<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                    March 31, 2000
                              --------------------------------------------------

                                       OR


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


For the transition period from                       to
                              -----------------------  -------------------------

Commission File Number                          0-11176
                      ----------------------------------------------------------

                               NTS-PROPERTIES III
--------------------------------------------------------------------------------
           (Exact name of the 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, KY                                      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 the 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.

                                                               YES  X   NO
                                                                   -----   -----

<PAGE>


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


                                     PART I


                                                                           Pages

Item 1.   Financial Statements

          Balance Sheets and Statement of Partners' Equity
            as of March 31, 2000 and December 31, 1999                         3

          Statements of Operations
            for the three months ended March 31, 2000 and 1999                 4

          Statements of Cash Flows
            for the three months ended March 31, 2000 and 1999                 5

          Notes to Financial Statements                                      6-9

Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations                            10-15

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.   Other 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 AND STATEMENTS OF PARTNERS' EQUITY
                -------------------------------------------------

<CAPTION>

                                                    As of               As of
                                              March 31, 2000   December 31,1999*
                                              --------------   -----------------
                                                (Unaudited)
ASSETS
------
<S>                                            <C>                   <C>
Cash and equivalents                           $   109,600           $   104,532
Cash and equivalents - restricted                   22,842                 8,073
Accounts receivable, net of allowance
 for doubtful accounts of $16,257 at
 March 31, 2000 and $15,512 at
 December 31, 1999                                 301,087               404,773
Land, buildings and amenities, net              11,106,725            11,316,969
Other assets                                       502,009               492,259
                                               -----------           -----------

 TOTAL ASSETS                                  $12,042,263           $12,326,606
                                               ===========           ===========


LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Mortgages payable                              $ 8,367,996           $ 8,073,856
Accounts payable                                   285,117               890,032
Security deposits                                  141,731               142,573
Other liabilities                                  108,517                43,995
                                               -----------           -----------

 TOTAL LIABILITIES                               8,903,361             9,150,456


COMMITMENTS AND CONTINGENCIES (Note 9)

Partners' equity                                 3,138,902             3,176,150
                                               -----------           -----------

 TOTAL LIABILITIES AND PARTNERS' EQUITY        $12,042,263           $12,326,606
                                               ===========           ===========
</TABLE>
<TABLE>


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

<CAPTION>

PARTNERS' EQUITY
----------------
<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)
                                  ------------     ------------     ------------

                                   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               (19,301)         (17,948)         (37,249)
Cash distributions declared
 to date                          (11,349,844)        (206,985)     (11,556,829)

Repurchase of Limited
 Partnership Units                   (643,240)            --           (643,240)
                                  ------------     ------------     ------------

Balances at March 31, 2000       $  3,345,470     $   (206,568)    $  3,138,902
                                  ============     ============     ============

</TABLE>

* Reference  is made to the  audited  financial  statements  in the Form 10-K as
filed with the 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
                            ------------------------

<CAPTION>

                                                       Three Months Ended
                                                            March 31,
                                                            ---------
                                                           (Unaudited)

                                                     2000               1999
                                                     ----               ----

REVENUES:
---------
<S>                                              <C>                <C>
Rental income, net of provision for
 doubtful accounts of $745 (2000) and
 $0 (1999)                                        $ 785,246          $ 749,865
 Rental income - affiliated                          73,834             73,834
 Interest and other income                            2,215               --
                                                   ---------          --------

                                                    861,295            823,699
                                                   ---------          ---------

EXPENSES:
---------
 Operating expenses                                 216,838            201,454
 Operating expenses - affiliated                     83,163            142,003
 Loss on disposal of assets                             105               --
 Interest expense                                   148,640            116,240
 Management fees                                     41,844             36,148
 Real estate taxes                                   53,220             51,561
 Professional and administrative expenses            20,079             29,053
 Professional and administrative
  expenses - affiliated                              27,476             29,742
 Depreciation and amortization                      307,179            254,122
                                                   ---------          ---------

