<PAGE>

                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                            Washington, D. C. 20549

                                  FORM 10-K

(Mark One)

    X      ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
   ---     EXCHANGE ACT OF 1934

           For the fiscal year ended  December 31, 1998
                                     -------------------

                                       OR

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

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

                         Commission file number  0-11655
                                                ---------

                                NTS-PROPERTIES IV
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             Kentucky                                 61-1026356
-----------------------------------          ----------------------------------
  (State or other jurisdiction of                   (I.R.S. Employer
  incorporation or organization)                    Identification No.)


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

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

Securities registered pursuant to Section 12(b) of the Act:

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                          Limited Partnership Interests
-------------------------------------------------------------------------------
                                (Title of Class)

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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

Exhibit Index: See page 54
Total Pages: 59

<PAGE>

                                     TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                          Pages
<S>                <C>                                                   <C>
                                     PART I

Items 1 and 2       Business and Properties                                3-17
Item 3              Legal Proceedings                                        17
Item 4              Submission of Matters to a Vote of
                      Security Holders                                       17


                                     PART II


Item 5              Market for the Registrant's Limited Partnership
                      Interests and Related Partner Matters                  18
Item 6              Selected Financial Data                                  19
Item 7              Management's Discussion and Analysis of
                      Financial Condition and Results of Operations       20-29
Item 8              Financial Statements and Supplementary Data           30-50
Item 9              Changes in and Disagreements with Accountants
                      on Accounting and Financial Disclosure                 51


                                    PART III


Item 10             Directors and Executive Officers of the
                      Registrant                                             52
Item 11             Management Remuneration and Transactions                 53
Item 12             Security Ownership of Certain Beneficial
                      Owners and Management                                  53
Item 13             Certain Relationships and Related Transactions           53


                                     PART IV


Item 14             Exhibits, Financial Statement Schedules
                      and Reports on Form 8-K                             54-58


Signatures                                                                   59
</TABLE>

                                       - 2 -

<PAGE>

                                     PART I

Items 1. and 2.  BUSINESS AND PROPERTIES

DEVELOPMENT OF BUSINESS

NTS-Properties IV., Ltd., a Kentucky Limited Partnership, (the "Partnership" or
"NTS-Properties IV") is a limited partnership organized under the laws of the
Commonwealth of Kentucky on May 13, 1983. The General Partner is NTS-Properties
Associates IV, a Kentucky limited partnership. As of December 31, 1998, the
Partnership owned the following properties:

     -    Commonwealth Business Center Phase I, a business center with
          approximately 57,000 net rentable ground floor square feet and
          approximately 24,000 net rentable mezzanine square feet in Louisville,
          Kentucky, constructed by the Partnership.

     -    Plainview Point Office Center Phases I and II, an office center with
          approximately 56,000 net rentable square feet in Louisville, Kentucky,
          acquired complete by the Partnership.

     -    The Willows of Plainview Phase I, a 118-unit luxury apartment complex
          in Louisville, Kentucky, constructed by the Partnership.

     -    A joint venture interest in The Willows of Plainview Phase II, a
          144-unit luxury apartment complex in Louisville, Kentucky, constructed
          by the joint venture between the Partnership and NTS-Properties V, a
          Maryland Limited Partnership, an affiliate of the General Partner of
          the Partnership, ("NTS-Properties V"). The Partnership's percentage
          interest in the joint venture was 10% at December 31, 1998.

     -    A joint venture interest in Golf Brook Apartments, a 195-unit luxury
          apartment complex in Orlando, Florida, constructed by the joint
          venture between the Partnership and NTS-Properties VI, a Maryland
          Limited Partnership, an affiliate of the General Partner of the
          Partnership, ("NTS-Properties VI"). The Partnership's percentage
          interest in the joint venture was 4% at December 31, 1998.

     -    A joint venture interest in Plainview Point III Office Center, an
          office center with approximately 62,000 net rentable square feet in
          Louisville, Kentucky, constructed by the joint venture between the
          Partnership and NTS-Properties VI. The Partnership's percentage
          interest in the joint venture was 5% at December 31, 1998.

     -    A joint venture interest in Blankenbaker Business Center 1A, a
          business center with approximately 50,000 net rentable ground floor
          square feet and approximately 50,000 net rentable mezzanine square
          feet located in Louisville, Kentucky, acquired complete by a joint
          venture between NTS-Properties Plus Ltd. and NTS-Properties VII, Ltd.,
          affiliates of the General Partner of the Partnership. The
          Partnership's percentage interest in the joint venture was 30% at
          December 31, 1998.

     -    A joint venture interest in the Lakeshore/University II Joint Venture
          ("L/U II Joint Venture"). The L/U II Joint Venture was formed on
          January 23, 1995 among the Partnership and NTS-Properties V,
          NTS-Properties Plus Ltd. and NTS/Fort Lauderdale, Ltd., affiliates of
          the General Partner of the Partnership. The Partnership's percentage
          interest in the joint venture was 18% at December 31, 1998.

                                       - 3 -

<PAGE>

A description of the properties owned by the L/U II Joint Venture as of December
31, 1998 appears below:

     -    LAKESHORE BUSINESS CENTER PHASE I - a business center with
          approximately 103,000 net rentable square feet located in Fort
          Lauderdale, Florida, acquired complete by the joint venture.

     -    LAKESHORE BUSINESS CENTER PHASE II - a business center with
          approximately 97,000 net rentable square feet located in Fort
          Lauderdale, Florida, acquired complete by the joint venture.

     -    OUTPARCEL BUILDING SITES - approximately 6.2 acres of undeveloped land
          adjacent to the Lakeshore Business Center development, which is zoned
          for commercial development.

The Partnership or the joint venture in which the Partnership is a partner has a
fee title interest in the above properties. In the opinion of the Partnership's
management, the properties are adequately covered by insurance.

As of December 31, 1998, the Partnership's properties were encumbered by
mortgages as shown in the table below:

<TABLE>
<CAPTION>

                                               Interest        Maturity              Balance
Property                                         Rate            Date              at 12/31/98
--------                                       --------        --------            -----------
<S>                                            <C>           <C>                   <C>
Commonwealth Business Center
Phase I                                           8.8%        10/01/04 (1)          $1,988,590

Plainview Point Office Center Phases
I and II                                           --               --                  None

Willows of Plainview Phase I                      7.15%       01/05/13 (2)          $1,927,484

Willows of Plainview Phase I                      7.15%       01/05/13 (2)          $1,834,872

Willows of Plainview Phase II                     7.2%        01/05/13 (2)          $  312,698 (3)

Willows of Plainview Phase II                     7.2%        01/05/13 (2)          $  186,758 (3)

Golf Brook Apartments                              --               --                See Below

Plainview Point Office Center Phase
III                                                --               --                  None

Blankenbaker Business Center
1A                                                8.5%        11/15/05 (4)          $1,058,249 (5)

Lakeshore Business Center
Phase I                                           8.125%      08/01/08 (6)          $  873,517 (7)

Lakeshore Business Center
Phase II                                          8.125%      08/01/08 (6)          $  939,811 (7)
</TABLE>

(1)  Current monthly principal payments are based upon 10-year amortization
     schedule. At maturity, the mortgage will have been repaid based on the
     current rate of amortization.

(2)  Current monthly principal payments are based upon a 15-year amortization
     schedule. At maturity, the loan will have been repaid based on the current
     rate of amortization.

(3)  This amount represents the Partnership's proportionate interest in the
     mortgages payable at December 31, 1998. The outstanding balances of the
     mortgages at December 31, 1998 were $3,080,776 and $1,839,975,
     respectively.

(4)  Current monthly principal payments are based upon an 11-year amortization
     schedule. At maturity, the mortgage will have been repaid based on the
     current rate of amortization.

                                       - 4 -

<PAGE>

(5)  This amount represents the Partnership's proportionate interest in the
     mortgage payable at December 31, 1998. The outstanding balance of the
     mortgage at December 31, 1998 was $3,511,112.

(6)  Current monthly principal payments are based upon a 12-year amortization
     schedule. At maturity, the mortgage will have been repaid based on the
     current rate of amortization.

(7)  This amount represents the Partnerships's proportionate interest in the
     mortgage payable at December 31, 1998. The outstanding balance of the
     mortgage at December 31, 1998 was $4,890,913 for Phase I and $5,262,099 for
     Phase II.

(8)  Golf Brook Apartments, a joint venture between the Partnership and
     NTS-Properties VI, is encumbered by a mortgage payable to an insurance
     company. The $8,220,270 mortgage payable is recorded as a liability by
     NTS-Properties VI in accordance with the Joint Venture Agreement. The
     mortgage bears interest at a fixed rate of 7.43% and matures May 15, 2009.

Currently, the Partnership's plans for renovations and other major capital
expenditures include tenant finish improvements as required by lease
negotiations at the Partnership's properties. Changes to current tenant
improvements are a typical part of any lease negotiation. Improvements generally
include a revision to the current floor plan to accommodate a tenant's needs,
new carpeting and paint and/or wallcovering. The extent and cost of the
improvements are determined by the size of the space and whether the
improvements are for a new tenant or incurred because of a lease renewal.

The Partnership had no other material commitments for renovations or capital
improvements as of December 31, 1998.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

The Partnership is engaged solely in the business of developing, constructing,
owning and operating residential apartments and commercial real estate. See Item
8, Note 12 for information regarding the Partnership's operating segments.

NARRATIVE DESCRIPTION OF BUSINESS

GENERAL

The current business of the Partnership is consistent with the original purpose
of the Partnership which was to invest in real property, which was either under
development or proposed for development, on which it would develop, construct,
own and operate apartment complexes, business parks, and retail, industrial and
office buildings. The Partnership properties are in a condition suitable for
their intended use.

The Partnership intends to hold the properties until such time as sale or other
disposition appears to be advantageous with a view to achieving the
Partnership's investment objectives or it appears that such objectives will not
be met. In deciding whether to sell a property, the Partnership will consider
factors such as potential capital appreciation, cash flow and Federal income tax
considerations, including possible adverse Federal income tax consequences to
the Limited Partners. Additionally, the outparcel building sites owned by the
L/U II Joint Venture are being marketed for sale. As of December 31, 1998, the
L/U II Joint Venture has a contract for the sale of approximately 2.4 acres of
land it owns at the Lakeshore Business Center development. See below for the
details of this contract. As of December 31, 1998, the L/U II Joint Venture
intends to use 3.8 acres of land it owns at the Lakeshore Business Center
Development to construct Lakeshore Business Center Phase III. See below for
details. Also discussed below is the October 1998 sale of University Business
Center Phase II.

The following is information regarding properties that represent either 10% or
more of total consolidated assets or revenues as of and for the year ending
December 31, 1998.

                                       - 5 -

<PAGE>

COMMONWEALTH BUSINESS CENTER PHASE I

Base annual rents, which exclude the cost of utilities, currently range from 
$7.17 to $15.92 per square foot for ground floor office space, ground floor 
warehouse space and mezzanine office space. The average base annual rental 
for all space leased as of December 31, 1998 was $8.08. Space is ordinarily 
leased for between three and five years with the majority of current square 
footage being leased for a term of five years (1). Current leases terminate 
between 1999 and 2004. Several of the leases provide for renewal options 
ranging from three to five years at rates which are based upon increases in 
the consumer price index and/or are negotiated between lessor and lessee. All 
leases provide for tenants to contribute toward the payment of common area 
expenses, insurance and real estate taxes. As of December 31, 1998, there 
were 10 tenants leasing office and warehouse space aggregating approximately 
50,602 square feet of rentable area (2). The tenants who occupy Commonwealth 
Business Center Phase I are professional service oriented organizations. The 
principal occupations/professions practiced include a stockbrokerage house, 
insurance and machinery sales/service. One tenant individually leases more 
than 10% of Commonwealth Business Center Phase I's rentable area. The 
occupancy levels at the business center as of December 31 were 89% (1998), 
87% (1997), 86% (1996 and 1995) and 82% (1994). See Item 7 for average 
occupancy levels for the periods ending December 31, 1998, 1997 and 1996.

(1)  Excluding a 19,101 square foot lease which is for 10-years.

The following table contains approximate data concerning the leases in effect on
December 31, 1998:

<TABLE>
<CAPTION>

                                                     Current Base
                                   Sq. Ft. and       Annual Rental
                                     % of Net       and % of Gross
                      Year of        Rentable         Base Annual        Renewal
No. of Tenants      Expiration       Area(2)            Rental           Options
--------------      ----------     -----------      --------------       -------
<S>                 <C>          <C>               <C>                 <C>

Major Tenants (3):
         1             2004       19,101 (33.8%)    $304,116 (50.6%)       None

Other Tenants:
         2             1999        7,634 (13.5%)    $102,127 (17.0%)   2 Three-Year
         3             2000        9,475 (16.7%)    $ 82,272 (13.7%)       (4)
         3             2001        8,792 (15.5%)    $ 67,689 (11.3%)      None
         1             2002        5,600  (9.9%)    $ 44,520  (7.4%)      None
</TABLE>

(2)  Rentable area includes only ground square feet (office and warehouse
     space).

(3)  Major tenants are those that individually occupy 10 percent or more of the
     rentable area.

(4)  3 Three-Year and 1 Five-Year.

PLAINVIEW POINT OFFICE CENTER PHASES I AND II

Except as indicated in the table below, base annual rents, which include the 
cost of utilities, currently range from $11.69 to $12.50 per square foot. The 
average base annual rental as of December 31, 1998 was approximately $12.00 
per square foot. Office space is ordinarily leased for between three to five 
years with the majority of current square footage being leased for a term of 
three years (5). Current leases terminate between 1999 and 2006. One lease 
provides for a renewal option of five years at a rate which will be 
negotiated between lessor and lessee. All leases provide for tenants to 
contribute toward the payment of increases in common area maintenance 
expenses, insurance, utilities and real estate taxes. As of December 31, 
1998, there were 6 tenants leasing office space aggregating approximately 
36,667 square feet of rentable area. The tenants who occupy Plainview Point 
Office Center Phases I and II are professional service oriented 
organizations. The principal occupations/professions practiced include a 
business school, telemarketing services and insurance. Two tenants 
individually lease more than 10% of Plainview Point Office Center's rentable 
area. The occupancy levels at the office center as of December 31 were 65% 
(1998), 73% (1997), 88% (1996), 85% (1995) and 74% (1994). See Item 7 for 
average occupancy levels for the periods ending December 31, 1998, 1997 and 
1996.

(5)  Excluding a 22,291 square foot lease which is for 10 years.

                                       - 6 -

<PAGE>

The following table contains approximate data concerning the leases in effect on
December 31, 1998:

<TABLE>
<CAPTION>
                                                     Current Base
                                   Sq. Ft. and      Annual Rental
                       Year of       % of Net       and % of Gross           Renewal
No. Of Tenants       Expiration    Rentable Area   Base Annual Rental        Options
--------------       ----------   ------------     ------------------       ------------
<S>                  <C>          <C>               <C>                   <C>
Major tenants:
        1               1999       6,031 (10.7%)    $ 70,524 (17.1%)         None
        1               2004      22,291 (39.7%)    $239,148 (58.2%)(1)   1 Five-Year

Other Tenants:
        2               1999       3,045 (5.5%)     $ 37,956  (9.2%)         None
       None             2000            --                    --              --
        1               2001       1,141 (2.0%)     $ 13,806  (3.4%)         None
       None           2002-2005         --                    --              --
        1               2006       4,159 (7.4%)     $ 49,908 (12.1%)         None
</TABLE>

(1)  The lease provides that the tenant will pay its own electricity costs and
     thus the base rent is below $11.22.

THE WILLOWS OF PLAINVIEW PHASE I

Units at The Willows of Plainview Phase I include one and two-bedroom loft 
and deluxe apartments and two-bedroom town homes. All units have wall-to-wall 
carpeting, individually controlled heating and air conditioning, dishwashers, 
ranges, refrigerators and garbage disposals. All units, except one-bedroom 
lofts, have washer/dryer hook-ups. The one-bedroom lofts have stackable 
washers and dryers. Tenants have access to and the use of coin-operated 
washer/dryer facilities, clubhouse, management offices, pool, whirlpool and 
tennis courts.

Monthly rental rates at The Willows of Plainview Phase I start at $659 for 
one-bedroom apartments, $919 for two-bedroom apartments and $1,019 for 
two-bedroom town homes, with additional monthly rental amounts for special 
features and locations. Tenants pay all costs of heating, air conditioning 
and electricity. Most leases are for a period of one year. Units will be 
rented in some cases, however, on a shorter term basis at an additional 
charge. The occupancy levels at the apartment complex as of December 31 
were 86% (1998), 92% (1997), 89% (1996), 91% (1995) and 87% (1994). See Item 
7 for average occupancy levels for the periods ending December 31, 1998, 1997 
and 1996.

BLANKENBAKER BUSINESS CENTER 1A

Sykes Health Plan Service Bureau, Inc. (formerly known as Prudential Service 
Bureau, Inc.) has leased 100% of Blankenbaker Business Center 1A. The annual 
base rent, which does not include the cost of utilities, is $7.89 per square 
foot for ground floor office space and $7.10 per square foot for second floor 
office space. The average base annual rental for all types of space leased as 
of December 31, 1998 was $7.48. The lease term is for 11 years and expires in 
July 2005. Sykes Health Plan Service Bureau, Inc. is a professional service 
oriented organization which deals in insurance claim processing. The lease 
provides for the tenant to contribute toward the payment of common area 
expenses, insurance and real estate taxes. The occupancy level at the 
business center as of December 31, 1998, 1997, 1996, 1995 and 1994 was 100%. 
See Item 7 for average occupancy levels for the periods ending December 31, 
1998, 1997 and 1996.

The following table contains approximate data concerning the lease in effect 
as of December 31, 1998:

<TABLE>
<CAPTION>
                                                     Current Base
                                   Sq. Ft. and      Annual Rental
                       Year of       % of Net       and % of Gross           Renewal
No. Of Tenants       Expiration    Rentable Area   Base Annual Rental        Options
--------------       ----------   ------------     ------------------       ------------
<S>                       <C>            <C>              <C>                 <C>
Sykes Health Plan
Service Bureau, Inc.         2005        48,463 (100%)     $752,787 (100%)     None
</TABLE>

(1)  Rentable area includes only ground floor square feet.

                                     - 7 -

<PAGE>

Subsequent to December 31, 1998, SHPS, Inc., formerly known as Sykes Health 
Plan Services, Inc., announced its intentions to consolidate its operations 
and to build its corporate headquarters in Jefferson County, Kentucky. One of 
SHPS, Inc's operations, Sykes is already based in Louisville, Kentucky. Sykes 
occupies 100% of Blankenbaker Business Center 1A. Due to the expansion of 
SHPS, Inc's headquarters, it is the Partnerships understanding that SHPS, 
Inc. does not intend to continue to occupy the space at Blankenbaker Business 
Center 1A through the duration of is lease, July 2005. The Partnership's 
proportionate share of the rental income from this property accounted for 
approximately 7% of the Partnership's rent revenues during 1998. The 
Partnership has not yet determined the effect, if any, on the Partnership's 
operations, given the fact Sykes is under lease until July 2005 and no 
official notice of termination has been received.

