# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

# FORM 10-Q

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

For the quarterly period ended June 30, 2004

OR

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

Commission File Number 0-13400

NTS-PROPERTIES V,
A MARYLAND LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)

|Maryland                        | 61-1051452                          
|------------------------------- | ------------------------------------
|(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 offices)

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

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the
Securities Exchange Act).     Yes [   ]    No [X]

---

# TABLE OF CONTENTS

| |  |  |  |      
| |  |  |  | -----
| |  |  |  | Pages

# PART I  FINANCIAL INFORMATION

|        |  |                                                                                                       |  |      
|------- |  | ----------------------------------------------------------------------------------------------------- |  | -----
|Item 1. |  | Consolidated Financial Statements (Unaudited)                                                        
|       
|        |  | Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003                                 |  | 4    
|       
|        |  | Consolidated Statement of Partners' Equity as of June 30, 2004                                        |  | 4    
|       
|        |  | Consolidated Statements of Operations for the Three and Six Months
      Ended June 30, 2004 and 2003 |  | 5    
|       
|        |  | Consolidated Statements of Cash Flows for the Six Months
      Ended June 30, 2004 and 2003           |  | 6    
|       
|        |  | Notes to Consolidated Financial Statements                                                            |  | 7-17 
|       
|Item 2. |  | Management's Discussion and Analysis of Financial
     Condition and Results of Operations            |  | 18-28
|       
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                            |  | 28   
|       
|Item 4. |  | Controls and Procedures                                                                               |  | 28   
|       

# PART II  OTHER INFORMATION

|            |  |  |  |      
|----------- |  |  |  | -----
|Items 1 - 6 |  |  |  | 29-30
|           
|Signatures  |  |  |  | 31   

2

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Some of the statements included in
this quarterly report on Form 10-Q, particularly those included in Part I, Item 2 
Managements Discussion and Analysis of Financial Condition and Results of Operations
(MD&A), may be considered forward-looking statements because
the statements relate to matters which have not yet occurred. For example, phrases such as
we anticipate, believe or expect indicate that it is
possible that the event anticipated, believed or expected may not occur. If these events
do not occur, the result which we expected also may, or may not, occur in a different
manner, which may be more or less favorable to us. We do not undertake any obligation to
update these forward-looking statements.

Any forward-looking statements
included in MD&A, or elsewhere in this report, reflect our general partners best
judgment based on known factors, but 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 described in our filings with the
Securities and Exchange Commission, particularly our annual report on Form 10-K for the
year ended December 31, 2003. Any forward-looking information provided by us pursuant to
the safe harbor established by the Private Securities Litigation Reform Act of 1995 should
be evaluated in the context of these factors.

3

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# PART I  FINANCIAL
INFORMATIONItem 1  Consolidated Financial Statements

# NTS-PROPERTIES V,
A MARYLAND LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS

`As of               As of
                                                                     June 30,         December 31,
                                                                       2004               2003
                                                                ------------------  -----------------
                                                                   (UNAUDITED)
ASSETS
Cash and equivalents                                           $           265,216 $          191,321
Cash and equivalents - restricted                                          812,000            363,643
Accounts receivable, net                                                   625,967            576,113
Land, buildings and amenities, net                                      19,883,966         20,360,408
Other assets                                                               819,774            893,961
                                                                ------------------  -----------------

      TOTAL ASSETS                                             $        22,406,923 $       22,385,446
                                                                ==================  =================

LIABILITIES AND PARTNERS' EQUITY
Mortgages payable                                              $        13,597,227 $       13,614,792
Accounts payable and accrued expenses                                      853,839            725,261
Accounts payable - affiliate                                               550,285            294,771
Security deposits                                                          229,239            210,252
Other liabilities                                                          468,757            192,601
                                                                ------------------  -----------------

      TOTAL LIABILITIES                                                 15,699,347         15,037,677

MINORITY INTEREST                                                          999,868          1,015,947

COMMITMENTS AND CONTINGENCIES (Note 10)

PARTNERS' EQUITY                                                         5,707,708          6,331,822
                                                                ------------------  -----------------

TOTAL LIABILITIES AND PARTNERS' EQUITY                         $        22,406,923 $       22,385,446

                                                                ==================  =================`

# NTS-PROPERTIES V,
A MARYLAND LIMITED PARTNERSHIP CONSOLIDATED STATEMENT OF PARTNERS EQUITY (UNAUDITED)

`Limited            General
                                                   Partners            Partner              Total
                                               -----------------  ------------------  ------------------
PARTNERS' EQUITY/(DEFICIT)
Capital contributions, net of offering costs  $       30,582,037 $               100 $        30,582,137
Net (loss) income - prior years                       (6,453,939)             48,606          (6,405,333)
Net loss - current year                                 (617,873)             (6,241)           (624,114)
Cash distributions declared to date                  (16,641,480)           (168,177)        (16,809,657)
Repurchase of limited partnership interests           (1,035,325)                 --          (1,035,325)
                                               -----------------  ------------------  ------------------

BALANCES ON JUNE 30, 2004                     $        5,833,420 $          (125,712)$         5,707,708
                                               =================  ==================  ==================`

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

4

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# NTS-PROPERTIES V,
A MARYLAND LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)

`Three Months Ended              Six Months Ended
                                                                 June 30,                       June 30,
                                                       -----------------------------  -----------------------------
                                                            2004           2003           2004            2003
                                                       --------------  -------------  -------------  --------------
REVENUES
Rental income                                         $       979,010 $    1,059,084 $    1,926,765 $     2,016,137
Tenant reimbursements                                         300,597        333,400        568,126         582,280
                                                       --------------  -------------  -------------  --------------

     TOTAL REVENUES                                         1,279,607      1,392,484      2,494,891       2,598,417
                                                       --------------  -------------  -------------  --------------

EXPENSES
Operating expenses                                            356,442        395,197        739,048         706,244
Operating expenses - affiliated                               149,024        152,325        314,651         293,571
Management fees                                                70,406         79,399        137,577         149,259
Real estate taxes                                             131,823        133,827        263,646         267,654
Professional and administrative expenses                      165,439        191,875        443,593         372,460
Professional and administrative expenses - affiliated          54,465         49,824        102,495          96,722
Depreciation and amortization                                 322,888        306,344        646,520         620,994
                                                       --------------  -------------  -------------  --------------

     TOTAL OPERATING EXPENSES                               1,250,487      1,308,791      2,647,530       2,506,904
                                                       --------------  -------------  -------------  --------------

OPERATING INCOME (LOSS)                                        29,120         83,693       (152,639)         91,513

Interest and other income                                       6,173           (237)        12,255           2,825
Interest expense                                             (244,101)      (244,470)      (489,224)       (494,293)
Loss on disposal of assets                                     (4,176)            --         (4,176)             --
                                                       --------------  -------------  -------------  --------------

Loss before minority interest                                (212,984)      (161,014)      (633,784)       (399,955)
Minority interest income (loss)                                   694         11,688         (9,670)          4,642
                                                       --------------  -------------  -------------  --------------

Net loss                                              $      (213,678)$     (172,702)$     (624,114)$      (404,597)
                                                       ==============  =============  =============  ==============

Net loss allocated to the limited partners            $      (211,541)$     (170,975)$     (617,873)$      (400,551)
                                                       ==============  =============  =============  ==============

Net loss per limited partnership interest             $         (6.93)$        (5.60)$       (20.24)$        (13.12)
                                                       ==============  =============  =============  ==============

Weighted average number of limited
  partnership interests                                        30,521         30,521         30,521          30,521
                                                       ==============  =============  =============  ==============`

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

5

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# NTS-PROPERTIES V,
A MARYLAND LIMITED PARTNERSHIPCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

