<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               September 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 September 30, 2000 and December 31, 1999          3

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

        Statements of Operations for the three months and nine months
          ended September 30, 2000 and 1999                                    4

        Statements of Cash Flows for the nine months ended
          September 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                              11-16

Item 3. Quantitative and Qualitative Disclosures About Market Risk            17


                                     PART II
                                     -------

Item 1. Legal Proceedings                                                     18

Item 2. Changes in Securities                                                 18

Item 3. Defaults Upon Senior Securities                                       18

Item 4. Submission of Matters to a Vote of Security Holders                   18

Item 5. Other Information                                                     18

Item 6. Exhibits and Reports on Form 8-K                                      18

Signatures                                                                    19


                                        2


<PAGE>

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

<TABLE>
                               NTS-PROPERTIES III
                               ------------------
                                 BALANCE SHEETS
                                 --------------

<CAPTION>

                                                         As of         As of
                                                     September 30,  December 31,
                                                          2000         1999*
                                                      -----------   ------------
                                                       (UNAUDITED)
ASSETS
------
<S>                                                   <C>            <C>
Cash and equivalents                                  $   140,589    $   104,532
Cash and equivalents - restricted                          77,380          8,073
Accounts receivable, net of allowance for doubtful
  accounts of $463 at September 30, 2000 and
  $15,512 at December 31, 1999                            355,714        404,773
Land, buildings and amenities, net                     11,104,905     11,316,969
Other assets                                              497,503        492,259
                                                       ----------     ----------
     TOTAL ASSETS                                     $12,176,091    $12,326,606
                                                       ==========     ==========

LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgages payable                                     $ 8,483,633    $ 8,073,856
Accounts payable                                          520,791        890,032
Security deposits                                         130,081        142,573
Other liabilities                                         152,278         43,995
                                                       ----------     ----------
     TOTAL LIABILITIES                                  9,286,783      9,150,456

COMMITMENTS AND CONTINGENCIES (Note 10)

PARTNERS' EQUITY                                        2,889,308      3,176,150
                                                       ----------     ----------
TOTAL LIABILITIES AND PARTNERS' EQUITY                $12,176,091    $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                     (231,248)      (55,595)     (286,843)
Cash distributions declared to date      (11,349,844)     (206,985)  (11,556,829)
Repurchase of Limited Partnership Units     (643,240)            -      (643,240)
                                         -----------   -----------   -----------
BALANCES AT September 30, 2000          $  3,133,523  $   (244,215) $  2,889,308
                                         ===========   ===========   ===========

</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       Nine Months Ended
                                                 September 30,           September 30,
                                                 -------------           -------------
                                               2000        1999        2000       1999
                                               ----        ----        ----       ----

REVENUES
--------
<S>                                        <C>         <C>         <C>         <C>
Rental income                              $  752,542  $  656,889  $2,311,986  $2,093,487
Rental income - affiliated                     73,834      73,834     221,503     221,503
Interest and other income                       6,272       3,973      14,553       8,524
                                            ---------   ---------   ---------   ---------
     TOTAL REVENUES                           832,648     734,696   2,548,042   2,323,514
                                            ---------   ---------   ---------   ---------
EXPENSES
--------
Operating expenses                            255,345     248,921     725,592     712,218
Operating expenses - affiliated               102,115     115,650     274,014     360,907
Loss on disposal of assets                        515     286,123         783     290,542
Interest expense                              161,287     131,832     466,275     368,635
Management fees                                38,569      39,446     123,605     116,688
Real estate taxes                              53,220      57,924     159,660     159,681
Professional and administrative expenses       21,758      41,069      61,468     100,808
Professional and administrative expenses
  - affiliated                                 29,275      24,028      90,842      77,595
Depreciation and amortization                 315,118     275,208     932,646     767,409
                                            ---------   ---------   ---------   ---------
     TOTAL EXPENSES                           977,202   1,220,201   2,834,885   2,954,483
                                            ---------   ---------   ---------   ---------
Net loss                                   $ (144,554) $ (485,505) $ (286,843) $ (630,969)
                                            =========   =========   =========   =========

Net loss allocated to the Limited Partners $ (125,528) $ (463,167) $ (231,248) $ (563,335)
                                            =========   =========   =========   =========

Net loss per Limited Partnership Unit      $    (9.83) $   (34.90) $   (18.11) $   (42.42)
                                            =========   =========   =========   =========
Weighted average number of Limited
   Partnership Units                           12,770      13,270      12,770      13,281
                                            =========   =========   =========   =========

