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               March 31, 2001
                              --------------------------------------------------

                                       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                    (I.R.S. Employer
of incorporation or organization)                Identification No.)

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

                                 (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 March 31, 2001 and December 31, 2000     3

             Statement of Partners' Equity as of March 31, 2001            3

             Statements of Operations for the Three Months Ended
                      March 31, 2001 and 2000                              4

             Statements of Cash Flows for the Three Months Ended
                      March 31, 2001 and 2000                              5

             Notes to Financial Statements                                 6-9

Item 2.      Management's Discussion and Analysis of Financial
                      Condition and Results of Operations                  10-14

Item 3.      Quantitative and Qualitative Disclosures About Market Risk    15

                                     PART II
                                     -------

Item 1.      Legal Proceedings                                             16

Item 2.      Changes in Securities                                         16

Item 3.      Defaults Upon Senior Securities                               16

Item 4.      Submission of Matters to a Vote of Security Holders           16

Item 5.      Othcer Information                                            16

Item 6.      Exhibits and Reports on Form 8-K                              16

Signatures                                                                 17


                                        2


<PAGE>



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

<TABLE>

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

<CAPTION>

                                                                                As of                   As of
                                                                            March 31, 2001        December 31, 2000*
                                                                        ----------------------  ----------------------
                                                                             (UNAUDITED)
<S>                                                                    <C>                     <C>
ASSETS
------
Cash and equivalents                                                   $               367,097 $                45,164
Cash and equivalents - restricted                                                       25,872                   4,923
Accounts receivable, net of allowance for doubtful
   accounts of $0 at March 31, 2001 and December 31, 2000                              541,582                 417,500
Land, buildings and amenities, net                                                  10,892,093              11,000,173
Other assets                                                                           461,830                 480,521
                                                                        ----------------------  ----------------------

     TOTAL ASSETS                                                      $            12,288,474 $            11,948,281
                                                                        ======================  ======================

LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgages payable                                                      $             8,903,004 $             8,716,153
Accounts payable                                                                       137,654                 228,959
Security deposits                                                                      132,624                 136,837
Other liabilities                                                                      107,154                  21,029
                                                                        ----------------------  ----------------------

     TOTAL LIABILITIES                                                               9,280,436               9,102,978

COMMITMENTS AND CONTINGENCIES (Note 9)

PARTNERS' EQUITY                                                                     3,008,038               2,845,303
                                                                        ----------------------  ----------------------

TOTAL LIABILITIES AND PARTNERS' EQUITY                                 $            12,288,474 $            11,948,281
                                                                        ======================  ======================
</TABLE>


<TABLE>

                                         STATEMENT OF PARTNERS' EQUITY / (DEFICIT)
                                         -----------------------------------------

<CAPTION>
                                                           Limited                General
                                                           Partners               Partner                 Total
                                                     --------------------   --------------------   --------------------
<S>                                                 <C>                    <C>                    <C>
PARTNERS' EQUITY/(DEFICIT)
--------------------------
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                                           (474,628)            (2,639,679)            (3,114,307)
Net income (loss) - current year                                  178,158                (15,424)               162,734
Cash distributions declared to date                           (11,349,844)              (206,985)           (11,556,829)
Repurchase of limited partnership Units                          (668,240)                    --               (668,240)
                                                     --------------------   --------------------   --------------------

BALANCES AT MARCH 31, 2001                          $           3,285,446  $            (277,408) $           3,008,038
                                                     ====================   ====================   ====================

</TABLE>


*    Reference is made to the audited  financial  statements in the Form 10-K as
     filed with the Securities and Exchange Commission on April 2, 2001.

