**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549**

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**FORM 10-Q**

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

For the quarterly period ended September 30, 2001

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

Commission File Number 0-11176

**NTS-PROPERTIES III**

Incorporated pursuant to the Laws of the State of Georgia

Internal Revenue Service - Employer Identification No. 61-1017240

10172 Linn Station Road, Louisville, Kentucky 40223

(502) 426-4800

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

**TABLE OF CONTENTS**

**PART I**
Pages Item 1.Financial Statements Balance Sheets as of September 30, 2001 and December 31, 20003 Statement of Partners' Equity as of September 30, 20013 Statements of Operations for the Three Months and    Nine Months Ended September 30, 2001 and 20004  Statements of Cash Flows for the Nine Months Ended    September 30, 2001 and 20005  Notes to Financial Statements6-10  Item 2. Management's Discussion and Analysis of Financial Condition    and Results of Operations11-16  Item 3. Quantitative and Qualitative Disclosures About Market Risk17  
**PART II**
  Item 1.Legal Proceedings18  Item 2.Changes in Securities18  Item 3.Defaults Upon Senior Securities18  Item 4.Submission of Matters to a Vote of Security Holders18  Item 5.Other Information18  Item 6.Exhibits and Reports on Form 8-K18  Signatures19
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**PART I - FINANCIAL INFORMATIONItem 1 - Financial Statements**
**NTS-PROPERTIES IIIBALANCE SHEETS**
                                                                  As of               As of                                                              September 30,       December 31,                                                                  2001                2000*                                                            -----------------   -----------------                                                               (UNAUDITED)ASSETS------Cash and equivalents                                       $          554,572  $           45,164Cash and equivalents - restricted                                      97,770               4,923Accounts receivable, net of allowance for doubtful  accounts of  $4,711 at September 30, 2001  and $0 at December 31, 2000                                         451,711             417,500Land, buildings and amenities, net                                 10,731,320          11,000,173Other assets                                                          437,271             480,521                                                            -----------------   -----------------     TOTAL ASSETS                                          $       12,272,644  $       11,948,281                                                            =================   =================LIABILITIES AND PARTNERS' EQUITY--------------------------------Mortgages payable                                          $        8,894,160  $        8,716,153Accounts payable                                                       75,742             228,959Security deposits                                                     139,146             136,837Other liabilities                                                     155,324              21,029                                                            -----------------   -----------------     TOTAL LIABILITIES                                              9,264,372           9,102,978COMMITMENTS AND CONTINGENCIES (Note 11)PARTNERS' EQUITY                                                    3,008,272           2,845,303                                                            -----------------   -----------------TOTAL LIABILITIES AND PARTNERS' EQUITY                     $       12,272,644  $       11,948,281                                                            =================   =================
**STATEMENT OF PARTNERS' EQUITY(UNAUDITED)**
                                                   Limited            General                                                   Partners           Partner            Total                                               ----------------  -----------------  ----------------PARTNERS' EQUITY/(DEFICIT)--------------------------Initial equity                                $      15,600,000 $        8,039,710 $      23,639,710Adjustment to historical basis                               --         (5,455,030)       (5,455,030)                                               ----------------  -----------------  ----------------     EQUITY                                   $      15,600,000 $        2,584,680 $      18,184,680Net loss - prior years                                 (474,628)        (2,639,679)       (3,114,307)Net income (loss) - current year                        212,492            (49,524)          162,968Cash distributions declared to date                 (11,349,844)          (206,985)      (11,556,829)Repurchase of limited partnership Units                (668,240)                --          (668,240)                                               ----------------  -----------------  ----------------BALANCES AT SEPTEMBER 30, 2001                $       3,319,780 $         (311,508)$       3,008,272                                               ================  =================  ================*  Reference is made to the audited financial statements in the Form 10-K as filed with the Securities and ExchangeCommission on April 2, 2001.The accompanying notes to financial statements are an integral part of these statements.
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**NTS-PROPERTIES IIISTATEMENTS OF OPERATIONS(UNAUDITED)**
