<PAGE>


                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


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

For the quarterly period ended             June 30, 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 No.)

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

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

<PAGE>


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

                                     PART I
                                     ------

                                                                           Pages
                                                                           -----

Item 1.  Financial Statements

         Balance Sheets as of June 30, 2000 and December 31, 1999          3

         Statement of Partners' Equity as of June 30, 2000                 3

         Statements of Operations for the three months and six months ended
               June 30, 2000 and 1999                                      4

         Statements of Cash Flows for the six months ended
               June 30, 2000 and 1999                                      5

         Notes to Financial Statements                                     6-10

Item 2.  Management's Discussion and Analysis of Financial
                Condition and Results of Operations                        11-15

Item 3.  Quantitative and Qualitative Disclosures About Market Risk        16

                                     PART II
                                     -------

Item 1.  Legal Proceedings                                                 17

Item 2.  Changes in Securities                                             17

Item 3.  Defaults Upon Senior Securities                                   17

Item 4.  Submission of Matters to a Vote of Security Holders               17

Item 5.  Other Information                                                 17

Item 6.  Exhibits and Reports on Form 8-K                                  17

Signatures                                                                 18




                                        2

<PAGE>

PART I.  FINANCIAL INFORMATION
         ---------------------
Item 1.  Financial Statements
         --------------------

<TABLE>

                               NTS-PROPERTIES III
                               ------------------
                                 BALANCE SHEETS
                                 --------------


<CAPTION>
                                                              As of                   As of
                                                           June 30, 2000        December 31, 1999*
                                                           -------------        ------------------
                                                            (Unaudited)
ASSETS
------
<S>                                                         <C>                   <C>
Cash and equivalents                                         $   196,581           $   104,532
Cash and equivalents - restricted                                 37,611                 8,073
Accounts receivable, net of allowance for doubtful
  accounts of $660 at June 30, 2000 and $15,512 at
  December 31, 1999                                              298,751               404,773
Land, buildings and amenities, net                            10,956,011            11,316,969
Other assets                                                     470,917               492,259
                                                             -----------           -----------

     TOTAL ASSETS                                            $11,959,871           $12,326,606
                                                             ===========           ===========

LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgages payable                                            $ 8,491,591           $ 8,073,856
Accounts payable                                                 142,305               890,032
Security deposits                                                130,517               142,573
Other liabilities                                                161,596                43,995
                                                             -----------           -----------
     TOTAL LIABILITIES                                         8,926,009             9,150,456

COMMITMENTS AND CONTINGENCIES (Note 9)

PARTNERS' EQUITY                                               3,033,862             3,176,150
                                                             -----------           -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY                       $11,959,871           $12,326,606
                                                             ===========           ===========

</TABLE>

<TABLE>

                          STATEMENT OF PARTNERS' EQUITY
                          -----------------------------

<CAPTION>

                                               Limited            General
                                               Partners           Partner              Total
                                               --------           -------              -----

PARTNERS' EQUITY/(DEFICIT)
--------------------------
<S>                                          <C>                <C>                <C>
Initial equity                               $ 15,600,000       $  8,039,710       $ 23,639,710
Adjustment to historical basis                         --         (5,455,030)        (5,455,030)
                                             -------------      -------------      -------------

     EQUITY                                  $ 15,600,000       $  2,584,680       $ 18,184,680

Net loss - prior years                           (242,145)        (2,566,315)        (2,808,460)
Net loss - current year                          (105,720)           (36,569)          (142,289)
Cash distributions declared to date           (11,349,844)          (206,985)       (11,556,829)
Repurchase of Limited Partnership Units          (643,240)                --           (643,240)
                                             -------------      -------------      -------------
BALANCES AT JUNE 30, 2000                    $  3,259,051       $   (225,189)      $  3,033,862
                                             =============      =============      =============

</TABLE>


* Reference  is made to the  audited  financial  statements  in the Form 10-K as
filed with the Securities and Exchange Commission on March 29, 2000.

