UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q

                                   (Mark one)

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

                 For the quarterly period ended March 31, 1999
                                                --------------
                                       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 Identification No.)
incorporation or organization)

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

Registrant's telephone number,
including area code                                  (502) 426-4800
                                                     --------------

                                 Not Applicable
                                 --------------
               Former name, former address and former fiscal year,
                          if changed since last report

Indicate by check mark whether the registrant (l) 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.
                                                      YES  X         NO
                                                          -----         -----

Exhibit Index: See page 16
Total Pages: 17





<PAGE>



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


                                                                          Pages
                                                                          -----

                                     PART I

Item 1.     Financial Statements

            Balance Sheets and Statement of Partners' Equity
              as of March 31, 1999 and December 31, 1998                    3

            Statements of Operations
              For the three months ended March 31, 1999 and 1998            4

            Statements of Cash Flows
              For the three months ended March 31, 1999 and 1998            5

            Notes To Financial Statements                                 6-9

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


                                     PART II

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 STATEMENT OF PARTNERS' EQUITY
                ------------------------------------------------
<CAPTION>

                                               As of                As of
                                           March 31, 1999     December 31, 1998*
                                           --------------     ------------------
ASSETS
<S>                                        <C>                <C>   
Cash and equivalents                       $    442,441       $    233,844
Cash and equivalents - restricted                27,883            139,350
Accounts receivable, net of allowance
 for doubtful accounts of $3,034 (1999
 and 1998)                                      225,567            184,327
Land, buildings and amenities, net            9,594,071          9,834,002
Construction in progress                        686,039            385,332
Other assets                                    449,642            393,301
                                            -----------        -----------

  Total assets                             $ 11,425,643       $ 11,170,156
                                            ===========        ===========

LIABILITIES AND PARTNERS' EQUITY

Mortgages payable                          $  6,916,013       $  6,656,145
Accounts payable - operations                    93,731             40,632
Accounts payable - construction                 245,528            180,272
Security deposits                               101,212             98,611
Other liabilities                               109,840             73,550
                                            -----------        -----------

                                              7,466,324          7,049,210
Commitments and Contingencies

Partners' equity                              3,959,319          4,120,946
                                            -----------        -----------

                                           $ 11,425,643       $ 11,170,156
                                            ===========        ===========
</TABLE>
<TABLE>
<CAPTION>
                                        Limited        General
                                        Partners       Partner         Total
                                        --------       -------         -----
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 income (loss) - prior years            374,637     (2,488,305)   (2,113,668)
Net (loss) - current year                  (13,962)       (22,662)      (36,624)
Cash distributions declared to
 date                                  (11,349,844)      (206,985)  (11,556,829)
Repurchase of limited partnership
 units                                    (518,240)          --        (518,240)
                                       ------------   ------------  ------------

Balances at March 31, 1999            $  4,092,591   $   (133,272) $  3,959,319
                                       ============   ============  ============
</TABLE>

*Reference is made to the audited financial statements in the Form 10-K as filed
with the Commission on March 31, 1999.

                                      - 3 -

<PAGE>


<TABLE>

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

                            STATEMENTS OF OPERATIONS
                            ------------------------
<CAPTION>


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

                                             1999                    1998
                                         ------------            ------------
Revenues:
<S>                                      <C>                     <C>  
 Rental income, net of provision for
  doubtful accounts of $ 0 (1999)
  and $5,700 (1998)                      $   749,865             $   846,996
 Rental income - affiliated                   73,834                  75,752
 Interest and other income                      --                     4,055
                                          -----------             ----------
                                             823,699                 926,803
Expenses:
 Operating expenses                          201,454                 218,329
 Operating expenses - affiliated             142,003                 122,713
 Amortization of capitalized leasing
  costs                                        6,370                   6,370
 Interest expense                            116,240                 122,863
 Management fees                              36,148                  48,442
 Real estate taxes                            51,561                  51,727
 Professional and administrative
  expenses                                    29,053                  15,006
 Professional and administrative
  expenses - affiliated                       29,742                  36,688
 Depreciation and amortization               247,752                 228,830
                                          -----------             ----------

                                             860,323                 850,968
                                          -----------             ----------

Net income (loss)                        $   (36,624)            $    75,835
                                          ===========             ==========

Net income (loss) allocated to the
 limited partners                        $   (13,962)            $    98,872
                                          ===========             ==========

