be
                    reviewed for impairment.  If such review  indicates that the
                    carrying  amount of an asset exceeds the sum of its expected
                    future  cash  flows,  the  asset's  carrying  value  must be
                    written  down to fair value.  Application  of this  standard
                    during the years ended December 31, 2000, 1999 and 1998, did
                    not result in an impairment loss.

         I)         Revenue Recognition - Rental Income and  Capitalized Leasing
                    ------------------------------------------------------------
                    Costs
                    -----

                    The Partnership  recognizes  revenue in accordance with each
                    tenant's lease agreement. 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 totaled  $241,177 and $136,323  December 31,
                    2000 and 1999, 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)         Advertising
                    -----------

                    The Partnership expenses advertising-type costs as incurred.
                    Advertising expense was immaterial to the Partnership during
                    the years ended December 31, 2000, 1999 and 1998.

         K)         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.






                                       26


<PAGE>

         L)         Reclassifications of 1999 and 1998 Financial Statements
                    -------------------------------------------------------

                    Certain reclassifications have been made to the December 31,
                    1999 and 1998 financial  statements to conform with December
                    31, 2000 classifications.  These  reclassifications  have no
                    material effect on previously reported operations.

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.  One tenant in NTS
          Center  occupies  46% of the  office  building's  net  rentable  area.
          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
          ---------------------------

          Pursuant to Section  16.4 of the  Partnership's  Amended and  Restated
          Agreement  of Limited  Partnership,  the  Partnership  established  an
          Interest  Repurchase  Reserve in 1995. During the years ended December
          31,  1999  and  1998,  the  Partnership  has  funded  $0 and  $75,000,
          respectively,  to the reserve.  For the year ending December 31, 2000,
          the  Partnership has funded $0 to the reserve.  Through  September 30,
          1998 (the commencement date of the Partnership's  First Tender Offer),
          the  Partnership  had repurchased a total of 1,830 Units for $393,240,
          at a price ranging from $208 to $250 per Unit.  The offering price per
          Unit was established by the General Partner in its sole discretion and
          does not purport to  represent  the fair market  value or  liquidation
          value  of the  Units.  Repurchased  Units  have  been  retired  by the
          Partnership,  thus  increasing  the  percentage  of  ownership of each
          remaining limited partner investor.  The Interest  Repurchase  Reserve
          was funded from cash reserves.  The balance in the reserve at December
          31, 2000 was $0.

4.        Tender Offers
          -------------

          On September 30, 1998, the  Partnership and ORIG, LLC, an affiliate of
          the Partnership (the "Offerors"), commenced a tender offer (the "First
          Tender  Offer") to purchase up to 1,000 of the  Partnership's  limited
          partnership  Units  at a price  of $250 per Unit as of the date of the
          First Tender Offer.  The initial  expiration  date of the First Tender
          Offer was December 29, 1998, and this expiration date was subsequently
          extended  through March 31, 1999. A total of 1,160 Units were tendered
          and the Offerors  accepted  all Units.  The  Partnership  repurchased,
          pursuant to the First Tender Offer,  500 Units and ORIG, LLC purchased
          660 Units at a cost of $290,000 plus offering expenses.

          On July 27, 1999, the  Partnership and ORIG, LLC, and affiliate of the
          Partnership,  (the  "Offerors")  commenced a second  tender offer (the
          "Second  Tender  Offer") to purchase up to 1,000 of the  Partnership's
          limited  partnership  Units at a price of $250 per Unit as of the date
          of the Second Tender Offer. The initial  expiration date of the Second
          Tender  Offer  was  October  29,  1999  and this  expiration  date was
          subsequently  extended  through December 8, 1999. A total of 938 Units
          were  tendered and the Offerors  accepted all Units.  The  Partnership
          repurchased,  pursuant to the Second Tender Offer, 500 Units and ORIG,
          LLC  purchased  438 Units at a total cost of  $234,500  plus  offering
          expenses.