</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>

                                                         Nine Months Ended
                                                            September 30,
                                                            -------------
                                                          2000           1999
                                                          ----           ----

CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S>                                                   <C>           <C>
Net loss                                              $  (286,843)  $  (630,969)
Adjustments to reconcile net loss to net cash
  provided by operating activities:
    Provision for doubtful accounts                         5,762        16,954
    Write-off of uncollectible accounts receivable        (20,811)            -
    Loss on disposal of assets                                783       290,542
    Depreciation and amortization                         932,646       767,409
    Changes in assets and liabilities:
      Cash and equivalents - restricted                   (44,307)      (40,599)
      Accounts receivable                                  64,108       (13,298)
      Other assets                                        (26,187)     (105,053)
      Accounts payable                                   (369,241)      208,002
      Security deposits                                   (12,492)       41,550
      Other liabilities                                   108,283        85,883
                                                       ----------    ----------
     Net cash provided by operating activities            351,701       620,421
                                                       ----------    ----------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings, and amenities              (689,786)   (1,603,665)
                                                       ----------    ----------
     Net cash used in investing activities               (689,786)   (1,603,665)
                                                       ----------    ----------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Increase in mortgages payable                             651,772     1,288,527
Principal payments on mortgages payable                  (241,995)     (169,912)
Increase in loan costs                                    (10,635)      (18,107)
Repurchase of Limited Partnership Units                         -      (125,000)
Increase in cash and equivalents - restricted             (25,000)            -
                                                       ----------    ----------
     Net cash provided by financing activities            374,142       975,508
                                                       ----------    ----------
     Net increase (decrease) in cash and equivalents       36,057        (7,736)

CASH AND EQUIVALENTS, beginning of period                 104,532       233,844
                                                       ----------    ----------
CASH AND EQUIVALENTS, end of period                   $   140,589   $   226,108
                                                       ==========    ==========

Interest paid on a cash basis                         $   460,662   $   360,850
                                                       ==========    ==========

</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 nine months ended September 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  September  30,  1999 and
     December 31, 1999 financial statements to conform to the September 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 and funds  reserved by the
     Partnership  for the  purchase  of Limited  Partnership  Units  through the
     tender offer. (See Notes to Financial Statements - Note 7).



                                        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  September 30, 2000 and 1999 did not result in any
     impairment loss.

7.   Tender Offer
     ------------

     On September 21, 2000, the  Partnership  and ORIG, LLC, an affiliate of the
     Partnership,  filed a tender offer (the "Tender Offer") with the Securities
     and Exchange  Commission,  commencing on September 20, 2000, to purchase up
     to 200 of the  Partnership's  Limited  Partnership Units at a price of $250
     per Unit.  Under the Tender Offer,  the Partnership will purchase the first
     100  Units  tendered  and will fund its  purchase  and its  portion  of the
     expenses from cash reserves. If more than 100 Units are tendered, ORIG, LLC
     will  purchase up to an  additional  100 Units.  If more than 200 Units are
     tendered,  the bidders may choose to acquire the additional  Units on a pro
     rata basis. The total costs of the Tender Offer are expected to be $60,000,
     consisting  of $50,000 to purchase 200 Units and $10,000 of  expenses.  The
     Partnership  expects  that its share of these  costs will be  approximately
     $30,000.  Units that are acquired by the Partnership will be retired. Units
     that are  acquired by ORIG,  LLC will be held by it. The  General  Partner,
     NTS-Properties  Associates,  does not intend to  participate  in the Tender
     Offer. The Tender Offer will expire on December 20, 2000 unless extended.

8.   Mortgages Payable
     -----------------

     Mortgages payable consist of the following:

<TABLE>

                                                     September 30,  December 31,
                                                         2000           1999
                                                         ----           ----
     <S>                                               <C>            <C>
     Mortgage payable to an insurance company
     bearing interest at 6.89%, due April 10, 2015,
     secured by land and buildings.                    $6,245,627     $6,427,622

     Mortgage payable to a bank bearing a variable
     interest rate of Prime minus 0.25%, due March 1,
     2002, secured by land and a building.
     The current rate at September 30, 2000 is 9.25%.   2,238,006      1,646,234
                                                        ---------      ---------

                                                       $8,483,633     $8,073,856
                                                        =========      =========

</TABLE>

                                       7

<PAGE>

8.   Mortgages Payable - Continued
     -----------------------------

     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 $7,886,000.