Net income (loss) per limited
 partnership unit                        $     (1.05)            $      7.03
                                          ===========             ==========

Weighted average number of limited
 partnership units                            13,303                  14,070
                                          ===========             ==========
</TABLE>



                                      - 4 -

<PAGE>


<TABLE>

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

                            STATEMENTS OF CASH FLOWS
                            ------------------------
<CAPTION>


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

                                                    1999                  1998
                                                  ---------           ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                              <C>                 <C>   

Net income (loss)                                $ (36,624)          $   75,835
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Provision for doubtful accounts                    3,034                5,700
  Accrued interest on investment securities           --                    923
  Amortization of capitalized leasing costs          6,370                6,370
  Depreciation and amortization                    247,752              228,830
  Change in assets and liabilities:
   Cash and equivalents - restricted               (13,533)             (10,410)
   Accounts receivable                             (44,274)              13,046
   Other assets                                    (46,970)             (71,438)
   Accounts payable - operations                    53,099              142,428
   Security deposits                                 2,601                  155
   Other liabilities                                36,290                 (416)
                                                  ---------           ----------

  Net cash provided by operating activities        207,745              391,023
                                                  ---------           ----------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings, amenities and
 construction in progress                         (241,148)            (394,701)
Increase in cash and equivalents - restricted         --                 (2,777)
Maturity of investment securities                     --                100,668
                                                  ---------           ----------

  Net cash used in investing activities           (241,148)            (296,810)
                                                  ---------           ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgage payable                       315,536                 --
Principal payments on mortgage payable             (55,668)             (20,352)
Additions to loan costs                            (17,868)            (119,847)
Repurchase of limited partnership units           (125,000)                --
(Increase) decrease in cash and equivalents -
 restricted                                        125,000              (50,000)
                                                  ---------           ----------

  Net cash provided by (used) in financing 
  activities                                       242,000             (190,199)
                                                  ---------           ----------

  Net increase (decrease) in cash and equivalents  208,597              (95,986)

CASH AND EQUIVALENTS, beginning of period          233,844              266,940
                                                  ---------           ----------

CASH AND EQUIVALENTS, end of period              $ 442,441           $  170,954
                                                  =========           ==========

Interest paid on a cash basis                    $ 114,334           $   81,458
                                                  =========           ==========
</TABLE>


                                      - 5 -

<PAGE>



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

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------

The financial  statements included herein should be read in conjunction with the
Partnership's  1998 Form 10-K as filed with the Commission on March 31, 1999. 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, 1999 and
1998.

1.   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.

2.   Concentration of Credit Risk
     ----------------------------

     NTS-Properties  III  is a  limited  partnership  which  owns  and  operates
     commercial  properties  in  Norcross,  Georgia,  a suburb of  Atlanta,  and
     Jeffersontown,  Kentucky,  a suburb of Louisville.  One tenant in Plainview
     Plaza  II  occupies  46%  of  the  office  building's  net  rentable  area.
     Substantially all of the Partnership's  tenants are local businesses or are
     businesses which have operations in the location in which they lease space.

3.   Cash and Equivalents - Restricted
     ---------------------------------

     Cash and  equivalents  -  restricted  represent  1)funds  which  have  been
     escrowed  with a mortgage  company for NTS  Plainview  Plaza II's  property
     taxes  in  accordance  with the  loan  agreement,  and  2)funds  which  the
     Partnership  has reserved for the repurchase of limited  partnership  Units
     (December 31, 1998 balance only).

4.   Interest Repurchase Reserve
     ---------------------------

     Pursuant  to  Section  16.4  of  the  Partnership's  Amended  and  Restated
     Agreement of Limited Partnership,  the Partnership  established an Interest
     Repurchase  Reserve in 1995. During the years ended December 31, 1998, 1997
     and  1996,  the  Partnership   has  funded   $75,000,   $0,  and  $243,700,
     respectively,  to the reserve.  For the three months  ending March 31, 1999
     the Partnership has funded $125,000 to the reserve. Through March 31, 1999,
     the  Partnership  has  repurchased a total of 2,330 Units for $518,240 at a
     price ranging from $208 to $250 per Unit.  The offering  price per Unit was
     established  by the  General  Partner in its sole  discretion  and does not
     purport to  represent  the fair market  value or  liquidation  value of the
     Units.  Repurchased  Units are retired by the Partnership,  thus increasing
     the percentage of ownership of each remaining limited partner investor. The
     Interest  Repurchase Reserve was funded from cash reserves.  The balance in
     the reserve at March 31, 1999 was $0.