                                       27


<PAGE>

4.        Tender Offers - Continued
          -------------------------

          On September 21, 2000, the Partnership and ORIG, LLC (the "Offerors'),
          commenced a third tender offer (the "Third Tender  Offer") to purchase
          up to 200 limited  partnership Units at a price of $250 per Unit as of
          the date of the Third Tender Offer.  The expiration  date of the offer
          was December 20, 2000. A total of 1,094 Units were tendered,  pursuant
          to the  Third  Tender  Offer,  and the  Offerors  accepted  all  Units
          tendered.  The  Partnership   repurchased  100  Units  and  ORIG,  LLC
          repurchased  994  Units  at a total  cost of  $273,500  plus  offering
          expenses.

          Although  the  Offerors  believe  that each  tender  offer's  price is
          appropriate,  the  price per Unit may not  equate  to the fair  market
          value or the liquidation value of the Units, and is less than the book
          value per Unit as of the date of each tender offer.

5.        Land, Buildings and Amenities
          -----------------------------

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


                                                2000               1999
                                                ----               ----

          Land and improvements            $  4,835,214      $  4,817,717
          Buildings and improvements         22,850,890        22,230,344
          Amenities                             157,187           148,876
                                           ------------      ------------
                                             27,843,291        27,196,937

          Less accumulated depreciation      16,843,118        15,879,968
                                           ------------      ------------
                                           $ 11,000,173      $ 11,316,969
                                           ============      ============

6.        Mortgages Payable
          -----------------

          Mortgages payable as of December 31 consist of the following:


                                                      2000            1999
                                                      ----            ----

          Mortgage payable to an insurance
          company, bearing interest at 6.89%,
          maturing April 10, 2015, secured
          by land and buildings.                   $ 6,182,848    $ 6,427,622

          Mortgage payable to a bank,
          bearing a variable interest rate
          of Prime -.25%, due March 1, 2002,
          secured by land and a building.
          The current rate at
          December 31, 2000 is 9.25%.                2,533,305      1,646,234
                                                   -----------    -----------
                                                   $ 8,716,153    $ 8,073,856
                                                   ===========    ===========







                                       28


<PAGE>

6.        Mortgages Payable - Continued
          -----------------------------

          Scheduled maturities of debt are as follows:


               For the Years Ended December 31,               Amount
               --------------------------------               ------
                           2001                           $   382,182
                           2002                             2,694,133
                           2003                               300,800
                           2004                               322,193
                           2005                               345,106
                        Thereafter                          4,671,739
                                                          -----------
                                                          $ 8,716,153
                                                          ===========

          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 $8,299,000.

7.        Rental Income Under Operating Lease
          -----------------------------------

          The  following  is a  schedule  of  minimum  future  rental  income on
          noncancellable operating leases as of December 31, 2000:


               For the Years Ended December 31,              Amount
               --------------------------------              ------
                           2001                           $ 3,377,834
                           2002                             2,935,725
                           2003                             2,389,459
                           2004                             1,713,488
                           2005                               726,503
                        Thereafter                            741,166
                                                         ------------
                                                         $ 11,884,175
                                                         ============
8.        Related Party Transactions
          --------------------------

          Pursuant  to  an  agreement  with  the  Partnership,  NTS  Development
          Company,  an  affiliate  of the  General  Partner of the  Partnership,
          receives  property  management  fees on a monthly basis.  The fees are
          paid  in an  amount  equal  to 5%  of  the  gross  revenues  from  the
          Partnership's   properties.   Also  pursuant  to  an  agreement,   NTS
          Development  Company  receives a repair and  maintenance  fee equal to
          5.9% of cost  incurred  which  relate to capital  improvements.  These
          repair and maintenance fees are capitalized as part of land, buildings
          and amenities.

          The Partnership was charged the following amounts from NTS Development
          Company for the twelve months ended December 31, 2000,  1999 and 1998.
          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.