9.   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 nine  months  ended  September  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.

<TABLE>

                                                         Nine Months Ended
                                                            September 30,
                                                            -------------

                                                        2000             1999
                                                        ----             ----

     <S>                                              <C>              <C>
     Property management fees                         $123,605         $116,688
                                                       -------          -------

       Total property management fees                  123,605          116,688
                                                       -------          -------

     Property management                               154,182          186,076
     Leasing                                            89,816          149,389
     Administrative - operating                         22,275           23,192
     Other                                               7,741            2,250
                                                       -------          -------

       Total operating expenses - affiliated           274,014          360,907
                                                       -------          -------

     Administrative - professional                      90,842           77,595
                                                       -------          -------

       Total professional and
        administrative expenses - affiliated            90,842           77,595
                                                       -------          -------

     Repairs and maintenance fee                        46,362           77,752
     Leasing commissions                                66,764           56,088
     Construction management                                62            5,350
                                                       -------          -------

       Total related party transactions capitalized    113,188          139,190
                                                       -------          -------

     Total related party transactions                 $601,649         $694,380
                                                       =======          =======

</TABLE>

     During the nine months ended  September 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 $221,503 in rental payments from NTS
     Development  Company  during the nine months ended  September  30, 2000 and
     1999. The lease term for NTS Development Company ends on March 31, 2004.

                                        8

<PAGE>

9.   Related Party Transactions - Continued
     --------------------------------------

     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.

10.  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.

     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.

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

                                        9

<PAGE>

10.  Commitments and Contingencies - Continued
     -----------------------------------------

     On July 17,  2000,  the  Partnership  made a commitment  for  approximately
     $257,000 for tenant  improvements at Plainview  Center.  This commitment is
     for a portion of the estimated  $700,000  necessary for leasing expenses 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
     expected to take place November 15, 2000 and will increase the occupancy of
     Plainview Center from 49% to 67%.

11.  Segment Reporting
     -----------------

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

                                        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 September 30 were as
follows:

<TABLE>

                                         Nine Months Ended September 30,
                                         -------------------------------
                                            2000 (1)             1999
                                            --------             ----

  <S>                                         <C>                <C>
  NTS Center (2)                              95%                100%
  Plainview Center (3)                        49%                 23%
  Peachtree Corporate Center                  79%                 82%

</TABLE>

(1)  With the  exception  of  Plainview  Center,  current  occupancy  levels are
     considered   adequate  to  continue  the  operation  of  the  Partnership's
     properties without additional financing. 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.
(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,  a current
     tenant signed a lease expanding their space by approximately  19,000 square
     feet. The expansion is expected to take place on November 15, 2000 and will
     increase the occupancy at Plainview Center to 67%.

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

<TABLE>

                                      Three Months Ended     Nine Months Ended
                                        September 30,          September 30,
                                        -------------          -------------
                                       2000      1999        2000         1999
                                       ----      ----        ----         ----

  <S>                                   <C>      <C>          <C>         <C>
  NTS Center (1)                        95%      100%         97%         100%
  Plainview Center                      48%       23%         48%          27%
  Peachtree Corporate Center (1)        79%       81%         79%          84%

</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 and nine months ended September 30, 2000 and 1999 were as follows:

<TABLE>

                                 Three Months Ended          Nine Months Ended
                                    September 30,               September 30,
                                    -------------               -------------
                                  2000        1999           2000        1999
                                  ----        ----           ----        ----

  <S>                          <C>         <C>            <C>         <C>
  NTS Center                   $  348,965  $  354,242     $1,112,689  $1,127,573
  Plainview Center             $  172,057  $   81,955     $  516,261  $  285,769
  Peachtree Corporate Center   $  309,646  $  294,142     $  916,887  $  903,725

</TABLE>

                                       12

<PAGE>

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

The following is an analysis of material  changes in results of  operations  for
the  periods  ending  September  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  $98,000 or 13% and $225,000 or
10% for the three months and nine months ended September 30, 2000, respectively,
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 nine months ended  September  30, 2000 and 1999.  As of September 30,
2000,  no action is being taken against any tenants to collect funds through the
remedies discussed above.

Operating  expenses  -  affiliated  decreased  approximately  $14,000 or 12% and
$87,000 or 24% for the three  months and nine months ended  September  30, 2000,
respectively,  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.