                                      - 6 -

<PAGE>



5.   Tender Offer
     ------------

     On September 30, 1998, the  Partnership  and ORIG, LLC, an affiliate of the
     Partnership,  ("the  Offerors")  commenced a Tender Offer to purchase up to
     1,000 of the Partnership's limited partnership Units at a price of $250 per
     Unit.  Although the  Partnership  and ORIG,  LLC believe that this price is
     appropriate,  the price of $250 per Unit may not equate to the fair  market
     value or the liquidation value of the Unit, and is less than the book value
     per Unit as of the offering  date.  The offer  stated that the  Partnership
     would  purchase the first 500 Units  tendered and would fund its  purchases
     and its portion of the expenses from cash reserves.  If more than 500 Units
     were tendered,  ORIG, LLC agreed to purchase up to an additional 500 Units.
     The  expiration  date of the original  Offer was December 29, 1998 at which
     time 729 Units were tendered.  The  Partnership  repurchased 500 Units at a
     cost of $125,000 and ORIG,  LLC  purchased  229 Units at a cost of $57,250.
     The expiration date of the Offer was extended to March 31, 1999. During the
     extension  period  ORIG,  LLC  purchased  an  additional  431  Units  at an
     aggregate cost of $107,750.

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

     Mortgages payable consist of the following:


                                               March 31,           December 31,
                                                 1999                   1998
                                                 ----                   ----
     Mortgage payable to an insurance 
     company bearing interest at 6.89%, 
     maturing April 10, 2015, secured 
     by land and buildings                    $ 6,600,477          $ 6,656,145

     $2,000,000 Mortgage payable to a 
     bank maturing March 1, 2001, secured
     by land and buildings, bearing a 
     variable interest of prime rate minus
     .25%. The current rate at March 31, 
     1999 is 7.5%. As of March 31, 1999 
     the Partnership had approximately 
     $1,684,000 available for additional 
     funding under this facility.                 315,536              --
                                               ----------          ----------
                                              $ 6,916,013         $ 6,656,145
                                               ==========          ==========

     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 approximates carrying value.

7.   Basis of Property
     -----------------

     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 such review indicates that 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 three months ended March 31, 1999
     and 1998 did not result in an impairment loss.

8.   Reclassification of 1998 Financial Statements
     ---------------------------------------------

     Certain reclassifications have been made to the December 31, 1998 financial
     statements  to  conform  with the March  31,  1999  classifications.  These
     reclassifications have no effect on previously reported operations.

                                      - 7 -

<PAGE>



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

     Property  management fees of $36,148 and $48,442 for the three months ended
     March  31,  1999  and  1998,  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
     incurred which relate to capital  improvements.  The  Partnership  incurred
     $30,929 and $39,531 as a repair and maintenance fee during the three months
     ended March 31, 1999 and 1998, respectively,  and has capitalized this cost
     as a part of land,  buildings and amenities.  As permitted by an agreement,
     the Partnership also was charged the following amounts from NTS Development
     Company for the three months ended March 31, 1999 and 1998.  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,  land,  buildings and amenities,  or
     construction in progress.
     These charges were as follows:


                                                 1999                  1998
                                              ---------             --------
           Leasing                            $ 57,088              $ 53,957
           Administrative                       37,194                44,140
           Property manager                     69,660                59,398
           Other                                13,869                15,077
                                               -------               -------

                                              $177,811              $172,572
                                               =======               =======

     During the three  months  ended  March 31, 1999 and 1998,  NTS  Development
     Company leased 20,368 square feet in Plainview Plaza II at a rental rate of
     $14.50 per square foot. The Partnership received  approximately  $74,000 in
     rental payments from NTS Development  Company during the three months ended
     March 31, 1999.  The lease term for NTS  Development  Company ends on March
     31, 2002.

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

     One tenant at  Plainview  Triad  North  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.  The  Partnership  was  able to  negotiate  a 30 day  renewal
     (through  September  30,  1998) with the tenant  for  approximately  63,000
     square  feet they  leased.  The  Partnership  was also able to  negotiate a
     renewal for approximately  11,000 square feet of the original 63,000 square
     feet 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 will likely be a protracted  period for the
     property to become fully leased again and substantial  funds will likely be
     needed for leasing expenses;  especially those needed to refinish space for
     new tenants.