                                       29


<PAGE>

8.        Related Party Transactions - Continued
          --------------------------------------

<TABLE>
                                                             Twelve Months Ended
                                                                 December 31,
                                                                 ------------

                                                         2000        1999         1998
                                                         ----        ----         ----

<CAPTION>

          <S>                                           <C>         <C>         <C>
          Property management fees                      $169,549    $157,290    $186,416
                                                        --------    --------    --------
          Property management                            204,586     252,627     230,315
          Leasing                                        133,598     194,184     120,431
          Administrative - operating                      29,700      29,988      29,822
          Other - operating                                9,242       3,000      31,770
                                                        --------    --------    --------
             Total operating expenses - affiliated       377,126     479,799     412,338
                                                        --------    --------    --------
          Professional and administrative expenses -
            affiliated                                   122,258     104,227     133,297
                                                        --------    --------    --------
          Repairs and maintenance fee                     34,762     141,626      80,897
          Leasing commissions                             75,124      68,324      48,864
          Loan costs                                        --          --         3,240
          Construction management                          2,912       5,679      24,400
                                                        --------    --------    --------
              Total related party transactions
                  capitalized                            112,798     215,629     157,401
                                                        --------    --------    --------
          Total related party transactions              $781,731    $956,945    $889,452
                                                        ========    ========    ========
</TABLE>

          During 2000, NTS Development  Company leased 20,368 square feet in NTS
          Center at a rental  rate of $14.50 per square  foot.  The  Partnership
          received   approximately   $295,000  in  rental   payments   from  NTS
          Development Company during 2000, 1999 and 1998.

          Effective November 19, 1999, the NTS Development  Company lease at NTS
          Center was extended  for two years to March 2004,  at a rental rate of
          $14.50 per square foot for 20,368  square feet.  Leasing  arrangements
          contemplated allowances for certain tenant finishes.  Expenses related
          to such tenant  finishes were  capitalized  within the line item land,
          buildings  and  amenities in the  accompanying  balance  sheets.  Such
          capital  expenditures were  approximately  $235,000 and $225,000 as of
          and for the years ended December 31, 2000 and 1999, respectively.

          On February 7, 2000, ORIG, LLC (the "Affiliate")  purchased  Interests
          in  the  Partnership  pursuant  to an  Agreement,  Bill  of  Sale  and
          Assignment  by and  among  the  Affiliate  and four  investors  in the
          Partnership (the "Purchase  Agreement").  The Affiliate  purchased 135
          Interests in the Partnership for total consideration of $38,676, or an
          average  price of  $286.49  per  Interest.  The  Affiliate  paid these
          investors a premium above the purchase  price  previously  offered for
          Interests  pursuant  to prior  tender  offers  because  this  purchase
          allowed the  Affiliate to purchase a  substantial  number of Interests
          without  incurring  the  expenses  involved  with a tender  offer  and
          multiple transfers.







                                       30


<PAGE>


9.        Commitments and  Contingencies
          -----------------------------

          The  Partnership,  as an owner of real  estate,  is subject to various
          environmental laws of federal, state and local governments. Compliance
          by the Partnership  with existing laws has not had a material  adverse
          effect  on  the  Partnership's  financial  condition  and  results  of
          operations.  However, the Partnership cannot predict the impact of new
          or  changed  laws  or  regulations  on its  current  properties  or on
          properties that it may acquire in the future.

          The  Partnership  does not believe there is any litigation  threatened
          against the Partnership other than routine  litigation  arising out of
          the  ordinary  course  of  business  some of which is  expected  to be
          covered by  insurance,  none of which is  expected  to have a material
          effect on the consolidated balance sheets and statements of operations
          of the Partnership except as discussed herein.

          One  tenant at  Plainview  Center  occupied  approximately  65% of the
          building.  During the third quarter of 1997, the Partnership  received
          notice  that the tenant  would  vacate the  property at the end of the
          lease term,  August 1998. A 30-day  renewal  extension was  negotiated
          (through September 30, 1998) with the tenant for approximately  63,000
          leased square feet. A renewal for approximately  11,000 square feet of
          the original 63,000 square feet was also negotiated  through March 31,
          1999. Costs  associated with this renewal were not  significant.  As a
          result of this tenant  vacating the  remainder of their space on March
          31, 1999,  there has been and will likely  continue to be a protracted
          period for the property to become  fully leased again and  substantial
          funds, currently estimated to be approximately  $400,000,  will likely
          be needed for leasing  expenses;  especially  those needed to refinish
          space for new  tenants.  Such  costs  will be funded  from  additional
          available loan proceeds (see Note 6) and cash reserves.

10.       Segment Reporting
          -----------------

          The  Partnership's  reportable  operating  segments  include  only one
          segment that is commercial real estate operations.