                                                    898,544            860,323
                                                   ---------          ---------


Net loss                                          $ (37,249)         $ (36,624)
                                                   =========          =========

Net loss allocated to
 the Limited Partners                             $ (19,301)         $ (13,962)
                                                   =========          =========

Net loss per Limited
 Partnership Unit                                 $   (1.51)         $   (1.05)
                                                   =========          =========

Weighted average number of
 Limited Partnership Units                           12,770             13,303
                                                   =========          =========

</TABLE>

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

                                       4

<PAGE>

<TABLE>


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

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

<CAPTION>

                                                      Three Months Ended
                                                            March 31,
                                                            ---------
                                                           (Unaudited)

                                                    2000                1999
                                                    ----                ----

CASH FLOWS FROM OPERATING ACTIVITIES
------------------------------------
<S>                                              <C>                 <C>
Net loss                                         $ (37,249)          $ (36,624)
Adjustments to reconcile net income
 to net cash provided by operating
 activities:
  Provision for doubtful accounts                      745                --
  Loss on disposal of assets                           105                --
  Depreciation and amortization                    307,179             254,122
  Changes in assets and liabilities:
   Cash and equivalents - restricted               (14,769)            (13,533)
   Accounts receivable                             102,941             (41,240)
   Other assets                                    (19,684)            (46,970)
   Accounts payable                               (604,915)             53,099
   Security deposits                                  (842)              2,601
   Other liabilities                                64,526              36,290
                                                  ---------           ---------

Net cash (used in) provided by
 operating activities                             (201,963)            207,745
                                                  ---------           ---------

CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
Additions to land, buildings,
 amenities and construction in progress            (87,109)           (241,148)
                                                  ---------           ---------

Net cash used in investing activities              (87,109)           (241,148)
                                                  ---------           ---------

CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------
Increase in mortgage payable                       353,766             315,536
Principal payments on mortgages
 payable                                           (59,626)            (55,668)
Increase in loan costs                                --               (17,868)
Repurchase of Limited Partnership
 Units                                                --              (125,000)
Increase in cash and equivalents -
 restricted                                           --               125,000
                                                  ---------           ---------

Net cash provided by
 financing activities                              294,140             242,000
                                                  ---------           ---------

Net increase in cash and equivalents                 5,068             208,597
                                                  ---------           ---------

CASH AND EQUIVALENTS, beginning of
 period                                            104,532             233,844
                                                  ---------           ---------

CASH AND EQUIVALENTS, end of period              $ 109,600           $ 442,441
                                                  =========           =========

Interest paid on a cash basis                    $ 146,060           $ 114,334
                                                  =========           =========
</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 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 ended March 31, 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 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.  Substantially  all of the  Partnership's  tenants are
          local  businesses  or  are  businesses  that  have  operations  in the
          location in which they lease space.

4.        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.

5.        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 10-30 years
          for land improvements, 5-30 years for buildings and improvements, 5-30
          years  for  amenities  and  the  applicable   lease  term  for  tenant
          improvements.


                                        6
<PAGE>


5.        Basis of Property and Depreciation - Continued
          ----------------------------------------------

          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 market value.
          Application  of this standard  during the periods ended March 31, 2000
          and 1999 did not result in any impairment loss.

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

          Mortgages payable consist of the following:


                                                 March 31,          December 31,
                                                   2000                1999
                                                   ----                ----

          Mortgage payable to an insurance
          company bearing interest at
          6.89%, maturing April 10, 2015,
          secured by land and buildings       $   6,367,996        $   6,427,622

          Mortgage payable to a bank
          maturing March 1, 2001, secured
          by land and buildings, bearing a
          variable interest rate of prime
          minus .25%.  The current rate at
          March 31, 2000 is 8.75%                 2,000,000            1,646,234
                                              -------------        -------------

                                              $   8,367,996        $   8,073,856
                                              =============        =============

          Based on the borrowing  rates  currently  available to the Partnership
          for  mortgages  with similar  terms and average  maturities,  the fair
          value of long-term debt is approximately $7,756,000.