`Six Months Ended
                                                                                 June 30,
                                                                  --------------------------------------
                                                                        2004                 2003
                                                                  -----------------    -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                       $           (624,114)$           (404,597)
Adjustments to reconcile net loss to net cash provided by
  operating activities:
    Loss on disposal of assets                                                4,176                   --
    Depreciation and amortization                                           757,914              725,822
    Minority interest (loss) income                                          (9,670)               4,642
    Changes in assets and liabilities:
      Cash and equivalents - restricted                                    (448,357)            (302,370)
      Accounts receivable                                                   (49,854)             (37,454)
      Other assets                                                          (34,092)             (81,965)
      Accounts payable and accrued expenses                                 384,092              750,302
      Security deposits                                                      18,987               49,513
      Other liabilities                                                     276,156              283,043
                                                                  -----------------    -----------------

     Net cash provided by operating activities                              275,238              986,936
                                                                  -----------------    -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to land, buildings and amenities                                 (174,253)            (524,018)
Minority interest                                                            (6,409)              (3,523)
                                                                  -----------------    -----------------

     Net cash used in investing activities                                 (180,662)            (527,541)
                                                                  -----------------    -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from mortgages payable                                             212,486              122,499
Principal payments on mortgages and notes payable                          (230,051)            (565,035)
Additions to loan costs                                                      (3,116)             (28,503)
                                                                  -----------------    -----------------

     Net cash used in financing activities                                  (20,681)            (471,039)
                                                                  -----------------    -----------------

     Net increase (decrease) in cash and equivalents                         73,895              (11,644)

CASH AND EQUIVALENTS, beginning of period                                   191,321              235,801
                                                                  -----------------    -----------------

CASH AND EQUIVALENTS, end of period                            $            265,216 $            224,157
                                                                  =================    =================

Interest paid on a cash basis                                  $            460,801 $            468,423
                                                                  =================    =================`

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

6

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# NTS-PROPERTIES V,
A MARYLAND LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)

The unaudited consolidated financial
statements included herein should be read in conjunction with NTS-Properties Vs 2003
annual report on Form 10-K as filed with the Securities and Exchange Commission on March
29, 2004. In the opinion of our general partner, all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation have been made to the
accompanying consolidated financial statements for the three and six months ended June 30,
2004 and 2003. The results of operations for the interim periods are not necessarily
indicative of the results that may be expected for the full year or any other interim
period. As used in this quarterly report on Form 10-Q the terms we,
us or our, as the context requires, may refer to NTS-Properties V
or its interests in its properties and joint ventures.

# Note 1 
Consolidation Policy

The consolidated financial statements
include the accounts of all wholly-owned properties and majority-owned joint ventures.
Intercompany transactions and balances have been eliminated.

Minority Interest

In May 2003, the Financial Accounting
Standards Board (FASB) issued Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity
(SFAS 150). SFAS 150 establishes standards for classifying and measuring as
liabilities certain financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity. SFAS 150 was effective for all financial
instruments created or modified after May 31, 2003, and otherwise was effective at the
beginning of the first interim period beginning after June 15, 2003. On November 7, 2003,
FASB Staff Position No. FAS 150-3 was issued, which deferred for an indefinite period the
classification and measurement provisions, but not the disclosure provisions of SFAS 150.

We consolidate certain properties
that are also owned by affiliated parties that have noncontrolling interests. In certain
cases, the applicable joint venture agreement provides for a contractual termination date
of the agreement based on certain specified events. SFAS 150 describes this type of
arrangement as a limited-life subsidiary. SFAS 150 requires the disclosure of
the estimated settlement value of these noncontrolling interests. As of June 30, 2004, the
estimated settlement value of these noncontrolling interests is approximately $3,372,000.
This settlement value is based on estimated third party consideration paid to the joint
venture upon disposition of each property and is net of all other assets and liabilities
including any yield maintenance that would have been due on that date had the mortgage
encumbering each property been prepaid on June 30, 2004. Due to the inherent risks and
uncertainties related to the operations and sale of real estate assets, among other
things, the amount of any potential distribution to the noncontrolling interests is likely
to change.

7

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# Note 2  Use of Estimates in the
Preparation of Financial Statements

The preparation of financial
statements in accordance with U.S. 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.

# Note 3 
Concentration of Credit Risk

We own and operate or have a joint
venture investment in one commercial property  Commonwealth Business Center Phase
II, in Louisville, Kentucky and three commercial properties  Lakeshore Business
Center Phases I, II and III, in Ft. Lauderdale, Florida. We also have a joint venture
investment in an apartment community  The Willows of Plainview Phase II, in
Louisville, Kentucky.

Our financial instruments that are
exposed to concentrations of credit risk consist of cash and equivalents. We maintain our
cash accounts primarily with banks located in Kentucky. Cash balances are insured by the
FDIC up to $100,000 per bank account. We may at times, in certain accounts, have deposits
in excess of $100,000.

# Note 4  Cash and
Equivalents

Cash and equivalents include cash on
hand and short-term, highly liquid investments with initial maturities of three months or
less. We have a cash management program which provides for the overnight investment of
excess cash balances. Under an agreement with a bank, excess cash is invested in a
repurchase agreement for U.S. government or agency securities each night. As of June 30,
2004, approximately $99,000 of our overnight investment was included in cash and
equivalents.

# Note 5  Cash and
Equivalents  Restricted

Cash and equivalents 
restricted represents funds received for residential security deposits and funds which
have been escrowed with mortgage companies for property taxes and capital improvements in
accordance with the loan agreements with said mortgage companies.

# Note 6  Basis of
Property and Depreciation

Land, buildings and amenities are
stated at historical cost, less accumulated depreciation. 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 5-30 years for land improvements, 3-30 years for buildings and improvements,
3-30 years for amenities and the applicable lease term for tenant improvements. The
aggregate cost of our properties for federal tax purposes is approximately $42,054,000.

8

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Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets, specifies circumstances in which certain long-lived assets must be reviewed
for impairment. If the carrying amount of an asset exceeds the sum of its expected future
cash flows, the assets carrying value must be written down to fair value. There were
no impairment losses during any of the periods presented.

# Note 7  Mortgages
Payable

Mortgages payable consist of the
following:

`June 30,           December 31,
                                                                        2004                 2003
                                                                  -----------------    -----------------
Mortgage payable to an insurance company in monthly
installments, bearing interest at a fixed rate of 8.125%, due
August 1, 2008, secured by land and a building.                $          3,313,988 $          3,356,890

Mortgage payable to an insurance company in monthly
installments, bearing interest at a fixed rate of 8.125%, due
August 1, 2008, secured by land and buildings.                            3,080,220            3,120,096

Mortgage payable to a bank on demand with interest payable in
monthly installments, at a variable rate based on LIBOR daily
rate plus 2.5%, currently 3.615%, due October 1, 2005, secured
by land and a building.                                                   2,844,873            2,632,387

Mortgage payable to an insurance company in monthly
installments, bearing interest at a fixed rate of 7.2%, due
January 5, 2013, secured by land, buildings and amenities.                2,227,679            2,319,883

Mortgage payable to an insurance company in monthly
installments, bearing interest at a fixed rate of 7.2%, due
January 5, 2013, secured by land, buildings and amenities.                1,330,467            1,385,536

Mortgage payable to a bank on demand with interest payable in
monthly installments, at a variable rate based on LIBOR one-
month rate plus 2.75%, currently 3.860%, due November 1,
2004, secured by land and a building.                                       800,000              800,000
                                                                  -----------------    -----------------

                                                               $         13,597,227 $         13,614,792
                                                                  =================    =================`

Our mortgages may be prepaid but are
generally subject to a yield-maintenance premium.

As of June 30, 2004, the fair value
of long-term debt is approximately $13,892,000, based on the borrowing rates currently
available to us for mortgages with similar terms and average maturities.

9

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# Note 8  Accounts
Payable  Affiliate

Accounts payable  affiliate
includes amounts owed to NTS Development Company for reimbursement of salary and overhead
expenses.