     At Plainview Triad North, the Partnership is renovating the common area and
     exterior building.  These renovations will be designed to make the property
     more  competitive  and  enhance  its  value.  The  estimated  cost  of  the
     renovations  which began during 1998 is  approximately  $1,000,000  and the
     renovation is expected to be completed by the end of the second  quarter of
     1999.

     The renovation and leasing costs  discussed  above will be funded from loan
     proceeds  ($2,000,000  note  payable  obtained  March  2,  1999)  and  cash
     reserves. If necessary,  it may be possible for the Partnership to increase
     the note payable  secured by Plainview  Triad North.  However,  there is no
     assurance  that  additional  financing  will be able  to be  obtained  when
     needed, or that any financing will be on favorable terms.


                                      - 8 -

<PAGE>



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

     The  Partnership  adopted SFAS No. 131,  Disclosures  about  Segments of an
     Enterprise and Related Information, during the fourth quarter of 1998. SFAS
     No. 131  established  standards for reporting  information  about operating
     segments in annual financial  statements and requires selected  information
     about  operating  segments in interim  financial  reports issued to limited
     partners.  Operating  segments are defined as  components  of an enterprise
     about which separate  financial  information is available that is evaluated
     regularly by the chief operating  decision maker, or decision making group,
     in deciding how to allocate  resources  and in assessing  performance.  The
     standard also allows entities to aggregate operating segments into a single
     segment if the  segments  are similar in each of the six criteria set forth
     in SFAS No. 131. The  Partnership's  chief operating  decision-maker is the
     General Partner.

     The  Company's  reportable  operating  segments  include  only one  segment
     Commercial real estate operations.











                                      - 9 -

<PAGE>



Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         -----------------------------------------------------------------------
         OF OPERATIONS
         -------------

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations  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.  Discussion  of certain  market  risks and our  cautionary
statements also follow. Management's analysis should be read in conjunction with
the financial statements in Item 1.

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



                                                      1999(1)          1998
                                                      -------          ----
Plainview Plaza II                                     100%            100%
Plainview Triad North(2)                                35%             88%
Peachtree Corporate Center                              87%             88%

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

(2)  The decrease  in occupancy is the result of a tenant vacating 52,000 square
     feet  on  September 30, 1998.  The tenant previously occupied approximately
     63,000  square  feet  and  has  only  extended  through  March 31, 1999 for
     approximately 11,000 square feet.  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:


                                                          1999         1998
                                                          ----         ----
Plainview Plaza II                                         100%         92%
Plainview Triad North(1)                                    35%         87%
Peachtree Corporate Center                                  88%         87%

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











                                     - 10 -

<PAGE>



The following is an analysis of material  changes in results of  operations  for
the periods  ending March 31, 1999 and 1998.  Items that did not have a material
impact on operations for the periods listed above have been eliminated from this
discussion.

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


                                                 1999                   1998
                                                 ----                   ----
Plainview Plaza II                            $ 389,515              $ 343,364
Plainview Triad North                         $ 126,226              $ 295,735
Peachtree Corporate Center                    $ 306,847              $ 283,950

Rental and other  income  decreased  approximately  $97,000 or 11% in 1999.  The
decrease is  primarily a result of a decrease in average  occupancy at Plainview
Triad North following the move-out of one tenant of approximately  52,000 square
feet at the end of the lease term (August 1998). The tenant previously  occupied
63,000 square feet or 65% of the building and accounted for approximately 22% of
the Partnership's  total revenues for the period ending March 31, 1998.  Through
March 31, 1999 the tenant occupied  approximately  11,000 square feet accounting
for 5% of the Partnership's total revenues for the period ending March 31, 1999.
The decrease is partially offset by increased rental rates on lease renewals and
increased cost recovery income at Peachtree  Corporate Center and an increase in
average occupancy at Plainview Plaza II.

The  Partnership  expects there will be a protracted  period for Plainview Triad
North to become fully leased again. During this period, which is unknown at this
time,  Partnership revenues in 1999 will most likely be decreased as compared to
revenues during 1998.