LAKESHORE BUSINESS CENTER PHASE I

Base annual rents, which exclude the cost of utilities, currently range from 
$9.78 to $12.25 per square foot for first floor office space, $6.18 to $10.65 
per square foot for first floor service space and $9.00 to $12.25 per square 
foot for second floor office space. The average base annual rental for all 
space leased as of December 31, 1998 was $10.85. Space is ordinarily leased 
for between three and five years with the majority of current square footage 
being leased for a term of five years. Current leases expire between 1999 and 
2004. Five leases provide for renewal options at rates which are based upon 
increases in the consumer price index and/or are negotiated between lessor 
and lessee. All leases provide for tenants to contribute toward the payment 
of common area expenses, insurance and real estate taxes. As of December 31, 
1998, there were 32 tenants leasing office space (first and second floor) and 
service space aggregating approximately 88,155 square feet of rentable area. 
The tenants who occupy Lakeshore Business Center Phase I are professional 
service oriented organizations. The principal occupations/professions 
practiced include telemarketing services and management offices for two 
cellular communications chain and a soft drink company. There are no tenants 
that individually lease more than 10% of Lakeshore Business Center Phase I's 
rentable area. The occupancy levels at the business center as of December 31 
were 85% (1998), 96% (1997), 92% (1996 and 1995), 80% (1994). See Item 7 for 
average occupancy levels for the periods ending December 31, 1998, 1997 and 
1996.

The following table contains approximate data concerning the leases in effect 
on December 31, 1998:

<TABLE>
<CAPTION>
                                                          Current Base
                                       Sq. Ft. and        Annual Rental
                                         % of Net        and % of Gross
                           Year of       Rentable          Base Annual       Renewal
No. Of Tenants           Expiration        Area              Rental          Options
--------------           ----------   -------------    -----------------  ------------
<S>                      <C>          <C>              <C>                <C>
Major tenants (1):
 None

Other Tenants:
     10                     1999      36,305 (35.1%)    $369,636 (38.6%)  2 Three-Year
     11                     2000      26,453 (25.6%)    $280,764 (29.5%)  2 Three-Year
     5                      2001       9,037  (8.8%)    $105,209 (11.0%)  2 Three-Year
     4                      2002       8,305  (8.0%)    $ 92,592  (9.8%)  2 Three-Year
     1                      2003       1,728  (1.7%)    $ 21,168  (2.2%)       None
     1                      2004       6,327  (6.1%)    $ 87,234  (9.1%)       None
</TABLE>

(1)  Major tenants are those that individually occupy 10 percent or more of the
     rentable square footage.

LAKESHORE BUSINESS CENTER PHASE II

Base annual rents, which exclude the cost of utilities, currently range from 
$10.00 to $12.39 per square foot for first floor office space and $9.80 to 
$14.95 per square foot for second floor office space. The average base rental 
for all space leased as of December 31, 1998 was $11.21. Space is ordinarily 
leased for between three and five years with the majority of current square 
footage being leased for a term of three years. Current leases expire between 
1999 and 2003. 


                                     - 8 -

<PAGE>

Five leases provide for renewal options at rates which are based upon 
increases in the consumer price index and/or are negotiated between lessor 
and lessee. All leases provide for tenants to contribute toward the payment 
of common area expenses, insurance and real estate taxes. As of December 31, 
1998, there were 17 tenants leasing office space (first and second floor) and 
service space aggregating approximately 75,458 square feet of rentable area 
(1). The tenants who occupy Lakeshore Business Center Phase II are 
professional service oriented organizations. The principal 
occupations/professions practiced include medical equipment leasing, 
insurance services and management offices for the Florida state lottery. Two 
tenants individually lease more than 10% of Lakeshore Business Center Phase 
II's rentable area. The occupancy levels at the business center as of 
December 31 were 79% (1998), 100% (1997), 89% (1996), 72% (1995) and 78% 
(1994). See Item 7 for average occupancy levels for the periods ending 
December 31, 1998, 1997 and 1996.

(1)  Excludes approximately 1,218 square feet which is occupied by the 
business center's property management and leasing staff.

The following table contains approximate data concerning the leases in effect 
on December 31, 1998:

<TABLE>
<CAPTION>
                                                          Current Base
                                         Sq. Ft. and      Annual Rental
                                          % of Net       and % of Gross
                           Year of        Rentable         Base Annual        Renewal
No. of Tenants           Expiration        Area(1)           Rental           Options
------------------       ----------    --------------   ----------------   ------------
<S>                      <C>           <C>              <C>                 <C>
Major tenants (2):
     1                      1999       10,580 (10.9%)   $127,176 (14.8%)   1 Three-Year
     1                      2002       14,665 (15.1%)   $166,212 (19.3%)    1 Five-Year

Other tenants:
     5                      1999       16,241 (16.7%)   $184,098 (21.4%)   1 Three-Year
     4                      2000       11,124 (11.5%)   $125,642 (14.6%)       None
     3                      2001        9,985 (10.3%)   $106,788 (12.4%)    1 Five-Year
     2                      2002        8,675  (8.9%)   $101,384 (11.8%)        (3)
     1                      2003        4,188  (4.3%)   $ 48,156  (5.6%)        None
</TABLE>

(1)  Excludes approximately 1,218 square feet which is occupied by the business
     center's property management and leasing staff.

(2)  Major tenants are those that occupy 10 percent or more of the rentable
     square footage.

(3)  1 Three year and 1 Five-Year.

Additional operating data regarding the Partnership's properties is furnished 
in the following table:

<TABLE>
<CAPTION>
                                           Federal          Realty           Annual
                                          Tax Basis        Tax Rate       Realty Taxes
                                         ----------       ---------       ------------
    <S>                                  <C>              <C>             <C>
    WHOLLY-OWNED PROPERTIES

    Commonwealth Business Center
    Phase I                              $4,048,195        $.010910           $ 35,297

    Plainview Point Office Center
    Phases I and II                       3,464,131         .011110             18,358

    The Willows of Plainview 
    Phase I                               7,452,416         .011110             50,494
</TABLE>

    Percentage ownership has not been applied to the information in the table
    above and below for properties owned through a joint venture.

                              (Continued next page)


                                     - 9 -

<PAGE>

<TABLE>
<CAPTION>
                                           Federal          Realty           Annual
                                          Tax Basis        Tax Rate       Realty Taxes
                                         ----------       ---------       ------------
    <S>                                  <C>              <C>             <C>
    PROPERTY OWNED IN JOINT
    VENTURE WITH NTS-PROPERTIES V

    The Willows of Plainview 
    Phase II                              7,993,098         .011110             58,361

    PROPERTIES OWNED IN JOINT
    VENTURE WITH NTS-PROPERTIES VI

    Golf Brook Apartments                16,179,398         .018437            280,100

    Plainview Point III Office
    Center                                4,318,750         .011110             34,818

    PROPERTY OWNED IN JOINT
    VENTURE WITH NTS-PROPERTIES
    VII AND NTS-PROPERTIES PLUS
    LTD.

    Blankenbaker Business
    Center 1A                             7,356,545         .010910             56,480

    PROPERTIES OWNED THROUGH
    LAKESHORE/ UNIVERSITY II JOINT
    VENTURE (L/U II JOINT VENTURE

    Lakeshore Business Center
    Phase I                              10,260,812         .026214            126,826

    Lakeshore Business Center
    Phase II                             12,227,459         .026214            144,702
</TABLE>

Depreciation for book purposes is computed using the straight-line method 
over the estimated useful lives of the assets which are 5-30 years for land 
improvements, 30 years for buildings, 5-30 years for building improvements 
and 5-30 years for amenities. The estimated realty taxes on planned 
renovations, primarily tenant improvements, is not material.

INVESTMENT IN JOINT VENTURES

NTS WILLOWS PHASE II JOINT VENTURE - On September 1, 1984, the Partnership 
entered into a joint venture agreement with NTS-Properties V to develop, 
construct, own and operate a 144 - unit luxury apartment complex on an 8.29 
acre site in Louisville, Kentucky known as The Willows of Plainview Phase II. 
The term of the Joint Venture shall continue until dissolved.

Dissolution shall occur upon, but not before, the first to occur of the 
following:

     (a)  the withdrawal, bankruptcy or dissolution of a Partner or the
          execution by a Partner of an assignment for the benefit of its
          creditors;

     (b)  the sale, condemnation or taking by eminent domain of all or
          substantially all of the assets of the Partnership, other than its
          cash and cash equivalent assets;

     (c)  the vote or consent of each of the Partners to dissolve the
          Partnership; or

     (d)  September 30, 2028.


                                     - 10 -

<PAGE>

The Partnership contributed land valued at $800,000 and NTS-Properties V 
contributed approximately $7,455,000, the construction and carrying costs of 
the apartment complex. No future contributions are anticipated as of December 
31, 1998.

The apartment complex is encumbered by permanent mortgages with two insurance 
companies. Both loans are secured by a first mortgage on the property. The 
outstanding balance of the mortgages at December 31, 1998 is $4,920,751 
($3,080,776 and $1,839,975). The mortgages are recorded as a liability of the 
Joint Venture. The Partnership's proportionate interest in the mortgages at 
December 31, 1998 is $499,456 ($312,698 and $186,758). Both mortgages bear 
interest at a fixed rate of 7.2% and are due January 5, 2013. At maturity, 
the loans will have been repaid based on the current rate of amortization.

The Net Cash Flow for each calendar quarter is distributed to the Partners in 
accordance with their respective Percentage Interests. The term Net Cash Flow 
means the excess, if any, of (A) the gross receipts from the operations of 
the Joint Venture Property (including investment income) for such period plus 
any funds released from previously established reserves (referred to in 
clause (iv) below), over (B) the sum of (i) all cash operating expenses paid 
by the Joint Venture Property during such period in the course of business, 
(ii) capital expenditures during such period not funded by capital 
contributions, loans or paid out of previously established reserves, (iii) 
payments during such period on account of amortization of the principal of 
any debts or liabilities of the Joint Venture property and (iv) reserves for 
contingent liabilities and future expenses of the Joint Venture Property. 
Percentage Interest means that percentage which the capital contributions of 
a Partner bears to the aggregate capital contributions of all the Partners.

Net income or net loss is allocated between the Partners in accordance with 
their respective Percentage Interests. The Partnership's ownership share was 
10% at December 31, 1998.

NTS SABAL GOLF VILLAS JOINT VENTURE - On September 1, 1985, the Partnership 
entered into a joint venture agreement with NTS-Properties VI to develop, 
construct, own and operate a 158-unit luxury apartment complex on a 13.15 
acre site in Orlando, Florida known as Golf Brook Apartments Phase I. On 
January 1, 1987, the joint venture agreement was amended to include Golf 
Brook Apartments Phase II, a 37-unit luxury apartment complex located on a 
3.069 acre site adjacent to Golf Brook Apartments Phase I. The term of the 
Joint Venture shall continue until dissolved. Dissolution shall occur upon, 
but not before, the first to occur of the following:

     (a)  the withdrawal, bankruptcy or dissolution of a Partner or the
          execution by a Partner of an assignment for the benefit of its
          creditors;

     (b)  the sale, condemnation or taking by eminent domain of all or
          substantially all of the assets of the Partnership, other than its
          cash and cash-equivalent assets;

     (c)  the vote or consent of each of the Partners to dissolve the
          Partnership; or

     (d)  September 30, 2025.

The Partnership contributed land valued at $1,900,000 with a related note 
payable to a bank of $1,200,000. NTS-Properties VI contributed approximately 
$15,800,000, the cost of constructing and leasing the apartments. 
NTS-Properties VI also contributed funds to retire the $1,200,000 note 
payable to a bank. No future contributions are anticipated as of December 31, 
1998.

Golf Brook Apartments is encumbered by a mortgage payable to an insurance 
company. The original borrowings obtained by NTS-Properties VI for Golf Brook 
Apartments were used to fund a portion of NTS-Properties VI's contribution to 
the Joint Venture. The current mortgage payable of $8,220,270 is recorded as 
a liability by NTS-Properties VI in accordance with the Joint Venture 
Agreement. The mortgage payable bears interest at a fixed rate of 7.43%, is 
due May 15, 2009 and is secured by the assets of Golf Brook Apartments. At 
maturity, the loan will have been repaid based on the current rate of 
amortization. 


                                     - 11 -

<PAGE>

The Net Cash Flow for each calendar quarter is distributed to the Partners in 
accordance with their respective Percentage Interests. The Term Net Cash Flow 
means the excess, if any, of (a) the sum of (i) the gross receipts of the 
Joint Venture Property, for such period, other than capital contributions, 
plus (ii) any funds from previously established reserves (referred to in 
clause (b) (iv) below), over (b) the sum of (i) all cash expenses paid by the 
Joint Venture Property during such period, (ii) all capital expenditures paid 
in cash during such period, (iii) payments during such period on account of 
amortization of the principal of any debts or liabilities of the Joint 
Venture Property, and (iv) reserves for contingent liabilities and future 
expenses of the Joint Venture Property, as established by the Partners; 
provided, however, that the amounts referred to in (i), (ii) and (iii) above 
shall be taken in to account only to the extent not funded by capital 
contributions or paid out of previously established reserves. Percentage 
Interest means that percentage which the capital contributions of a Partner 
bears to the aggregate capital contributions of all the Partners.

Net income or net loss is allocated between the Partners in accordance with 
their respective Percentage Interests. The Partnership's ownership share was 
4% at December 31, 1998.

PLAINVIEW POINT III JOINT VENTURE - On March 1, 1987, the Partnership entered 
into a joint venture agreement with NTS-Properties VI to develop, construct, 
own and operate an office building in Louisville, Kentucky known as Plainview 
Point III Office Center. The terms of the Joint Venture shall continue until 
dissolved. Dissolution shall occur upon, but not before, the first to occur 
of the following:

     (a)  the withdrawal, bankruptcy or dissolution of a Partner or the
          execution by a Partner of an assignment for the benefit of its
          creditors;

     (b)  the sale, condemnation or taking by eminent domain of all or
          substantially all of the assets of the Real Property, unless such
          disposition is, in whole or in part, represented by a promissory note
          of the purchaser;

     (c)  the vote or consent of each of the Partners to dissolve the
          Partnership; or

     (d)  December 30, 2026.

The Partnership contributed land valued at $790,000 with an outstanding note 
payable to a bank of $550,000 which was secured by the land. NTS-Properties 
VI contributed approximately $4,100,000, the cost to construct and lease the 
building. NTS-Properties VI also contributed funds to retire the $550,000 
note payable to the bank. No future contributions are anticipated as of 
December 31, 1998.

The office center is not encumbered by any outstanding mortgages as of 
December 31, 1998.

The Net Cash Flow for each calendar quarter is distributed to the Partners in 
accordance with their respective Percentage Interests. The term Net Cash Flow 
means the excess, if any, of (a) the sum of (i) the gross receipts of the 
Joint Venture Property, for such period, other than capital contributions, 
plus (ii) any funds from previously established reserves (referred to in 
clause (b) (iv) below), over (b) the sum of (i) all cash expenses paid by the 
Joint Venture Property during such period, (ii) all capital expenditures paid 
in cash during such period, (iii) payments during such period on account of 
amortization of the principal of any debts or liabilities of the Joint 
Venture Property, and (iv) reserves for contingent liabilities and future 
expenses of the Joint Venture Property, as established by the Partners; 
provided, however, that the amounts referred to in (i), (ii) and (iii) above 
shall be taken in to account only to the extent not funded by capital 
contributions or paid out of previously established reserves. Percentage 
Interest means that percentage which the capital contributions of a Partner 
bears to the aggregate capital contributions of all the Partners. 


                                     - 12 -

<PAGE>

Net income or net loss is allocated between the Partners in accordance with 
their respective Percentage Interests. The Partnership's ownership share was 
5% at December 31, 1998.

BLANKENBAKER BUSINESS CENTER JOINT VENTURE - On August 16, 1994, the 
Blankenbaker Business Center Joint Venture agreement was amended to admit the 
Partnership to the Joint Venture. The Joint Venture was originally formed on 
December 28, 1990 between NTS-Properties Plus Ltd. and NTS-Properties VII, 
Ltd., affiliates of the General Partner of the Partnership, to own and 
operate Blankenbaker Business Center 1A and to acquire an approximately 2.49 
acre parking lot that was being leased by the business center from an 
affiliate of the General Partner. The use of the parking lot is a provision 
of the tenant's lease agreement with the business center. The terms of the 
Joint Venture shall continue until dissolved. Dissolution shall occur upon, 
but not before, the first to occur of the following:

     (a)  the withdrawal, bankruptcy or dissolution of a Partner or the
          execution by a Partner of an assignment for the benefit of its
          creditors;

     (b)  the sale, condemnation or taking by eminent domain of all or
          substantially all of the assets of the Real Property and Parking Lot
          and the sale and/or collection of any evidences of indebtedness
          received in connection therewith;

     (c)  the vote or consent of each of the Partners to dissolve the
          Partnership; or

     (d)  December 31, 2030.

In 1990 when the Joint Venture was originally formed, NTS-Properties VII, 
Ltd. contributed $450,000 which was used for additional tenant improvements 
to the business center, and contributed $325,000 to purchase the 2.49 acre 
parking lot. The additional tenant improvements were made to the business 
center and the parking lot was purchased in 1991. NTS-Properties Plus Ltd. 
contributed Blankenbaker Business Center 1A together with improvements and 
personal property subject to mortgage indebtedness of $4,715,000. During 
November 1994, this note payable was replaced with permanent financing in the 
amount of $4,800,000. The outstanding balance at December 31, 1998 was 
$3,511,112. The mortgage is recorded as a liability of the Joint Venture. The 
Partnership's proportionate interest in the mortgage at December 31, 1998 was 
$1,058,249. The mortgage bears interest at a fixed rate of 8.5% and is due 
November 15, 2005. Monthly principal payments are based upon an 11-year 
amortization. At maturity, the mortgage will have been repaid based on the 
current rate of amortization.

On April 28, 1994, the Joint Venture obtained $1,100,000 in debt financing to 
fund a portion of the tenant finish and leasing costs which were associated 
with the Prudential Service Bureau, Inc. [currently known as Sykes Health Plan
Service Bureau, Inc. ("Sykes")] lease renewal and expansion. The $1,100,000 
note bore interest at the Prime Rate + 1 1/2%. In order for the Joint Venture 
to obtain the $4,800,000 of permanent financing discussed above, it was 
necessary for the Joint Venture to seek an additional Joint Venture partner 
to provide the funds necessary for the tenant finish and leasing costs 
instead of debt financing. The $1,100,000 note was retired in August 1994. 
This resulted in the Joint Venture's debt being at a level where permanent 
financing could be obtained and serviced.

On August 16, 1994, NTS-Properties IV contributed $1,100,000 and 
NTS-Properties VII, Ltd. contributed $500,000 in accordance with the 
agreement to amend the Joint Venture agreement. The need for additional 
capital by the Joint Venture was a result of the lease renewal and expansion 
which was signed April 28, 1994 between the Joint Venture and Sykes. 
NTS-Properties Plus Ltd. was not in a position to contribute additional 
capital, nor was NTS-Properties VII, Ltd. in a position to contribute all of 
the capital required for this project. NTS-Properties IV was willing to 
participate in the Joint Venture and to contribute, together with 
NTS-Properties VII, Ltd., the capital necessary with respect to the project. 
NTS-Properties Plus Ltd. agreed to the admission of NTS-Properties IV to the 
Joint Venture, and to the capital contributions by NTS-Properties IV and 
NTS-Properties VII, Ltd. with the knowledge that its joint venture interest 


                                     - 13 -

<PAGE>

would, as a result, decrease. With this expansion, Sykes occupied 100% of the 
business center. No future contributions are anticipated as of December 31, 
1998.