NTS Development Company has agreed to
defer, until March 31, 2005, amounts owed to them by us as of December 31, 2003 and those
amounts accruing from January 1, 2004 through March 31, 2005, other than as permitted by
our cash flows. There can be no assurances that NTS Development Company will continue to
defer amounts due them past March 31, 2005.

# Note 9  Related
Party Transactions

Pursuant to an agreement with us, NTS
Development Company, an affiliate of our General Partner, receives property management
fees on a monthly basis. The monthly fees are equal to 5% of the gross receipts from our
apartment community and 6% of the gross receipts from our commercial properties. Also
pursuant to an agreement, NTS Development Company receives a repair and maintenance fee
equal to 5.9% of costs incurred which relates to capital improvements and major repair and
renovation projects. These repair and maintenance fees are capitalized as part of land,
buildings and amenities.

We were charged the following amounts
from NTS Development Company for the six months ended June 30, 2004 and 2003. These
charges include items which have been expensed as operating expenses  affiliated or
professional and administrative expenses  affiliated and items which have been
capitalized as other assets or as land, buildings and amenities.

`Six Months Ended
                                                                                June 30,
                                                                ----------------------------------------
                                                                       2004                 2003
                                                                -------------------  -------------------

Property management fees                                       $            137,577 $            149,259
                                                                -------------------  -------------------

Property management                                                         224,124              195,093
Leasing                                                                      21,400               45,506
Administrative - operating                                                   65,288               52,610
Other                                                                         3,839                  362
                                                                -------------------  -------------------

     Total operating expenses - affiliated                                  314,651              293,571
                                                                -------------------  -------------------

Professional and administrative expenses - affiliated                       102,495               96,722
                                                                -------------------  -------------------

Repair and maintenance fees                                                   6,439                1,260
Leasing commissions                                                             187                1,020
                                                                -------------------  -------------------

     Total related party transactions capitalized                             6,626                2,280
                                                                -------------------  -------------------

Total related party transactions                               $            561,349 $            541,832
                                                                ===================  ===================`

10

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# Note 10 
Commitments and Contingencies

As an owner of real estate, we are
subject to various environmental laws of federal, state and local governments. Our
compliance with existing laws has not had a material adverse effect on our financial
condition or results of operations. However, we cannot predict the impact of new or
changed laws or regulations on our current properties or on properties that we may acquire
in the future.

Litigation

On December 12, 2001, three
individuals filed an action in the Superior Court of the State of California for the
County of Contra Costa (the Superior Court) originally captioned Buchanan,
et al. v. NTS-Properties Associates, et al. (Case No. C 01-05090)against the
general partners (the General Partners) of NTS-Properties III, NTS-Properties
IV, NTS-Properties V, NTS-Properties VI and NTS-Properties VII, Ltd. (the
Partnerships), as well as several individuals and entities affiliated with us.
The action purported to bring claims on behalf of a class of limited partners. These
claims were based on, among other things, tender offers made by the Partnerships and an
affiliate of the General Partners, as well as the operation of the Partnerships by the
General Partners. The plaintiffs alleged, among other things, that the prices at which
limited partnership interests were purchased in these tender offers were too low. The
plaintiffs sought monetary damages and equitable relief, including an order directing the
disposition of the properties owned by the Partnerships and the distribution of the
proceeds. No amounts have been accrued as a liability for this action in our financial
statements. Under an indemnification agreement with our general partner, we are
responsible for the costs of defending any such action.

On February 27, 2003, two individuals
filed a class and derivative action in the Circuit Court of Jefferson County, Kentucky
captioned Bohm, et al. v. J.D. Nichols, et al.(Case No. 03-CI-01740) against
certain of the General Partners and several individuals and entities affiliated with us.
The complaint was amended to include the general partner of NTS-Properties III and the
general partner of NTS-Properties Plus Ltd., which is no longer in existence. In the
amended complaint, the plaintiffs purport to bring claims on behalf of a class of limited
partners and derivatively on behalf of us and the Partnerships based on alleged
overpayment of fees, prohibited investments, improper failures to make distributions,
purchases of limited partnerships interests at insufficient prices and other violations of
the limited partnership agreements. The plaintiffs are seeking, among other things,
compensatory and punitive damages in an unspecified amount, an accounting, the appointment
of a receiver or liquidating trustee, the entry of an order of dissolution against the
Partnerships, a declaratory judgment and injunctive relief. No amounts have been accrued
as a liability for this action in our financial statements. Our general partner and legal
counsel believe that this action is without merit and are vigorously defending it.

On June 20, 2003, the General
Partners reached an agreement in principle with the representatives of the class of
plaintiffs to settle the Buchanan litigation. This agreed upon settlement includes
releases for all of the parties for all of the claims asserted in the Buchananlitigation and the Bohm

11

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litigation. As
part of the agreed upon settlement, the General Partners agreed to pursue a
merger of the Partnerships and other real estate entities affiliated with the
General Partners into a newly-formed entity named NTS Realty Holdings Limited
Partnership (NTS Realty). NTS Development Company agreed to pay the
Partnerships $1,500,000 on the closing date of the merger. We expect to receive
$345,000 of this payment.

On December 5, 2003, the General
Partners, certain of their affiliates and the class of plaintiffs in the Buchananlitigation jointly filed a Stipulation and Agreement of Settlement (the
Settlement Agreement) with the Superior Court. The Settlement Agreement sets
forth in writing the terms of the agreed upon settlement the parties reached on June 20,
2003. On February 26, 2004, the Superior Court preliminarily approved the Settlement
Agreement as within the range of reasonableness and that it is fair, just and adequate to
the class of plaintiffs. The Superior Court scheduled a hearing to finally determine
whether the Settlement Agreement is in the best interests of the class of plaintiffs and
whether the Buchananlitigation should be dismissed with prejudice.

On March 2, 2004, we, along with all
defendants, filed a Motion to Dismiss the Bohm litigation. After the
Motion to Dismiss was fully briefed, the settlement agreement in the Buchananlitigation received final court approval. The Circuit Court of Jefferson County,
Kentucky, instructed the plaintiffs in the Bohmlitigation to file an amended
complaint in light of the approved settlement of the Buchananlitigation. The
plaintiffs in the Bohmlitigation filed a corrected Second Amended Complaint on
August 11, 2004. Our general partner believes that the claims asserted in the
corrected Second Amended Complaint have no merit.

On May 6, 2004, the Superior Court
granted its final approval of the Settlement Agreement. At the final hearing, any member
of the class of plaintiffs was given the opportunity to object to the final approval of
the Settlement Agreement, the entry of a final judgment dismissing with prejudice the
Buchananlitigation, or an application of an award for attorneys fees and
expenses to plaintiffs counsel. The Superior Courts order provides, among
other things, that: (1) the Settlement Agreement, and all transactions contemplated
thereby, including the proposed merger of the Partnerships into NTS Realty, are fair,
reasonable and adequate, and in the best interests of the class of plaintiffs; (2) the
plaintiffs complaint and each and every cause of action and claim set forth therein
is dismissed with prejudice; (3) each class member is barred from (a) transferring,
selling or otherwise disposing of (other than by operation of law) their interests until
the earlier of the closing date of the merger, the termination of the settlement or June
30, 2004; and (4) each class member who requested to be excluded from the settlement
released their claims in the Bohm litigation.

On June 11, 2004, Joseph Bohm and
David Duval, class members who objected to the Settlement Agreement but were overruled by
the Superior Court, filed an appeal in the Court of Appeals of the State of California,
first Appellate District. Our general partner believes that this appeal has no merit and
intends to defend it and the decision of the Superior Court.

For the six months ended June 30,
2004 and 2003, our share of the legal costs for theBuchanan and Bohm
litigations was approximately $137,000 and $158,000, respectively, which was included in
our professional and administrative expenses.

12

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We do not believe there is any other
litigation threatened against us other than routine litigation arising out of the ordinary
course of business, some of which is expected to be covered by insurance, none of which is
expected to have a material effect on our consolidated financial position or results of
operations, except as discussed herein.