11.       Subsequent Event
          ----------------

          Subsequent to December 31, 2000, the Partnership made a commitment for
          approximately  $95,000  of tenant  finish  improvements  at  Plainview
          Center.













                                       31


<PAGE>

12.       Selected Quarterly Financial Data (Unaudited)
          ---------------------------------------------

<TABLE>
                                                         For the Quarters Ended
                                                         ----------------------

                2000                          March 31     June 30    September 30  December 31
                ----                          --------     -------    ------------  -----------

<CAPTION>

<S>                                           <C>         <C>         <C>         <C>
          Total revenues                      $ 861,295   $ 854,099   $ 832,648   $ 932,068
          Total expenses                        898,544     959,139     977,202     951,072
          Net loss                              (37,249)   (105,040)   (144,554)    (19,004)
          Net loss allocated to the
            limited partners                    (19,301)    (86,419)   (125,528)     (1,235)
          Net loss per limited
            partnership Unit                      (1.51)      (6.77)      (9.83)      (0.10)

</TABLE>

<TABLE>

                                                        For the Quarters Ended
                                                        ----------------------

                1999                          March 31     June 30  September 30  December 31
                ----                          --------     -------  ------------  -----------
<CAPTION>

<S>                                           <C>           <C>           <C>           <C>
          Total revenues                      $ 823,699   $ 760,699  $  734,696   $ 909,568
          Total expenses                        860,323     869,538   1,220,201     973,396
          Net loss                              (36,624)   (108,839)   (485,505)    (63,828)
          Net loss allocated to the
            limited partners                    (13,952)    (86,205)   (463,167)    (53,460)
          Net loss per limited
            partnership Unit                      (1.05)      (6.50)     (34.90)      (4.09)

</TABLE>


























                                       32


<PAGE>



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

None.










































                                       33


<PAGE>

                                    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  59)  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 71) has been an independent  real estate developer for the past 25
years. He is a partner in other 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 S. N.  Alliance,  Inc.  S.N.  Alliance,  Inc.  is also the parent
corporation of Stifle, Nicolas & Company, Inc. which acted as the Dealer Manager
in connection with the offering for the interests.

Gary D. Adams
-------------

Mr. Adams (age 55) 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 53) joined  Abel  Construction  during  1995 as the  Director of
Business  Development.  From  1985 to 1995,  Mr.  Rizzo  was an  officer  of the
Huntington Group and prior to 1985 was an employee of NTS Development Company.





                                       34


<PAGE>


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

NTS Development  Company is the "Manager"of the  Partnership's  properties,  the
executive officers and/or directors of which are Messrs. J. D. Nichols, Brian F.
Lavin and Gregory A. Wells.

Brian F. Lavin
--------------

Mr.  Lavin  (age 47)  serves as  President  and Chief  Operating  Officer of NTS
Corporation  and NTS Development  Company.  Mr. Lavin joined the Manager in June
1997. From November 1994 through June 1997, Mr. Lavin served as President of the
Residential  Division of the Paragon  Group,  Inc.,  and as a Vice  President of
Paragon's Midwest Division prior to November 1994. In this capacity, he directed
the  development,  marketing,  leasing and  management  operations for the firms
expanding  portfolios.  Mr. Lavin  attended the  University of Missouri where he
received  his  Bachelor's  Degree in Business  Administration.  He is a licensed
Kentucky  Real Estate  Broker and  Certified  Property  Manager.  Mr. Lavin is a
member of the Young  President's  Organization,  the  Institute  of Real  Estate
Management,  council  member  of the  Urban  Land  Institute  and  member of the
National  Multi-Housing  Council.  He has served on the Boards of the Louisville
Science  Center,   Louisville   Ballet,   Greater   Louisville  Inc.,   National
Multi-Housing Council and Louisville Apartment Association. Currently, Mr. Lavin
serves on the Board of Overseers of the University of  Louisville,  the Board of
Trustees  for the  Louisville  Olmsted  Parks  Conservancy,  Inc.,  and the Home
Builders Association's Program Committee.