The Net Cash Flow for each calendar quarter is distributed to the Partners in 
accordance with the respective Percentage Interests. The term Net Cash Flow 
for any period shall mean the excess, if any, of (A) the sum of (i) the gross 
receipts of the Joint Venture Property for such period, other than capital 
contributions, plus (ii) any funds released by the Partners from previously 
established reserves (referred to in clause (B) (iv) below), over (B) the sum 
of (i) all cash operating expenses paid by the Joint Venture Property during 
such period in the course of the business, (ii) capital expenditures paid in 
cash during such period, (iii) payments during such period on account of 
amortization of the principal of any debts or liabilities of the Joint 
Venture Property and (iv) reserves for contingent liabilities and future 
expenses of the Joint Venture Property as established by the Partners; 
provided, however, that the amounts referred to in (B)(i), (ii) and (iii) 
above shall only be taken into account to the extent not funded by capital 
contributions or paid out of previously established reserves. Percentage 
Interest means that percentage which the capital contributions of a Partner 
bears to the aggregate capital contributions of all the Partners.

Net income or net loss is allocated between the Partners in accordance with 
their respective Percentage Interests. The Partnership's ownership share was 
30% at December 31, 1998.

LAKESHORE/UNIVERSITY II JOINT VENTURE - On January 23, 1995, a joint venture 
known as the Lakeshore/University II Joint Venture (L/U II Joint Venture) was 
formed among the Partnership and NTS-Properties V, NTS-Properties Plus Ltd. 
and NTS/Fort Lauderdale, Ltd., affiliates of the General Partner of the 
Partnership, for purposes of owning Lakeshore Business Center Phases I and 
II, University Business Center Phase II (property sold during 1998 - see 
below for details regarding this transaction) and certain undeveloped tracts 
of land adjacent to the Lakeshore Business Center development.

The table below identifies which properties were contributed to the L/U II 
Joint Venture and the respective owners of such properties prior to the 
formation of the joint venture.

<TABLE>
<CAPTION>
             Property                                      Contributing Owner
             --------                                      ------------------
     <S>                                               <C>
     Lakeshore Business Center Phase I                 NTS-Properties IV and NTS-
                                                       Properties V

     Lakeshore Business Center Phase II                NTS-Properties Plus Ltd.

     Undeveloped land adjacent to the                  NTS-Properties Plus Ltd.
     Lakeshore Business Center
     development (3.8 acres)

     Undeveloped land adjacent to the                  NTS/Fort Lauderdale, Ltd.
     Lakeshore Business Center
     development (2.4 acres)

     University Business Center Phase II               NTS-Properties V and NTS-
                                                       Properties Plus Ltd.
</TABLE>

                                     - 14 -


<PAGE>

The term of the Joint Venture shall continue until dissolved. Dissolution shall
occur upon, but not before, the first to occur of the following:

     (a)  the withdrawal, bankruptcy or dissolution of a Partner or the
          execution by a Partner of an assignment for the benefit of its
          creditors;

     (b)  the sale, condemnation or taking by eminent domain of all or
          substantially all of the Real Property and the sale and/or collection
          of any evidences of indebtedness received in connection therewith;

     (c)  the vote or consent of each of the Partners to dissolve the
          Partnership; or

     (d)  December 31, 2030.

Each of the properties was contributed to the L/U II Joint Venture subject to
existing indebtedness, except for Lakeshore Business Center Phase I which was
contributed to the joint venture free and clear of any mortgage liens, and all
such indebtedness was assumed by the joint venture. Mortgages were recorded on
Lakeshore Business Center Phase I in the amount of $5,500,000, and on University
Business Center Phase II in the amount of $3,000,000, in favor of the banks
which held the indebtedness on University Business Center Phase II, Lakeshore
Business Center Phase II and the undeveloped tracts of land prior to the
formation of the joint venture and on Lakeshore Business Center Phase I in the
amount of $5,500,000 subsequent to the formation of the L/U II Joint Venture. In
addition to the above, the Partnership also contributed $750,000 to the L/U II
Joint Venture. As a result of the valuation of the properties contributed to the
L/U II Joint Venture, the Partnership obtained an 18% partnership interest in
the joint venture.

The properties of the L/U II Joint Venture are encumbered by mortgages payable
to an insurance company as follows:

<TABLE>
<CAPTION>

         Loan Balance
         at 12/31/98                Encumbered Property
         -------------              -------------------
         <S>                       <C>
            $5,262,099              Lakeshore Business Center Phase II
            $4,890,913              Lakeshore Business Center Phase I
</TABLE>

The loans are recorded as liabilities of the Joint Venture. The Partnership's
proportionate interest in the loans at December 31, 1998 was $1,813,328
($873,517, and $939,811). The mortgages bear interest at a fixed rate of 8.125%
and are due August 1, 2008. Monthly principal payments are based upon a 12-year
amortization schedule. At maturity, the loans will have been repaid based on the
current rate of amortization.

On October 6, 1998 pursuant to a contract executed on September 8, 1998, the
Lakeshore/University II Joint Venture ("L/U II") sold University Business Center
Phase II office building to Silver City Properties, Ltd. ("the Purchaser") for
$8,975,000. University Business Center Phase II was owned by the L/U II Joint
Venture of which the Partnership owns an 18% interest. Portions of the proceeds
from this sale were immediately used to pay the remainder of the outstanding
debt of approximately $5,933,382 on University Business Center Phase II
(including interest and prepayment penalty). NTS-Properties IV reflects a gain
of approximately $208,000 associated with this sale in the fourth quarter of
1998. Net cash proceeds received by the Partnership from the L/U II Joint
Venture as a result of a cash distribution of the proceeds from the sale were
approximately $442,000.

The Net Cash Flow for each calendar quarter is distributed to the Partners in
accordance with their respective Percentage Interest. The term Net Cash Flow
means the excess, if any, of (A) the sum of (i) the gross receipts of the Joint
Venture Properties for such period (including loan proceeds), other than capital
contributions, plus (ii) any funds released from previously established reserves
(referred to in clause (B)(iv) below), over (B) the sum of (i) all cash
operating expenses paid by the Joint Venture during such period in the course of
business, (ii) capital expenditures paid in cash during such period, (iii)
payments during such period on account of amortization of the principal of any
debts or liabilities of the Joint Venture and (iv) reserves for contingent
liabilities and 

                                     - 15 -
<PAGE>


future expenses of the Joint Venture, as established by the Partners; 
provided, however, that the amounts referred to in (B)(i), (ii) and (iii) 
above shall only be taken into account to the extent not funded by capital 
contributions or paid out of previously established reserves. Percentage 
Interest means that percentage which the capital contributions of a Partner 
bears to the aggregate capital contributions of all the Partners.

Net income or net loss is allocated between the partners in accordance with
their respective Percentage Interests. The Partnership's ownership share was 18%
at December 31, 1998.

COMPETITION

The Partnership's properties are subject to competition from similar types of 
properties (including, in certain areas, properties owned or managed by 
affiliates of the General Partner) in the respective vicinities in which they 
are located. Such competition is generally for the retention of existing 
tenants or for new tenants when vacancies occur. The Partnership maintains 
the suitability and competitiveness of its properties primarily on the basis 
of effective rents, amenities and service provided to tenants. Competition is 
expected to increase in the future as a result of the construction of 
additional properties. As of December 31, 1998, there are no properties under 
construction in the respective vicinities in which the properties are 
located, except for, in the vicinity of Golf Brook Apartments, there are 750 
apartment units currently under construction which are scheduled to be 
completed during the fourth quarter 1999. In the vicinity of The Willows of 
Plainview, there are 664 apartment units currently under construction which 
are scheduled to be completed during the second and third quarter of 1999. At 
this time it is unknown the effect these new units will have on occupancy at 
Golf Brook Apartments and the Willows of Plainview. The Partnership has not 
commissioned a formal market analysis of competitive conditions in any market 
in which it owns properties, but relies upon the market condition knowledge 
of the employees of NTS Development Company who manage and supervise leasing 
for each property.

MANAGEMENT OF PROPERTIES

NTS Development Company, an affiliate of NTS-Properties Associates IV, the 
General Partner of the Partnership, directs the management of the 
Partnership's properties pursuant to a written agreement. NTS Development 
Company is a wholly-owned subsidiary of NTS Corporation. Mr. J. D. Nichols 
has a controlling interest in NTS Corporation and is a General Partner of 
NTS-Properties Associates IV. Under the agreement, the Property Manager 
establishes rental policies and rates and directs the marketing activity of 
leasing personnel. It also coordinates the purchase of equipment and 
supplies, maintenance activity and the selection of all vendors, suppliers 
and independent contractors. As compensation for its services, the Property 
Manager received a total of $204,498 for the year ended December 31, 1998. 
$134,252 was received from commercial properties and $70,246 was received 
from residential properties. The fee is equal to 6% of gross revenues from 
commercial properties and 5% of gross revenues from residential properties.

In addition, the management agreement requires the Partnership to purchase 
all insurance relating to the managed properties, to pay the direct 
out-of-pocket expenses of the Property Manager in connection with the 
operation of the properties, including the cost of goods and materials used 
for and on behalf of the Partnership, and to reimburse the Property Manager 
for the salaries, commissions, fringe benefits, and related employment 
expenses of on-site personnel.

The term of the Management Agreement between NTS Development Company and the 
Partnership was initially for five years, and thereafter for succeeding 
one-year periods, unless canceled. The Agreement is subject to cancellation 
by either party upon sixty days written notice. As of December 31, 1998, the 
Management Agreement is still in effect.

                                     - 16 -

<PAGE>

WORKING CAPITAL PRACTICES

Information about the Partnership's working capital practices is included in 
Management Discussion and Analysis of Financial Condition and Results of 
Operations in Part II, Item 7.

SEASONAL OPERATIONS

The Partnership does not consider its operations to be seasonal to any material
degree.

CONFLICT OF INTEREST

Because the principals of the General Partner and/or its affiliates own 
and/or operate real estate properties other than those owned by the 
Partnership that are or could be in competition with the Partnership, 
potential conflicts of interest exist. Because the Partnership was organized 
by and is operated by the General Partner, these conflicts are not resolved 
through arms-length negotiations but through the exercise of the General 
Partner's good judgment consistent with its fiduciary responsibility to the 
Limited Partners and the Partnership's investment objectives and policies. 
The General Partner is accountable to the Limited Partners as a fiduciary and 
consequently must exercise good faith and integrity in handling the 
Partnership's affairs. A provision has been made in the Partnership Agreement 
that the General Partner will not be liable to the Partnership except for 
acts or omissions performed or omitted fraudulently, in bad faith or with 
negligence. In addition, the Partnership Agreement provides for 
indemnification by the General Partner of the Partnership for liability 
resulting from errors in judgement or certain acts or omissions. The General 
Partner and its affiliates retain a free right to compete with the 
Partnership's properties including the right to develop competing properties 
now and in the future in addition to those existing properties which may 
compete directly or indirectly. NTS Development Company, the Property Manager 
and an affiliate of the General Partner, acts in a similar capacity for other 
affiliated entities in the same geographic region where the Partnership has 
property interests. In management's opinion, the agreement with the Property 
Manager is on terms no less favorable to the Partnership than those which 
could be obtained from a third party for similar services in the same 
geographical region in which the properties are located. The contract is 
terminable by either party without penalty upon 60 days written notice.

There are no other agreements or relationships between the Partnership, the
General Partner and its affiliates other than that previously described.

EMPLOYEES

The Partnership has no employees; however, employees of an affiliate of the 
General Partner are available to perform services for the Partnership. The 
Partnership reimburses this affiliate for the allocated costs of providing 
such services. (See Item 8 Note 10 for further discussions of related party 
transactions).

GOVERNMENTAL CONTRACTS AND REGULATIONS

No portions of the Partnership's business is subject to renegotiation of profits
or termination of contracts or sub-contracts at the election of the United
States Government.

Item 3.  LEGAL PROCEEDINGS

None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


                                     - 17 -

<PAGE>


                                    PART II

Item 5.  MARKET FOR REGISTRANT'S LIMITED PARTNERSHIP INTERESTS AND RELATED 
         PARTNER MATTERS

There is no established trading market for the limited partnership interests. 
The Partnership had 2,313 limited partners as of March 1, 1999. Cash 
distributions and allocations of income and loss are made as described in 
Note 1C to the Partnership's 1998 financial statements.

Annual distributions totaling $8.00 were paid per limited partnership unit 
during 1996. No distribution was made during 1997 and 1998. Quarterly 
distributions are determined based on current cash balances, cash flow being 
generated by operations and cash reserves needed, as determined by the 
General Partner, for future leasing costs, tenant finish costs and capital 
improvements. Distributions were paid quarterly as follows:

<TABLE>
<CAPTION>

                                                    1996
                                                 ---------
<S>                                             <C>
First quarter                                      $ 3.00
Second quarter                                       3.00
Third quarter                                        2.00
Fourth quarter                                       --
                                                 ---------
                                                   $ 8.00
                                                 ---------
                                                 ---------
</TABLE>

The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
years ended December 31, 1998, 1997 and 1996.

<TABLE>
<CAPTION>

                                             Net Income          Cash
                                               (Loss)        Distributions     Return of
                                             Allocated         Declared         Capital
                                            -----------      --------------    ---------
         <S>                               <C>              <C>              <C>
         Limited Partners:
                1998                        $ 97,313          $     --         $     --
                1997                         (48,560)               --               --
                1996                         (45,719)           222,842          222,842
                                                                              
         General Partner:                                                     
                1998                         $   983          $     --         $     --
                1997                            (490)               --               --
                1996                            (462)             2,251            2,251
</TABLE>



                                     - 18 -
<PAGE>


Item 6.  SELECTED FINANCIAL DATA

Years ended December 31, 1998, 1997, 1996, 1995 and 1994.

<TABLE>
<CAPTION>

                                          1998                 1997               1996               1995               1994
                                     ------------          ------------       ------------       ------------       ------------
<S>                                  <C>                  <C>                <C>                 <C>                <C>
Rental and other income              $  3,619,094          $  3,708,597       $  3,577,554       $  3,285,430       $  2,595,299
Gain on sale of assets                    208,607(1)                 --                 --                 --                 --
Total expenses                         (3,575,343)           (3,680,643)        (3,610,839)        (3,711,915)        (2,901,514)
                                     ------------          ------------       ------------       ------------       ------------
Income (loss) before
  extraordinary item                      252,358                27,954            (33,285)          (426,485)          (306,215)
Extraordinary item                       (154,062)              (77,004)           (12,896)                --                 --
                                     ------------          ------------       ------------       ------------       ------------
Net income (loss)                    $     98,296          $    (49,050)      $    (46,181)      $   (426,485)      $   (306,215)
                                     ------------          ------------       ------------       ------------       ------------
                                     ------------          ------------       ------------       ------------       ------------
Net income (loss)
allocated to:
  General Partner                    $        983          $       (490)      $       (462)      $     (4,265)      $     (3,062)
  Limited partners                   $     97,313          $    (48,560)      $    (45,719)      $   (422,220)      $   (303,153)

Net income (loss) per
limited partnership
units                                $       3.75          $      (1.82)      $      (1.63)      $     (14.19)      $     (10.19)

Weighted average number of limited
partnership units
                                           25,918                26,708             28,012             29,745             29,745

Cumulative net income
(loss)allocated to:
  General Partner                    $      3,899          $      2,916       $      3,406       $      3,868       $      8,133
  Limited partners                   $    385,853          $    288,540       $    337,100       $    382,819       $    805,039

Cumulative taxable
income (loss)
allocated to:
  General Partner                    $    (26,810)         $    (24,092)      $    (24,618)      $    (24,486)      $    (20,830)
  Limited partners                   $ (2,654,795)         $ (2,385,433)      $ (2,437,521)      $ (2,424,353)      $ (2,062,388)

Distributions declared:
 General Partner                     $         --          $         --       $      2,251       $     11,117       $      3,479
 Limited partners                    $         --          $         --       $    222,842       $  1,100,565       $    344,447

Cumulative distributions
 declared to:
  General Partner                    $    218,253          $    218,253       $    218,253       $    216,002       $    204,885
  Limited partners                   $ 21,607,636          $ 21,607,636       $ 21,607,636       $ 21,384,794       $ 20,284,229

At year end:
Land, buildings and
 amenities, net                      $ 11,269,660          $ 13,023,781       $ 13,801,251       $ 14,617,818       $ 11,974,200

Total assets                         $ 13,055,709          $ 14,812,308       $ 15,406,286       $ 16,645,788       $ 15,483,541

Mortgages and notes
 payable                             $  9,121,979          $ 10,706,802       $ 11,236,625       $ 11,592,641       $  8,895,313
</TABLE>

The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Form 10-K
report.

(1) See Item 8 Note 11 for the details on the sale of University Business Center
Phase II to Silver City Properties, Ltd. on October 6, 1998.

                                     - 19 -
<PAGE>


Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations is structured in four major sections. The first section provides
information related to occupancy levels and information regarding rental and
other income generated by the Partnership's properties. The second analyzes
results of operations on a consolidated basis. The final sections address
consolidated cash flows and financial condition. Discussion of certain market
risks and our cautionary statements also follow. Management's analysis should be
read in conjunction with the financial statements in Item 8 and the cautionary
statements below.

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

<TABLE>
<CAPTION>

                                                         Percentage
                                                         Ownership at 
                                                          12/31/98       1998(1)    1997    1996
                                                         ------------    -------    ----    ----
<S>                                                     <C>              <C>       <C>     <C>
WHOLLY-OWNED PROPERTIES

Commonwealth Business Center Phase I                        100%           89%       87%     86%
                                                                          
Plainview Point Office Center Phases I and II (2)                         
                                                            100%           65%       73%     88%
                                                                          
The Willows of Plainview Phase I (2)                        100%           86%       92%     89%
                                                                          
PROPERTIES OWNED IN JOINT VENTURE WITH                                    
NTS-PROPERTIES V                                                          
The Willows of Plainview Phase II                            10%           92%       90%     92%
                                                                          
PROPERTIES OWNED IN JOINT VENTURE WITH                                    
NTS-PROPERTIES VI                                                         
Golf Brook Apartments                                         4%           96%       96%     97%
                                                                          
Plainview Point III Office Center (2)(3)                      5%           81%       96%     91%
                                                                          
PROPERTY OWNED IN JOINT VENTURE WITH NTS-PROPERTIES                       
VII, LTD. AND NTS-PROPERTIES PLUS LTD.                                    
Blankenbaker Business Center 1A                              30%          100%      100%    100%
                                                                          
PROPERTIES OWNED THROUGH LAKESHORE/UNIVERSITY II                          
JOINT VENTURE (L/U II JOINT VENTURE)                                      
Lakeshore Business Center Phase I (2)(4)                     18%           85%       96%     92%
                                                                          
Lakeshore Business Center Phase II (2)(5)                    18%           79%      100%     89%
                                                                          
University Business Center Phase II                         N/A (6)     N/A(6)       99%     99%
</TABLE>

(1)  Current occupancy levels are considered adequate to continue the operation
     of the Partnership's properties.

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

(3)  At Plainview Point III Office Center, a current tenant has leased an
     additional 5,439 square feet. Occupancy of this additional space is planned
     for the first half of 1999. The office center's occupancy level should
     increase to 93% at that time.