                                               Three Months Ended                Nine Months Ended                                                  September 30,                    September 30,                                         -------------------------------  -------------------------------                                              2001             2000            2001            2000                                         --------------   --------------  --------------  ---------------REVENUES--------Rental income                           $       918,389  $       752,542 $     2,697,271 $      2,311,986Rental income - affiliated                       73,834           73,834         221,503          221,503Interest and other income                         9,088            6,272         173,654           14,553                                         --------------   --------------  --------------  ---------------     TOTAL REVENUES                           1,001,311          832,648       3,092,428        2,548,042                                         --------------   --------------  --------------  ---------------EXPENSES--------Operating expenses                              239,706          255,345         698,869          725,592Operating expenses - affiliated                  81,134          102,115         293,560          274,014Loss on disposal of assets                           --              515              --              783Interest expense                                154,044          169,042         478,520          481,868Management fees                                  48,471           38,569         147,694          123,605Real estate taxes                                54,273           53,220         162,819          159,660Professional and administrative  expenses                                       15,513           21,758          59,301           61,468Professional and administrative  expenses -  affiliated                         36,710           29,275          99,237           90,842Depreciation and amortization                   345,110          307,363         989,460          917,053                                         --------------   --------------  --------------  ---------------     TOTAL EXPENSES                             974,961          977,202       2,929,460        2,834,885                                         --------------   --------------  --------------  ---------------Net income (loss)                       $        26,350  $      (144,554)$       162,968 $       (286,843)                                         ==============   ==============  ==============  ===============Net income (loss) allocated to the  limited partners                      $        43,138  $      (125,528)$       212,492 $       (231,248)                                         ==============   ==============  ==============  ===============Net income (loss) per limited  partnership Unit                      $          3.40  $        (9.83) $         16.77 $        (18.11)                                         ==============   ==============  ==============  ===============Weighted average number of limited  partnership Units                              12,670           12,770          12,670           12,770                                         ==============   ==============  ==============  ===============The accompanying notes to financial statements are an integral part of these statements.
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**NTS-PROPERTIES IIISTATEMENTS OF CASH FLOWS(UNAUDITED)**
                                                                     Nine Months Ended                                                                       September 30,                                                           -------------------------------------                                                                 2001                2000                                                           -----------------  ------------------CASH FLOWS FROM OPERATING ACTIVITIES------------------------------------Net income (loss)                                         $          162,968 $          (286,843)Adjustments to reconcile net income (loss) to net cash  provided  by operating activities:    Provision for doubtful accounts                                   29,532               5,762    Write-off of uncollectible accounts receivable                   (24,821)            (20,811)    Loss on disposal of assets                                            --                 783    Depreciation and amortization                                  1,075,072           1,006,135    Changes in assets and liabilities:      Cash and equivalents - restricted                              (92,847)            (69,307)      Accounts receivable                                            (38,922)             64,108      Other assets                                                   (58,346)            (99,676)      Accounts payable                                              (153,217)           (369,241)      Security deposits                                                2,309             (12,492)      Other liabilities                                              134,295             108,283                                                           -----------------  ------------------     Net cash provided by operating activities                     1,036,023             326,701                                                           -----------------  ------------------CASH FLOWS FROM INVESTING ACTIVITIES------------------------------------Additions to land, buildings and amenities                          (704,622)           (689,786)                                                           -----------------  ------------------     Net cash used in investing activities                          (704,622)           (689,786)                                                           -----------------  ------------------CASH FLOWS FROM FINANCING ACTIVITIES------------------------------------Proceeds from mortgages payable                                      462,945             651,772Principal payments on mortgages payable                             (284,938)           (241,995)Increase in loan costs                                                    --             (10,635)                                                           -----------------  ------------------     Net cash provided by financing activities                       178,007             399,142                                                           -----------------  ------------------     Net increase in cash and equivalents                            509,408              36,057CASH AND EQUIVALENTS, beginning of period                             45,164             104,532                                                           -----------------  ------------------CASH AND EQUIVALENTS, end of period                       $          554,572 $           140,589                                                           =================  ==================Interest paid on a cash basis                             $          475,020 $           460,662                                                           =================  ==================The accompanying notes to financial statements are an integral part of these statements.
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**NTS-PROPERTIES IIINOTES TO FINANCIAL STATEMENTS**