Period-ending percentages represent occupancy only on a specific date, therefore
the  above  analysis   considers   average   occupancy   percentages  which  are
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.  In the
case  of  tenants  who  vacated  Peachtree  Corporate  Center  as  a  result  of
bankruptcy,  the  Partnership  has taken legal action when it was thought  there
could be a possible  collection.  There have been no significant funds recovered
as a result of these  actions  during the three  months  ended March 31, 1999 or
1998. As of March 31, 1999 there were no on-going cases.

Interest and other income for the three  months  ending March 31, 1998  includes
interest income earned from short-term  investments made by the Partnership with
cash  reserves  and from funds  escrowed  for the  replacement  of the  heating,
ventilating and air conditioning ("HVAC") system and asphalt paving at Peachtree
Corporate Center.  The approximate  $4,000 decrease in interest and other income
for the three months ended March 31, 1999 as compared to the same period in 1998
is due primarily to the decrease in cash reserves available for investment,  and
the release of the escrow of the funds described above during 1998.

Operating expenses - affiliated increased  approximately  $19,000 or 15% in 1999
primarily  as a result  of  increased  architectural  and  leasing  salaries  at
Plainview  Triad  North  and  increased  administrative  salaries  at  Peachtree
Corporate  Center.  The increase is partially  offset by deceased  architectural
salaries at Plainview  Plaza II.  Operating  expenses - affiliated  are expenses
incurred for services  performed by  employees of NTS  Development  Company,  an
affiliate of the General Partner.

                                     - 11 -

<PAGE>



Management  fees are  calculated as a percentage of cash  collections;  however,
revenue  for  reporting  purposes  is on the  accrual  basis.  As a result,  the
fluctuations of revenues  between  periods will differ from the  fluctuations of
management fee expense.

Professional and administrative  expenses increased approximately $14,000 or 93%
in 1999. The increase is primarily a result of costs incurred in connection with
the Tender Offer (see discussion below).

Professional and administrative  expenses - affiliated  decreased  approximately
$7,000 or 19% in 1999  primarily  as a result  of a  decrease  in salary  costs.
Professional and administrative  expenses - affiliated are expenses incurred for
services performed by employees of NTS Development  Company, an affiliate of the
General Partner.

Depreciation  is computed  using the  straight-line  method  over the  estimated
useful lives of the assets which are 5-30 years for land improvements,  30 years
for  buildings,  5-30  years  for  building  improvements  and  5-30  years  for
amenities.  The aggregate cost of the  Partnership's  properties for Federal tax
purposes is approximately $26,341,200.

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

The  majority  of  the  Partnership's   cash  flow  is  derived  from  operating
activities.  Cash  flows used in  investing  activities  are for  tenant  finish
improvements and other capital additions and are funded by operating  activities
and cash reserves.  Changes to current tenant improvements are a typical part of
any lease negotiation.  Improvements generally include a revision to the current
floor plan to  accommodate  a tenant's  needs,  new  carpeting  and paint and/or
wallcovering.  The extent and cost of these  improvements  are determined by the
size of the space and whether the  improvements are for a new tenant or incurred
because of a lease renewal.  Cash flows provided by investing activities in 1998
include the maturity of investment  securities.  As part of its cash  management
activities,  the  Partnership  purchased  Certificates  of Deposit or securities
issued by the U.S.  Government  with  initial  maturities  of greater than three
months to improve  the  return on its  excess  cash.  The  Partnership  held the
securities  until  maturity.  Cash flows used in  financing  activities  include
principal  payments  on  the  mortgages  payable,   the  repurchase  of  limited
partnership Units, cash reserved by the Partnership to fund the Tender Offer and
the addition of loan costs. Cash flows provided by financing  activities in 1999
represent the utilization of cash which has been reserved by the Partnership for
the  repurchase of limited  partnership  Units and proceeds  received from a new
mortgage  loan  obtained  March 2,  1999.  The  Partnership  does not expect any
material changes in the mix and relative cost of capital resources from those in
1998 except for changes  resulting from the new debt  financing  obtained by the
Partnership during 1999.

Cash flows provided by (used in):


                                          1999                   1998
                                          -----                  ----

Operating activities                  $   207,745             $   391,023
Investing activities                     (241,148)               (296,810)
Financing activities                      242,000                (190,199)
                                       -----------             -----------
Net increase (decrease) in
 cash and equivalents                 $   208,597             $   (95,986)
                                       ===========             ===========

Net cash provided by operating  activities decreased  approximately  $183,000 or
46% in 1999.  This  decrease  was  primarily  driven by a decrease  in  accounts
payable  and a decrease  in net income as a result of  decreased  revenues  from
Plainview Triad North (as discussed above).