(4)  Subsequent to December 31, 1998, two new five-year leases totaling 6,880
     square feet were signed at Lakeshore Business Center Phase I. Both tenants
     are expected to take occupancy during the first quarter of 1999. With these
     new leases the business center's occupancy should improve to 89%.

(5)  As of December 31, 1998, Lakeshore Business Center Phase II has an
     additional 5,668 square feet leased to two new tenants. Both tenants took
     occupancy during the first quarter of 1999 and the business center's
     occupancy has increased to 85%.

(6)  On October 6, 1998, University Center Phase II was sold. See below for the
     details of this transaction.

                                       -20-
<PAGE>

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

<TABLE>
<CAPTION>

                                                      Percentage
                                                       Ownership
                                                      at 12/31/98    1998       1997       1996
                                                      -----------    ----       ----       ----
<S>                                                      <C>        <C>        <C>       <C>
WHOLLY-OWNED PROPERTIES

Commonwealth Business Center Phase I                       100%       88%        85%        91%

Plainview Point Office Center Phases I and
II (1)                                                     100%       70%        83%        86%

The Willows of Plainview Phase I (1)                       100%       90%        93%        89%

PROPERTIES OWNED IN JOINT VENTURE WITH
NTS-PROPERTIES V

The Willows of Plainview Phase II(1)                        10%       87%        91%        95%

PROPERTIES OWNED IN JOINT VENTURE WITH
NTS-PROPERTIES VI

Golf Brook Apartments                                        4%       96%        93%        94%

Plainview Point III Office Center                            5%       92%        90%        93%

PROPERTY OWNED IN JOINT VENTURE WITH
NTS-PROPERTIES VII, LTD. AND NTS-PROPERTIES
PLUS LTD.

Blankenbaker Business Center 1A                             30%      100%       100%       100%

PROPERTIES OWNED THROUGH
LAKESHORE/UNIVERSITY II JOINT VENTURE (L/U
II JOINT VENTURE)

Lakeshore Business Center Phase I(1)                        18%       88%        96%        97%

Lakeshore Business Center Phase II(1)                       18%       91%        94%        80%
                                                           

University Business Center Phase II                        N/A (2)    91%(3)     99%        99%
</TABLE>

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

(2)  On October 6, 1998, University Center Phase II was sold. See below for the
     details of this transaction.

(3)  Represents average occupancy through October 6, 1998.

                                       - 21 -

<PAGE>

RENTAL AND OTHER INCOME

The rental and other income generated by the Partnership's properties for the
years ended December 31, 1998, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>

                                                      Percentage
                                                       Ownership
                                                      at 12/31/98      1998         1997             1996
                                                      -----------      ----         ----             ----
<S>                                                      <C>        <C>          <C>             <C>
WHOLLY-OWNED PROPERTIES
Commonwealth Business Center
Phase I                                                   100%      $  705,009    $  657,888      $  684,996

Plainview Point Office Center
Phases I and II                                           100%      $  457,904    $  571,950      $  544,023

The Willows of Plainview Phase I
                                                          100%      $1,148,200    $1,231,150      $1,108,767

PROPERTIES OWNED IN JOINT
VENTURE WITH NTS-PROPERTIES V

The Willows of Plainview Phase
II                                                         10%      $  130,126    $  137,881      $  123,547

PROPERTIES OWNED IN JOINT
VENTURE WITH NTS-PROPERTIES VI

Golf Brook Apartments                                       4%      $  120,971    $  113,578      $  115,828

Plainview Point Office Center
III                                                         5%      $   40,779    $   38,512      $   38,079

PROPERTY OWNED IN JOINT VENTURE
WITH NTS-PROPERTIES VII, LTD.,
AND NTS-PROPERTIES PLUS LTD 

Blankenbaker Business Center 1A                            30%      $  276,575    $  277,713      $  277,578

PROPERTIES OWNED THROUGH
LAKESHORE/UNIVERSITY II JOINT
VENTURE (L/U II JOINT VENTURE)

Lakeshore Business Center Phase
I                                                          18%      $  266,873    $  253,826      $  237,375

Lakeshore Business Center Phase
II                                                         18%      $  292,671    $  251,910      $  207,357

University Business Center
Phase II                                                   18%      $  139,220(1) $  148,536      $  215,922
</TABLE>

(1)  On October 6, 1998, University Business Centers Phase II was sold. See
     below for the details of this transaction. Revenues shown here represent
     1998 income through the date of disposition.

Revenues shown in the table above for properties owned through a joint venture
represent only the Partnership's percentage interest in those revenues.

                                       - 22 -

<PAGE>

The following is an analysis of material changes in results of operations for 
the periods ending December 31, 1998, 1997 and 1996. Items that did not have 
a material impact on operations for the periods listed above have been 
omitted from this discussion.

The GAIN ON SALE OF ASSET is the result of selling University Business Center 
Phase II. On October 6, 1998 pursuant to a contract executed on September 8, 
1998, the Lakeshore/University II Joint Venture ("L/U II") sold University 
Business Center Phase II office building to Silver City Properties, Ltd. 
("the Purchaser"), for $8,975,000. University Business Center Phase II was 
owned by the L/U II Joint Venture of which the Partnership owns an 18% 
interest. Portions of the proceeds from this sale were immediately used to 
pay outstanding debt on the University II property (including interest and 
prepayment penalty) of approximately $5,933,382.

INTEREST AND OTHER INCOME includes income from investments made by the 
Partnership with cash reserves. Interest income decreased approximately 
$34,000 or 37% in 1998 as a result of decreased cash reserves available for 
investment. Interest income increased approximately $58,000 in 1997 as a 
result of an increase in cash reserves available for investment. The increase 
in other income in 1997 is also a result of an insurance claim reimbursement 
for roof damage exceeding the cost to repair the roof at The Willows of 
Plainview Phases I and II.

OPERATING EXPENSES increased approximately $150,000 or 23% in 1997 primarily 
due to increased landscaping costs and legal expenses at the Partnership's 
commercial properties, increased exterior building renovations at 
Blankenbaker Business Center 1A and increased advertising expenses at The 
Willows of Plainview Phase I and II.

OPERATING EXPENSES - AFFILIATED increased approximately $67,000 or 17% in 
1998. The increase was primarily the result of increased allocated property 
management payroll costs at Commonwealth Business Center Phase I and 
Plainview Point Office Center Phase I and II.

OPERATING EXPENSES - AFFILIATED increased approximately $27,000 or 7% in 1997 
primarily due to increased property management payroll costs at the 
Partnership's commercial properties and at The Willows of Plainview Phases I 
and II. Operating expenses-affiliated are expenses for services performed by 
employees of NTS Development Company, an affiliate of the General Partner of 
the Partnership.

The 1998 WRITE-OFF OF UNAMORTIZED LAND IMPROVEMENTS AND AMENITIES can be 
attributed primarily to The Willows of Plainview Phases I and II. The 
write-off was a result of new property signage, updating the model apartments 
and pool renovations. In order to complete these projects, it was necessary 
to replace assets which had not been fully depreciated. This results in a 
write-off of unamortized land improvements and amenities.

The 1996 WRITE-OFF OF UNAMORTIZED BUILDING IMPROVEMENTS can be attributed to 
Plainview Point Office Center Phases I and II. The write-of is the result of 
an exterior stair replacement and represents the cost of the stairs which 
were replaced that had not been fully depreciated.

AMORTIZATION OF CAPITALIZED LEASING costs decreased approximately $6,000 or 
28% in 1998 as a result of a special tenant allowance at Commonwealth 
Business Center Phase I becoming fully amortized.

INTEREST EXPENSE decreased approximately $52,000 or 6% in 1998 primarily due 
to required principal payments on the mortgages payable of the Partnership 
and its Joint Venture properties. Interest expense also decreased in 1998 as 
a result of the reduction in debt from the sale of University Business Center 
Phase II (see discussion above). The decrease in interest expense is 
partially offset by a higher interest rate on The Willows of Plainview Phase 
I financing the Partnership obtained December 1997 (7.15% as compared to a 
rate of 7% on the previous mortgage).

                                       - 23 -

<PAGE>

INTEREST EXPENSE decreased approximately $85,000 or 9% in 1997 primarily due 
to a lower interest rates on the permanent financing the Partnership obtained 
by the L/U II Joint Venture in July 1996 (8.125% compared to a rate of 10.6% 
on the previous mortgage). The decrease is also due to continued principal 
payments on the mortgages payable by the Partnership and its Joint Venture 
properties.

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

REAL ESTATE TAXES decreased approximately $12,000 or 5% in 1998 as a result 
of decreased property tax assessments for Lakeshore Business Center Phases I 
and II and the sale of University Business Center Phase II in October 1998 
(see discussions above).

PROFESSIONAL AND ADMINISTRATIVE EXPENSES increased approximately $13,000 or 
12% in 1998 as a result of costs incurred in connection with the Tender 
Offer. Professional and administrative expenses increased approximately 
$7,500 or 8% in 1997 primarily as a result of outside legal fees.

PROFESSIONAL AND ADMINISTRATIVE EXPENSES - AFFILIATED decreased approximately 
$21,000 or 12% in 1997 mainly due to decreased salary costs. Professional and 
administrative expenses - affiliated are expenses for services performed by 
employees of NTS Development Company, an affiliate of the General Partner.

DEPRECIATION AND AMORTIZATION decreased approximately $100,000 or 11% in 1998 
primarily as a result of a portion of the original assets at Blankenbaker 
Business Center 1A becoming fully depreciated and the result of the sale of 
University Business Center Phase II in October 1998 (see discussion below). 
Depreciation is computed using the straight-line method over the estimated 
useful lives of the assets which are 5-30 years for land improvements, 30 
years for buildings, 5-30 years for building improvements and 5-30 years for 
amenities. The aggregate cost of the Partnership's properties for Federal tax 
purposes is approximately $23,592,217.

The 1998 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT relates to the 
sale of University Business Center Phase II (see discussion above). A portion 
of the proceeds from the sale was used to retire a $5,128,872 mortgage 
payable prior to its maturity (August 2008). As a result of the prepayment, a 
$763,995 penalty, of which the Partnerships proportionate share was $136,449, 
was required by the insurance company who held the mortgage. Unamortized loan 
costs connected with this loan were also expensed due to the fact that the 
mortgage was repaid prior to its maturity.

The 1997 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT relates to loan 
costs associated with The Willows of Plainview Phase I and II mortgages 
payable. The unamortized loan costs were expensed due to the fact that the 
mortgages were retired in 1997 prior to their maturity (December 5, 2003).

The 1996 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT relates to loan 
costs associated with L/U II Joint Venture's note payable. The unamortized 
loan costs were expensed due to the fact that the notes were retired in 1996 
prior to their maturity (January 31, 1998).

CONSOLIDATED CASH FLOWS AND FINANCIAL CONDITION

The majority of the Partnership's cash flow is derived from operating 
activities. Cash flows used in investing activities are for tenant finish 
improvements and other capital additions and were funded by operating 
activities or cash reserves. 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 these 
improvements are determined by the size of the space and whether the 
improvements are for a new tenant or incurred because of a lease renewal. 
Cash flows used in investing activities are also for the purchase of 
investment securities. As part of its cash management activities, the 
Partnership 

                                       - 24 -

<PAGE>

has purchased Certificates of Deposit or securities issued by the 
U.S. Government with initial maturities of greater than three months to 
improve the return on its cash reserves. The Partnership intends to hold the 
securities until maturity. Cash flows provided by investing activities were 
from the maturity of investment securities. Cash flows used in financing 
activities are for cash distributions, payment of loan costs, principal 
payments on mortgages and notes payable, repurchases of limited partnership 
Units and an increase in funds reserved by the Partnership for the repurchase 
of limited partnership Units through the Tender Offer or the Interest 
Repurchase Reserve. Cash flows provided by financing activities represent an 
increase in mortgages payable. The Partnership utilizes the proportionate 
consolidation method of accounting for joint venture properties. The 
Partnership's interest in the joint venture's assets, liabilities, revenues, 
expenses and cash flows are combined on a line-by-line basis with the 
Partnership's own assets, liabilities, revenues, expenses and cash flows.

The Partnership does not expect any material changes in the mix and relative
cost of capital resources except for renovations and other major capital
expenditures, including tenant finish, which may be required to be funded from
cash reserves if they exceed cash flows from operating activities.

Cash flows provided by (used in):

<TABLE>
<CAPTION>

                                        1998              1997              1996
                                        ----              ----              ----
<S>                                 <C>               <C>               <C>
Operating activities                 $   985,883       $ 1,176,545       $   936,169
Investing activities                   1,454,698          (517,720)          294,832
Financing activities                  (2,075,757)         (729,159)       (1,161,132)
                                     -----------       -----------       -----------
Net increase (decrease) in cash
and equivalents                      $   364,824       $   (70,334)      $    69,869
                                     -----------       -----------       -----------
                                     -----------       -----------       -----------
</TABLE>

Net cash provided by operating activities decreased approximately $191,000 or
16% in 1998. The decrease was primarily driven by a decrease in net working
capital assets and liabilities (excluding cash).

Net cash provided by operating activities increased approximately $240,000 or
26% in 1997. The increase was primarily driven by an increase in net working
capital assets and a decrease in accounts payable.

Net cash provided by investing activities increased approximately $1,970,000 in
1998. The increase in cash provided by investing activities was primarily driven
by the proceeds from the sale of assets and net maturities of investment
securities over purchases partially offset by increased capital expenditures.

Net cash provided by investing activities deceased approximately $810,000 in
1997. The decrease was primarily a result of net purchases of investment
securities over maturities.

Net cash used in financing activities totaled $2,075,757, $729,159 and
$1,161,132 in 1998, 1997 and 1996, respectively. The approximate $1,347,000
increase in net cash used in financing activities in 1998 as compared to 1997 is
primarily a result of increased principal payments on mortgages payable and
increased funds used for the repurchase of limited partnership Units through the
Interest Repurchase Reserve and increased funds reserved for the repurchase of
limited partnership Units through the Tender Offer. Net cash used in financing
activities decreased approximately $430,000 in 1997 as compared to 1996. The
decrease was primarily driven by decreased cash distributions and decreased
funds used for the repurchase of limited partnership Units through the Interest
Repurchase Reserve.

During 1996, a 1.05% (annualized) cash distribution of $225,093 was made. The
annualized distribution rate is calculated as a percent of the original capital
contribution less a return of capital of $235.64 per limited partnership unit
made from the proceeds of the sale of Sabal Club Apartments in 1988. The limited

                                       - 25 -

<PAGE>

partners received 99% and the General Partners received 1% of these
distributions. No distributions were made during the years ended December 31,
1998 and 1997 or the quarter ended December 31, 1996. Distributions will be
resumed once the Partnership has established adequate cash reserves and is
generating cash from distributions which, in management's opinion, is sufficient
to warrant future distributions. The primary source of future liquidity and
distributions is expected to be derived from cash generated by the Partnership's
properties after adequate cash reserves are established for future leasing
costs, tenant finish costs and other capital improvements. Cash reserves (which
are unrestricted cash and equivalents and investment securities as shown on the
Partnership's balance sheet as of December 31) were $783,538, $698,481 and
$346,479 at December 31, 1998, 1997 and 1996, respectively.

In the next 12 months, the demand on future liquidity is anticipated to increase
as the Partnership continues its efforts in the leasing of the Partnership's
commercial properties. At this time, the future leasing and tenant finish costs
which will be required to renew current leases that expire during 1999 or obtain
new tenants are unknown.

The Partnership had no material commitments for renovations or capital
improvements as of December 31, 1998.

The table below presents that portion of the distributions that represent a
return of capital on a Generally Accepted Accounting Principle basis for the
years ended December 31, 1998, 1997 and 1996.

<TABLE>
<CAPTION>

                                      Net Income          Cash            Return
                                         (loss)       Distributions         of
                                       Allocated         Declared         Capital
                                      ----------      -------------       -------
<S>                                  <C>               <C>               <C>
        Limited Partners:

              1998                    $   97,313        $     --          $     --
              1997                       (48,560)             --                --
              1996                       (45,719)          222,842          222,842

        General Partner:

              1998                    $      983        $      --         $     --
              1997                          (490)       $      --         $     --
              1996                          (462)             2,251            2,251
</TABLE>

Pursuant to Section 16.4 of the Partnership's Amended and Restated Agreement of
Limited Partnership, the Partnership established an Interest Repurchase Reserve
in June 1996. During the years ended December 31, 1998, 1997 and 1996, the
Partnership funded $201,565, $45,000, and $575,070, respectively, to the
reserve. On January 10, 1997, the repurchase of partnership Units was
temporarily suspended in order to conserve cash. This step was taken until it
was clear that, in the General Partner's opinion, the Partnership had the
necessary cash reserves to meet future leasing and tenant finish costs and had
rebuilt cash reserves to meet the ongoing needs of the Partnership. Through
December 31, 1998, the Partnership has repurchased 4,436 Units for $700,920 at a
price ranging from $150 to $205 per Unit. The offering price per Unit was
established by the General Partner in its sole discretion and does not purport
to represent the fair market value or liquidation value of the Units.
Repurchased Units are retired by the Partnership, thus increasing the percentage
of ownership of each remaining limited partner investor. The Interest Repurchase
Reserve was funded from cash reserves. The funds remaining in the Interest
Repurchase Reserve at the commencement of the Tender Offer (discussed below)
were returned to unrestricted cash for utilization in the Partnership's
operations.

On November 20, 1998, the Partnership and ORIG, LLC, an affiliate of the
Partnership, commenced a Tender Offer to purchase up to 1,200 of the
Partnership's limited partnership Units at a price of $205 per Unit. Although
the Partnership and ORIG, LLC believes that this price is appropriate, the price
of $205 per Unit may not equate to the fair market value or the liquidation
value of the Unit as of the offering date. The amount of funds required by the

                                       - 26 -

<PAGE>

Partnership to fund the Offer is estimated to be approximately $20,000 for its
proportionate share of the expenses associated with administering the Offer).
The Offer stated that the Partnership will purchase the first 600 Units tendered
and will fund its purchases and its portion of the expenses from cash reserves.
If more than 1,200 Units are tendered, the Partnership and ORIG, LLC may choose
to acquire the additional Units on the same terms. Otherwise, tendered Units
will be purchased on a pro rata basis up to 1,200. Units that are acquired by
the Partnership will be retired. Units that are acquired by ORIG, LLC will be
held by it. The General Partner, NTS-Properties Associates IV, does not intend
to participate in the Tender Offer. Under the terms of the Offer, the Offer was
to expire on February 19, 1999 unless extended.

As of February 19, 1999, 1,259 Units were tendered pursuant to the Offer. The
Partnership repurchased 600 Units at a cost of $123,000 and ORIG, LLC purchased
659 Units at a cost of $135,095.

The L/U II Joint Venture owns approximately 6 acres of land adjacent to the
Lakeshore Business Center development in Ft. Lauderdale, Florida. The
Partnership's proportionate interest at December 31, 1998 in the asset held for
sale is $297,251. The Joint Venture continues to actively market the asset for
sale. In management's opinion, the net book value approximates the fair market
value less cost to sell. See below for information regarding a contract for the
sale of a portion of this land and plans for the construction of Lakeshore
Business Center Phase III.