Gregory A. Wells
----------------

Mr. Wells (age 42),  Senior Vice  President and Chief  Financial  Officer of NTS
Corporation and NTS Development Company,  joined the Manager in July, 1999. From
May 1998 through  July 1999,  Mr.  Wells  served as Chief  Financial  Officer of
Hokanson Companies, Inc. and as Secretary and Treasurer of Hokanson Construction
Inc.,  Indianapolis,  Indiana  from  January  1995  through  May 1998.  In these
capacities,  he directed  financial and  operational  activities  for commercial
rental real estate,  managed property,  building and suite  renovations,  out of
ground commercial and residential  construction and third party management.  Mr.
Wells  previously  served as Vice  President  of  Operations  and  Treasurer  of
Executive Telecom Systems,  Inc. a subsidiary of the Bureau of National Affairs,
Inc.  (Washington,  D.C.). Mr. Wells attended George Mason University,  where he
received  a  Bachelor's  Degree  in  Business  Administration.  Mr.  Wells  is a
Certified  Public  Accountant  in both  Virginia  and  Indiana  and is active in
various   charitable   and   philanthropic   endeavors  in  the  Louisville  and
Indianapolis areas.

Item 11.    Management Remuneration and Transactions
            ----------------------------------------

The officers  and/or  directors of the  corporate  General  Partner  received no
direct  remuneration  in such  capacities.  The Partnership is required to pay a
property  management  fee of 5%  based  on  gross  revenues  to NTS  Development
Company.  The Partnership is also required to pay to NTS  Development  Company a
repair  and  maintenance  fee  on  costs  related  to  specific  projects  and a
refinancing  fee on net cash proceeds from the  refinancing  of any  Partnership
property.  Also, NTS Development  Company provides certain other services to the
Partnership.  See Part II, Note 8 to the  Partnership's  consolidated  financial
statements which sets forth  transactions with affiliates of the General Partner
for the years ended December 31, 2000, 1999 and 1998.




                                       35


<PAGE>


Item 11.    Management Remuneration and Transactions - Continued
            ----------------------------------------------------

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% non-cumulative 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  form 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 any portion of the Partnership's  income,
gain,  loss,  deduction or credit  allocated to the General Partner be less than
1%.

Item  12.  Security  Ownership  of  Certain  Beneficial  Owners  and  Management
           ---------------------------------------------------------------------

The following  provides  details  regarding  owners of more than 5% of the total
outstanding limited partnership Units as of February 28, 2001.

          ORIG, LLC                                      2,389 Units (18.85%)
          10172 Linn Station Rd.
          Louisville, Kentucky 40223

ORIG, LLC is a Kentucky limited liability  company,  the members of which are J.
D. Nichols  (1%),  Barbara M. Nichols  (J.D.  Nichols'  wife) (74%) and Brian F.
Lavin (25%).  J.D.  Nichols and Brian F. Lavin are the  Chairman and  President,
respectively,  of NTS Capital  Corporation,  a general partner of NTS Properties
Associates, the General Partner of the Partnership.

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                                      86.07%
          10172 Linn Station Road
          Louisville, Kentucky 40223

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

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

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





                                       36


<PAGE>

Item 12.  Security  Ownership  of  Certain  Beneficial  Owners  and Management -
          ----------------------------------------------------------------
          Continued
          ---------

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

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

Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires that
certain  persons,  including  persons  who own  more  than  ten  percent  of the
Partnership's  limited  partnership   interests,   file  initial  statements  of
beneficial ownership (Form 3), and statements of changes in beneficial ownership
(Forms 4 or 5), with the U.S.  Securities and Exchange  Commission  (the "SEC").
The SEC requires that these persons furnish the  Partnership  with copies of all
forms filed with the SEC.

To the Partnership's knowledge, based solely on its review of the copies for the
forms received by it, or written  representations from certain reporting persons
that no  additional  forms were  required  for those  persons,  the  Partnership
believes  that ORIG,  LLC was late in filing one Form 4 relating to one purchase
of the Partnership's  limited partnership  interests in connection with a tender
offer made during 2000.