7.        Reclassification of 1999 Financial Statements
          ---------------------------------------------

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

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

          Property  management  fees of $41,844 and $36,148 for the three months
          ended  March  31,  2000  and  1999,  respectively,  were  paid  to NTS
          Development Company, an affiliate of the General Partner,  pursuant to
          an  agreement  with the  Partnership.  The fee is equal to 5% of gross
          revenues  from the  Partnership's  properties.  Also  permitted  by an
          agreement,   NTS  Development   Company  will  receive  a  repair  and
          maintenance  fee  equal  to 5.9% of  costs  which  relate  to  capital
          improvements.  The  Partnership  has  incurred  $6,679 and  $30,929 as
          repair and maintenance fees during the three months ended

                                        7

<PAGE>


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

          March 31, 2000 and 1999, respectively, and has capitalized these costs
          as a part  of  land,  buildings  and  amenities.  As  permitted  by an
          agreement, the Partnership was also charged the following amounts from
          NTS Development  Company for the three months ended March 31, 2000 and
          1999.  These  charges  include  items,  which  have been  expensed  as
          operating  expenses - affiliated or  professional  and  administrative
          expenses - affiliated,  and items that have been  capitalized as other
          assets or as land, buildings,  amenities and construction in progress.
          These charges were as follows:


                                              Three Months Ended
                                                   March 31,
                                                   ---------


                                            2000                1999
                                            ----                ----


          Leasing                        $  47,527          $   57,088
          Administrative                    34,901              37,194
          Property Management               49,007              69,660
          Other                                751              13,869
                                         ---------           ---------

                                         $ 132,186           $ 177,811
                                         =========           =========


          During the three months ended March 31, 2000 and 1999, NTS Development
          Company  leased  20,368  square  feet in NTS  Center at a rental  rate
          $14.50 per square foot. The Partnership received approximately $73,800
          in rental  payments  from NTS  Development  Company  during  the three
          months  ended  March  31,  2000  and  1999.  The  lease  term  for NTS
          Development Company ends on March 31, 2004.

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

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

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


                                        8

<PAGE>


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

          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.  See discussion below for information  regarding a commitment
          obtained by the  Partnership  to increase the note payable  secured by
          Plainview Center.

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

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

11.       Subsequent Event
          ----------------
          On May 9,  2000,  the  Partnership  obtained  a  loan  from a bank  to
          increase the $2,000,000  mortgage  payable secured by Plainview Center
          to  $3,500,000  and to extend the maturity  date from March 1, 2001 to
          March  1,  2002.  The  funds  will be used to fund  leasing  costs  at
          Plainview  Center as discussed above,  approximately  $600,000 in roof
          replacements at Peachtree Corporate Center and approximately  $200,000
          of tenant improvements at NTS Center.


                                        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.  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 judgment,  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 principal activity is the leasing and management of commercial
office buildings and a business center. If a major commercial tenant defaults on
its  lease,  the  Partnership's  ability  to make  payments  due  under its debt
agreements,  payment of operating costs and other partnership  expenses would be
directly  impacted.  A lessee's  ability to make  payments  are subject to risks
generally  associated with real estate,  many of which are beyond the control of
the Partnership,  including general or local economic  conditions,  competition,
interest rates, real estate tax rates, other operating expenses and acts of God.

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


                                       10

<PAGE>


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

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


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

       NTS Center                           100%                100%

       Plainview Center (2)                  48%                 35%

       Peachtree Corporate Center (3)        83%                 87%

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

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

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

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


                                               Three Months Ended
                                                   March 31,
                                                   ---------


                                            2000                1999
                                            ----                ----

       NTS Center                           100%                100%

       Plainview Center                      48%                 35%

       Peachtree Corporate Center (4)        81%                 88%

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

                                       11

<PAGE>


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

The rental and other income  generated by the  Partnership's  properties for the
three months ended March 31, 2000 and 1999 were as follows:


                                            Three Months Ended
                                                 March 31,
                                                 ---------


                                            2000                1999
                                            ----                ----

       NTS Center                        $ 379,051           $ 389,515

       Plainview Center                  $ 171,873           $ 126,226

       Peachtree Corporate Center        $ 311,218           $ 306,847

Rental  and other  income  increased  approximately  $38,000 or 5% for the three
months ended March 31, 2000,  as compared to the same period 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  ended  March 31,  2000 or 1999.  As of March 31, 2000 no action is being
taken against any tenants to collect funds through the remedies discussed above.