As of December 31, 1998, the L/U II Joint Venture had a contract for the sale of
approximately 2.4 acres of land adjacent to the Lakeshore Business Center
development for a purchase price of $528,405. Concurrent with the signing of the
original contract, the purchaser deposited into an escrow account $10,000. This
deposit will be applied to the purchase price at closing. The contract requires
that the purchaser proceed, at their cost, to have the property re-zoned to
allow for a self-storage facility. If the purchaser is unable to obtain the
re-zoning, they may cancel the contract. The General Partner of the Partnership
has met with city officials who seem interested in the project and have voiced a
willingness to consider the re-zoning request. Subsequent to December 31, 1998,
the re-zoning has not yet been granted and per the contract, the purchaser has
elected to postpone the closing for a period of 30 days. At its option, the
purchaser may postpone the Closing Date four times for a period of 30 days each
by delivering written notice and paying to the L/U II Joint Venture $10,000 for
each 30-day postponement period. $5,000 of each payment will be applied toward
the purchase price. The Partnership has an 18% interest in the Joint Venture.
The Partnership has not yet determined what the use of net proceeds would be
from the sale of the land.

As of December 31, 1998 the L/U II Joint Venture intends to use the remaining
3.8 acres of the land it owns at the Lakeshore Business Center Development to
construct Lakeshore Business Center Phase III. Construction is expected to begin
during 1999. The construction cost is currently estimated to be $4,000,000 and
will be funded by a capital contribution from NTS-Properties V and debt
financing. Construction will not begin until, in the opinion of the General
Partner, financing on favorable terms has been obtained. The Partnership and
NTS-Properties Plus, which currently have an 18% and 12% interest respectively,
in the L/U II Joint Venture are not in a position to contribute additional
capital required for the construction of Lakeshore Business Center Phase III.
The Partnership and NTS-Properties Plus have agreed that NTS-Properties V will
make a capital contribution to the L/U II Joint Venture with the knowledge that
their Joint Venture interest will, as a result, decrease.

The following describes the efforts being taken by the Partnership to increase
the occupancy levels at the Partnership's commercial properties. The leasing and
renewal negotiations at the Lakeshore Business Center development are handled by
an on-site leasing agent, an employee of NTS Development Company, (an affiliate
of the General Partner of the Partnership), who makes calls to potential
tenants, negotiates lease renewals with current tenants and manages local
advertising with the assistance of NTS Development Company's marketing staff.
The leasing and renewal negotiations for the Partnership's remaining commercial
properties are handled by leasing agents, employees of NTS Development Company,
located in 

                                       - 27 -

<PAGE>

Louisville, Kentucky. The leasing agents are located in the same city 
as commercial properties. All advertising for these properties is 
coordinated by NTS Development Company's marketing staff located in 
Louisville, Kentucky. In an effort to continue to improve occupancy at the 
Partnership's residential properties, the Partnership has an on-site leasing 
staff, employees of NTS Development Company, at each of the apartment 
communities. The staff handles all on-site visits from potential tenants, 
coordinates local advertising with NTS Development Company's marketing staff, 
makes visits to local companies to promote fully furnished units and 
negotiates lease renewals with current residents.

Leases at Commonwealth Business Center Phase I, Blankenbaker Business Center 1A,
and Lakeshore Business Center Phases I and II provide for tenants to contribute
toward the payment of common area expenses, insurance and real estate taxes.
Leases at Lakeshore Business Center Phases I and II also provide for rent
increases which are based upon increases in the consumer price index. Leases at
Plainview Point Office Center Phases I and II and Plainview Point III Office
Center provide for tenants to contribute toward the payment of increases in
common area maintenance expenses, insurance, utilities and real estate taxes.
These lease provisions, along with the fact that residential leases are
generally for a period of one year, should protect the residential leases are
generally for a period of one year, should protect the Partnership's operations
from the impact of inflation and changing prices.

YEAR 2000

All divisions of NTS, the General Partner of the Partnership, are reviewing the
effort necessary to prepare our information systems (IT) and non-information
technology with embedded technology (ET) for the Year 2000. The information
technology solutions have been addressed separate for the Year 2000 since the
Partnership saw the need to move to more advanced management and accounting
systems made available by new technology and software developments during the
decade of the 1990's.

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

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

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

The cost of these advances in our systems technology is not all attributable to
the Year 2000 issue since we had already identified the need to move to a
network based system regardless of the Year 2000. The Partnership's share of the
costs involved will be approximately $70,000 over 1998 and 1999. Costs incurred
through December 31, 1998 are approximately $13,000. These costs include
primarily hardware and software.

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

                                       - 28 -


<PAGE>

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

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

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

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk exposure with regards to financial instruments is 
changes in interest rates. All of the Partnership's debt bears interest at a 
fixed rate. At December 31, 1998, a hypothetical 100 basis point increase in 
interest rates would result in an approximately $376,000 decrease in the fair 
value of debt.

CAUTIONARY STATEMENTS

Some of the statements included in Item 7, Management's Discussion and 
Analysis of Financial Condition and Results of Operations, may be considered 
to be "forward-looking statements" since such statements relate to matters 
which have not yet occurred. For example, phrases such as " the Partnership 
anticipates ", "believes" or "expects" indicate that it is possible that the 
event anticipated, believed or expected may not occur. Should such event not 
occur, then the result which the Partnership expected also may not occur or 
occur in a different manner, which may be more or less favorable to the 
Partnership. The Partnership does not undertake any obligations to publicly 
release the result of any revisions to these forward-looking statements that 
may be made to reflect any future events or circumstances.

Any forward-looking statements included in Management's Discussion and 
Analysis of Financial Condition and Results of Operations, or elsewhere in 
this report, which reflect management's best judgement based on factors 
known, involve risks and uncertainties. Actual results could differ 
materially from those anticipated in any forward-looking statements as a 
result of a number of factors, including but not limited to those discussed 
below. Any forward-looking information provided by the Partnership pursuant 
to the safe harbor established by recent securities legislation should be 
evaluated in the context of these factors.

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

Subsequent to December 31, 1998, SHPS, Inc., formerly known as Sykes Health 
Plan Services, Inc., announced its intentions to consolidate its operations 
and to build its corporate headquarters in Jefferson County, Kentucky. One of 
SHPS, Inc's operations, Sykes is already based in Louisville, Kentucky. Sykes 
occupies 100% of Blankenbaker Business Center 1A. Due to the expansion of 
SHPS, Inc's headquarters, it is the Partnerships understanding that SHPS, 
Inc. does not intend to continue to occupy the space at Blankenbaker Business 
Center 1A through the duration of its lease, July 2005. The Partnership's 
proportionate share of the rental income from this property accounted for 
approximately 7% of the Partnership's rent revenues during 1998. The 
Partnership has not yet determined the effect, if any, on the Partnership's 
operations, given the fact Sykes is under lease until July 2005 and no 
official notice of termination has been received.


                                     - 29 -

<PAGE>


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To NTS-Properties IV,

We have audited the accompanying balance sheets of NTS-Properties IV, (a 
Kentucky limited partnership), as of December 31, 1998 and 1997, and the 
related statements of operations, partners' equity and cash flows for each of 
the three years in the period ended December 31, 1998. These financial 
statements and the schedules referred to below are the responsibility of the 
Partnership's management. Our responsibility is to express an opinion on 
these financial statements and schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the financial position of NTS-Properties IV as of 
December 31, 1998 and 1997, and the results of its operations and its cash 
flows for each of the three years in the period ended December 31, 1998 in 
conformity with generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic 
financial statements taken as a whole. The schedules included on pages 55 
through 58 are presented for purposes of complying with the Securities and 
Exchange Commission's rules and regulations and are not a required part of 
the basic financial statements. These schedules have been subjected to the 
auditing procedures applied in the audits of the basic financial statements 
and, in our opinion, fairly state in all material respects the financial data 
required to be set forth therein in relation to the basic financial 
statements taken as a whole.

                                                   ARTHUR ANDERSEN LLP


Louisville, Kentucky
March 12, 1999


                                     - 30 -

<PAGE>


                                NTS-PROPERTIES IV

                                 BALANCE SHEETS

                        AS OF DECEMBER 31, 1998 AND 1997

<TABLE>
<CAPTION>
                                               1998             1997
                                           -----------      -----------
<S>                                        <C>              <C>
ASSETS

Cash and equivalents                       $   640,969      $   276,145
Cash and equivalents - restricted              183,050          108,724
Investment securities                          142,569          422,336
Accounts receivable, net of allowance
 for doubtful accounts of $1,972
 (1998) and $0 (1997)                          183,170          243,134
Land, buildings and amenities, net          11,269,660       13,023,781
Asset held for sale and development            297,251          297,251
Other assets                                   339,040          440,937
                                           -----------      -----------
                                           $13,055,709      $14,812,308
                                           -----------      -----------
                                           -----------      -----------
LIABILITIES AND PARTNERS' EQUITY

Mortgages payable                          $ 9,121,979      $10,706,802
Accounts payable                               115,103          122,418
Security deposits                               75,108           83,390
Other Liabilities                               53,518           65,473
                                           -----------      -----------
                                             9,365,708       10,978,083

Commitments and Contingencies
Partners' equity                             3,690,001        3,834,225
                                           -----------      -----------
                                           $13,055,709      $14,812,308
                                           -----------      -----------
                                           -----------      -----------
</TABLE>

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


                                     - 31 -

<PAGE>

                                NTS-PROPERTIES IV

                            STATEMENTS OF OPERATIONS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                                   1998              1997              1996
                                                                 -----------      ------------      ------------
<S>                                                              <C>              <C>               <C>
Revenues:
 Rental income, net of provision for
  doubtful accounts of $2,043 (1998) and
  $0(1997 and 1996)                                              $ 3,561,342       $ 3,616,883       $ 3,544,153
 Gain on sale of asset                                               208,607                --                --
 Interest and other income                                            57,752            91,714            33,401
                                                                 -----------      ------------      ------------
                                                                   3,827,701         3,708,597         3,577,554
Expenses:
 Operating expenses                                                  785,718           813,091           662,463
 Operating expenses - affiliated                                     466,497           398,950           371,856
 Write-off of unamortized improvements                                13,081                --             6,871
 Amortization of capitalized leasing
  costs                                                               14,998            20,951            20,908
 Interest expense                                                    803,140           855,488           940,941
 Management fees                                                     204,498           208,837           204,165
 Real estate taxes                                                   212,763           224,345           220,956
 Professional and administrative
  expenses                                                           114,956           102,345            94,799
 Professional and administrative
  expenses - affiliated                                              154,605           150,715           171,778
 Depreciation and amortization                                       805,087           905,921           916,102
                                                                 -----------      ------------      ------------
                                                                   3,575,343         3,680,643         3,610,839
                                                                 -----------      ------------      ------------
Income (loss) before extraordinary item                              252,358            27,954           (33,285)
Extraordinary item - early extinguishment of debt                   (154,062)          (77,004)          (12,896)
                                                                 -----------      ------------      ------------
Net income (loss)                                                $    98,296       $   (49,050)      $   (46,181)
                                                                 -----------      ------------      ------------
                                                                 -----------      ------------      ------------
Net income (loss) allocated to the limited
  partners:
  Income (loss) before extraordinary item                        $   249,834       $    27,674       $   (32,952)
  Extraordinary item                                                (152,521)          (76,234)          (12,767)
                                                                 -----------      ------------      ------------
  Net income (loss)                                              $    97,313       $   (48,560)      $   (45,719)
                                                                 -----------      ------------      ------------
                                                                 -----------      ------------      ------------
Net income (loss) per limited partnership Unit:
  Income (loss) before extraordinary item                        $      9.64       $      1.03       $     (1.18)
  Extraordinary item                                                   (5.89)            (2.85)             (.45)
                                                                 -----------      ------------      ------------
Net income (loss) per limited partnership Unit                   $      3.75       $     (1.82)      $     (1.63)
                                                                 -----------      ------------      ------------
                                                                 -----------      ------------      ------------
Weighted average number of limited
 partnership units                                                    25,918            26,708            28,012
                                                                 -----------      ------------      ------------
                                                                 -----------      ------------      ------------
</TABLE>

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


                                     - 32 -

<PAGE>

                                NTS-PROPERTIES IV

                       STATEMENTS OF PARTNERS' EQUITY (1)

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                          Limited           General
                                         Partners           Partners            Total
                                        ------------      ------------      ------------
<S>                                     <C>               <C>               <C>
Balances at December 31, 1995           $ 4,825,084       $  (212,135)      $ 4,612,949
 Net loss                                   (45,719)             (462)          (46,181)
 Distributions declared                    (222,842)           (2,251)         (225,093)
 Repurchase of limited partnership
       Units                               (424,500)               --          (424,500)
                                        ------------      ------------      ------------
Balances at December 31, 1996             4,132,023          (214,848)        3,917,175
 Net loss                                   (48,560)             (490)          (49,050)
 Repurchase of limited partnership
       Units                                (33,900)               --           (33,900)
                                        ------------      ------------      ------------
Balances at December 31, 1997             4,049,563          (215,338)        3,834,225
 Net loss                                    97,313               983            98,296
 Repurchase of limited partnership
       Units                               (242,520)               --          (242,520)
                                        ------------      ------------      ------------
Balances at December 31, 1998           $ 3,904,356       $  (214,355)      $ 3,690,001
                                        ------------      ------------      ------------
                                        ------------      ------------      ------------
</TABLE>

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

     (1)  For the periods presented, there are no elements of other
          comprehensive income as defined by the Financial Accounting Standards
          Board, Statement of Financial Accounting Standards Statement No. 130,
          REPORTING COMPREHENSIVE INCOME.


                                     - 33 -
<PAGE>

<TABLE>
<CAPTION>

                                NTS-PROPERTIES IV
                            STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                                                          1998              1997              1996
                                                     -----------       ------------     -------------
<S>                                                  <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)                                    $    98,296       $   (49,050)      $   (46,181)
Adjustments to reconcile net income (loss) to
 net cash provided by operating activities:
Gain on sale of assets                                  (208,607)               --                --
Extraordinary item - early extinguishment of
 debt                                                    154,062            77,004            12,896
Accrued interest on investment securities                 (2,569)           (3,877)            3,642
Provision for doubtful accounts                            2,043                --                --
Write-off of unamortized improvements                     13,081                --             6,871
Amortization of capitalized leasing costs                 14,998            20,951            20,908
Depreciation and amortization                            805,087           905,921           916,102
Changes in assets and liabilities:
 Cash and equivalents - restricted                        47,924             4,719            (8,834)
 Accounts receivable                                      57,921           103,999            84,639
 Other assets                                             44,359           100,947            13,366
 Accounts payable - operations                           (20,479)          (22,608)          (76,265)
 Security deposits                                        (8,282)             (521)              (84)
 Other liabilities                                       (11,951)           39,060             9,109
                                                     -----------       ------------     -------------
  Net cash provided by operating activities              985,883         1,176,545           936,169
                                                     -----------       ------------     -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of assets before payment
   of debt                                             1,498,242                --                --
Additions to land, buildings and amenities              (334,563)          (99,261)         (108,563)
Decrease (increase) in cash and equivalents -
  restricted                                                  --                --             2,450
Purchase of investment securities                     (1,125,550)         (799,777)               --
Maturity of investment securities                      1,407,885           381,318           400,945
Other                                                      8,684                --                --
                                                     -----------       ------------     -------------
  Net cash provided by (used in) investing
    activities                                         1,454,698          (517,720)          294,832
                                                     -----------       ------------     -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in mortgages payable                                 --         4,414,080         3,105,900
Principal payments on mortgages and notes
 payable                                              (1,584,823)       (4,943,902)       (3,461,916)
Early principal payment penalty                         (136,449)               --                --
Cash distributions                                            --                --          (315,228)
Decrease in loan costs                                    10,285                --                --
Additions to loan costs                                       --          (120,187)          (64,888)
Repurchase of limited partnership Units                 (242,520)          (33,900)         (424,500)
Increase in cash and equivalents - restricted           (122,250)          (45,250)             (500)
                                                     -----------       ------------     -------------

  Net cash used in financing activities               (2,075,757)         (729,159)       (1,161,132)
                                                     -----------       ------------     -------------
  Net increase (decrease) in cash and
   equivalents                                           364,824           (70,334)           69,869

CASH AND EQUIVALENTS, beginning of year                  276,145           346,479           276,610
                                                     -----------       ------------     -------------
CASH AND EQUIVALENTS, end of year                    $   640,969       $   276,145       $   346,479
                                                     -----------       ------------     -------------
                                                     -----------       ------------     -------------

Interest paid on a cash basis                        $   793,577       $   876,871       $   950,760
                                                     -----------       ------------     -------------
                                                     -----------       ------------     -------------
</TABLE>

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


                                     - 34 -

<PAGE>

                                NTS-PROPERTIES IV

                          NOTES TO FINANCIAL STATEMENTS

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

1.   SIGNIFICANT ACCOUNTING POLICIES

     A)   ORGANIZATION

          NTS-Properties IV (the "Partnership") is a limited partnership
          organized under the laws of the Commonwealth of Kentucky on May 13,
          1983. The General Partner is NTS-Properties Associates IV, a Kentucky
          limited partnership. The Partnership is in the business of developing,
          constructing, owning and operating residential apartments and
          commercial real estate.

     B)   PROPERTIES

          The Partnership owns and operates the following properties:

          -    Commonwealth Business Center Phase I, a business center with
               approximately 57,000 net rentable ground floor square feet and
               approximately 24,000 net rentable mezzanine square feet in
               Louisville, Kentucky.

          -    Plainview Point Office Center Phases I and II, an office center
               with approximately 56,000 net rentable square feet in Louisville,
               Kentucky.

          -    The Willows of Plainview Phase I, a 118-unit luxury apartment
               complex in Louisville, Kentucky.

          -    A 10% joint venture interest in The Willows of Plainview Phase
               II, a 144-unit luxury apartment complex in Louisville, Kentucky.

          -    A 4% joint venture interest in Golf Brook Apartments, a 195-unit
               luxury apartment complex in Orlando, Florida.

          -    A 5% joint venture interest in Plainview Point III Office Center,
               an office center with approximately 62,000 net rentable square
               feet in Louisville, Kentucky.

          -    A 30% joint venture interest in Blankenbaker Business Center 1A,
               a business center with approximately 50,000 net rentable ground
               floor square feet and approximately 50,000 net rentable mezzanine
               square feet in Louisville, Kentucky.

          -    An 18% joint venture interest in the Lakeshore/University II
               Joint Venture. A description of the properties owned by the Joint
               Venture appears below:

               -    LAKESHORE BUSINESS CENTER PHASE I - a business center with
                    approximately 103,000 rentable square feet located in Fort
                    Lauderdale, Florida.

               -    LAKESHORE BUSINESS CENTER PHASE II - a business center with
                    approximately 97,000 net rentable square feet located in
                    Fort Lauderdale, Florida.

               -    OUTPARCEL BUILDING SITES - approximately 6.2 acres of
                    undeveloped land adjacent to the Lakeshore Business Center
                    development which is zoned for commercial development.


                                     - 35 -

<PAGE>

1.   SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     C)   ALLOCATION OF NET INCOME (LOSS) AND CASH DISTRIBUTIONS

          Net Cash Receipts made available for distribution, as defined in the
          partnership agreement, will be distributed 1) 99% to the limited
          partners and 1% to the General Partner until the limited partners have
          received their 8% Preference Distribution as defined in the
          partnership agreement; 2) to the General Partner in an amount equal to
          approximately 10% of the limited partners' 8% Preference Distribution;
          and 3) the remainder, 90% to the limited partners and 10% to the
          General Partner. Starting December 31, 1996, the Partnership has
          indefinitely interrupted distributions.