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

                                        3

<PAGE>
<TABLE>

                               NTS-PROPERTIES III
                               ------------------
                            STATEMENTS OF OPERATIONS
                            ------------------------
                                   (UNAUDITED)
                                   -----------

<CAPTION>

                                                   Three Months Ended               Six Months Ended
                                                         June 30,                       June 30,
                                                         --------                       --------
                                                    2000           1999           2000            1999
                                                    ----           ----           ----            ----

REVENUES
--------
<S>                                           <C>             <C>             <C>             <C>
Rental income, net of provision for
  doubtful accounts of $4,605 (2000)
  and $12,194 (1999)                          $   774,199      $  685,886     $ 1,559,445     $ 1,434,641
Rental income - affiliated                         73,834          73,834         147,668         147,668
Interest and other income                           6,066             979           8,280           2,090
                                              ------------    ------------    ------------    ------------

     TOTAL REVENUES                               854,099         760,699       1,715,393       1,584,399
                                              ------------    ------------    ------------    ------------

EXPENSES
--------
Operating expenses                                253,571         249,103         470,245         450,556
Operating expenses - affiliated                    88,736         103,254         171,899         245,257
Loss on disposal of assets                             --              --             268              --
Interest expense                                  156,348         120,563         304,988         236,803
Management fees                                    43,192          41,094          85,036          77,242
Real estate taxes                                  53,220          50,196         106,440         101,757
Professional and administrative expenses           19,631          30,686          39,711          59,739
Professional and administrative expenses
  - affiliated                                     34,091          23,826          61,567          53,568
Depreciation and amortization                     310,350         250,816         617,528         504,940
                                              ------------    ------------    ------------    ------------

     TOTAL EXPENSES                               959,139         869,538       1,857,682       1,729,862
                                              ------------    ------------    ------------    ------------
Net loss                                      $  (105,040)    $  (108,839)    $  (142,289)    $  (145,463)
                                              ============    ============    ============    ============

Net loss allocated to the Limited Partners    $   (86,419)    $   (86,205)    $  (105,720)    $  (100,167)
                                              ============    ============    ============    ============

Net loss per Limited Partnership Unit         $     (6.77)    $     (6.50)    $     (8.28)    $     (7.54)
                                              ============    ============    ============    ============
Weighted average number of Limited
   Partnership Units                               12,770          13,270          12,770          13,286
                                              ============    ============    ============    ============

</TABLE>

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












                                        4

<PAGE>

<TABLE>

                               NTS-PROPERTIES III
                               ------------------
                            STATEMENTS OF CASH FLOWS
                            ------------------------
                                   (UNAUDITED)
                                   -----------
<CAPTION>


                                                                          Six Months Ended
                                                                              June 30,
                                                                              --------
                                                                     2000                 1999
                                                                     ----                 ----

CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S>                                                              <C>                  <C>
Net loss                                                         $  (142,289)         $  (145,463)
Adjustments to reconcile net loss to net cash (used in)
  provided by operating activities:
    Provision for doubtful accounts                                    4,605               12,194
    Loss on disposal of assets                                           268                 --
    Depreciation and amortization                                    617,528              504,940
    Changes in assets and liabilities:
      Cash and equivalents - restricted                              (29,538)             (27,066)
      Accounts receivable                                            101,417              (66,266)
      Other assets                                                    13,483              (19,415)
      Accounts payable                                              (747,727)              89,753
      Security deposits                                              (12,056)              10,325
      Other liabilities                                              117,601               94,747
                                                                 ------------         ------------

     Net cash (used in) provided by operating activities             (76,708)             453,749
                                                                 ------------         ------------

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings, and amenities                         (238,343)          (1,009,934)
                                                                 ------------         ------------
     Net cash used in investing activities                          (238,343)          (1,009,934)
                                                                 ------------         ------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Increase in mortgages payable                                        568,020              787,107
Principal payments on mortgages payable                             (150,285)            (112,299)
Increase in loan costs                                               (10,635)             (27,509)
Repurchase of Limited Partnership Units                                   --             (125,000)
Decrease in cash and equivalents - restricted                             --              125,000
                                                                 ------------         ------------
     Net cash provided by financing activities                       407,100              647,299
                                                                 ------------         ------------
     Net increase in cash and equivalents                             92,049               91,114