Operating  expenses increased  approximately  $15,000 or 8% for the three months
ended March 31,  2000,  as compared to the same period in 1999.  The increase is
due primarily to increased  landscape  maintenance  expenses at Plainview Center
and NTS Center and increased heating and air conditioning system replacements at
Peachtree Corporate Center.

Operating expenses - affiliated decreased  approximately  $59,000 or 41% for the
three months ended March 31, 2000,  as compared to the same period in 1999.  The
decrease  is  due  primarily  to  decreased  overhead  costs  allocated  to  the
Partnership  as a result of  personnel  status  changes.  Operating  expenses  -
affiliated  are expenses  incurred  for  services  performed by employees of NTS
Development Company, an affiliate of the General Partner.

Interest  expense  increased  approximately  $32,000 or 28% for the three months
ended March 31, 2000, as compared to the same period in 1999, as a result of the
$2,000,000  mortgage payable secured by Plainview Center in March 1999. The note
bears  interest at prime -.25%.  The  increase in interest  expense is partially
offset by principal  payments made on the Partnership's  mortgage secured by NTS
Center.


                                       12

<PAGE>

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

Professional and administrative  expenses decreased  approximately $9,000 or 31%
for the three  months  ended March 31,  2000,  as compared to the same period in
1999.  The decrease is primarily a result of decreased  costs incurred for legal
and accounting fees.

Depreciation and  amortization  increased  approximately  $53,000 or 21% for the
three months ended March 31, 2000,  as compared to the same period 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.  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
10-30 years for land  improvements,  5-30 years for buildings and  improvements,
5-30 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 $26,214,477.

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

Cash flows provided by (used in):


                                          2000                     1999
                                          ----                     ----


       Operating activities          $(201,963)               $ 207,745
       Investing activities            (87,109)                (241,148)
       Financing activities            294,140                  242,000
                                      ---------                ---------

       Net increase in cash and
        equivalents                  $   5,068                $ 208,597
                                      =========                =========

Net cash provided by operating activities decreased  approximately  $409,700 for
the three months  ended March 31, 2000,  as compared to the same period in 1999.
This decrease was primarily  driven by a decrease in accounts  payable offset by
decreased accounts receivable and higher income before depreciation.

Net cash used in investing activities decreased  approximately  $154,000 for the
three months ended March 31, 2000,  as compared to the same period in 1999.  The
decrease  was  primarily  due to  decreased  funds used for  renovations  at the
Partnership's properties.

Net cash provided by financing  activities increased  approximately  $52,000 for
the three months  ended March 31, 2000,  as compared to the same period in 1999.
The increase is the result of a new mortgage loan obtained March 2, 1999 to fund
renovations at Plainview Center.

The Partnership  indefinitely suspended distributions starting December 31, 1996
as a result of the anticipated  decrease in occupancy at Plainview Center.  Cash
reserves  (which  are  unrestricted   cash  and  equivalents  as  shown  on  the
Partnership's balance sheet) as of March 31, 2000 were $109,600.


                                       13

<PAGE>



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

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. As of March 31, 2000,
the Partnership had no material commitments for tenant finish improvements.  The
demand on future  liquidity will be managed by the General Partner through funds
from  operations  and  additional   borrowings   secured  by  the  Partnership's
properties (See Notes to Financial Statements "11. Subsequent Event").

Due to the fact that no  distributions  were made during the three  months ended
March  31,  2000 or 1999,  the  table,  which  represents  that  portion  of the
distribution,  that  represents  a return of  capital  on a  Generally  Accepted
Accounting Principle basis has been omitted.