Proposed Merger

As part of the Settlement Agreement,
our general partner and the general partners of the four public partnerships affiliated
with us, have agreed to pursue a merger of the partnerships and several other affiliated
real estate entities into a newly formed limited partnership known as NTS Realty. The
merger is subject to, among other things, approval by a majority of the limited partner
interests in each partnership. We may not seek the approval of the limited partners until
a filing made by NTS Realty with the Securities and Exchange Commission is declared
effective. For the six months ended June 30, 2004 and 2003, our share of the legal and
professional fees for the proposed merger was approximately $245,000 and $67,000,
respectively.

On February 4, 2004, NTS Realty filed
a joint consent solicitation statement/prospectus on Form S-4 with the Securities and
Exchange Commission. The solicitation statement/prospectus presents the merger of
NTS-Properties III; NTS-Properties IV; NTS-Properties V; NTS-Properties VI; and
NTS-Properties VII, Ltd. with NTS Realty. Concurrent with the merger, ORIG, LLC, a
Kentucky limited liability company, which is affiliated with our general partner, will
contribute substantially all its real estate assets and all of its liabilities to NTS
Realty.

On June 24, 2004 and August 13, 2004,
NTS Realty filed first and second amendments, respectively, to Form S-4 with the
Securities and Exchange Commission. Both amendments are in response to comments made by
the Securities and Exchange Commission.

# Note 11  Segment
Reporting

Our reportable operating segments are
Residential and Commercial Real Estate Operations. The residential operations represent
our ownership and operating results relative to the apartment complex known as The Willows
of Plainview Phase II. The commercial real estate operations represent our ownership and
operating results relative to suburban commercial office space known as Commonwealth
Business Center Phase II and Lakeshore Business Center Phases I, II and III.

The financial information of the
operating segments has been prepared using a management approach, which is consistent with
the basis and manner in which our management internally reports financial information for
the purposes of assisting in making internal operating decisions. Our management evaluated
performance based on stand-alone operating segment net income. Professional and
administrative expenses, interest and other income, depreciation, interest expense and
minority interest income (loss) recorded at the Partnership level have not been allocated
to the segments.

13

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`Three Months Ended June 30, 2004
                                               ---------------------------------------------------------

                                                  Residential         Commercial            Total
                                               -----------------  ------------------  ------------------
Rental income                                 $          284,470 $           694,540 $           979,010
Tenant reimbursements                                         --             300,597             300,597
                                               -----------------  ------------------  ------------------

     Total revenues                                      284,470             995,137           1,279,607
                                               -----------------  ------------------  ------------------

Operating expenses and operating expenses -
  affiliated                                             132,066             373,400             505,466
Management fees                                           15,347              55,059              70,406
Real estate taxes                                         14,490             117,333             131,823
Depreciation and amortization                             56,911             261,322             318,233
                                               -----------------  ------------------  ------------------

     Total operating expenses                            218,814             807,114           1,025,928
                                               -----------------  ------------------  ------------------

Operating income                                          65,656             188,023             253,679

Interest and other income                                     69               5,333               5,402
Interest expense                                         (64,967)           (174,043)           (239,010)
Loss on disposal of assets                                (4,176)                 --              (4,176)
                                               -----------------  ------------------  ------------------

Net (loss) income                             $           (3,418)$            19,313 $            15,895
                                               =================  ==================  ==================`

`Three Months Ended June 30, 2003
                                               ---------------------------------------------------------

                                                  Residential         Commercial            Total
                                               -----------------  ------------------  ------------------
Rental income                                 $          303,787 $           755,297 $         1,059,084
Tenant reimbursements                                         --             333,400             333,400
                                               -----------------  ------------------  ------------------

     Total revenues                                      303,787           1,088,697           1,392,484
                                               -----------------  ------------------  ------------------

Operating expenses and operating expenses -
  affiliated                                             135,360             412,162             547,522
Management fees                                           15,791              63,608              79,399
Real estate taxes                                         16,779             117,048             133,827
Depreciation and amortization                             56,994             244,695             301,689
                                               -----------------  ------------------  ------------------

     Total operating expenses                            224,924             837,513           1,062,437
                                               -----------------  ------------------  ------------------

Operating income                                          78,863             251,184             330,047

Interest and other income                                    211                (519)               (308)
Interest expense                                         (70,150)           (169,229)           (239,379)
                                               -----------------  ------------------  ------------------

Net income                                    $            8,924 $            81,436 $            90,360
                                               =================  ==================  ==================`

14

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`Six Months Ended June 30, 2004
                                               ---------------------------------------------------------

                                                  Residential         Commercial            Total
                                               -----------------  ------------------  ------------------
Rental income                                 $          577,608 $         1,349,157 $         1,926,765
Tenant reimbursements                                         --             568,126             568,126
                                               -----------------  ------------------  ------------------

     Total revenues                                      577,608           1,917,283           2,494,891
                                               -----------------  ------------------  ------------------

Operating expenses and operating expenses -
  affiliated                                             301,225             752,474           1,053,699
Management fees                                           30,109             107,468             137,577
Real estate taxes                                         28,980             234,666             263,646
Depreciation and amortization                            113,495             523,717             637,212
                                               -----------------  ------------------  ------------------

     Total operating expenses                            473,809           1,618,325           2,092,134
                                               -----------------  ------------------  ------------------

Operating income                                         103,799             298,958             402,757

Interest and other income                                    578              10,630              11,208
Interest expense                                        (131,264)           (347,779)           (479,043)
Loss of disposal of assets                                (4,176)                 --              (4,176)
                                               -----------------  ------------------  ------------------

Net loss                                      $          (31,063)$           (38,191)$           (69,254)
                                               =================  ==================  ==================`

`Six Months Ended June 30, 2003
                                               ---------------------------------------------------------

                                                  Residential         Commercial            Total
                                               -----------------  ------------------  ------------------
Rental income                                 $          619,892 $         1,396,245 $         2,016,137
Tenant reimbursements                                         --             582,280             582,280
                                               -----------------  ------------------  ------------------

     Total revenues                                      619,892           1,978,525           2,598,417
                                               -----------------  ------------------  ------------------

Operating expenses and operating expenses -
  affiliated                                             247,984             751,831             999,815
Management fees                                           32,404             116,855             149,259
Real estate taxes                                         33,558             234,096             267,654
Depreciation and amortization                            114,390             497,296             611,686
                                               -----------------  ------------------  ------------------

     Total operating expenses                            428,336           1,600,078           2,028,414
                                               -----------------  ------------------  ------------------

Operating income                                         191,556             378,447             570,003

Interest and other income                                    237               2,444               2,681
Interest expense                                        (141,599)           (342,513)           (484,112)
                                               -----------------  ------------------  ------------------

Net income                                    $           50,194 $            38,378 $            88,572
                                               =================  ==================  ==================`

15

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A reconciliation of the totals
reported for the operating segments to the applicable line items in the consolidated
financial statements for the three and six months ended June 30, 2004 and 2003, is
necessary given amounts recorded at the Partnership level and not allocated to the
operating properties for internal reporting purposes.