CASH AND EQUIVALENTS, beginning of period                            104,532              233,844
                                                                 ------------         ------------
CASH AND EQUIVALENTS, end of period                              $   196,581          $   324,958
                                                                 ============         ============
Interest paid on a cash basis                                    $   299,553          $   236,803
                                                                 ============         ============
</TABLE>

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


                                        5

<PAGE>

                               NTS-PROPERTIES III
                               ------------------
                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

The unaudited financial statements included herein should be read in conjunction
with the Partnership's  1999 Form 10-K as filed with the Securities and Exchange
Commission  on March 29,  2000.  In the  opinion  of the  General  Partner,  all
adjustments (only consisting of normal recurring  accruals) necessary for a fair
presentation  have been made to the  accompanying  financial  statements for the
three months and six months ended June 30, 2000 and 1999.

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 Triad North was renamed Plainview Center.

2.   Use of Estimates in the Preparation of Financial Statements
     -----------------------------------------------------------

     The  preparation  of financial  statements  in  conformity  with  Generally
     Accepted  Accounting   Principles  ("GAAP")  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.

3.   Concentration of Credit Risk
     ----------------------------

     NTS-Properties  III is a  Limited  Partnership,  which  owns  and  operates
     commercial rental 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.

4.   Reclassification of 1999 Financial Statements
     ---------------------------------------------

     Certain  reclassifications have been made to the June 30, 1999 and December
     31,   1999   financial   statements   to  conform  to  the  June  30,  2000
     classifications.  These  reclassifications  have no  effect  on  previously
     reported operations.

5.   Cash and Equivalents - Restricted
     ---------------------------------

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






                                        6

<PAGE>


6.   Basis of Property and Depreciation
     ----------------------------------

     Land,   buildings  and  amenities  are  stated  at  historical  cost,  less
     accumulated  depreciation,  to the Partnership.  Costs directly  associated
     with  the  acquisition,  development  and  construction  of a  project  are
     capitalized.  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 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
     periods ended June 30, 2000 and 1999 did not result in any impairment loss.

7.   Mortgages Payable
     -----------------

     Mortgages payable consist of the following:


                                                       June 30,     December 31,
                                                         2000          1999
                                                         ----          ----

     Mortgage payable to an insurance company
     bearing interest at 6.89%, due April 10, 2015,
     secured by land and buildings.                  $  6,307,337   $  6,427,622

     Mortgage payable to a bank bearing a variable
     interest rate of Prime minus .25%, due March 1,
     2002, secured by land and buildings.The current
     rate at June 30, 2000 is 9.25%.                    2,184,254      1,646,234
                                                     ------------  -------------
                                                     $  8,491,591  $   8,073,856
                                                     ============  =============

     Based on the borrowing  rates  currently  available to the  Partnership for
     mortgages  with  similar  terms and average  maturities,  the fair value of
     long-term debt is approximately $7,847,000.

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

     Property  management  fees of $85,036 and $77,242 for the six months  ended
     June 30, 2000 and 1999, respectively, were paid to NTS Development Company,
     an affiliate of the General  Partner.  The fee is paid monthly in an amount
     equal  to 5% of  the  gross  revenues  from  the  Partnership's  properties
     pursuant  to  an  agreement  with  the  Partnership.  Also  pursuant  to an
     agreement,  NTS  Development  Company will receive a repair and maintenance
     fee equal to 5.9% of costs incurred which relate to capital improvements.





                                        7

<PAGE>


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

     The Partnership  has incurred  $14,547 and $70,922 for the six months ended
     June 30, 2000 and 1999,  respectively,  as repair and maintenance fees, and
     has capitalized these costs as part of land,  buildings and amenities.  The
     Partnership  was also charged the  following  amounts from NTS  Development
     Company  for the six months  ended June 30,  2000 and 1999.  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.