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
                                                                                           March 31,
                                                                      ---------------------------------------------------
                                                                                2001                       2000
                                                                      -------------------------  ------------------------
<S>                                                                  <C>                        <C>
REVENUES
--------
Rental income                                                        $                  874,123 $                 785,246
Rental income - affiliated                                                               73,834                    73,834
Interest and other income                                                               159,134                     2,215
                                                                      -------------------------  ------------------------

     TOTAL REVENUES                                                                   1,107,091                   861,295
                                                                      -------------------------  ------------------------

EXPENSES
--------
Operating expenses                                                                      213,857                   216,838
Operating expenses - affiliated                                                          98,073                    83,163
Loss on disposal of assets                                                                   --                       105
Interest expense                                                                        168,146                   148,640
Management fees                                                                          45,468                    41,844
Real estate taxes                                                                        54,273                    53,220
Professional and administrative expenses                                                 16,294                    20,079
Professional and administrative expenses - affiliated                                    30,045                    27,476
Depreciation and amortization                                                           318,201                   307,179
                                                                      -------------------------  ------------------------

     TOTAL EXPENSES                                                                     944,357                   898,544
                                                                      -------------------------  ------------------------

Net income (loss)                                                    $                  162,734 $                 (37,249)
                                                                      =========================  ========================

Net income (loss) allocated to the limited partners                  $                  178,158 $                 (19,301)
                                                                      =========================  ========================

Net income (loss) per limited partnership Unit                       $                    14.06 $                  (1.51)
                                                                      =========================  ========================

Weighted average number of limited partnership Units                                     12,670                    12,770
                                                                      =========================  ========================

</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>

                                                                                              Three Months Ended
                                                                                                   March 31,
                                                                                    ---------------------------------------
                                                                                           2001                 2000
                                                                                    -------------------  ------------------
<S>                                                                                <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
Net income (loss)                                                                  $            162,734 $           (37,249)
Adjustments to reconcile net income (loss) to net cash provided by
  operating activities:
    Provision for doubtful accounts                                                               3,508                 745
    Write-off of uncollectible accounts receivable                                               (3,508)                 --
    Loss on disposal of assets                                                                       --                 105
    Depreciation and amortization                                                               347,295             328,662
    Changes in assets and liabilities:
      Cash and equivalents - restricted                                                         (20,949)            (14,769)
      Accounts receivable                                                                      (124,082)            102,941
      Other assets                                                                              (15,730)            (41,167)
      Accounts payable                                                                          (91,305)           (604,915)
      Security deposits                                                                          (4,213)               (842)
      Other liabilities                                                                          86,125              64,526
                                                                                    -------------------  ------------------

     Net cash provided by operating activities                                                  339,875            (201,963)
                                                                                    -------------------  ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings and amenities                                                     (204,793)            (87,109)
                                                                                    -------------------  ------------------

     Net cash used in investing activities                                                     (204,793)            (87,109)
                                                                                    -------------------  ------------------

CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Increase in mortgages payable                                                                   280,718             353,766
Principal payments on mortgages payable                                                         (93,867)            (59,626)
                                                                                    -------------------  ------------------

     Net cash provided by financing activities                                                  186,851             294,140
                                                                                    -------------------  ------------------

     Net increase in cash and equivalents                                                       321,933               5,068

CASH AND EQUIVALENTS, beginning of period                                                        45,164             104,532
                                                                                    -------------------  ------------------

CASH AND EQUIVALENTS, end of period                                                $            367,097 $           109,600
                                                                                    ===================  ==================

Interest paid on a cash basis                                                      $            161,773 $           146,060
                                                                                    ===================  ==================

</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  NTS-Properties  III's (the "Partnership") 2000 Form 10-K as filed with the
Securities  and  Exchange  Commission  on April 2, 2001.  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 ended March 31, 2001 and 2000.

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 2000 Financial Statements
          ---------------------------------------------

          Certain  reclassifications  have  been  made  to the  March  31,  2000
          financial statements to conform to the March 31, 2001 classifications.
          These   reclassifications   have  no  effect  on  previously  reported
          operations.

5.        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.


                                        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 by  management  during the periods ended
          March 31, 2001 and 2000 did not result in an impairment loss.