The unaudited financial statements and schedules included herein should be read in conjunction withNTS-Properties III's (the "Partnership") 2000 Form 10-K as filed with the Securities and ExchangeCommission on April 2, 2001. In the opinion of the General Partner, all adjustments (only consistingof normal recurring accruals) necessary for a fair presentation have been made to the accompanyingfinancial statements for the three months and nine months ended September 30, 2001 and 2000.

**Note 1 - Changes to the Names of Properties Held by the Partnership**

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

**Note 2 - Use of Estimates in the Preparation of Financial Statements**

The preparation of financial statements in conformity with Generally Accepted AccountingPrinciples ("GAAP") requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues and expenses during the reportingperiod. Actual results could differ from those estimates.

**Note 3 - Concentration of Credit Risk**

NTS-Properties III is a limited partnership, which owns and operates commercial rental propertiesin Norcross, Georgia, a suburb of Atlanta, and Jeffersontown, Kentucky, a suburb of Louisville. Onetenant in NTS Center occupies 46% of the office building's net rentable area.

The Partnership's financial instruments that are exposed to concentrations of credit risk consist ofcash and equivalents. The Partnership maintains its cash accounts primarily with banks located inKentucky. The total cash balances are insured by the FDIC up to $100,000 per bank account. ThePartnership may at times, in certain accounts, have deposits in excess of $100,000.

**Note 4 - Reclassification of 2000 Financial Statements**

Certain reclassifications have been made to the September 30, 2000  financial statements to conformto the September 30, 2001 classifications. These reclassifications have no effect on previouslyreported operations.

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**Note 5 - Cash and Equivalents**

The Partnership has a cash management program which provides for the overnight investment ofexcess cash balances. Per an agreement with a bank, excess cash is invested in a repurchaseagreement for U.S. government or agency securities on a nightly basis. As of September 30, 2001approximately $447,300 was transferred into the investment.

**Note 6 - Cash and Equivalents - Restricted**

Cash and equivalents - restricted represents funds which have been escrowed with a mortgagecompany for NTS Center's property taxes in accordance with the loan agreement and funds reservedby the Partnership for the purchase of limited partnership Units through the tender offer. See Note8 - Tender Offer for information regarding the tender offer.

**Note 7 - Basis of Property and Depreciation**

Land, buildings and amenities are stated at historical cost, less accumulated depreciation, to thePartnership. Costs directly associated with the acquisition, development and construction of a projectare capitalized. Depreciation is computed using the straight-line method over the estimated usefullives of the assets which are 6-30 years for land improvements, 5-30 years for buildings andimprovements, 3-27 years for amenities and the applicable lease term for tenant improvements.

Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairmentof Long-Lived Assets and for Long-Lived Assets to be Disposed Of," specifies circumstances inwhich certain long-lived assets must be reviewed for impairment. If the carrying amount of an assetexceeds the sum of its expected future cash flows, the asset's carrying value must be written downto fair value. Application of this standard by management during the periods ended September 30,2001 and 2000 did not result in any impairment loss.

**Note 8 - Tender Offer**

On June 25, 2001, the Partnership and ORIG, LLC, an affiliate of the Partnership (the "Offerors")commenced a tender offer for up to 200 of the Partnership's interests at a price of $250 per interest.The Partnership offered to purchase the first 100 interests tendered. ORIG offered to purchase upto an additional 100 interests. If more than 200 interests were tendered, the Offerors could purchaseinterests on a pro rata basis, or all interests tendered. The total costs of the tender offer were expectedto be $60,000, consisting of $50,000 to purchase 200 interests and $10,000 for expenses. ThePartnership's share of these costs was estimated to be $30,000. Interests acquired by the Partnershipwould be retired while those acquired by ORIG would be held by it. The tender offer was scheduledto expire on September 25, 2001.

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On July 18, 2001, a third party (the "Third-Party Purchaser"), unaffiliated with the Partnership orORIG, commenced a tender offer at a price of $275 per interest, which was scheduled to expire onAugust 16, 2001.

On July 23, 2001, the Offerors sent an amended offer to purchase increasing the purchase price to$285 per interest. On July 30, 2001, the Offerors amended their tender offer to increase the numberof interests from 200 to 2,000. The total costs of the tender offer were expected to be $585,000,consisting of $570,000 to purchase 2,000 interests and $15,000 for expenses. The Partnership's shareof these costs was estimated to be $29,250.

On August 16, 2001, the same Third-Party Purchaser sent notice to the Partnership's limited partnersstating that the purchase price of their offer had increased from $275 to $290 per interest and thatthe offer would expire on August 30, 2001.

On August 17, 2001, the Offerors increased the purchase price under the tender offer to $300 perinterest. The Third-Party Purchaser has not made any public filings since August 16, 2001, and thePartnership has no knowledge as to whether the Third-Party purchased any interests pursuant to itsoffer.