                                     - 12 -

<PAGE>



Net cash used in  investing  activities  was  $241,148  and $296,810 in 1999 and
1998,  respectively.  Net cash used in investing activities decreased in 1999 as
compared  to 1998 as a  result  of  decreased  capital  expenditures  offset  by
maturities of investment securities in 1998.

Net cash provided by (used in) financing  activities was $242,000 and $(190,199)
in 1999 and 1998,  respectively.  The increase in net cash provided by financing
activities in 1999 is the result of a new mortgage  loan obtained  March 2, 1999
to fund renovations at Triad North and a reduction in loan costs in 1999.

The Partnership  indefinitely suspended distributions starting December 31, 1996
as a result of the  anticipated  decrease in occupancy at Plainview Triad North.
Cash  reserves  (which are  unrestricted  cash and  equivalents  and  investment
securities  as shown on the  Partnership's  balance  sheet as of March  31) were
$442,441 and $170,954 at March 31, 1999 and 1998, respectively.

In the next 12  months,  the  General  Partner  expects  the  demand  on  future
liquidity to increase as a result of future leasing activity driven primarily by
the decreased occupancy at Plainview Triad North.

Demand on future  liquidity  is also  expected  to  increase  as a result of the
common area and  exterior  building  renovation  which is  currently  ongoing at
Plainview Triad North.  The renovations  have been designed to make the property
more  competitive and enhance its value. The estimated cost of the renovation is
approximately  $1,000,000. It is anticipated that the cash flow from operations,
cash reserves and funds  available on the $2,000,000 loan obtained March 2, 1999
will be sufficient to meet the needs of the Partnership. Through March 31, 1999,
the Partnership has incurred  approximately $470,000 of the $1,000,000 estimated
Triad North  renovation.  As of March 31, 1999, the  Partnership had no material
commitments for tenant finish improvements.

Due to the fact that no  distributions  were made during the three  months ended
March  31,  1999 or  1998,  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.

Pursuant to Section 16.4 of the Partnership's  Amended and Restated Agreement of
Limited Partnership,  the Partnership established an Interest Repurchase Reserve
in  1995.  During  the  years  ended  December  31,  1998,  1997 and  1996,  the
Partnership has funded $75,000, $0, and $243,700,  respectively, to the reserve.
For the three months ending March 31, 1999 the  Partnership  has funded $125,000
to the reserve.  Through March 31, 1999, the Partnership has repurchased a total
of 2,330 Units for $518,240 at a price  ranging from $208 to $250 per Unit.  The
offering  price per Unit was  established  by the  General  Partner  in its sole
discretion  and  does  not  purport  to  represent  the  fair  market  value  or
liquidation   value  of  the  Units.   Repurchased  Units  are  retired  by  the
Partnership,  thus  increasing  the  percentage  of ownership of each  remaining
limited partner investor.  The Interest  Repurchase Reserve was funded from cash
reserves. The balance in the reserve at March 31, 1999 was $0.

On  September  30,  1998,  the  Partnership  and ORIG,  LLC, an affiliate of the
Partnership,  ("the Offerors")  commenced a Tender Offer to purchase up to 1,000
of the  Partnership's  limited  partnership  Units at a price of $250 per  Unit.
Although the  Partnership  and ORIG, LLC believe that this price is appropriate,
the  price  of $250  per Unit may not  equate  to the fair  market  value or the
liquidation  value of the Unit,  and is less than the book  value per Unit as of
the offering  date.  The offer stated that the  Partnership  would  purchase the
first 500 Units  tendered  and would fund its  purchases  and its portion of the
expenses from cash  reserves.  If more than 500 Units were  tendered,  ORIG, LLC
agreed to purchase up to an additional  500 Units.  The  expiration  date of the
original offer was December 29, 1998 at which time 729 Units were tendered.  The
Partnership  repurchased 500 Units at a cost of $125,000 and ORIG, LLC purchased
229 Units at a cost of $57,250. The expiration date of the offer was extended to
March 31,

                                     - 13 -

<PAGE>



1999. During the extension period ORIG, LLC purchased an additional 431 Units at
an aggregate cost of $107,750.  

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 Plainview Plaza II and
Plainview  Triad  North  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.  All advertising for the
Louisville properties is also coordinated by NTS Development Company's marketing
staff located in Louisville, Kentucky.