`Three Months Ended
                                                                             June 30,
                                                             ----------------------------------------
                                                                    2004                 2003
                                                             -------------------  -------------------
DEPRECIATION AND AMORTIZATION
Total depreciation and amortization for reportable segments $            318,233 $            301,689
Depreciation and amortization for Partnership                              4,655                4,655
                                                             -------------------  -------------------

     Total depreciation and amortization                    $            322,888 $            306,344
                                                             ===================  ===================

INTEREST AND OTHER INCOME
Total interest and other income for reportable segments     $              5,402 $               (308)
Interest and other income for Partnership                                    771                   71
                                                             -------------------  -------------------

     Total interest and other income                        $              6,173 $               (237)
                                                             ===================  ===================

INTEREST EXPENSE
Total interest expense for reportable segments              $            239,010 $            239,379
Interest expense for Partnership                                           5,091                5,091
                                                             -------------------  -------------------

     Total interest expense                                 $            244,101 $            244,470
                                                             ===================  ===================

NET LOSS
Total net loss for reportable segments                      $             15,895 $             90,360
Net loss for Partnership (1)                                            (228,879)            (251,374)
Minority interest income                                                     694               11,688
                                                             -------------------  -------------------

     Total net loss                                         $           (213,678)$           (172,702)
                                                             ===================  ===================`

|(1) | The Partnership net loss is primarily composed of professional and
administrative costs born by the Partnership as well as interest and other
income, depreciation, interest expense and minority interest recorded at the
partnership level and not allocated to the operating segments. The professional
and administrative costs include the tax and public company reporting and
compliance costs associated with a public limited partnership.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

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`Six Months Ended
                                                                             June 30,
                                                             ----------------------------------------
                                                                    2004                 2003
                                                             -------------------  -------------------
DEPRECIATION AND AMORTIZATION
Total depreciation and amortization for reportable segments $            637,212 $            611,686
Depreciation and amortization for Partnership                              9,308                9,308
                                                             -------------------  -------------------

     Total depreciation and amortization                    $            646,520 $            620,994
                                                             ===================  ===================

INTEREST AND OTHER INCOME
Total interest and other income for reportable segments     $             11,208 $              2,681
Interest and other income for Partnership                                  1,047                  144
                                                             -------------------  -------------------

     Total interest and other income                        $             12,255 $              2,825
                                                             ===================  ===================

INTEREST EXPENSE
Total interest expense for reportable segments              $            479,043 $            484,112
Interest expense for Partnership                                          10,181               10,181
                                                             -------------------  -------------------

     Total interest expense                                 $            489,224 $            494,293
                                                             ===================  ===================

NET LOSS
Total net (loss) income for reportable segments             $            (69,254)$             88,572
Net loss for Partnership (1)                                            (564,530)            (488,527)
Minority interest (loss) income                                           (9,670)               4,642
                                                             -------------------  -------------------

     Total net loss                                         $           (624,114)$           (404,597)
                                                             ===================  ===================`

|(1) | The Partnership net loss is primarily composed of professional and
administrative costs born by the Partnership as well as interest and other
income, depreciation, interest expense and minority interest recorded at the
partnership level and not allocated to the operating segments. The professional
and administrative costs include the tax and public company reporting and
compliance costs associated with a public limited partnership.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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# 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 should be read in conjunction
with the Consolidated Financial Statements in Item 1 and the cautionary statements below.

# Critical Accounting
Policies

General

A critical accounting policy is one
that would materially affect our operations or financial condition, and requires
management to make estimates or judgments in certain circumstances. These judgments often
result from the need to make estimates about the effect of matters that are inherently
uncertain. Critical accounting policies discussed in this section are not to be confused
with accounting principles and methods disclosed in accordance with U.S. generally
accepted accounting principles (GAAP). GAAP requires information in financial
statements about accounting principles, methods used and disclosures pertaining to
significant estimates. The following disclosure discusses judgments known to management
pertaining to trends, events or uncertainties known which were taken into consideration
upon the application of those policies and the likelihood that materially different
amounts would be reported upon taking into consideration different conditions and
assumptions.

Impairment and Valuation

Statement of Financial Accounting
Standards No. 144 Accounting for the Impairment or Disposal of Long-Lived
Assets, specifies circumstances in which certain long-lived assets must be reviewed
for impairment. If the carrying amount of an asset exceeds the sum of its expected future
cash flows, the assets carrying value must be written down to fair value. In
determining the value of an investment property and whether the investment property is
impaired, management considers several factors such as projected rental and vacancy rates,
property operating expenses, capital expenditures and interest rates. The capitalization
rate used to determine property valuation is based on the market in which the investment
property is located, length of leases, tenant financial strength, the economy in general,
demographics, environment, property location, visibility, age and physical condition among
others. All of these factors are considered by management in determining the value of any
particular investment property. The value of any particular investment property is
sensitive to the actual results of any of these factors, either individually or taken as a
whole. If the actual results differ from managements judgment, the valuation could
be negatively or positively affected.

18

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Recognition of Rental
Income

Our apartment community has operating
leases with apartment residents with terms generally of twelve months or less. We
recognize rental revenue related to these leases on an accrual basis when due from
residents. In accordance with our standard lease terms, rental payments are generally due
on a monthly basis.

Our commercial property leases are
accounted for as operating leases. We accrue minimum rents on a straight-line basis over
the terms of their respective leases. We structure our leases to allow us to recover a
significant portion of our property operating, real estate taxes and repairs and
maintenance expenses from our commercial tenants. Property operating expenses typically
include utility, insurance, security, janitorial, landscaping and other administrative
expenses. We accrue reimbursements from tenants for recoverable portions of all these
expenses as revenue in the period the applicable expenditures are incurred. We also
receive estimated payments for these reimbursements from substantially all our tenants
throughout the year. We do this to reduce the risk of loss on uncollectible accounts once
we perform the final year-end billings for recoverable expenditures. We recognize the
difference between estimated recoveries and the final billed amounts in the subsequent
year and we believe these differences were not material in any period presented.

Under GAAP, we are required to
recognize rental income based on the effective monthly rent for each lease. The effective
monthly rent is equal to the average monthly rent during the term of the lease, not the
stated rent for any particular month. The process, known as straight-lining or
stepping rent generally has the effect of increasing rental revenues during
the early phases of a lease and decreasing rental revenues in the latter phases of a
lease. Due to the impact of straight- lining, rental income exceeded the cash
collected for rent by approximately $113,000 and $21,000, for the six months ended June
30, 2004 and 2003, respectively. If rental income calculated on a straight-line basis
exceeds the cash rent due under the lease, the difference is recorded as an increase in
deferred rent receivable and included as a component of accounts receivable on the
relevant balance sheet. If the cash rent due under the lease exceeds rental income
calculated on a straight-line basis, the difference is recorded as a decrease in deferred
rent receivable and is recorded as a decrease of accounts receivable on the relevant
balance sheet. We defer recognition of contingent rental income, such as percentage or
excess rent, until the specified target that triggers the contingent rental income is
achieved. We periodically review the collectability of outstanding receivables. Allowances
are generally taken for tenants with outstanding balances due for a period greater than
ninety days and for tenants with potentially uncollectible outstanding balances due for a
period less than ninety days.

Recognition of Lease
Termination Income

We recognize lease termination income
upon receipt of the income. We accrue lease termination income if there is a signed
termination agreement, all of the conditions of the agreement have been met and the tenant
is no longer occupying the property.

19

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Cost Capitalization and
Depreciation Policies

We review all expenditures and
capitalize any item exceeding $1,000 deemed to be an upgrade or a tenant improvement with
an expected useful life greater than one year. Land, building and amenities are stated at
cost. Depreciation expense is computed using the straight-line method over the estimated
useful lives of the assets. Buildings and improvements have estimated useful lives between
3-30 years, land improvements have estimated useful lives between 5-30 years and
amenities have estimated useful lives between 3-30 years.

Minority Interest

In May 2003, the Financial Accounting
Standards Board (FASB) issued Statement No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity(SFAS
150). SFAS 150 establishes standards for classifying and measuring as liabilities
certain financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity. SFAS 150 was effective for all financial
instruments created or modified after May 31, 2003, and otherwise was effective at the
beginning of the first interim period beginning after June 15, 2003. On November 7, 2003,
FASB Staff Position No. FAS 150-3 was issued, which deferred for an indefinite period the
classification and measurement provisions, but not the disclosure provisions of SFAS 150.