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

          Mortgages payable consist of the following:

<TABLE>

                                                                March 31, 2001            December 31, 2000
                                                           -------------------------   ------------------------

          <S>                                             <C>                         <C>
          Mortgage payable to an insurance company
          bearing interest at 6.89%, due April
          10, 2015, secured by land
          and buildings.                                  $                6,118,981  $               6,182,848


          Mortgage payable to a bank bearing a variable
          interest rate of Prime -0.25%, due March 1, 2002,
          secured by land and a building. The current rate
          at March 31, 2001 is 8.25%.                                      2,784,023                  2,533,305
                                                           -------------------------   ------------------------

                                                          $                8,903,004  $               8,716,153
                                                           =========================   ========================

</TABLE>


          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 $8,666,000.

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 costs  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 three  months  ended  March 31,  2001 and 2000.  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.


                                        7


<PAGE>



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

<TABLE>

                                                                                  Three Months Ended
                                                                                       March 31,
                                                                     ---------------------------------------------
                                                                             2001                     2000
                                                                     --------------------      -------------------
<S>                                                               <C>                       <C>
Property management fees                                          $                45,468   $               41,844
                                                                     --------------------      -------------------

Property management                                                                70,913                   49,008
Leasing                                                                            18,235                   25,979
Administrative - operating                                                          7,425                    7,425
Other                                                                               1,500                      751
                                                                     --------------------      -------------------

     Total operating expenses - affiliated                                         98,073                   83,163
                                                                     --------------------      -------------------

Professional and administrative expenses - affiliated                              30,045                   27,476
                                                                     --------------------      -------------------

Repairs and maintenance fee                                                         9,506                    6,679
Leasing commissions                                                                 5,701                   21,548
                                                                     --------------------      -------------------

     Total related party transactions capitalized                                  15,207                   28,227
                                                                     --------------------      -------------------

Total related party transactions                                  $               188,793   $              180,710
                                                                     ====================      ===================

</TABLE>


          During the three months ended March 31, 2001 and 2000, NTS Development
          Company  leased  20,368  square  feet in NTS  Center at a rental  rate
          $14.50 per square foot.  The  Partnership  received  $73,800 in rental
          payments from NTS  Development  Company  during the three months ended
          March 31, 2001 and 2000.  The lease term for NTS  Development  Company
          ends on March 31, 2004.

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 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 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 $368,000,  will likely be needed for
          leasing  expenses;  especially  those needed to refinish space for new
          tenants.

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

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










                                        9


<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. The 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 the 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.


                                       10


<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 March 31 were as
follows:


<TABLE>
                                                                                        Three Months Ended March 31,
                                                                            -----------------------------------------------------
                                                                                    2001(1)                        2000
                                                                            -----------------------       -----------------------
<S>                                                                                   <C>                          <C>
NTS Center (2)                                                                        93%                          100%
Plainview Center (3)                                                                  70%                           48%
Peachtree Corporate Center (2)                                                        82%                           83%

</TABLE>


(1)  Current occupancy levels are considered  adequate to continue the operation
     of the Partnership's properties without additional financing.
(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.
(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.  During the third quarter of 2000, a
     current tenant signed a lease expanding their space by approximately 19,000
     square feet.  The  expansion  took place on November 15, 2000 and increased
     the occupancy at Plainview Center to 67%.

The average  occupancy levels at the  Partnership's  properties during the three
months ended March 31 were as follows:


<TABLE>

                                                                                        Three Months Ended March 31,
                                                                            -----------------------------------------------------
                                                                                     2001                          2000
                                                                            -----------------------       -----------------------
<S>                                                                                   <C>                          <C>
NTS Center (1)                                                                        93%                          100%
Plainview Center                                                                      69%                           48%
Peachtree Corporate Center                                                            83%                           81%

</TABLE>


(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 ended March 31, 2001 and 2000 were as follows:


<TABLE>

                                                                                      Three Months Ended March 31,
                                                                          ----------------------------------------------------
                                                                                   2001                         2000
                                                                          -----------------------      -----------------------
<S>                                                                     <C>                          <C>
NTS Center                                                              $                 341,859    $                 379,051
Plainview Center                                                        $                 291,819    $                 171,873
Peachtree Corporate Center                                              $                 316,312    $                 311,218

</TABLE>


                                       11


<PAGE>



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

The following is an analysis of material  changes in results of  operations  for
the periods  ending March 31, 2001 and 2000.  Items that did not have a material
impact on operations  for the periods  listed above have been excluded from this
discussion.