                                              Six Months Ended
                                                  June 30,
                                                  --------
                                          2000                  1999
                                          ----                  ----

     Leasing                           $  83,135             $  98,727
     Administrative                       76,417                69,848
     Property Management                 100,190               123,456
     Other                                 6,258                62,633
                                      ----------            ----------

                                      $  266,000            $  354,664
                                      ==========            ==========

     During the six months ended June 30, 2000 and 1999, NTS Development Company
     leased  20,368 square feet in NTS Center at a rental rate $14.50 per square
     foot. The Partnership  received  approximately  $147,668 in rental payments
     from NTS Development  Company during the six months ended June 30, 2000 and
     1999. The lease term for NTS Development Company ends on March 31, 2004.

     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.

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

     The  Partnership,  as an  owner  of real  estate,  is  subject  to  various
     environmental  laws of federal  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  adverse  effect  on the
     consolidated financial statements of the Partnership.

                                        8

<PAGE>

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

     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 $700,000 will likely be needed
     for leasing  expenses;  especially  those needed to refinish  space for new
     tenants.  See  Note  12  for  details  of  a  lease  expansion  and  tenant
     improvement commitment made by the Partnership subsequent to June 30, 2000.

     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.

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

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

11.  Recent Accounting Pronouncement
     -------------------------------

     The  Emerging  Issues  Task  Force  ("EITF")  of the  Financial  Accounting
     Standards  Board  ("FASB")  has  reached a  consensus  on Issue  No.  00-1,
     "Applicability  of the Pro Rata Method of  Consolidation  to Investments in
     Certain  Partnerships  and Other  Unincorporated  Joint Ventures." The EITF
     reached  a  consensus  that  a  proportionate   gross  financial  statement
     presentation   (referred  to  as   "proportionate   consolidation"  in  the
     Partnership's  1999  Form  10-K  Notes  to  Financial  Statements)  is  not
     appropriate for an investment in an  unincorporated  legal entity accounted
     for by the equity  method of  accounting,  unless the investee is in either
     the  construction  industry  or an  extractive  industry  where  there is a
     longstanding practice of its use.


     The  consensus is  applicable to financial  statements  for annual  periods
     ending  after  June  15,  2000.  Upon  application  of the  consensus,  all
     comparative  financial  statements  shall be restated  to conform  with the
     consensus.  The  application  of  this  consensus  will  not  result  in  a
     restatement  of  previously   reported   partners'  equity  or  results  of
     operations,  but will result in a recharacterization or reclassification of
     certain financial  statements'  captions and amounts. The Partnership plans
     to restate its financial  statements using the equity method to account for
     its joint venture investments for the year ending December 31, 2000.



                                        9

<PAGE>


12.  Subsequent Event
     ----------------

     On July 17,  2000,  the  Partnership  made a commitment  for  approximately
     $256,600 for tenant improvements at Plainview Center. The improvements will
     expand  the space of a current  tenant  by 19,000  square  feet and will be
     funded by the  $1,500,000  increase  in the  mortgage  payable  secured  by
     Plainview Center.  This expansion is effective on November 1, 2000 and will
     increase the occupancy of Plainview Center from 47% to 67%.







































                                       10

<PAGE>


Item 2.  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.  MD&A should be read in  conjunction  with the financial  statements in
Item 1 and the Cautionary Statements below.

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

Some  of  the  statements  included  in  this  Item 2 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 MD&A, 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.




                                       11

<PAGE>

Cautionary Statements - Continued
---------------------------------

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.

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

The  occupancy  levels  at the  Partnership's  properties  as of June 30 were as
follows:


                                           Six Months Ended June 30,
                                           -------------------------
                                        2000 (1)                 1999
                                        --------                 ----

 NTS Center (2)                           92%                    100%
 Plainview Center (3)                     47%                     21%
 Peachtree Corporate Center               79%                     79%

(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)  In the opinion of the General Partner of the  Partnership,  the decrease in
     period-ending  occupancy  is only a  temporary  fluctuation  and  does  not
     represent a permanent  downward  occupancy  trend.  As of June 30,  2000, a
     current  tenant has signed a lease to expand  their  space by 2,882  square
     feet effective July 15, 2000. This expansion will increase the occupancy at
     NTS Center to 95%.