We consolidate certain properties
that are also owned by affiliated parties that have noncontrolling interests. In certain
cases, the applicable joint venture agreement provides for a contractual termination date
of the agreement based on certain specified events. SFAS 150 describes this type of
arrangement as a limited-life subsidiary. SFAS 150 requires the disclosure of
the estimated settlement value of these noncontrolling interests. As of June 30, 2004, the
estimated settlement value of these noncontrolling interests is approximately $3,372,000.
This settlement value is based on estimated third party consideration paid to the joint
venture upon disposition of each property and is net of all other assets and liabilities
including any yield maintenance that would have been due on that date had the mortgages
encumbering each property been prepaid on June 30, 2004. Due to the inherent risks and
uncertainties related to the operations and sale of real estate assets, among other
things, the amount of any potential distribution to the noncontrolling interests is likely
to change.

20

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# Results of Operations

The following tables include our
selected summarized operating data for the three and six months ended June 30, 2004 and
2003. This data is presented to provide assistance in identifying trends in our operating
results and other factors affecting our business. This data should be read in conjunction
with our consolidated financial statements, including the notes thereto, in Part I, Item 1
of this report.

`Three Months Ended June 30, 2004
                                            -----------------------------------------------------------------------
                                                 Residential       Commercial       Partnership         Total
                                            -----------------------------------------------------------------------
Net revenues                                  $        284,470 $         995,137 $             -- $       1,279,607
Operating expenses and operating
  expenses - affiliated                                132,066           373,400               --           505,466
Depreciation and amortization                           56,911           261,322            4,655           322,888
Interest expense                                        64,967           174,043            5,091           244,101
Net (loss) income                                       (3,418)           19,313         (229,573)         (213,678)`

`Three Months Ended June 30, 2003
                                            -----------------------------------------------------------------------
                                                 Residential       Commercial       Partnership         Total
                                            -----------------------------------------------------------------------
Net revenues                                  $        303,787 $       1,088,697 $             -- $       1,392,484
Operating expenses and operating
  expenses - affiliated                                135,360           412,162               --           547,522
Depreciation and amortization                           56,994           244,695            4,655           306,344
Interest expense                                        70,150           169,229            5,091           244,470
Net income (loss)                                        8,924            81,436         (263,062)         (172,702)`

`Six Months Ended June 30, 2004
                                            -----------------------------------------------------------------------
                                                 Residential       Commercial       Partnership         Total
                                            -----------------------------------------------------------------------
Net revenues                                  $        577,608 $       1,917,283 $             -- $       2,494,891
Operating expenses and operating
  expenses - affiliated                                301,225           752,474               --         1,053,699
Depreciation and amortization                          113,495           523,717            9,308           646,520
Interest expense                                       131,264           347,779           10,181           489,224
Net loss                                               (31,063)          (38,191)        (554,860)         (624,114)`

`Six Months Ended June 30, 2003
                                            -----------------------------------------------------------------------
                                                 Residential       Commercial       Partnership         Total
                                            -----------------------------------------------------------------------
Net revenues                                  $        619,892 $       1,978,525 $             -- $       2,598,417
Operating expenses and operating
  expenses - affiliated                                247,984           751,831               --           999,815
Depreciation and amortization                          114,390           497,296            9,308           620,994
Interest expense                                       141,599           342,513           10,181           494,293
Net income (loss)                                       50,194            38,378         (493,169)         (404,597)`

21

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During our most recent operating
period net revenues for the residential segment have decreased primarily due to a lower
average occupancy and a decrease in the average rental rate per unit. Net revenues for the
commercial segment have decreased primarily due to a decrease in lease-buy-out income at
Lakeshore Business Center Phases I and II and decreased average occupancy at Commonwealth
Business Center Phase II, where we have not been successful in renewing several
tenants expired leases. We continue our leasing efforts by seeking new tenants for
this property. The decrease in the commercial net revenues is partially offset by an
increase in average occupancy at Lakeshore Business Center Phase III as a result of our
efforts to lease this recently constructed property. Operating expenses and operating
expenses  affiliated quarter to date have decreased primarily due to decreased
consulting fees at the Lakeshore Business Center Phases I, II and III, decreased loan fees
at Lakeshore Business Center Phase III, decreased landscaping at Commonwealth Business
Center Phase II and The Willows of Plainview Phase II and decreased repairs and
maintenance at The Willows of Plainview Phase II. Operating expenses and operating
expenses  affiliated year to date have remained relatively stable. Depreciation
expense has increased due to the addition of fixed assets, while interest expense has
remained relatively stable. The expenses related to our ongoing litigation and proposed
merger have negatively impacted our partnership net losses.

Rental income and tenant
reimbursements generated by our property and joint ventures for the three and six months
ended June 30, 2004 and 2003 were as follows:

`Three Months Ended              Six Months Ended
                                                                 June 30,                       June 30,
                                                       -----------------------------  -----------------------------
                                                            2004           2003           2004            2003
                                                       --------------  -------------  -------------  --------------
Wholly-Owned Property
Commonwealth Business Center Phase II                 $       114,037 $      121,649 $      198,322 $       243,871

Joint Venture Properties
(Ownership % on June 30, 2004)
The Willows of Plainview Phase II (90.30%)            $       284,470 $      303,787 $      577,608 $       619,892
Lakeshore Business Center Phase I (81.19%)                    375,477        436,276        740,706         795,903
Lakeshore Business Center Phase II (81.19%)                   366,213        445,818        702,146         780,201
Lakeshore Business Center Phase III (81.19%)                  139,410         84,954        276,109         158,550`

We believe the changes in rental
income and tenant reimbursements from period to period are temporary effects of each
propertys specific mix of lease maturities and are not indicative of any known
trend, except as described above for Commonwealth Business Center Phase II and Lakeshore
Business Center Phase III.

22

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The occupancy levels at our property
and joint ventures as of June 30, 2004 and 2003 were as follows:

`June 30,
                                                               -----------------------------------------
                                                                      2004                   2003
                                                               ------------------     ------------------
Wholly-Owned Property
Commonwealth Business Center Phase II                                 62%                    69%

Joint Venture Properties
(Ownership % on June 30, 2004)
The Willows of Plainview Phase II (90.30%)                            80%                    88%
Lakeshore Business Center Phase I (81.19%)                            72%                    69%
Lakeshore Business Center Phase II (81.19%)                           83%                    81%
Lakeshore Business Center Phase III (81.19%)                          89%                    38%`

We believe the changes in occupancy
on June 30 from year to year are temporary effects of each propertys specific mix of
lease maturities and are not indicative of any known trend, except as described above for
Commonwealth Business Center Phase II and Lakeshore Business Center Phase III.

The average occupancy levels at our
property and joint ventures for the three and six months ended June 30, 2004 and 2003 were
as follows:

`Three Months Ended                    Six Months Ended
                                                                  June 30,                             June 30,
                                                       -------------------------------     --------------------------------
                                                           2004              2003              2004               2003
                                                       -------------     -------------     -------------      -------------
Wholly-Owned Property
Commonwealth Business Center Phase II                       62%               69%               62%                69%

Joint Venture Properties
(Ownership % on June 30, 2004)
The Willows of Plainview Phase II (90.30%)                  81%               85%               82%                85%
Lakeshore Business Center Phase I (81.19%)                  72%               69%               72%                70%
Lakeshore Business Center Phase II (81.19%)                 80%               81%               80%                81%
Lakeshore Business Center Phase III (81.19%)                89%               38%               89%                38%`

We believe the changes in average
occupancy from period to period are temporary effects of each propertys specific mix
of lease maturities and are not indicative of any known trend, except as described above
for Commonwealth Business Center Phase II and Lakeshore Business Center Phase III.

The following discussion relating to
changes in our results of operations includes only material line items within our
Statements of Operations or line items for which there was a material change between the
three and six months ending June 30, 2004 and 2003.