          Net Cash Proceeds, as defined in the partnership agreement, which are
          available for distribution will be distributed 1) 99% to the limited
          partners and 1% to the General Partner until the limited partners have
          received distributions from all sources equal to their Original
          Capital plus the amount of any deficiency in their 8% Cumulative
          Distribution as defined in the partnership agreement; and 2) the
          remainder, 75% to the limited partners and 25% to the General Partner.
          Net income (loss) is to be allocated 99% to the limited partners and
          1% to the General Partner.

     D)   TAX STATUS

          The Partnership has received a ruling from the Internal Revenue
          Service stating that the Partnership is classified as a limited
          partnership for federal income tax purposes. As such, the Partnership
          makes no provision for income taxes. The taxable income or loss is
          passed through to the holders of interests for inclusion on their
          individual income tax returns.

          A reconciliation of net loss for financial statement purposes versus
          that for income tax reporting is as follows:

<TABLE>
<CAPTION>
                                              1998           1997            1996
                                          ----------      ----------      ----------
          <S>                             <C>             <C>             <C>
          Net income (loss)               $  98,296       $ (49,050)      $ (46,181)
          Items handled differently
            for tax purposes:
           Gain on sale of assets          (329,513)             --              --
            Depreciation and
             amortization                   (46,238)         (1,014)        (18,531)
            Capitalized leasing
             costs                              324             237             111
            Rental income                    28,217         138,433          75,494
            Write-off of unamortized
             tenant improvements            (25,037)        (28,620)        (15,890)
            Allowance for doubtful
             accounts                         1,865          (7,372)         (8,303)
                                          ----------      ----------      ----------

          Taxable income (loss)           $(272,086)      $  52,614       $ (13,300)
                                          ----------      ----------      ----------
                                          ----------      ----------      ----------
</TABLE>

     E)   USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

          The preparation of financial statements in conformity with generally
          accepted accounting principles requires management to make estimates
          and assumptions that affect the reported amounts of assets and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial statements and the reported amounts of revenues
          and expenses during the reporting period. Actual results could differ
          from those estimates.


                                     - 36 -

<PAGE>

1.   SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     F)   JOINT VENTURE ACCOUNTING

          The Partnership has adopted the proportionate consolidation method of
          accounting for joint venture properties. The Partnership's
          proportionate interest in the joint venture's assets, liabilities,
          revenues, expenses and cash flows are combined on a line-by-line basis
          with the Partnership's own assets, liabilities, revenues and expenses
          and cash flows. All intercompany accounts and transactions have been
          eliminated in consolidation.

          Proportionate consolidation is utilized by the Partnership due to the
          fact that the ownership of joint venture properties, in substance, is
          not subject to joint control. The managing General Partners of the
          sole partner of the NTS sponsored partnerships which have formed joint
          ventures are substantially the same. As such, decisions regarding
          financing, development, sale or operations do not require the approval
          of different partners. Additionally, the joint venture properties are
          in the same business/industry as their respective joint venture
          partners and their asset, liability, revenue and expense accounts
          correspond with the accounts of such partners. It is the belief of the
          General Partner of the Partnership that the financial statement
          disclosures resulting from proportionate consolidation provides the
          most meaningful presentation of assets, liabilities, revenues,
          expenses and cash flows for the years presented given the commonality
          of the Partnership's operations.

     G)   CASH AND EQUIVALENTS - RESTRICTED

          Cash and equivalents - restricted represent 1) funds received for
          residential security deposits, 2) funds which have been escrowed with
          mortgage companies for property taxes and insurance in accordance with
          the loan agreements and 3) funds which the Partnership has reserved
          for the repurchase of limited partnership Units through the Interest
          Repurchase Reserve (1997 only) and 4) funds which the Partnership has
          reserved for the repurchase of limited partnership Units under the
          Tender Offer.

     H)   INVESTMENT SECURITIES

          Investment securities represent investments in Certificates of Deposit
          or securities issued by the U.S. Government with initial maturities of
          greater than three months. The investments are carried at cost which
          approximates market value. The Partnership intends to hold the
          securities until maturity. During 1998, 1997 and 1996 the Partnership
          sold no investment securities.

          The following provides details regarding the investments held at
          December 31, 1998:

<TABLE>
<CAPTION>

                                                 Amortized      Maturity      Value at
                      Type                          Cost          Date        Maturity
                      ----                       ---------      --------      ----------
          <S>                                    <C>            <C>           <C>
          Certificate of deposit                  $ 40,797      01/04/99      $ 40,815
          Certificate of deposit                    50,886      01/04/99        50,907
          Certificate of deposit                    50,886      02/01/99        51,111
                                                 ---------                    ----------
                                                  $142,569                    $142,833
                                                 ---------                    ----------
                                                 ---------                    ----------
</TABLE>


                                     - 37 -

<PAGE>

1.   SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

     H)   INVESTMENT SECURITIES - CONTINUED

          The following provides details regarding the investments held at
          December 31, 1997:

<TABLE>
<CAPTION>
                                                 Amortized      Maturity      Value at
                      Type                          Cost          Date        Maturity
                      ----                       -----------    --------      ---------
          <S>                                    <C>            <C>            <C>
          Certificate of deposit                    $101,627    01/30/98       $102,052
          Certificate of deposit                     120,091    02/27/98        121,081
          Certificate of deposit                     100,467    03/31/98        101,808
          Certificate of deposit                     100,151    04/03/98        101,537
                                                    --------                   --------
                                                    $422,336                   $426,478
                                                    --------                   --------
                                                    --------                   --------
</TABLE>

     I)   BASIS OF PROPERTY AND DEPRECIATION

          Land, buildings and amenities are stated at cost to the Partnership.
          Costs directly associated with the acquisition, development and
          construction of a project are capitalized. Depreciation is computed
          using the straight-line method over the estimated useful lives of the
          assets which are 5-30 years for land improvements, 5-30 years for
          building and improvements and 5-30 years for amenities.

          Statement of Financial Accounting Standards (SFAS) No. 121, Accounting
          for the Impairment of Long-Lived Assets and for Long-Lived Assets to
          be Disposed Of, specifies circumstances in which certain long-lived
          assets must be reviewed for impairment. If such review indicates that
          the carrying amount of an asset exceeds the sum of its expected future
          cash flows, the asset's carrying value must be written down to fair
          market value. Application of this standard during the years ended
          December 31, 1998, 1997 and 1996 did not result in an impairment loss.

     J)   RENTAL INCOME AND CAPITALIZED LEASING COSTS

          Certain of the Partnership's lease agreements for the commercial
          properties are structured to include scheduled and specified rent
          increases over the lease term. For financial reporting purposes, the
          income from these leases is being recognized on a straight-line basis
          over the lease term. Accrued income connected with these leases is
          included in accounts receivable and totaled $124,909 and $164,608 at
          December 31, 1998 and 1997, respectively.

          All commissions paid to commercial leasing agents and incentives paid
          to tenants are deferred and amortized on a straight-line basis over
          the applicable lease term. In addition, certain other costs associated
          with the initial leasing of the properties are capitalized and
          amortized over a five year period.

     K)   ADVERTISING

          The Partnership expenses advertising-type costs as incurred.
          Advertising expense was immaterial to the Partnership during the years
          ended December 31, 1998, 1997 and 1996.

     L)   STATEMENTS OF CASH FLOWS

          For purposes of reporting cash flows, cash and equivalents include
          cash on hand and short-term, highly liquid investments with initial
          maturities of three months or less.

2.   CONCENTRATION OF CREDIT RISK

     NTS-Properties IV owns and operates commercial properties in Louisville,
     Kentucky, Orlando, Florida and Ft. Lauderdale, Florida. Substantially all
     of the Partnership's tenants are local businesses or are businesses which
     have operations in the location in which they lease space. In Louisville,


                                     - 38 -

<PAGE>

2.   CONCENTRATION OF CREDIT RISK - CONTINUED

     Kentucky, one tenant occupies 100% of the Blankenbaker Business Center 1A
     property. The Partnership also owns and operates, either wholly or through
     a joint venture, residential properties in Louisville, Kentucky and
     Orlando, Florida. The apartment unit is generally the principal residence
     of the tenant.

3.   INTEREST REPURCHASE RESERVE

     Pursuant to Section 16.4 of the Partnership's Amended and Restated
     Agreement of Limited Partnership, the Partnership established an Interest
     Repurchase Reserve in June 1996. During the years ended December 31, 1998,
     1997 and 1996, the Partnership funded $201,565, $45,000, and $575,070,
     respectively, to the reserve. On January 10, 1997, the repurchase of
     partnership Units was temporarily suspended in order to conserve cash. This
     step was taken until it was clear that, in the General Partner's opinion,
     the Partnership had the necessary cash reserves to meet future leasing and
     tenant finish costs and had rebuilt cash reserves to meet the ongoing needs
     of the Partnership. Through December 31, 1998, the Partnership has
     repurchased 4,436 Units for $700,920 at a price ranging from $150 to $205
     per Unit. The offering price per Unit was established by the General
     Partner in its sole discretion and does not purport to represent the fair
     market value or liquidation value of the Units. Repurchased Units are
     retired by the Partnership, thus increasing the percentage of ownership of
     each remaining investor. The Interest Repurchase Reserve was funded from
     cash reserves. The funds remaining in the Interest Repurchase Reserve at
     the commencement of the Tender Offer were returned to unrestricted cash for
     utilization in the Partnership's operations.

4.   TENDER OFFER

     On November 20, 1998, the Partnership and ORIG, LLC, an affiliate of the
     Partnership, commenced a Tender Offer to purchase up to 1,200 of the
     Partnership's limited partnership Units at a price of $205 per Unit.
     Although the Partnership and ORIG, LLC believes that this price is
     appropriate, the price of $205 per Unit may not equate to the fair market
     value or the liquidation value of the Unit as of the offering date. The
     amount of funds required by the Partnership to fund the Offer is estimated
     to be approximately $143,000 ($123,000 to purchase 600 Interests plus
     approximately $20,000 for its proportionate share of the expenses
     associated with administering the Offer). The Offer stated that the
     Partnership will purchase the first 600 Units tendered and will fund its
     purchases and its portion of the expenses from cash reserves. If more than
     1,200 Units are tendered, the Partnership and ORIG, LLC may choose to
     acquire the additional Units on the same terms. Otherwise, tendered Units
     will be purchased on a pro rata basis up to 1,200. Units that are acquired
     by the Partnership will be retired. Units that are acquired by ORIG, LLC
     will be held by it. The General Partner, NTS-Properties Associates IV, does
     not intend to participate in the Tender Offer. The Tender Offer expired
     February 19, 1999.

     As of February 19, 1999, 1,259 Units were tendered pursuant to the Offer.
     The Partnership repurchased 600 Units at a cost of $123,000 and ORIG, LLC
     purchased 659 Units at a cost of $135,095.

5.   INVESTMENT IN JOINT VENTURES

     A)   NTS/WILLOWS PHASE II JOINT VENTURE

          In 1984, the Partnership entered into a joint venture agreement with
          NTS-Properties V, an affiliate of the General Partner of the
          Partnership, to develop and construct a 144-unit luxury apartment
          complex on an 8.29-acre site in Louisville, Kentucky known as The
          Willows of Plainview Phase II. The Partnership contributed land valued
          at $800,000 and NTS-Properties V contributed approximately $7,455,000,
          the construction and carrying costs of the apartment complex. The 


                                     - 39 -

<PAGE>

5.   INVESTMENT IN JOINT VENTURES - CONTINUED

     A)   NTS/WILLOWS PHASE II JOINT VENTURE - CONTINUED

          project was completed in August 1985. Net income or net loss is
          allocated each calendar quarter based on the respective partnership's
          contribution. The Partnership's ownership share was 10% at December
          31, 1998. The Partnership's share of the joint venture's revenues was
          $130,126 (1998), $137,881 (1997) and $123,547 (1996). The
          Partnership's share of the joint venture's expenses was $129,696
          (1998), $135,431 (1997) and $116,924 (1996).

     B)   NTS FT. LAUDERDALE OFFICE JOINT VENTURE

          In 1985, the Partnership entered into a joint venture agreement with
          NTS-Properties V to develop an approximately 103,000 square-foot
          commercial business center known as Lakeshore Business Center Phase I,
          located in Fort Lauderdale, Florida. The Partnership contributed land
          valued at $1,752,982 and NTS-Properties V contributed approximately
          $9,170,000, the cost of constructing and leasing the building. The net
          income or net loss was allocated each calendar quarter based on the
          respective partnership's contribution.

          On January 23, 1995, the partners of the NTS Ft. Lauderdale Office
          Joint Venture contributed Lakeshore Business Center Phase I to the
          newly formed Lakeshore/University II (L/U II) Joint Venture. Refer to
          Note 5F for a further discussion of the new joint venture.

     C)   NTS SABAL GOLF VILLAS JOINT VENTURE

          In 1985, the Partnership entered into a joint venture agreement with
          NTS-Properties VI, an affiliate of the General Partner of the
          Partnership, to develop and construct a 158-unit luxury apartment
          complex on a 13.15-acre site in Orlando, Florida to be known as the
          Golf Brook Apartments Phase I. The Partnership contributed land valued
          at $1,900,000 with an outstanding note payable to a bank of $1,200,000
          which was secured by the land. On January 1, 1987,the joint venture
          agreement was amended to include Golf Brook Apartments Phase II, a
          37-unit luxury apartment complex located on a 3.069-acre site adjacent
          to Golf Brook Apartments Phase I. NTS-Properties VI contributed
          approximately $15,800,000, the cost of constructing and leasing the
          complexes. NTS-Properties VI also contributed funds to retire the
          $1,200,000 note payable to the bank.

          Net income or net loss is allocated based on the respective
          contribution of each partnership as of the end of each calendar
          quarter. The Partnership's ownership share was 4% at December 31,
          1998. The Partnership's share of the joint venture's revenues
          was $120,971 (1998), $113,579 (1997) and $115,827 (1996). The
          Partnership's share of the joint ventures expenses was $78,511 (1998),
          $73,649 (1997) and $73,498 (1996).

     D)   PLAINVIEW POINT III JOINT VENTURE

          In 1987, the Partnership entered into a joint venture agreement with
          NTS-Properties VI to develop and construct an approximately 62,000
          square foot office building located in Louisville, Kentucky to be
          known as Plainview Point Phase III Office Center. The Partnership
          contributed land valued at $790,000 with an outstanding note payable
          to a bank of $550,000 which was secured by the land. NTS-Properties VI
          contributed approximately $4,100,000, the cost to construct and lease
          the building. NTS-Properties VI also contributed funds to retire the
          $550,000 note payable to the bank.


                                     - 40 -
<PAGE>

5.   INVESTMENT IN JOINT VENTURES - CONTINUED

     D)   PLAINVIEW POINT III JOINT VENTURE - CONTINUED

          Net income or net loss is allocated based on the respective
          partnership's contribution as of the end of each calendar quarter. The
          Partnership's ownership share was 5% at December 31, 1998. The
          Partnership's share of the joint venture's revenues was $40,779
          (1998), $38,512 (1997) and $38,079 (1996). The Partnership's share of
          the joint venture's expenses was $44,273 (1998), $42,023 (1997) and
          $39,747 (1996).

     E)   BLANKENBAKER BUSINESS CENTER JOINT VENTURE

          On August 16, 1994, the Blankenbaker Business Center Joint Venture
          agreement was amended to admit the Partnership to the Joint Venture.
          The Joint Venture was originally formed on December 28, 1990 between
          NTS-Properties Plus Ltd. and NTS-Properties VII, Ltd., affiliates of
          the General Partner of the Partnership, to own and operate
          Blankenbaker Business Center 1A and to acquire an approximately 2.49
          acre parking lot that was being leased by the business center from an
          affiliate of the General Partner. The use of the parking lot is a
          provision of the tenants's lease agreement with the business center.

          In accordance with the Joint Venture Agreement Amendment, the
          Partnership contributed $1,100,000 and NTS-Properties VII, Ltd.
          contributed $500,000. The General Partner of the Partnership
          determined the utilization of a portion of the Partnership's cash
          reserves to participate in the Joint Venture would be consistent with
          the investment objectives set forth in the Partnership's partnership
          agreement, and should enhance the future returns of the Partnership.

          The need for additional capital by the Joint Venture was a result of
          the lease renewal and expansion which was signed April 28, 1994
          between the Joint Venture and Prudential Service Bureau, Inc.
          ("Prudential"). The lease expanded Prudential's leased space by
          approximately 15,000 square feet and extended its current lease term
          through July 2005. Approximately 12,000 square feet of the expansion
          was into new space which had to be constructed on the second level of
          the existing business center. With this expansion, Prudential occupied
          100% of the business center (approximately 101,000 square feet). The
          tenant finish and leasing costs connected with the lease renewal and
          expansion were approximately $1,400,000.

          In order to calculate the revised joint venture percentage interests,
          the assets of the Joint Venture were revalued in connection with the
          admission of the Partnership as a joint venture partner and the
          additional capital contributions. The value of the Joint Venture's
          assets immediately prior to the additional capital contributions was
          $6,764,322 and its outstanding debt was $4,650,042, with net equity
          being $2,114,280. The difference between the value of the Joint
          Venture's assets and the value at which they were carried on the books
          of the Joint Venture has been allocated to NTS-Properties VII, Ltd.
          and NTS-Properties Plus Ltd. in determining each Joint Venture
          partner's percentage interest.

          As a result of its capital contribution, the Partnership obtained a 
          30% interest in the Joint Venture. NTS-Properties Plus Ltd.'s 
          interest in the Joint Venture decreased from 69% to 39% as a result 
          of the capital contributions made by NTS-Properties VII, Ltd. and 
          the Partnership. NTS-Properties VII, Ltd.'s interest in the Joint 
          Venture remained at 31%.

          Net income or net loss is allocated based on the respective
          contribution of each partner as of the end of each calendar quarter.
          The Partnership's ownership share was 30% at December 31, 1998. The
          Partnership's share of the joint venture's revenues was $276,575
          (1998), $277,712 (1997) and $277,577 (1996). The Partnership's share
          of the joint venture's expenses was $310,531 (1998), $329,529 (1997)
          and $324,015 (1996).

                                     - 41 -
<PAGE>

5.   INVESTMENT IN JOINT VENTURES - CONTINUED

     F)   LAKESHORE/UNIVERSITY II JOINT VENTURE

          On January 23, 1995, a joint venture known as the Lakeshore/University
          II Joint Venture (L/U II Joint Venture) was formed among the
          Partnership and NTS-Properties V, NTS-Properties Plus Ltd. and
          NTS/Fort Lauderdale, Ltd., affiliates of the General Partner of the
          Partnership, for purposes of owning Lakeshore Business Center Phases I
          and II, University Business Center Phase II (sold October 1998 - see
          Note 11) and certain undeveloped tracts of land adjacent to the
          Lakeshore Business Center development. The table below identifies
          which properties were contributed to the L/U II Joint Venture and the
          respective owners of such properties prior to the formation of the
          joint venture.