On September 21, 2001, the Offerors extended the expiration date of the tender offer to October 12,2001. The total costs of the tender offer were expected to be $635,000, consisting of $600,000 topurchase 2,000 interests and $35,000 for expenses. The Partnership's share of these costs wasestimated to be $32,800. See Note 13 - Subsequent Event for details regarding the completion of thetender offer.

**Note 9 - Mortgages Payable**

Mortgages payable consist of the following:
                                                          September 30,        December 31,                                                               2001                2000                                                        ------------------  ------------------Mortgage payable to an insurance company, bearinginterest at 6.89%, due April 10, 2015, secured by landand buildings.                                         $         5,987,909 $         6,182,848Mortgage payable to a bank, bearing a variable interestrate of Prime minus 0.25%, due March 1, 2002,secured by land and a building. The current interestrate at September 30, 2001 is 5.75%. (1)                         2,906,251           2,533,305                                                        ------------------  ------------------                                                       $         8,894,160 $         8,716,153                                                        ==================  ==================(1) The Partnership intends on extending the maturity date from March 1, 2002 to March 1, 2003.
Based on the borrowing rates currently available to the Partnership for mortgages with similar termsand average maturities, the fair value of long-term debt is approximately $8,670,000.

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**Note 10 - Related Party Transactions**

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

The Partnership was charged the following amounts by NTS Development Company for the ninemonths ended September 30, 2001 and 2000. These charges include items which have been expensedas operating expenses - affiliated or professional and administrative expenses - affiliated and itemswhich have been capitalized as other assets or as land, buildings and amenities.
                                                                    Nine Months Ended                                                                      September 30,                                                         ---------------------------------------                                                               2001                  2000                                                         -----------------    ------------------Property management fees                              $            147,694  $            123,605                                                         -----------------    ------------------Property management                                                170,617               154,182Leasing                                                             95,775                89,816Administrative - operating                                          22,414                22,275Other                                                                4,754                 7,741                                                         -----------------    ------------------     Total operating expenses - affiliated                         293,560               274,014                                                         -----------------    ------------------Professional and administrative expenses - affiliated               99,237                90,842                                                         -----------------    ------------------Repairs and maintenance fee                                         34,941                46,362Leasing commissions                                                  8,580                66,764Other                                                                   --                    62                                                         -----------------    ------------------     Total related party transactions capitalized                   43,521               113,188                                                         -----------------    ------------------Total related party transactions                      $            584,012  $            601,649                                                         =================    ==================
During the nine months ended September 30, 2001 and 2000, NTS Development Company leased20,368 square feet in NTS Center at a rental rate of $14.50 per square foot. The Partnership received$221,503 in rental payments from NTS Development Company during the nine months endedSeptember 30, 2001 and 2000. The lease term for NTS Development Company ends on March 31,2004.

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**Note 11 - Commitments and Contingencies**

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

The Partnership does not believe there is any litigation threatened against the Partnership other thanroutine litigation arising out of the ordinary course of business, some of which is expected to becovered by insurance, none of which is expected to have a material effect on the financial statementsof the Partnership.

Previously, one tenant at Plainview Center occupied approximately 65% of the building. During thethird quarter of 1997, the Partnership received notice that the tenant would vacate the property at theend of the lease term, August 1998. A 30-day renewal extension was negotiated (through September30, 1998) with the tenant for approximately 63,000 leased square feet. A renewal for approximately11,000 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 theremainder of their space on March 31, 1999, there has been and will likely continue to be aprotracted period for the property to become fully leased again and substantial funds, currentlyestimated to be $260,000 will likely be needed for leasing expenses; especially those needed torenovate space for new tenants.

As of September 30, 2001, the Partnership anticipates making window repairs at Plainview Centerfor a cost of approximately $80,000, which will be funded by cash from operations.

**Note 12 - Segment Reporting**

The Partnership's reportable operating segments include only one segment - Commercial Real EstateOperations.

**Note 13 - Subsequent Event**

On October 17, 2001, a total of 1,311 interests were tendered, pursuant to the June 25, 2001 tenderoffer as amended, which expired on October 12, 2001. The Offerors accepted all interests tenderedat a purchase price of $300 per interest. The Partnership repurchased 100 interests and ORIGpurchased 1,211 interests, for a total of $393,300.

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**Item 2 - Management's Discussion and Analysis of Financial Condition and Results of**