23

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Rental Income and Tenant
Reimbursements

Our rental income and tenant
reimbursements for the three months ended June 30, 2004 and 2003 were approximately
$1,279,000 and $1,392,000, respectively. Our rental income and tenant reimbursements for
the six months ended June 30, 2004 and 2003 were approximately $2,494,000 and $2,598,000,
respectively. The decrease of $113,000, or 8%, and $104,000, or 4%, respectively, was
primarily due to a decrease in lease-buy-out income at Lakeshore Business Center Phases I
and II, decreased average occupancy at Commonwealth Business Center Phase II and The
Willows of Plainview Phase II and lower rental rates per unit at The Willows of Plainview
Phase II. The decrease can also be attributed to a decrease in common area maintenance at
Lakeshore Business Center Phases I, II and III. The decrease is partially offset by an
increase in average occupancy at Lakeshore Business Center Phase III.

Operating Expenses and
Operating Expenses  Affiliated

Our operating expenses for the three
months ended June 30, 2004 and 2003 were approximately $356,000 and $395,000,
respectively. The decrease of $39,000, or 10%, was primarily due to a decrease in
consulting fees at Lakeshore Business Center Phases I, II and III , a decrease in loan
fees expense at Lakeshore Business Center Phase III, decreased landscaping at Commonwealth
Business Center Phase II and The Willows of Plainview Phase II and decreased repairs and
maintenance at The Willows of Plainview Phase II. The decrease is partially offset by
increased bad debt expense at Lakeshore Business Center Phase II. Our operating expenses
did not change significantly between the six months ended June 30, 2004 and 2003. There
were no offsetting material changes.

Our operating expenses 
affiliated did not change significantly for the three and six months ended June 30, 2004
and 2003. There were no offsetting material changes.

Operating expenses  affiliated
are for the services performed by employees of NTS Development Company, an affiliate of
our General Partner. These employee services include property management, leasing,
maintenance, security and other services necessary to manage and operate our business.

Professional and
Administrative Expenses and Professional and Administrative Expenses Affiliated

Our professional and administrative
expenses for the three months ended June 30, 2004 and 2003 were approximately $165,000 and
$191,000, respectively. The decrease of $26,000, or 14% was primarily due to decreased
legal and professional fees associated with our litigation filed by limited partners. Our
professional and administrative expenses for the six months ended June 30, 2004 and 2003
were approximately $443,000 and $372,000, respectively. The increase of $71,000, or 19%
was primarily due to increased legal and professional fees associated with our proposed
merger. See Part I, Item I  Note 10 for information regarding our proposed merger
and our litigation filed by limited partners.

24

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Our professional and administrative
expenses  affiliated did not change significantly for the three and six months ended
June 30, 2004 and 2003. There were no offsetting material changes.

Professional and administrative
expenses  affiliated are for the services performed by employees of NTS Development
Company, an affiliate of our General Partner. These employee services include legal,
financial and other services necessary to manage and operate our business.

Depreciation and
Amortization Expense

Our depreciation and amortization
expense did not change significantly for the three and six months ended June 30, 2004 and
2003. There were no offsetting material changes.

Interest Expense

Our interest expense did not change
significantly for the three and six months ended June 30, 2004 and 2003. There were no
offsetting material changes.

# Liquidity and Capital
Resources

The following table sets forth the
cash provided by or used in operating activities, investing activities and financing
activities for the six months ended June 30, 2004 and 2003.

Cash flows (used in) provided by:

`Six Months Ended
                                                                                  June 30,
                                                                  -----------------------------------------
                                                                         2004                  2003
                                                                  ------------------    -------------------
Operating activities                                           $             275,238 $              986,936
Investing activities                                                        (180,662)              (527,541)
Financing activities                                                         (20,681)              (471,039)
                                                                  ------------------    -------------------

     Net  increase (decrease) in cash and equivalents          $              73,895 $              (11,644)
                                                                  ==================    ===================`

Net cash provided by operating
activities decreased from approximately $987,000 for the six months ended June 30, 2003 to
approximately $275,000 for the six months ended June 30, 2004. The decrease is primarily
due to the change in accounts payable and decreased net income from operations as a result
of increased expenses associated with our proposed merger.

Net cash used in investing activities
decreased from approximately $528,000 for the six months ended June 30, 2003 to
approximately $181,000 for the six months ended June 30, 2004. The decrease is primarily
due to decreased capital expenditures at Lakeshore Business Center Phase III.

25

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Net cash flow used in financing
activities decreased from approximately $471,000 for the six months ended June 30, 2003 to
approximately $21,000 for the six months ended June 30, 2004. The decrease is primarily
the result of refinancing the existing loans at Lakeshore Business Center Phases I and II,
which suspended principal payments and refinancing the construction loan at Lakeshore
Business Center Phase III, which resulted in increased borrowings.

Due to the fact that no distributions
were made during the six months ended June 30, 2004 or 2003, the table which presents that
portion of the distributions that represents a return of capital in accordance with GAAP
has been omitted.

Future Liquidity

Our future liquidity depends
significantly on our properties occupancy remaining at a level which provides for
debt payments and adequate working capital, currently and in the future. If occupancy were
to fall below that level and remain at or below that level for a significant period of
time, our ability to make payments due under our debt agreements and to continue paying
daily operational costs would be greatly impaired. In addition, we may be required to
obtain financing in connection with the capital improvements and leasing costs described
below.

NTS Development Company has agreed to
defer, until March 31, 2005, amounts owed to them by us as of December 31, 2003 and those
amounts accruing from January 1, 2004 through March 31, 2005, other than as permitted by
our cash flows. There can be no assurances that NTS Development Company will continue to
defer amounts due them past March 31, 2005. If these amounts are not deferred, such action
could have a material adverse effect on our liquidity and financial condition. Payment of
such deferred amounts would be dependent upon available operating cash flow or funding
from potential third-party resources in the form of loans or advances.

As of June 30, 2004, our planned
capital improvements include HVAC replacements at Commonwealth Business Center Phase II
and Lakeshore Business Center Phase II estimated to cost approximately $12,000 and
$14,000, respectively. At Lakeshore Business Center Phase I we plan to replace the common
area decor for an estimated cost of approximately $22,000 and repaint the building
exterior for an estimated cost of approximately $30,000.

As of June 30, 2004 we have a
commitment from a tenant at Lakeshore Business Center Phase III for tenant improvements on
approximately 4,000 square feet, estimated to cost approximately $162,000. As of June 30,
2004 approximately $19,000 of this cost has been incurred.

Currently, our plans for renovations
and other major capital expenditures include tenant improvements at our commercial
properties as required by lease negotiations at these properties. Changes to current
tenant finish 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 the
improvements are determined by the size of the space being leased and whether the
improvements are for a new tenant or incurred because of a lease renewal.

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The demands on liquidity as discussed
above will be managed by our general partner using cash provided by operations, cash
reserves, deferral of amounts owed to NTS Development Company and existing or additional
financing secured by our properties. Typically, these capital improvements and leasing
costs require use of existing financing or additional financing. There can be no guarantee
that such funds will be available at which time our general partner will manage the demand
on liquidity according to our best interest.

We are making efforts to increase the
occupancy levels at our properties. At Commonwealth Business Center Phase II, the leasing
and renewal negotiations are conducted by leasing agents that are employees of NTS
Development Company in Louisville, Kentucky. The leasing agents are located in the same
city as the property. All advertising is coordinated by NTS Development Companys
marketing staff located in Louisville, Kentucky. The leasing and renewal negotiations at
Lakeshore Business Center Phases I, II and III are managed by an employee of NTS
Development Company. At The Willows of Plainview Phase II, we have an on-site leasing
staff that are employees of NTS Development Company, who facilitate all on-site visits
from potential tenants, make visits to local companies to promote fully furnished
apartments, negotiate lease renewals with current residents and coordinate all local
advertising with NTS Development Companys marketing staff.

Leases at our commercial properties
provide for tenants to contribute toward the payment of common area maintenance expenses,
insurance and real estate taxes. These lease provisions, along with the fact that
residential leases are generally for a period of one year, provide limited protection to
our operations from the impact of inflation and changing prices.