The 1999 loss on disposal of assets can be  attributed to common area and tenant
renovations at Plainview  Center during the third quarter of 1999. The 2000 loss
is not material.

Interest expense increased  approximately  $29,000 or 22% and $98,000 or 27% for
the three months and nine months ended  September  30,  2000,  respectively,  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  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 $19,000 or 47%
and $39,000 or 39% for the three  months and nine  months  ended  September  30,
2000,  respectively,  as compared to the same  periods in 1999.  The decrease is
primarily a result of decreased  costs  incurred for legal and  accounting  fees
related to the September 30, 1998 tender offer, which expired March 31, 1999.

                                       13

<PAGE>

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

Professional and administrative  expenses - affiliated  increased  approximately
$5,000 or 22% and  $13,000  or 17% for the three  months and nine  months  ended
September 30, 2000, respectively,  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.

Depreciation  and  amortization  increased  approximately  $40,000  or  15%  and
$165,000 or 22% for the three months and nine months ended  September  30, 2000,
respectively,  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:

<TABLE>

                                                          Nine Months Ended
                                                             September 30,
                                                             -------------
                                                        2000             1999
                                                        ----             ----

<S>                                                <C>              <C>
Operating activities                               $   351,701      $   620,421
Investing activities                                  (689,786)      (1,603,665)
Financing activities                                   374,142          975,508
                                                    ----------       ----------

   Net increase (decrease) in cash and equivalents $    36,057      $    (7,736)
                                                    ==========       ==========

</TABLE>

Net cash provided by operating activities decreased  approximately  $269,000 for
the nine months  ended  September  30,  2000,  as compared to the same period in
1999.  This  decrease  was  primarily  driven by a decrease in accounts  payable
offset by increased depreciation and higher income before depreciation.

Net cash used in investing activities decreased  approximately  $914,000 for the
nine months ended  September  30, 2000,  as compared to the same period in 1999.
The decrease  was due to a decrease in the amount of funds used for  renovations
at all of the Partnership's properties.

Net cash provided by financing activities decreased  approximately  $601,000 for
the nine months  ended  September  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, due to a decrease in renovations  and tenant finish
activity.

                                       14

<PAGE>

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

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 September 30, 2000 were $140,589.

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 for new tenants.

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 additional funds will be used to meet
the demands  discussed  above. The Peachtree Center roof replacement is expected
to cost approximately $500,000 and is to be complete in 2001.

On July 17, 2000, the Partnership made a commitment for  approximately  $257,000
for tenant improvements at Plainview Center. This commitment is for a portion of
the estimated  $700,000  necessary for leasing expenses 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 expected to take place November 15, 2000 and
will increase the  occupancy of Plainview  Center from 49% to 67%. 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.

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

On  September  21,  2000,  the  Partnership  and ORIG,  LLC, an affiliate of the
Partnership,  filed a tender offer (the "Tender  Offer") with the Securities and
Exchange Commission,  commencing on September 20, 2000, to purchase up to 200 of
the Partnership's  Limited  Partnership Units at a price of $250 per Unit. Under
the Tender Offer, the Partnership will purchase the first 100 Units tendered and
will fund its purchase and its portion of the expenses  from cash  reserves.  If
more than 100 Units are  tendered,  ORIG,  LLC will purchase up to an additional
100  Units.  If more than 200 Units are  tendered,  the  bidders  may  choose to
acquire the additional  Units on a pro rata basis. The total costs of the Tender
Offer are  expected to be $60,000,  consisting  of $50,000 to purchase 200 Units
and $10,000 of expenses.  The Partnership  expects that its share of these costs
will be approximately  $30,000.  Units that are acquired by the Partnership will
be retired. Units that are acquired by ORIG, LLC will be held by it. The General
Partner,  NTS-  Properties  Associates,  does not intend to  participate  in the
Tender Offer. The Tender Offer will expire on December 20, 2000 unless extended.

                                       15

<PAGE>

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

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.

                                       16

<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 September 30, 2000, a  hypothetical  100 basis point
increase in interest rates would increase  interest expense on the variable rate
mortgage by  approximately  $22,000 per year and  decrease the fair value of the
debt approximately $320,000.

<PAGE>

                                       17


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.

                                       18

<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
                                      ------------------------------------------
                                      Senior Vice President and
                                      Chief Financial Officer of
                                      NTS Capital Corporation



Date: November 13, 2000

                                       19

<PAGE>