(3)  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 period-ending
     occupancy  level is only a  temporary  situation  and does not  represent a
     permanent downward occupancy trend.  Subsequent to June 30, 2000, a current
     tenant signed a lease expanding their space by approximately  19,000 square
     feet as of November 1, 2000.  The expansion  will increase the occupancy at
     Plainview Center to 67%.

The average  occupancy levels at the  Partnership's  properties during the three
months and six months ended June 30 were as follows:

                                 Three Months Ended        Six Months Ended
                                      June 30,                 June 30,
                                      --------                 --------

                                  2000        1999         2000          1999
                                  ----        ----         ----          ----

 NTS Center (1)                    96%        100%          98%          100%
 Plainview Center                  48%         21%          48%           28%
 Peachtree Corporate Center (1)    79%         81%          80%           85%

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

The rental and other income  generated by the  Partnership's  properties for the
three months and six months ended June 30, 2000 and 1999 were as follows:


                                    Three Months Ended         Six Months Ended
                                         June 30,                  June 30,
                                         --------                  --------
                                      2000        1999        2000       1999
                                      ----        ----        ----       ----

 NTS Center                        $ 384,673   $ 383,816   $ 763,724   $ 773,331
 Plainview Center                  $ 172,331   $  75,275   $ 344,204   $ 201,501
 Peachtree Corporate Center        $ 296,023   $ 300,629   $ 607,240   $ 607,477

                                       12

<PAGE>

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

The following is an analysis of material  changes in results of  operations  for
the periods  ending  June 30, 2000 and 1999.  Items that did not have a material
impact on operations  for the periods  listed above have been excluded from this
discussion.

Rental and other income increased  approximately  $88,000 or 13% and $124,800 or
9% for the three months and six months  ended June 30, 2000,  as compared to the
same periods in 1999,  primarily as a result of increased  average  occupancy at
Plainview Center.

Period-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 period'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  actions  during  the three
months and six months  ended June 30,  2000 and 1999.  As of June 30,  2000,  no
action is being taken  against any tenants to collect funds through the remedies
discussed above.

Operating  expenses  -  affiliated  decreased  approximately  $14,500 or 14% and
$73,400  or 30% for the three  months and six months  ended  June 30,  2000,  as
compared to the same periods in 1999. 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.

Interest expense increased  approximately  $35,800 or 30% and $68,000 or 29% for
the three  months and six months  ended June 30,  2000,  as compared to the same
periods 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 minus .25%. The increase in interest expense is
partially  offset  by  principal  payments  made on the  Partnership's  mortgage
secured by NTS Center.

Professional and administrative  expenses decreased approximately $11,000 or 36%
and $20,000 or 33% for the three months and six months  ended June 30, 2000,  as
compared to the same  periods in 1999.  The  decrease  is  primarily a result of
decreased costs incurred for legal and accounting fees.

Professional and administrative  expenses - affiliated  increased  approximately
$10,300 or 43% and $8,000 or 15% for the three  months and six months ended June
30,  2000,  as compared to the same  periods in 1999,  as a result of changes in
accounting personnel.  Professional and administrative expenses - affiliated are
expenses  incurred  for  services  performed  by  employees  of NTS  Development
Company, an affiliate of the General Partner.




                                       13

<PAGE>

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

Depreciation  and  amortization  increased  approximately  $59,500  or  24%  and
$112,600  or 22% for the three  months and six months  ended June 30,  2000,  as
compared  to the same  periods in 1999,  as a 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.  Items  having  the  most
significant  effect on the  increase are the  renovation  of the common area  at
Plainview  Center for  approximately  $988,000 which was capitalized  during the
fourth quarter of 1999 and approximately $500,000 for tenant finish improvements
for a new tenant at  Plainview  Center  which was  capitalized  during the first
quarter of 2000.  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.  The aggregate  cost of the
Partnership's properties for federal tax purposes is approximately $26,214,477.