We have no other material commitments
for renovations or capital improvements as of June 30, 2004.

# Proposed Merger

As part of the Settlement Agreement,
our general partner and the general partners of the four public partnerships affiliated
with us, have agreed to pursue a merger of the partnerships and several other affiliated
real estate entities into a newly formed limited partnership known as NTS Realty Holdings
Limited Partnership (NTS Realty). The merger is subject to, among other
things, approval by a majority of the limited partner interests in each partnership. We
may not seek the approval of the limited partners until a filing made by NTS Realty with
the Securities and Exchange Commission is declared effective. For the six months ended
June 30, 2004 and 2003, our share of the legal and professional fees for the proposed
merger was approximately $245,000 and $67,000, respectively.

On February 4, 2004, NTS Realty filed
a joint consent solicitation statement/prospectus on Form S-4 with the Securities and
Exchange Commission. The solicitation statement/prospectus presents the merger of
NTS-Properties III; NTS-Properties IV; NTS-Properties V; NTS-Properties VI; and
NTS-Properties VII, Ltd. with NTS Realty. Concurrent with the merger, ORIG, LLC, a
Kentucky limited liability company, which is affiliated with our general partner, will
contribute substantially all its real estate assets and all of its liabilities to NTS
Realty.

27

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On June 24, 2004 and August 13, 2004,
NTS Realty filed first and second amendments, respectively, to Form S-4 with the
Securities and Exchange Commission. Both amendments are in response to comments made by
the Securities and Exchange Commission.

# Ownership of Joint
Ventures

On June 25, 2002, NTS-Properties Plus
Ltd. merged with ORIG, LLC, (ORIG) an affiliate of ours. ORIG is the surviving
entity as a result of this merger. NTS-Properties V continues to hold a 81.19% interest in
the L/U II Joint Venture after the completion of the NTS-Properties Plus Ltd./ORIG Merger.
ORIG now holds a 7.69% interest in the L/U II Joint Venture.

# Website Information

Our website address is
www.ntsdevelopment.com.Our annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act are available and may be
accessed free of charge through the About NTS section of our website as soon
as reasonably practicable after we electronically file this material with, or furnish it
to, the SEC. Our website and the information contained therein or connected thereto are
not incorporated into this quarterly report on Form 10-Q.

# Item 3 
Quantitative and Qualitative Disclosures About Market Risk

Our primary market risk exposure with
regard to financial instruments stems from changes in interest rates. All of our debt
bears interest at a fixed rate with the exception of the $2,844,873 mortgage payable on
Lakeshore Business Center Phase III and the $800,000 mortgage payable on Commonwealth
Business Center Phase II. On June 30, 2004, a hypothetical 100 basis point increase in
interest rates would result in an approximate $290,000 decrease in the fair value of the
debt and would increase interest expense on the variable rate mortgages by approximately
$36,000 annually.

# Item 4  Controls
and Procedures

Our General Partner, with the
participation of the Chief Executive Officer and Chief Financial Officer, has evaluated
the effectiveness of our disclosure controls and procedures as of June 30, 2004. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that
our disclosure controls and procedures were effective as of June 30, 2004. There were no
material changes in our internal controls over financial reporting during the six months
ended June 30, 2004.

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# PART II  OTHER INFORMATION

# Item 1  Legal Proceedings

On May 6, 2004, the Superior Court of
the State of California for the County of Contra Costa granted its final approval of the
Stipulation and Agreement of Settlement (the Settlement Agreement) jointly
filed by the general partners (the General Partners) of NTS-Properties III,
NTS-Properties IV, NTS-Properties V, NTS-Properties VI and NTS-Properties VII, Ltd. (the
Partnerships), along with certain of their affiliates, with the class of
plaintiffs in the action originally captioned Buchanan, et al. v. NTS-Properties
Associates, et al.(Case No. C 01-05090) on December 5, 2003. At the final hearing,
any member of the class of plaintiffs was given the opportunity to object to the final
approval of the Settlement Agreement, the entry of a final judgment dismissing with
prejudice the Buchananlitigation, or an application of an award for
attorneys fees and expenses to plaintiffs counsel. The Superior Courts
order provides, among other things, that: (1) the Settlement Agreement, and all
transactions contemplated thereby, including the proposed merger of the Partnerships into
NTS Realty Holdings Limited Partnership, are fair, reasonable and adequate, and in the
best interests of the class of plaintiffs; (2) the plaintiffs complaint and each and
every cause of action and claim set forth therein is dismissed with prejudice; (3) each
class member is barred from (a) transferring, selling or otherwise disposing of (other
than by operation of law) their interests until the earlier of the closing date of the
merger, the termination of the settlement or June 30, 2004; and (4) each class member who
requested to be excluded from the settlement released their claims in the Bohm
litigation.

On June 11, 2004, Joseph Bohm and
David Duval, class members who objected to the Settlement Agreement but were overruled by
the Superior Court, filed an appeal in the Court of Appeals of the State of California,
first Appellate District.

Items 2 through 5 are omitted because these items are inapplicable or the answers to the items are negative.

# Item 6  Exhibits and Reports on Form 8-K

Exhibit No.

|   |                                                                                                                               |   
|-- | ----------------------------------------------------------------------------------------------------------------------------- | --
|3  | Amended and Restated Agreement and Certificate
of Limited Partnership of NTS-Properties V,
a Maryland limited partnership.    | * 
|  
|3a | First Amendment to Amended and Restated
Agreement of Limited Partnership of
NTS-Properties V, a Maryland limited partnership. | **

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|     |                                                                                                                                                                                                                                                 |     
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|10   | Property Management Agreement between
NTS Development Company and NTS-Properties V,
a Maryland limited partnership.                                                                                                                             | *   
|    
|14   | Code of Ethics.                                                                                                                                                                                                                                 | *** 
|    
|31.1 | Certification of Chief Executive Officer Pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended.                                                                                                              | ****
|    
|31.2 | Certification of Chief Financial Officer Pursuant to
Rule 13a-14(a) and Rule 15d-14(a) of the Securities
Exchange Act, as amended.                                                                                                              | ****
|    
|32.1 | Certification of Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.                                                                                                      | ****
|    
|32.2 | Certification of Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.                                                                                                      | ****
|    
|*    | Incorporated by reference to documents filed with the Securities and Exchange
Commission in connection with the filing of the Registration Statements on Form S-11
on May 1, 1984 (effective August 1, 1984) under Commission File No. 2-90818.
|    
|**   | Incorporated by reference to Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1987 under Commission
File No. 0-13400.                                                                        
|    
|***  | See www.ntsdevelopment.comfor our code of ethics.                                                                                                                                                                                              
|    
|**** | Attached as an exhibit with this Form 10-Q.                                                                                                                                                                                                    

Reports on Form 8-K

We filed a Form 8-K on June 24, 2004,
to announce that NTS Realty Holdings Limited Partnership filed an amendment to Form S-4
with the Securities and Exchange Commission on June 18, 2004. The original Form S-4 was
filed on February 4, 2004.

We filed a Form 8-K on August 13,
2004, to announce that NTS Realty Holdings Limited Partnership filed a second amendment to
Form S-4 with the Securities and Exchange Commission on August 13, 2004. The original Form
S-4 was filed on February 4, 2004.

30

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

|NTS-PROPERTIES V,
A MARYLAND LIMITED PARTNERSHIP
|------------------------------------------------
|
|                                                
|By:                                             
|                                                
|                                                
|                                                
|                                                
|                                                
|                                                

|/s/ Brian F. Lavin                                
|--------------------------------------------------
|                                                  
|Brian F. Lavin                                    
|President of NTS Capital Corporation              
|                                                  
|                                                  
|/s/ Gregory A. Wells                              
|                                                  
|Gregory A. Wells                                  
|Chief Financial Officer of NTS Capital Corporation
|                                                  
|                                                  
|Date: August 16, 2004                             

31