The following  describes the efforts being taken by the  Partnership to increase
the occupancy levels at the  Partnership's  properties.  At Peachtree  Corporate
Center in Norcross,  Georgia,  the  Partnership has an on-site leasing agent, an
employee of NTS Development  Company (an affiliate of the General Partner),  who
makes calls to potential tenants, negotiates lease renewals with current tenants
and manages local  advertising with the assistance of NTS Development  Company's
marketing  staff.  The  leasing  and  renewal  negotiations  for NTS  Center and
Plainview  Center are handled by leasing  agents,  employees of NTS  Development
Company, located in Louisville,  Kentucky. The leasing agents are located in the
same city as both commercial  properties.  NTS Development  Company's  marketing
staff located in Louisville,  Kentucky also  coordinates all advertising for the
Louisville properties.

Leases at all the  Partnership's  properties  provide for tenants to  contribute
toward the payment of increases in common area maintenance expenses,  insurance,
utilities  and real  estate  taxes.  This lease  provision  should  protect  the
Partnership's operations from the impact of inflation and changing prices.

Year 2000
---------

During 1999, all divisions of NTS Corporation, including NTS-Properties III, the
General  Partner of the  Partnership,  reviewed the effort  necessary to prepare
NTS'  information  systems (IT) and  non-information  technology  with  embedded
technology  (ET) for the Year 2000. The  information  technology  solutions were
addressed  separately  for the Year 2000 since the  Partnership  saw the need to
move to more advanced  management and  accounting  systems made available by new
technology  and  software  development  during  the decade of the  1990's.  NTS'
property  management staff surveyed vendors to evaluate  embedded  technology in
our  alarm  systems,  HVAC  controls,   telephone  systems  and  other  computer
associated facilities.  Some equipment was replaced,  while others had circuitry
upgrades.


                                       14

<PAGE>

Year 2000 - Continued
---------------------

In 1999, the PILOT software system,  purchased in the early 1990's, was replaced
by a Windows based network system both for NTS' headquarters functions and other
locations.  The real estate accounting system developed,  sold, and supported by
the Yardi Company of Santa Barbara,  California replaced PILOT. The Yardi system
was fully  implemented and operational as of December 31, 1999.  There have been
no Year 2000 related problems with the system.

The costs of these advances in NTS' systems  technology are not all attributable
to the Year 2000 issue  since NTS had already  identified  the need to move to a
network based system regardless of the Year 2000. The Partnership's share of the
costs  involved were  approximately  $25,000  during 1999 and 1998.  These costs
include primarily purchase, lease and maintenance of hardware and software.

At the date of this filing the  Partnership  did not experience any  significant
operating issues relative to the Year 2000 issue. Despite diligent  preparation,
unanticipated  third-party  failures,  inability of our tenants to pay rent when
due, more general public  infrastructure  failures or failure of our remediation
efforts  as  planned  could have a  material  adverse  impact on our  results of
operations, financial conditions and/or cash flows in 2000 and beyond.

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

Our primary  market risk  exposure  with  regards to  financial  instruments  is
changes in interest  rates.  All of the  Partnership's  debt bears interest at a
fixed rate with the  exception of the  $2,000,000  mortgage  payable,  which the
Partnership  obtained on March 2, 1999.  At March 31, 2000, a  hypothetical  100
basis point  increase  in interest  rates  would  increase  interest  expense by
approximately $20,000, and would result in an approximately $330,000 decrease in
the fair value of the debt.


                                       15

<PAGE>


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

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

         None.

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

         None.

Item 6.  Exhibits and Reports on Form 8-K

         (a)     Exhibits

                 Exhibit 27. Financial Data Schedule.

         (b)     Reports of Form 8-K

                 None.

Items 1,2 and 4 are not applicable and have been omitted.



                                       16

<PAGE>

                                   SIGNATURES
                                   ----------

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  NTS-Properties III 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 12, 2000


                                       17