Item 13.  Certain Relationships and Related Transactions
          ----------------------------------------------

Pursuant to an agreement  with the  Partnership,  NTS  Development  Company,  an
affiliate  of  the  General  Partner  of  the  Partnership,   receives  property
management  fees on a monthly basis.  The fees are paid in an amount equal to 5%
of the gross  revenues from the  Partnership's  properties.  Also pursuant to an
agreement,  NTS Development  Company receives a repair and maintenance fee equal
to 5.9% of cost incurred which relate to capital improvements.  These repair and
maintenance fees are capitalized as part of land, buildings and amenities.

The Partnership was charged the following  amounts from NTS Development  Company
for the twelve  months ended  December 31, 2000,  1999 and 1998.  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.













                                       37


<PAGE>


Item 13.  Certain Relationships and Related Transactions - Continued
          ----------------------------------------------------------

<TABLE>
                                                          Twelve Months Ended
                                                              December 31,
                                                              ------------

                                                      2000        1999        1998
                                                      ----        ----        ----
<CAPTION>

<S>                                                 <C>         <C>         <C>
      Property management fees                      $169,549    $157,290    $186,416
                                                    --------    --------    --------
      Property management                            204,586     252,627     230,315
      Leasing                                        133,598     194,184     120,431
      Administrative - operating                      29,700      29,988      29,822
      Other - operating                                9,242       3,000      31,770
                                                    --------    --------    --------
           Total operating expenses - affiliated     377,126     479,799     412,338
                                                    --------    --------    --------
      Professional and administrative expenses -
        affiliated                                   122,258     104,227     133,297
                                                    --------    --------    --------

      Repairs and maintenance fee                     34,762     141,626      80,897
      Leasing commissions                             75,124      68,324      48,864
      Loan costs                                        --          --         3,240
      Construction management                          2,912       5,679      24,400
                                                    --------    --------    --------
           Total related party transactions
              capitalized                            112,798     215,629     157,401
                                                    --------    --------    --------
      Total related party transactions              $781,731    $956,945    $889,452
                                                    ========    ========    ========
</TABLE>

During 2000, NTS Development  Company leased 20,368 square feet in NTS Center at
a rental rate of $14.50 per square foot. The Partnership received  approximately
$295,000 in rental payments from NTS  Development  Company during 2000, 1999 and
1998.

Effective November 19, 1999, the NTS Development Company lease at NTS Center was
extended for two years to March 2004, at a rental rate of $14.50 per square foot
for 20,368 square feet. Leasing arrangements contemplated allowances for certain
tenant  finishes.  Expenses  related to such tenant  finishes  were  capitalized
within the line item land,  buildings and amenities in the accompanying  balance
sheets. Such capital expenditures were approximately $235,000 and $225,000 as of
and for the years ended December 31, 2000 and 1999, respectively.

On February 7, 2000,  ORIG,  LLC (the  "Affiliate")  purchased  Interests in the
Partnership  pursuant to an Agreement,  Bill of Sale and Assignment by and among
the Affiliate and four investors in the Partnership (the "Purchase  Agreement").
The Affiliate purchased 135 Interests in the Partnership for total consideration
of $38,676,  or an average  price of $286.49 per Interest.  The  Affiliate  paid
these  investors  a premium  above the  purchase  price  previously  offered for
Interests  pursuant to prior tender  offers  because this  purchase  allowed the
Affiliate to purchase a substantial  number of Interests  without  incurring the
expenses involved with a tender offer and multiple transfers.






                                       38


<PAGE>

                                     PART IV
                                     -------

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

1.        Consolidated Financial Statements
          ---------------------------------

          The financial  statements for the years ended December 31, 2000,  1999
          and 1998 along with the report from Arthur Andersen LLP dated March 9,
          2001,  appear in Part II, Item 8. The  following  schedules  should be
          read in conjunction with those consolidated financial statements.

2.        Consolidated Financial Statement Schedules
          ------------------------------------------

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

          III-Real Estate and Accumulated Depreciation               40-41

          All other schedules have been omitted because they are not applicable,
          are 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

          *    Incorporated  by reference to documents filed with the Securities
               and  Exchange  Commission  in  connection  with the filing of the
               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
          -------------------

          No  reports  on Form 8-K were  filed  during  the three  months  ended
          December 31, 2000.