<TABLE>
<CAPTION>

          Property (Net Asset Contributed)          Contributing Owner
          -------------------------------           -------------------
          <S>                                       <C>
          Lakeshore Business Center                 NTS-Properties IV and NTS-
          Phase I ($6,249,667)                      Properties V

          Lakeshore Business Center                 NTS-Properties Plus Ltd.
          Phase II (-$1,023,535)

          Undeveloped land adjacent to the          NTS-Properties Plus Ltd.
          Lakeshore Business Center
          development (3.8 acres)(-$670,709)

          Undeveloped land adjacent to the          NTS/Fort Lauderdale, Ltd.
          Lakeshore Business Center
          development (2.4 acres)($27,104)

          University Business Center                NTS-Properties V and NTS-
          Phase II ($953,236)                       Properties Plus Ltd.
</TABLE>

          Each of the properties were contributed to the L/U II Joint Venture
          subject to existing indebtedness, except for Lakeshore BusinessCenter
          Phase I which was contributed to the joint venture free and clear of
          any mortgage liens, and all such indebtedness was assumed by the L/U
          II joint venture. Mortgages were recorded on University Business
          Center Phase II in the amount of $3,000,000, in favor of the banks
          which held the indebtedness on University Business Center Phase II,
          Lakeshore Business Center Phase II and the undeveloped tracts of land
          prior to the formation of the joint venture and on Lakeshore Business
          Center Phase I in the amount of $5,500,000 subsequent to the formation
          of the L/U II Joint Venture. In addition to the above, the Partnership
          also contributed $750,000 to the L/U II Joint Venture. The
          Partnership's ownership share was 18% at December 31, 1998. Net income
          or net loss is allocated based on the respective contribution of each
          partner as of the end of each calendar quarter. The Partnership's
          share of the joint venture's revenues was $908,593 (1998), $654,897
          (1997) and $662,025 (1996). The Partnership's share of the joint
          venture's expenses was $830,675 (1998), $790,607 (1997) and $838,382
          (1996).

6.  LAND, BUILDINGS AND AMENITIES

     The following schedule provides an analysis of the Partnership's investment
     in property held for lease as of December 31:

<TABLE>
<CAPTION>
                                                       1998             1997
                                                   -----------      ----------
<S>                                               <C>              <C>

       Land and improvements                       $ 5,189,463      $ 5,551,534
       Buildings, improvements and
          amenities                                 17,426,923       18,806,479
                                                   -----------      -----------
                                                    22,616,386       24,358,013

       Less accumulated depreciation                11,346,726       11,334,232
                                                   -----------      -----------
                                                   $11,269,660      $13,023,781
                                                   -----------      -----------
                                                   -----------      -----------
</TABLE>

                                     - 42 -
<PAGE>


7.   ASSET HELD FOR SALE

     Asset held for sale of $297,251 at December 31, 1998 represents the
     Partnership's proportionate share of approximately 6.2 acres of land owned
     by the L/U II Joint Venture which is adjacent to the Lakeshore Business
     Center development in Ft. Lauderdale, Florida. In management's opinion, the
     net book value approximates the fair market value less cost to sell. See
     below for information regarding a contract for the sale of a portion of
     this land.

     As of December 31, 1998, the L/U II Joint Venture had a contract for the
     sale of approximately 2.4 acres of land adjacent to the Lakeshore Business
     Center development for a purchase price of $528,405. Concurrent with the
     signing of the original contract, the purchaser deposited into an escrow
     account $10,000. This deposit will be applied to the purchase price at
     closing. The contract requires that the purchaser proceed, at their cost,
     to have the property re-zoned to allow for a self-storage facility. If the
     purchaser is unable to obtain the re-zoning, they may cancel the contract.
     The General partner of the Partnership has met with city officials who seem
     interested in the project and have voiced a willingness to consider the
     re-zoning request. Subsequent to December 31, 1998, the re-zoning had not
     yet been granted and per the contract, the purchaser has elected to
     postpone the closing for a period of 30 days. At its option, the purchaser
     may postpone the Closing Date four times for a period of 30 days each by
     delivering written notice and paying to the L/U II Joint Venture $10,000
     for each 30-day postponement period. $5,000 of each payment will be applied
     toward the purchase price. The Partnership has an 18% interest in the Joint
     Venture. The Partnership has not yet determined what the use of net
     proceeds, if any, would be from the sale of the land.

     As of December 31, 1998 the L/U II Joint Venture intends to use the
     remaining 3.8 acres of the land it owns at the Lakeshore Business Center
     Development to construct Lakeshore Business Center Phase III. Construction
     is expected to begin during 1999. The construction cost is currently
     estimated to be $4,000,000 and will be funded by a capital contribution
     from NTS-Properties V and debt financing. Construction will not begin
     until, in the opinion of the General Partner, financing on favorable terms
     has been obtained. The Partnership and NTS-Properties Plus, which currently
     have an 18% and 12% interest respectively, in the L/U II Joint Venture are
     not in a position to contribute additional capital required for the
     construction of Lakeshore Business Center Phase III. The Partnership and
     NTS-Properties Plus have agreed that NTS-Properties V will make a capital
     contribution to the L/U II Joint Venture with the knowledge that their
     Joint Venture interest will, as a result, decrease.

8.   MORTGAGES PAYABLE

     Mortgages payable as of December 31 consist of the following:

<TABLE>
<CAPTION>
                                                         1998            1997
                                                      -----------     ----------
<S>                                                  <C>              <C>
     Mortgage payable with an insurance company,
     bearing interest at a fixed rate
     of 8.8%, due October 1, 2004,
     secured by land and building                      $1,988,590      $2,238,591

     Mortgage payable with an insurance
     company, bearing interest at a fixed rate
     of 7.15%, due January 5, 2013, secured by
     land, buildings and amenities                      1,927,484       1,998,000

     Mortgage payable with an insurance company,
     bearing interest at a fixed rate
     of 7.15%, due January 5, 2013, secured
     by land, buildings and amenities                   1,834,872       1,902,000
</TABLE>
                             (Continued on page 44)

                                     - 43 -
<PAGE>

<TABLE>
<CAPTION>

8.   MORTGAGES PAYABLE - CONTINUED
                                                          1998           1997
                                                       ----------     -----------
<S>                                                    <C>            <C>
     Mortgage payable with an insurance company,
     bearing interest at a fixed rate
     of 8.5%, due November 15, 2005,
     secured by land and building                      $1,058,249     $ 1,163,828

     Mortgage payable with an insurance company,
     bearing interest at a fixed rate of 8.125%
     due August 1, 2008, secured by land and
     building                                             939,811       1,000,809

     Mortgage payable with an insurance company
     bearing interest at a fixed rate of 8.125%,
     due August 1, 2008, secured by land and
     building                                             873,517         930,213

     Mortgage payable with an insurance company,
     bearing interest at a fixed rate of 7.2%, due
     January 5, 2013, secured by land, buildings
     and amenities                                        312,698         321,854

     Mortgage payable with an insurance company,
     bearing interest at a fixed rate of 7.2%,
     due January 5, 2013, secured by land,
     buildings and amenities                              186,758         192,225


     Mortgage payable with an insurance company 
     bearing interest at a fixed rate of 8.125%, 
     due August 1, 2008, secured by land and
     building                                                  --         959,282
                                                       ----------     -----------
                                                       $9,121,979     $10,706,802
                                                       ----------     -----------
                                                       ----------     -----------
</TABLE>

     The mortgages are payable in aggregate monthly installments of $125,190
     which includes principal, interest, insurance escrow and property tax
     escrow.

     Scheduled maturities of debt are as follows:

<TABLE>
<CAPTION>

        For the Years Ended December 31,              Amount
        --------------------------------            ------------
     <S>                                            <C>
                     1999                           $   701,182
                     2000                               760,897
                     2001                               825,733
                     2002                               896,132
                     2003                               972,575
                  Thereafter                          4,965,460
                                                    -----------
                                                    $ 9,121,979
                                                    -----------
                                                    -----------
</TABLE>

     Based on the borrowing rates currently available to the Partnership for
     mortgages with similar terms and average maturities, the fair value of
     long-term debt approximates carrying value.

     The 1998 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT relates to the
     sale of University Business Phase II (see discussion below). A portion of
     the proceeds from the sale was used to retire the $5,128,872 mortgage
     payable prior to its maturity (August 2008). As a result of the prepayment,
     a $763,995 penalty, of which the Partnership's proportionate share was
     $136,449, was required by the insurance company who held the mortgage.
     Unamortized loan costs connected with this loan were also expnesed due to
     the fact that the mortgage was paid prior to its maturity.

                                     - 44 -
<PAGE>

 8. MORTGAGES PAYABLE - CONTINUED

    The 1997 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT relates to
    unamortized loan costs associated with The Willows of Plainview Phase I and
    II note payable. The unamortized loan costs were expensed due to the fact
    that the mortgages were retired in 1997 prior to their maturity (December
    5, 2003).

    The 1996 EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT relates to
    unamortized loan costs associated with L/U II Joint Venture's mortgages
    payable. The unamortized loan costs were expensed due to the fact that the
    notes were retired in 1996 prior to their maturity (January 31, 1998).

9.  RENTAL INCOME UNDER OPERATING LEASES

    The following is a schedule of minimum future rental income on
    noncancellable operating leases as of December 31, 1998:

<TABLE>
<CAPTION>

     For the Years Ended December 31,                 Amount
     --------------------------------              -----------
     <S>                                           <C>
                    1999                           $ 1,354,234
                    2000                             1,148,260
                    2001                             1,005,631
                    2002                               892,920
                    2003                               813,087
                 Thereafter                            862,699
                                                   -----------
                                                   $ 6,076,831
                                                   -----------
                                                   -----------
</TABLE>

10. RELATED PARTY TRANSACTIONS

    Property management fees of $204,498 (1998), $208,837 (1997) and $204,165
    (1996) were paid to NTS Development Company, an affiliate of the General
    Partner of the Partnership. The fee is equal to 5% of gross revenues from
    residential properties and 6% of gross revenues from commercial properties
    pursuant to an agreement with the Partnership. As permitted by an
    agreement, NTS Development Company will receive a repair and maintenance
    fee equal to 5.9% of costs incurred which relate to capital improvements.
    The Partnership has incurred $17,697 and $14,351 as a repair and maintenance
    fee during the years ended December 31, 1998 and 1997 respectively, and has
    capitalized this cost as a part of land, buildings and amenities.

    As permitted by an agreement, the Partnership was also charged the
    following amounts from NTS Development Company for the years ended 
    December 31, 1998, 1997 and 1996. These charges include items which have 
    been expensed as operating expenses affiliated or professional and
    administrative expenses - affiliated and items which have been capitalized
    as other assets or as land, buildings and amenities.

<TABLE>
<CAPTION>

                                               1998          1997          1996
                                            ---------     ---------    ---------
         <S>                                <C>           <C>           <C>
          Leasing                            $127,001      $121,834     $108,913
          Administrative                      195,908       196,182      214,530
          Property manager                    292,427       261,511      241,289
          Other                                30,301         5,015        8,674
                                            ---------     ---------    ---------
                                             $645,637      $584,542     $573,406
                                            ---------     ---------    ---------
                                            ---------     ---------    ---------
</TABLE>
                                     - 45 -
<PAGE>

11.  SALE OF ASSET

     On October 6, 1998 pursuant to a contract executed on September 8, 1998,
     the Lakeshore /University II Joint Venture ("L/U II") sold University
     Business Center Phase II Office building to Silver City Properties, Ltd.
     ("the Purchaser") for $8,975,000. University Business Center Phase II was
     owned by the L/U II Joint Venture of which the Partnership owns an 18%
     interest. Portions of the proceeds from the sale were immediately used to
     pay the remainder of the outstanding debt recorded on the joint venture's
     books of approximately $5,933,382 on University Business Center Phase II
     (including interest and prepayment penalty). NTS-Properties IV reflects a
     gain of approximately $208,000 associated with this sale in the fourth
     quarter of 1998. Net cash proceeds received by the Partnership from the L/U
     II Joint Venture as a result of a cash distribution of the proceeds from
     the sale were approximately $442,000.

12.  SEGMENT REPORTING

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

     The Partnership's reportable operating segments include Residential and
     Commercial real estate operations. The Residential operations represent the
     Partnership's ownership and operating results relative to an apartment
     complex known as Golf Brook and the Willows of Plainview Phases I and II.
     The Commercial operations represent the Partnership's ownership and
     operating results relative to suburban commercial office space known as
     Commonwealth Business Center Phase I, Plainview Point Office Center Phases
     I, II and III, Blankenbaker Business Center 1A and Lakeshore Business
     Center Phases I and II, and University Business Center Phase II through
     October 6, 1998.

                                  - 46 -
<PAGE>

12.  SEGMENT REPORTING - CONTINUED

     The financial information of the operating segments have been prepared
     using a management approach, which is consistent with the basis and manner
     in which the Partnership's management internally disaggregates financial
     information for the purposes of assisting in making internal operating
     decisions. The Partnership evaluates performance based on stand-alone
     operating segment net income.

<TABLE>
<CAPTION>

                                                                 1998
                                                                 ----
                                              Residential      Commercial          Total
                                              -----------      ----------          -----
<S>                                          <C>             <C>               <C>
      Rental income                           $ 1,391,996     $ 2,169,346       $ 3,561,342
      Other income                                  7,301          10,907            18,208
      Gain of sale of assets                        --            208,608           208,608
                                              -----------     -----------       -----------

      Total net revenues                      $ 1,399,297     $ 2,388,861       $ 3,788,158
                                              -----------     -----------       -----------
                                              -----------     -----------       -----------

      Operating expenses                      $   540,065     $   712,150       $ 1,252,215
      Write-off of unamortized
        improvements                               11,213           1,868            13,081
      Amortization of capitalized
        leasing costs                                   0          14,998            14,998
      Interest expense                             35,493         302,724           338,217
      Management fees                              70,246         134,252           204,498
      Real estate taxes                            67,275         145,221           212,496
      Professional and                                                           
        administrative                              8,730          68,179            76,909
      Depreciation expense                        227,003         564,009           791,012
                                              -----------     -----------       -----------

      Net income (loss)before
        extraordinary item                    $   439,272     $   445,460       $   884,732

      Extraordinary item -early
        extinguishment of debt                        --         (154,062)        (154,062)
                                              -----------     -----------       -----------

      Net income (loss)                       $   439,272     $   291,398       $   730,670
                                              -----------     -----------       -----------
                                              -----------     -----------       -----------

      Land, buildings and
        amenities, net                        $ 4,014,293     $ 7,242,171       $11,256,464
                                              -----------     -----------       -----------
                                              -----------     -----------       -----------

      Expenditures for land,
        buildings and amenities               $    61,872     $   259,495       $   321,367
                                              -----------     -----------       -----------
                                              -----------     -----------       -----------

      Segment liabilities                     $   555,247     $ 3,084,149       $ 3,639,396
                                              -----------     -----------       -----------
                                              -----------     -----------       -----------
</TABLE>

                                       - 47 -

<PAGE>
<TABLE>
<CAPTION>

12.  SEGMENT REPORTING - CONTINUED
                                                                 1997
                                                                 ----
                                              Residential      Commercial          Total
                                              -----------      ----------          -----
<S>                                          <C>             <C>               <C>
      Rental income                           $ 1,423,067     $ 2,193,816      $ 3,616,883
      Other income                                 59,542           7,142           66,684
                                              -----------     -----------      -----------

      Total net revenues                      $ 1,482,609     $ 2,200,958      $ 3,683,567
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Operating expenses                      $   525,978     $   686,063      $ 1,212,041
      Amortization of capitalized
        leasing costs                                --            20,951           20,951
      Interest expense                             36,672         342,662          379,334
      Management fees                              70,486         138,351          208,837
      Real estate taxes                            66,752         157,593          224,345
      Professional and
        administrative                             12,610          51,156           63,766
      Depreciation expense                        224,440         657,124          881,564
                                              -----------     -----------      -----------

      Net income (loss) before
        extraordinary item                    $   545,671     $   147,058      $   692,729

      Extraordinary item - early
        extinguishment of debt                     (5,291)             --           (5,291)
                                              -----------     -----------      -----------

      Net income (loss)                       $   540,380     $   147,058      $   687,438
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Land, buildings and
        amenities, net                        $ 4,084,220     $ 8,939,561      $13,023,781
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Expenditures for land,
        buildings and amenities               $     8,750     $    90,511      $    99,261
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Segment liabilities                     $   579,395     $ 4,286,836      $ 4,866,231
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------
</TABLE>

                                       - 48 -

<PAGE>
<TABLE>
<CAPTION>

12.  SEGMENT REPORTING - CONTINUED
                                                                 1996
                                                                 ----
                                              Residential      Commercial          Total
                                              -----------      ----------          -----
<S>                                          <C>             <C>               <C>
      Rental income                           $ 1,344,990     $ 2,199,163      $ 3,544,153
      Other income                                  3,151           7,538           10,689
                                              -----------     -----------      -----------

      Total net revenues                      $ 1,348,141     $ 2,206,701      $ 3,554,842
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Operating expenses                      $   466,061     $   568,258      $ 1,034,319
      Write-off of unamortized
        improvements                                --              6,871            6,871
      Amortization of capitalized
        leasing costs                               --             20,908           20,908
      Interest expense                             37,672         400,979          438,651
      Management fees                              67,239         136,926          204,165
      Real estate taxes                            67,110         153,846          220,956
      Professional and administrative               5,335          51,645           56,980
      Depreciation expense                        221,029         670,710          891,739
                                              -----------     -----------      -----------

      Net income (loss)before
        extraordinary item                    $   483,695     $   196,558      $   680,253

      Extraordinary item - early
        extinguishment of debt                      --            (12,896)         (12,896)
                                              -----------     -----------      -----------

      Net income (loss)                       $   483,695     $   183,662      $   667,357
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Land, buildings and
        amenities, net                        $ 4,297,939     $ 9,503,312      $13,801,251
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Expenditures for land,
        buildings and amenities               $    42,408     $    66,155      $   108,563
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------

      Segment liabilities                     $   589,011     $ 4,507,499      $ 5,096,510
                                              -----------     -----------      -----------
                                              -----------     -----------      -----------
</TABLE>

                                       - 49 -

<PAGE>

A reconciliation of the totals reported for the operating segments to the
applicable line items in the consolidated financial statements is necessary
given amounts recorded at the Partnership level and not allocated to the
operating properties for internal reporting purposes:

<TABLE>
<CAPTION>

                                                                   1998             1997             1996
                                                                   ----             ----             ----
<S>                                                            <C>              <C>              <C>
NET REVENUES
 Total revenues for reportable segments                         $ 3,788,158      $ 3,683,567      $ 3,554,842
 Other income for partnership                                        39,543           25,030           22,712
                                                                -----------      -----------      -----------

Total consolidated net revenues                                 $ 3,827,701      $ 3,708,597      $ 3,577,554
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------
INTEREST EXPENSE
 Interest expense for reportable segments                       $   338,217      $   379,334      $   438,651
 Interest expense for partnership                                   464,923          476,154          502,290
                                                                -----------      -----------      -----------

Total interest expense                                          $   803,140      $   855,488      $   940,941
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

REAL ESTATE TAXES
 Total real estate taxes for reportable segments                $   212,496      $   224,345      $   220,956
 Real estate taxes for partnership                                      267            --               --
                                                                -----------      -----------      -----------

Total real estate expense                                       $   212,763      $   224,345      $   220,956
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

PROFESSIONAL AND ADMINISTRATIVE
 Total professional and administrative for
   reportable segments                                          $    76,909      $    63,766      $    56,980
 Professional and administrative for partnership                    192,652          189,294          209,597
                                                                -----------      -----------      -----------

Total professional and administrative                           $   269,561      $   253,060      $   266,577
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

DEPRECIATION AND AMORTIZATION
 Total depreciation and amortization for
   reportable segments                                          $   791,012      $   881,564      $   891,739
 Depreciation and amortization for partnership                        8,257           18,540           18,540
 Eliminations                                                         5,818            5,817            5,823
                                                                -----------      -----------      -----------

Total depreciation and amortization                             $   805,087      $   905,921      $   916,102
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

NET INCOME (LOSS)BEFORE EXTRAORDINARY ITEM
 Net income (loss) before extraordinary  item for
   reportable segments                                          $   884,732      $   692,729      $   680,253
 Net income (loss) before extraordinary item for
   partnership                                                     (543,243)        (807,615)        (883,227)
 Eliminations                                                       (89,131)         142,840          169,689
                                                                -----------      -----------      -----------

Total net income (loss) before extraordinary item               $   252,358      $    27,954      $   (33,285)
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT
 Total extraordinary item for reportable segments               $  (154,062)     $    (5,291)     $   (12,896)
 Extraordinary item for partnership                                   --             (71,713)           --
                                                                -----------      -----------      -----------

Total extraordinary item - early extinguishment of
       debt                                                     $  (154,062)     $   (77,004)     $   (12,896)
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

TOTAL NET INCOME (LOSS)                                         $    98,296      $   (49,050)     $   (46,181)
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

LAND, BUILDINGS AND AMENITIES
 Total land, buildings and amenities for
   reportable segments                                          $11,256,464      $13,023,781      $13,801,251
 Partnership                                                         13,196           --               --
                                                                -----------      -----------      -----------

Total land, buildings and amenities                             $11,269,660      $13,023,781      $13,801,251
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

TOTAL EXPENDITURES
 Total expenditures for land, buildings and
  amenities for reportable segments                             $   321,367      $    99,261      $   108,563

 Expenditures for land, buildings and amenities
           for partnership                                           13,196           --              --
                                                                -----------      -----------      -----------

Total expenditures for land, buildings and
amenities                                                       $   334,563      $    99,261      $   108,563
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------
LIABILITIES
 Total liabilities for reportable segments                      $ 3,639,396      $ 4,866,231      $ 5,096,510
 Liabilities for partnership                                      5,726,312        6,111,852        6,392,598
                                                                -----------      -----------      -----------

Total liabilities                                               $ 9,365,708      $10,978,083      $11,489,108
                                                                -----------      -----------      -----------
                                                                -----------      -----------      -----------

</TABLE>
                                       - 50 -

<PAGE>

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                       - 51 -


<PAGE>


                             PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Because the Partnership is a limited partnership and not a corporation, it 
has no directors or officers as such. Management of the Partnership is the 
responsibility of the General Partner, NTS-Properties Associates IV. The 
Partnership has entered into a management contract with NTS Development 
Company, an affiliate of the General Partner, to provide property management 
services.