Rental  income  increased  approximately  $89,000,  or 11%, for the three months
ended March 31,  2001,  as compared to the same period in 2000,  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 ended March 31, 2001 and 2000.  As of March 31, 2001,  no action is being
taken against any tenants to collect funds through the remedies discussed above.

Other income increased  approximately  $156,000 for the three months ended March
31, 2001, as a result of a one time settlement of certain claims in favor of the
Partnership.

Operating expenses - affiliated increased approximately $15,000, or 18%, for the
three months ended March 31, 2001,  as compared to the same period in 2000.  The
increase is due  primarily to increased  employee  costs at Peachtree  Corporate
Center.  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  $19,500, or 13%, for the three months
ended March 31, 2001, as compared to the same period in 2000, 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
-0.25%.  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 $3,800, or 19%,
for the three  months  ended March 31,  2001,  as compared to the same period in
2000. The decrease is primarily a result of decreased processing fees.

Professional and administrative  expenses - affiliated  increased  approximately
$2,600,  or 9%, for the three months  ended March 31,  2001,  as compared to the
same  period  in  2000,  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.


                                       12


<PAGE>



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

Depreciation and amortization  increased  approximately  $11,000, or 4%, for the
three months ended March 31, 2001, respectively,  as compared to the same period
in 2000, 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.  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 cost of the  Partnership's  properties for federal tax purposes is
approximately $27,617,578.

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

Cash flows provided by (used in):

<TABLE>

                                                                                     Three Months Ended March 31,
                                                                        ------------------------------------------------------
                                                                                  2001                          2000
                                                                        ------------------------      ------------------------
<S>                                                                   <C>                           <C>
Operating activities                                                  $                  339,875    $                 (201,963)
Investing activities                                                                    (204,793)                      (87,109)
Financing activities                                                                     186,851                       294,140
                                                                        ------------------------      ------------------------

     Net increase in cash and equivalents                             $                  321,933    $                    5,068
                                                                        ========================      ========================

</TABLE>


Net cash provided by operating activities increased  approximately  $542,000 for
the three months  ended March 31, 2001,  as compared to the same period in 2000.
This increase was primarily  driven by a reduction in accounts  payable prior to
March 31, 2000 and higher income before depreciation.

Net cash used in investing activities increased  approximately  $118,000 for the
three months ended March 31, 2001,  as compared to the same period in 2000.  The
increase is a result of increased capital expenditures.

Net cash provided by financing activities decreased  approximately  $107,000 for
the three months  ended March 31, 2001,  as compared to the same period in 2000.
The  decrease is the 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 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 March 31, 2001 were $367,097.

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 $368,000,  will likely be needed for leasing expenses;
especially those needed to refinish space for new tenants.


                                       13


<PAGE>



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

Due to the fact that no  distributions  were made during the three  months ended
March  31,  2001  or  2000,  the  table  which  presents  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 off-site leasing agent 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,  who are  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.  These lease  provisions  should  protect the
Partnership's operations from the impact of inflation and changing prices.










                                       14


<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 March 31,  2001,  a  hypothetical  100 basis point
increase in interest rates would increase  interest expense on the variable rate
mortgage by  approximately  $28,000 per year and  decrease the fair value of the
debt approximately $333,000.










                                       15


<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)       Reports on Form 8-K:

                           Not applicable.










                                       16


<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: May 11, 2001










                                       17


<PAGE>