                                       39


<PAGE>

<TABLE>
                               NTS-PROPERTIES III
                               ------------------

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
             -------------------------------------------------------

                             AS OF DECEMBER 31, 2000
                             -----------------------


<CAPTION>
                                                                               Peachtree
                                                    NTS        Plainview       Corporate
                                                  Center        Center          Center          Total
                                                  ------        ------          ------          -----

<S>                                            <C>            <C>            <C>           <C>
Encumbrances                                        (A)            (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                                 3,443,943      2,097,206      2,568,888      8,110,037
    Carrying costs                                    --             --             --             --

Gross amount at which carried
  December 31, 2000 (C):
    Land                                       $ 1,765,889    $ 1,391,193    $ 1,678,133    $ 4,835,215
    Buildings, improvements and amenities        8,020,830      6,436,071      8,530,244     22,987,145
                                               -----------    -----------    -----------    -----------
     Total (E)                                 $ 9,786,719    $ 7,827,264    $10,208,377    $27,822,360
                                               ===========    ===========    ===========    ===========

Accumulated depreciation                       $ 5,790,167    $ 3,763,208    $ 7,283,463    $16,836,838
                                               ===========    ===========    ===========    ===========

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)
</TABLE>

(A)  First mortgage held by an insurance company.
(B)  First mortgage held by a bank.
(C)  Aggregate cost of real estate for tax purposes is $27,617,578.
(D)  Depreciation is computed using the straight-line  method over the estimated
     useful lives of the assets which are 6-30 years for land improvements, 5-30
     years for  buildings  and  improvements,  3-27 years for  amenities and the
     applicable lease term for tenant improvements.
(E)  Reconciliation,  net of accumulated  depreciation to consolidated financial
     statements:


      Total gross cost at December 31, 2000                      $  27,822,360
        Additions to Partnership for computer hardware
         and software in 1998 and 1999
          (no additions in 2000)                                        20,931
                                                                 --------------
      Balance at December 31, 2000                                  27,843,291

      Less accumulated depreciation - per above                    (16,836,838)
      Less accumulated depreciation for Partnership
        computer hardware and software                                  (6,280)
                                                                 --------------
      Land, buildings and amenities, net at December 31, 2000    $  11,000,173
                                                                 ==============

                                       40


<PAGE>

<TABLE>
                               NTS-PROPERTIES III,
                               -------------------

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
             -------------------------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
              ----------------------------------------------------


<CAPTION>
                                          Real               Accumulated
                                         Estate             Depreciation
                                         ------             ------------

<S>                                   <C>                   <C>
Balances at December 31, 1997         $ 25,355,586          $ 15,526,624

Additions during period:
  Improvements                           1,418,950                  --
  Depreciation (a)                            --                 980,469

Deductions during period:
  Retirements                             (433,336)             (385,227)
                                      -------------         -------------
Balances at December 31, 1998           26,341,200            16,121,866

Additions during period:
  Improvements                           2,461,264                  --
  Depreciation (a)                            --               1,031,295

Deductions during period:
  Retirements                           (1,605,527)           (1,273,193)
                                      -------------         -------------
Balances at December 31, 1999           27,196,937            15,879,968

Additions during period:
  Improvements                             903,810                  --
  Depreciation (a)                            --               1,209,376

Deductions during period:
  Retirements                             (257,456)             (246,226)
                                      -------------         -------------
Balances at December 31, 2000         $ 27,843,291          $ 16,843,118
                                      =============         =============
</TABLE>

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












                                       41


<PAGE>

                                   SIGNATURES
                                   ----------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  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/ Gregory A. Wells
                                     -------------------------------------------
                                     Gregory A. Wells
                                     Senior Vice President and
                                     Chief Financial Officer of
                                     NTS Capital Corporation


Date: April 2, 2001

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


/s/ Brian F. Lavin
-------------------------
Brian F. Lavin                      President and Chief Operating Officer of
                                    NTS Capital Corporation


/s/ Gregory A. Wells
-------------------------
Gregory A. Wells                    Senior Vice President and Chief Financial
                                    Officer of NTS Capital Corporation

The Partnership is a limited  partnership and no proxy material has been sent to
the limited  partners.  The Partnership  will deliver to the limited partners an
annual report containing the Partnership's consolidated financial statements and
a message from the General Partner.

                                       42