The General Partners of NTS-Properties Associates IV are as follows:

J. D. NICHOLS

Mr. Nichols (age 57) is the managing General Partner of NTS-Properties 
Associates IV and is Chairman of the Board of NTS Corporation (since 1985) 
and NTS Development Company (since 1977).

NTS CAPITAL CORPORATION

NTS Capital Corporation (formerly NTS Corporation) is a Kentucky corporation 
formed in October 1979. At the present time its capital is $1,000 and it is 
not anticipated that such capital will be significantly increased. J. D. 
Nichols is Chairman of the Board and the sole director of NTS Capital 
Corporation.

NTS SUB-PARTNERSHIP IV

NTS Sub-partnership IV is a Kentucky limited partnership whose primary 
business purpose is to acquire, own and hold an interest in NTS-Properties 
Associates IV. The partners of NTS Sub-partnership IV include various 
management personnel of NTS Corporation and its affiliates.

ALLIANCE REALTY CORPORATION

Alliance Realty Corporation was formed in September 1982, and is a 
wholly-owned subsidiary of SN Alliance, Inc. SN Alliance, Inc. is also the 
parent corporation of Stifel, Nicolaus & Company, Inc. which acted as the 
Dealer Manager in connection with the offering for the interests.

The Manager of the Partnership's properties is NTS Development Company, the 
executive officers and/or directors of which are Messrs. J. D. Nichols, 
Richard L. Good and Brian F. Lavin.

RICHARD L. GOOD

Mr. Good, (age 59) Vice Chairman of NTS Corporation and of NTS Development 
Company and Chairman of the Board of NTS Securities, Inc., joined the Manager 
in January 1985. From 1981 through 1984, he was Executive Vice President of 
Jacques-Miller, Inc., a real estate syndication, property management and 
financial planning firm in Nashville, Tennessee.

BRIAN F. LAVIN

Mr. Lavin (age 45) President of NTS Corporation and NTS Development Company 
joined the Manager in June 1997. Prior to joining NTS, Mr. Lavin served as 
President of the Residential Division of Paragon Group, Inc., and as a Vice 
President of Paragon's Midwest Division. In this capacity, he directed the 
development, marketing, leasing and management operations for the firms 
expanding portfolios. Mr. Lavin attended the University of Missouri where he 
received his Bachelor's Degree in Business Administration. He has served as a 
Director of the Louisville Apartment Association. He is a licensed Kentucky 
Real Estate Broker and Certified Property Manager. Mr. Lavin is a member of 
the Institute of Real Estate Management, and council member of the Urban Land 
Institute. He currently serves on the University of Louisville Board of 
Overseers and is on the Board of Directors of the National Multi-Housing 
Council and the Louisville Science Center.


                                     - 52 -

<PAGE>

Item 11. MANAGEMENT REMUNERATION AND TRANSACTIONS

The officers and/or directors of the corporate General Partner receive no 
direct remuneration in such capacities. The Partnership is required to pay a 
property management fee based on gross rentals to NTS Development Company, an 
affiliate of the General Partner. The Partnership is also required to pay to 
NTS Development Company a repair and maintenance fee on costs related to 
specific projects and a refinancing fee on Net Cash Proceeds from the 
refinancing of any Partnership property. Also, NTS Development Company 
provides certain other services to the Partnership. See Note 9 to the 
financial statements which sets forth transactions with affiliates of the 
General Partner for the years ended December 31, 1998, 1997 and 1996.

The General Partner is entitled to receive cash distributions and allocations 
of profits and losses from the Partnership. See Note 1C to the financial 
statements which describes the methods used to determine income allocations 
and cash distributions.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The General Partner is NTS-Properties Associates IV, a Kentucky limited 
partnership, 10172 Linn Station Road, Louisville, Kentucky 40223. The 
partners of the General Partner and their total respective interests in 
NTS-Properties Associates IV are as follows:

<TABLE>

      <S>                                     <C>
      J. D. Nichols                           69.69%
      10172 Linn Station Road
      Louisville, Kentucky 40223

      NTS Sub-partnership IV                  30.00%
      10172 Linn Station Road
      Louisville, Kentucky 40223

      NTS Capital Corporation                   .30%
      10172 Linn Station Road
      Louisville, Kentucky 40223

      Alliance Realty Corporation               .01%
      500 North Broadway
      St. Louis, Missouri 63102
</TABLE>

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Property management fees of $204,498 (1998), $208,837 (1997) and $204,165 
(1996) were paid to NTS Development Company, an affiliate of the General 
Partner of the Partnership. The fee is equal to 5% of gross revenues from 
residential properties and 6% of gross revenues from commercial properties 
pursuant to an agreement with the Partnership. As permitted by an agreement, 
NTS Development Company will receive a repair and maintenance fee equal to 
5.9% of costs incurred which relate to capital improvements. The Partnership 
has incurred $17,697 and $14,351 as a repair and maintenance fee during the 
years ended December 31, 1998 and 1997, respectively, and has capitalized 
this cost as a part of land, buildings and amenities.

As permitted by an agreement, the Partnership was also charged the following 
amounts from NTS Development Company for the years ended December 31, 1998, 
1997 and 1996. These charges include items which have been expensed as 
operating expenses - affiliated or professional and administrative expenses - 
affiliated and items which have been capitalized as other assets or as land, 
buildings and amenities.

<TABLE>
<CAPTION>
                                                1998          1997         1996
                                              --------      --------     --------
           <S>                                <C>           <C>          <C>
           Leasing                            $127,001      $121,834     $108,913
           Administrative                      195,908       196,182      214,530
           Property manager                    292,427       261,511      241,289
           Other                                30,301         5,015        8,674
                                              --------      --------     --------

                                              $645,637      $584,542     $573,406
                                              --------      --------     --------
                                              --------      --------     --------
</TABLE>

There are no other agreements or relationships between the Partnership, the 
General Partner and its affiliates other than those previously described.


                                     - 53 -

<PAGE>

                                     PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

1.   Financial statements

     The financial statements for the years ended December 31, 1998, 1997 and
     1996 together with the report of Arthur Andersen LLP dated March 12, 1999,
     appear in Item 8. The following financial statement schedules should be
     read in conjunction with such financial statements.

2.   Financial statement schedules

<TABLE>
     <S>                                                              <C>
     Schedules:                                                       Page No.
                                                                      --------
     III-Real Estate and Accumulated Depreciation                       55-58
</TABLE>

       All other schedules have been omitted because they are not applicable,
       are not required, or because the required information is included in the
       financial statements or notes thereto.

3.   Exhibits

<TABLE>
     <S>                                                              <C>
     Exhibit No.                                                      Page No.

      3.    Amended and Restated Agreement and Certificate                *
            of Limited Partnership of NTS-Properties IV

     10.    Property Management Agreement and Construction                *
            Management Agreement between NTS Development
            Company and NTS-Properties IV

     27.    Financial Data Schedule                                    Included
                                                                       herewith

      *     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 16, 1983 (effective
            August 1, 1983) under Commission File No. 2-83771.
</TABLE>

4.   Reports on Form 8-K

     Form 8-K was filed October 5, 1998 to report in Item 5 that the recently
     announced contract for the sale of the University Business Center may be
     in jeopardy.

     Form 8-K was filed October 9, 1998 to report in Item 2 that the
     Lakeshore/University II Joint Venture had sold University Business Center
     Phase II.

     Form 8-K/A was filed December 8, 1998 to amend under Item 7 the Form 8-K
     that was filed October 9, 1998. The filing included the September 30,
     1998 Proforma Balance Sheet and Statements of Operation for the nine
     months ended September 30, 1998 and for the year ended December 31, 1997.

     Form 8-K/A was filed December 17, 1998 to amend the financial statements
     that were filed December 8, 1998.


                                     - 54 -

<PAGE>

                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>

                                               Commonwealth        Plainview
                                                   Business     Point Office      The Willows      The Willows
                                                     Center    Center Phases     of Plainview     of Plainview
                                                    Phase I         I and II          Phase I         Phase II
                                                -----------    -------------     ------------     ------------
<S>                                             <C>            <C>               <C>              <C>
Encumbrances                                            (A)             None              (B)              (B)

Initial cost to partnership:
  Land                                          $   928,867     $    356,048     $  1,798,292     $    170,808
  Buildings and improvements                      1,419,653        2,214,001        5,447,513          585,917

Cost capitalized subsequent to acquisition:
  Improvements                                    1,743,221          894,082          262,188           65,727
  Other                                                  --               --               --               --

Gross amount at which carried December 31, 1998:
  Land                                          $   949,932     $    455,681     $  1,843,471     $    183,647
  Buildings and improvements                      3,141,809        3,008,450        5,664,522          638,805
                                                -----------    -------------     ------------     ------------
  Total                                         $ 4,091,741     $  3,464,131     $  7,507,993     $    822,452
                                                -----------    -------------     ------------     ------------
                                                -----------    -------------     ------------     ------------

Accumulated depreciation                        $ 2,429,195     $  1,529,456     $  3,660,932     $    396,093
                                                -----------    -------------     ------------     ------------
                                                -----------    -------------     ------------     ------------

Date of construction                                  06/84              N/A            03/85            08/85

Date Acquired                                           N/A            04/84              N/A              N/A

Life at which depreciation in
 latest income statement is
 computed                                               (C)              (C)              (C)              (C)
</TABLE>

   (A)  First mortgage held by an insurance company.

   (B)  First mortgage held by two insurance companies.

   (C)  Depreciation is computed using the straight-line method over the 
        estimated useful lives of the assets which are 5-30 years for land 
        improvements, 5-30 years for buildings and improvements and 5-30 years 
        for amenities.


                                     - 55 -

<PAGE>

                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                                                     Lakeshore
                                                                      Plainview      Blankenbaker    Business
                                                     Golf Brook       Point III        Business       Center
                                                     Apartments     Office Center       Center 1A     Phase I
                                                     ----------     -------------    ------------    ----------
<S>                                                  <C>            <C>              <C>             <C>
Encumbrances                                           (A)              None             (A)            (A)

     Initial cost to partnership:
       Land                                           $  175,557    $   65,211       $  582,561      $  422,983
       Buildings and improvements                        474,566       116,284        2,263,506         662,259

     Cost capitalized subsequent to acquisition:
       Improvements                                         (689)       56,526           98,216         561,344
       Other (B)                                              --            --               --         184,250

     Gross amount at which carried December 31, 1998:
       Land                                           $  174,989    $   66,065       $  673,705      $  479,478
       Buildings and improvements                        474,445       171,956        2,270,578       1,351,358
                                                     -----------    -------------    ------------    ----------

       Total                                          $  649,434    $  238,021       $2,944,283      $1,830,836
                                                     -----------    -------------    ------------    ----------
                                                     -----------    -------------    ------------    ----------

     Accumulated depreciation                         $  245,829    $   98,066       $1,176,382      $  944,723
                                                     -----------    -------------    ------------    ----------
                                                     -----------     -------------    ------------    ----------

     Date of construction                               05/88           01/88              N/A         05/86

     Date Acquired                                       N/A             N/A              08/94          N/A

     Life at which depreciation in
      latest income statement is
      computed                                            (C)            (C)               (C)           (C)
</TABLE>

   (A)  First mortgage held by an insurance company.

   (B)  Represents NTS-Properties IV's increased interest in Lakeshore Business
        Center Phase I as a result of the formation of the Lakeshore/
        University II Joint Venture in 1995.

   (C)  Depreciation is computed using the straight-line method over the 
        estimated useful lives of the assets which are 5-30 years for land 
        improvements, 5-30 years for buildings and improvements and 5-30 years 
        for amenities.


                                     - 56 -

<PAGE>

                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

                             AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                              Lakeshore
                                                               Business
                                                                 Center           Total
                                                                Phase II        Pages 55-57
                                                              -----------       -----------
     <S>                                                      <C>               <C>
     Encumbrances                                                 (A)

     Initial cost to partnership:
       Land                                                    $   658,760      $ 5,159,087
       Buildings and improvements                                1,508,328       14,692,027

     Cost capitalized subsequent to acquisition:
       Improvements                                                 45,943        3,726,558
       Other                                                            --          184,250

     Gross amount at which carried December 31, 1998 (B):
       Land                                                    $   659,134      $ 5,486,102
       Buildings and improvements                                1,553,897       18,275,820
                                                              ------------      -----------

       Total                                                   $ 2,213,031      $23,761,922
                                                              ------------      -----------
                                                              ------------      -----------

     Accumulated depreciation                                  $   866,050      $11,346,726
                                                              ------------      -----------
                                                              ------------      -----------

     Date of construction                                           N/A

     Date Acquired                                                 01/95

     Life at which depreciation in
      latest income statement is
      computed                                                       (C)
</TABLE>

(A)  First mortgage held by an insurance company.

(B)  Aggregate cost of real estate for tax purposes is $23,592,217.

(C)  Depreciation is computed using the straight-line method over the estimated
     useful lives of the assets which are 5-30 years for land improvements, 5-30
     years for buildings and improvements and 5-30 years for amenities.

<TABLE>
<S>  <C>                                               <C>
(D)  Total gross cost at December 31, 1998             $ 23,761,922
       Additions to Partnership
         for computer hardware and software in 1998          13,195
     Adjust land contribution
       from fair market value to cost: 
         Golf Brook Apartments                             (662,731)
         Plainview Point III Office Center                 (496,000)
                                                       ------------
       Balance at December 31, 1998                      22,616,386

       Less accumulated depreciation                    (11,346,726)
                                                       ------------
       Land, Buildings and Amenities, net at
        December 31, 1998                              $ 11,269,660
                                                       ------------
                                                       ------------
</TABLE>


                                     - 57 -

<PAGE>

                                NTS-PROPERTIES IV

             SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION

              FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

<TABLE>
<CAPTION>
                                                            Real        Accumulated
                                                          Estate        Depreciation
                                                        -----------     ------------
<S>                                                     <C>             <C>
Balances at December 31, 1995                           $24,312,012      $ 9,694,194

Additions during period:
 Improvements (a)                                            73,741            --
 Depreciation (b)                                             --             883,436

Deductions during period:
 Retirements                                               (77,115)         (70,243)
                                                        -----------     ------------

Balances at December 31, 1996                            24,308,638       10,507,387

Additions during period:
 Improvements (a)                                            99,673            --
 Depreciation (b)                                             --             877,005

Deductions during period:
 Retirements                                               (50,298)         (50,160)
                                                        -----------     ------------
Balances at December 31, 1997                            24,358,013       11,334,232

Additions during period:
 Improvements (a)                                           350,567            --
 Depreciation (b)                                             --             747,221

Deductions during period:
 Retirements (c)                                        (2,092,194)        (734,727)
                                                        -----------     ------------

Balances at December 31, 1998                           $22,616,386     $11,346,726
                                                        -----------     ------------
                                                        -----------     ------------
</TABLE>

(a)  The additions to improvements on this schedule will differ from the
     additions to land, buildings, amenities and construction in progress on the
     Statements of Cash Flows primarily due to the fact that changes in accounts
     payable - construction are not included in the real estate balance sheet
     above.

(b)  The additions charged to accumulated depreciation on this schedule will
     differ from the depreciation and amortization on the Statements of Cash
     Flows due to the amortization of loan costs.

(c)  Result of the sale of University Business Center Phase II on October 6,
     1998.


                                     - 58 -

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, NTS-Properties IV has duly caused this report to be 
signed on its behalf by the undersigned, thereunto duly authorized.

                                   NTS-PROPERTIES IV
                                     (Registrant)
                                   BY: NTS-Properties Associates IV,
                                       General Partner
                                       BY: NTS Capital Corporation,
                                           General Partner

                                           /s/ Brian F. Lavin
                                           ------------------
                                               Brian F. Lavin
                                               President


Date: April 15, 1999



Pursuant to the requirements of the Securities and Exchange Act of 1934, this 
Form 10-K has been signed below by the following persons on behalf of the 
registrant in their capacities and on the date indicated above.

<TABLE>
<CAPTION>
            Signature                           Title
            ---------                           -----
<S>                                     <C>
/s/ J. D. Nichols                       General Partner of NTS-Properties
------------------------                Associates IV and Chairman of the 
    J. D. Nichols                       Board and Sole Director of 
                                        NTS Capital Corporation


/s/ Richard L. Good                     President of NTS Capital Corporation
------------------------
    Richard L. Good


/s/ Brian F. Lavin                      President and Chief Operation Officer
------------------------                (acting Chief Financial Officer) of NTS 
    Brian F. Lavin                      Capital Corporation
</TABLE>

The Partnership is a limited partnership and no proxy material has been sent to
the limited partners.


                                     - 59 -