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

Cash flows (used in) provided by:


                                                 Six Months Ended June 30,
                                                 -------------------------
                                                  2000               1999
                                                  ----               ----

Operating activities                        $   (76,708)       $   453,749
Investing activities                           (238,343)        (1,009,934)
Financing activities                            407,100            647,299
                                            ------------       ------------

     Net increase in cash and equivalents   $    92,049        $    91,114
                                            ============       ============


Net cash from operating activities decreased  approximately $530,500 for the six
months  ended  June 30,  2000,  as  compared  to the same  period in 1999.  This
decrease  was  primarily  driven by a decrease  in  accounts  payable  offset by
decreased accounts receivable and higher income before depreciation.

Net cash used in investing activities decreased  approximately  $771,600 for the
six months  ended June 30,  2000,  as compared  to the same period in 1999.  The
decrease  was  primarily  due to a  decrease  in the  amount  of funds  used for
renovations at the Partnership's properties.

Net cash provided by financing activities decreased  approximately  $240,200 for
the six months ended June 30, 2000, as compared to the same period in 1999.  The
decrease  is the  result  of a  decrease  in funds  drawn on the  mortgage  loan
obtained March 2, 1999.

The Partnership indefinitely suspended distributions starting December 31, 1996,
as a result of the anticipated  decrease in occupancy at Plainview Center.  Cash
reserves  (which  are  unrestricted   cash  and  equivalents  as  shown  on  the
Partnership's balance sheet) as of June 30, 2000 were $196,581.

In the next 12  months,  the  General  Partner  expects  the  demand  on  future
liquidity  to  increase  as a result of future  leasing  activity  at  Plainview
Center,  roof replacements at Peachtree Corporate Center and tenant improvements
at NTS 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 $700,000,  will likely be needed for leasing expenses;
especially those needed to refinish space

                                       14

<PAGE>

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

for  new  tenants.  As of  June  30,  2000,  the  Partnership  had  no  material
commitments for tenant finish improvements.  The demand on future liquidity will
be managed by the General  Partner  through funds from operations and additional
borrowings secured by the Partnership's properties.

On May 9, 2000,  the  Partnership  increased  the  mortgage  payable  secured by
Plainview  Center from  $2,000,000 to $3,500,000  and extended the maturity date
from  March 1,  2001 to  March 1,  2002.  These  funds  will be used to meet the
demands discussed above and to fund an approximate  $256,600 tenant  improvement
commitment  made by the  Partnership  subsequent to June 30, 2000. (See Notes to
Financial  Statements  - Note  12).  This  commitment  is for a  portion  of the
estimated $700,000 necessary.

Due to the fact that no distributions were made during the six months ended June
30, 2000 or 1999, the table which  represents  that portion of the  distribution
that represents a return of capital on a GAAP basis has been omitted.

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.  NTS Development  Company's  marketing
staff located in Louisville,  Kentucky also  coordinates all advertising for the
Louisville Properties.

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.














                                       15

<PAGE>


Item 3.  Quantitative and Qualitative Disclosures about Market Risk
         ----------------------------------------------------------

Our primary market risk exposure with regard 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  mortgage  payable,  which the  Partnership
obtained  on May 9, 2000.  At June 30,  2000,  a  hypothetical  100 basis  point
increase in interest rates would increase  interest expense on the variable rate
mortgage  by  approximately  $21,840.  The  same  increase  would  result  in an
approximate  $326,700  decrease  in the  fair  value  of all  debt  held  by the
Partnership.





































                                       16

<PAGE>

PART II.          OTHER INFORMATION
                  -----------------

Item 1.           Legal Proceedings
                  -----------------

                  Not applicable.

Item 2.           Changes in Securities
                  ---------------------

                  Not applicable.

Item 3.           Defaults Upon Senior Securities
                  -------------------------------

                  Not applicable.

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

                  Not applicable.

Item 5.           Other Information
                  -----------------

                  Not applicable.

Item 6.           Exhibits and Reports on Form 8-K
                  --------------------------------

                  a)       Exhibits:

                           Exhibit 27.      Financial Data Schedule

                  b)       Reports on Form 8-K:

                           Not applicable.















                                       17

<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: August 11, 2000

                                       18
<PAGE>