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
---------

All divisions of NTS, the General Partner of the Partnership,  are reviewing the
effort  necessary to prepare our  information  systems (IT) and  non-information
technology  with embedded  technology  (ET) for the Year 2000.  The  information
technology  solutions have been  addressed  separate 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  developments  during the
decade of the 1990's.

The PILOT software system,  purchased in the early 1990's, needed to be replaced
by a windows based network system both for our headquarters  functions and other
locations.  The real estate accounting system developed,  sold, and supported by
the Yardi Company of Santa  Barbara,  California  has been selected to supercede
PILOT.  The Yardi  system has been tested and is  compatible  with Year 2000 and
beyond.  This  system  is  being  implemented  with  the  help  of  third  party
consultants  and should be fully  operational  by the third quarter of 1999. Our
system for multi-family  apartment  locations was converted to GEAC's Power Site
System earlier in 1998 and is Year 2000 compliant.

The few remaining  systems not addressed by these conversions are being modified
by our in-house staff of programmers.  The Hewlett Packard 3000 system, used for
PILOT and custom applications, was purchased in 1997 and will be part of our new
network.  It will be retained as long as necessary to assure  smooth  operations
and has been upgraded to meet Year 2000 requirements.

All risks identified with information technology are believed to be addressed by
these plans.

The cost of these advances in our systems  technology is not all attributable to
the Year  2000  issue  since  we had  already  identified  the need to move to a
network  based system  regardless of the Year 2000.  The costs  involved will be
approximately  $45,000 over 1999.  Costs incurred through December 31, 1998 were
approximately $10,000. These costs primarily include hardware and software.

NTS  property  management  staff has been  surveying  our  vendors  to  evaluate
embedded technology in our alarm systems,  HVAC controls,  telephone systems and
other  computer  associated  facilities.  In a few  cases,  equipment  is  being
replaced. In some cases circuitry is being upgraded.  The cost involved is still
being evaluated. There are no known significant risks that are currently without
solutions.  Management  anticipates that applications  involving ET will be Year
2000 compliant by the third quarter of 1999.


                                     - 14 -

<PAGE>




We are also currently  addressing the Year 2000 readiness of third parties whose
business interruption could have a material negative impact on our business. All
significant  vendors and tenants have  indicated  that they will be compliant by
the end of 1999. Such assurances are being evaluated and documented.

Management has determined that at our current state of readiness,  the need does
not  presently  exist for a  contingency  plan. We will continue to evaluate the
need for such a plan.

Despite diligent preparation,  unanticipated third-party failures,  inability of
our tenants to pay rent when due, more general public infrastructure failures or
failure to successfully conclude our remediation efforts as planned could have a
material  adverse  impact on our  results of  operations,  financial  conditions
and/or cash flows in 1999 and beyond.

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  note  payable  which  the
Partnership obtained on March 3, 1999.

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

Some of the statements included in Item 2, Management's  Discussion and Analysis
of  Financial  Condition  and Results of  Operations,  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 Managements's Discussion and Analysis
of Financial  Condition and Results of Operations,  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 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.

                                     - 15 -

<PAGE>



PART II.  OTHER INFORMATION

     3.  Defaults upon Senior Securities
         -------------------------------

         None.

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

         (a)    Exhibits

                Exhibit 27. Financial Data Schedule

         (b)    Reports on Form 8-K

                None.

     Items 1,2,4 and 5 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,  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/ Brian F. Lavin
                                                         ------------------
                                                         Brian F. Lavin
                                                         President and Chief
                                                         Operating Officer of
                                                         NTS Capital Corporation
                                                         (acting Chief Financial
                                                         Officer)


Date:     May 14, 1999
        ---------------



                                     - 17 -

<PAGE>


                                   SIGNATURES
                                   ----------


Pursuant to the  requirements of Section 13 or 15(d) 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


                                                        ---------------------
                                                        Brian F. Lavin
                                                        President and Chief
                                                        Operating Officer of
                                                        NTS Capital Corporation
                                                        (acting Chief Financial
                                                        Officer)

Date:     May 14, 1999
        ---------------





                                     - 17 -

<PAGE>