10-Q 1 plus_10q032001.txt FORM 10-Q PERIOD ENDING MARCH 31, 2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 -------------------------------------------------- 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 0-18952 --------------------------------------------------------- NTS-PROPERTIES PLUS LTD. -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Florida 61-1126478 --------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 10172 Linn Station Road Louisville, Kentucky 40223 --------------------------------- ------------------------------------ (Address of principal executive offices) (Zip Code) (502) 426-4800 -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No TABLE OF CONTENTS ----------------- PART I ------ Pages ----- Item 1. Financial Statements Balance Sheets as of March 31, 2001 and December 31, 2000 3 Statement of Partners' Deficit as of March 31, 2001 3 Statements of Operations for the Three Months Ended March 31, 2001 and 2000 4 Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 5 Notes to Financial Statements 6-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-16 Item 3. Quantitative and Qualitative Disclosures About Market Risk 17 PART II ------- Item 1. Legal Proceedings 18 Item 2. Changes in Securities 18 Item 3. Defaults Upon Senior Securities 18 Item 4. Submission of Matters to a Vote of Security Holders 18 Item 5. Other Information 18 Item 6. Exhibits and Reports on Form 8-K 18 Signatures 19 2 PART I. FINANCIAL INFORMATION --------------------- Item 1. Financial Statements -------------------- NTS-PROPERTIES PLUS LTD. ------------------------ BALANCE SHEETS --------------

STATEMENT OF PARTNERS' DEFICIT ------------------------------

* Reference is made to the audited financial statements in Form 10-K as filed with the Securities and Exchange Commission on April 6, 2001. The auditors' report on these statements was qualified with respect to the Partnership continuing as a going concern (See Notes to Financial Statements - Note 2). The accompanying notes to financial statements are an integral part of these statements. 3 NTS-PROPERTIES PLUS LTD. ------------------------ STATEMENTS OF OPERATIONS ------------------------ (UNAUDITED) -----------

The accompanying notes to financial statements are an integral part of these statements. 4 NTS-PROPERTIES PLUS LTD. ------------------------ STATEMENTS OF CASH FLOWS ------------------------ (UNAUDITED) -----------

The accompanying notes to financial statements are an integral part of these statements. 5 NTS-PROPERTIES PLUS LTD. ------------------------ NOTES TO FINANCIAL STATEMENTS ----------------------------- The unaudited financial statements and schedules included herein should be read in conjunction with NTS- Properties Plus' (the "Partnership") 2000 Form 10-K as filed with the Securities and Exchange Commission on April 6, 2001. In the opinion of the General Partner, all adjustments (only consisting of normal recurring accruals) necessary for a fair presentation have been made to the accompanying financial statements for the three months ended March 31, 2001 and 2000. 1. Consolidation Policies and Joint Venture Accounting --------------------------------------------------- The less than 50% owned joint ventures are accounted for under the equity method. From inception, the Partnership used 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 were combined on a line-by-line basis with the Partnership's own assets, liabilities, revenues, expenses and cash flows. All intercompany accounts and transactions were eliminated in consolidation. Proportionate consolidation was utilized by the Partnership due to the fact that the ownership of joint venture properties, in substance, was not subject to joint control. The managing General Partners of the sole General Partner of the NTS sponsored partnerships which have formed joint ventures are substantially the same. As such, decisions regarding financing, development, sale or operations did 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 partner. It is the belief of the General Partner of the Partnership that the financial statement disclosures resulting from proportionate consolidation provided the most meaningful presentation of assets, liabilities, revenues, expenses and cash flows given the commonality of the Partnership's operations. The Emerging Issues Tasks Force ("EITF") of the Financial Accounting Standards Board ("FASB") has reached a consensus on Issue No. 00-1, "Applicability of the Pro Rata Method of Consolidation to Investments in Certain Partnerships and Other Unincorporated Joint Ventures." The EITF reached a consensus that a proportionate gross financial statement presentation (referred to as "proportionate consolidation" in the Notes to Financial Statements) is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting, unless the investee is in either the construction industry or an extractive industry where there is a longstanding practice of its use. The consensus is applicable to financial statements for annual periods ending after June 15, 2000. The Partnership now uses the equity method to account for its joint venture investments for the three months ending March 31, 2001. The Partnership has applied the consensus to all comparative financial statements, restating them to conform with the consensus for all periods presented. The application of this consensus did not result in a restatement of previously reported partners' deficit or results of operations, but did result in a recharacterization or reclassification of certain financial statements' captions and amounts. 6 1. Consolidation Policies and Joint Venture Accounting - Continued --------------------------------------------------------------- The investment in joint ventures reflected as a contra asset in the accompanying balance sheets is derived primarily from distributions of the joint ventures in excess of the respective minority partner's historical investment in the joint ventures used for financial reporting purposes. The contra asset will be satisfied upon the sale of the respective joint venture properties or dissolution of the respective joint venture. 2. Partnership's Plans Relative to Continuing Operations ----------------------------------------------------- The Partnership currently holds minority interests in four properties and thus cannot effect decisions made by NTS affiliate partnerships holding a majority position in these properties. The Partnership does not possess the resources to contribute to improvements of any significant amount and has seen its minority interests further decline as a result of the contributions made by the financially stronger majority interest affiliate partnerships. Prior to December 31, 1999, NTS Development Company, an affiliate of the General Partner ("NTS"), agreed to defer amounts owed to it by the Partnership. NTS, prior to January 1, 2000, also agreed to provide the financial support necessary for the Partnership to pay its non-affiliated operating expenses as they came due through January 1, 2000. NTS did not extend the commitment past January 1, 2000. NTS, after January 1, 2000, will not defer amounts owed to it or renew its commitment to provide financial support for non-affiliated expenses of the Partnership. During the three months ended March 31, 2001, and the year ended December 31, 2000, NTS, through an affiliate, provided collateral in the form of a certificate of deposit for the Partnership's note payable. Accordingly, without an infusion of cash or a sale of Partnership assets, the Partnership may not be able to meet its obligations as they come due in the normal course of business. As a result, the auditors' report in the Partnership's 2000 Form 10-K was qualified with respect to the Partnership continuing as a going concern. These conditions continue to exist and may exist at December 31, 2001. Given these conditions, it is anticipated that the auditors' report included in the Partnership's 2001 Form 10-K may be qualified with respect to the Partnership continuing as a going concern. The Partnership is evaluating alternatives with its assets, debt and capital structure to remedy this situation. See Note 7 - Tender Offer for a discussion of the outstanding tender offer to acquire all outstanding units which is a part of a going private transaction and proposed plan of merger, both of which are intended to result in the Partnership no longer existing in its current form. 7 3. 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. 4. Concentration of Credit Risk ---------------------------- The Partnership has joint venture investments in commercial properties in Kentucky (Louisville) and Florida (Ft. Lauderdale). A single tenant occupies the property in Kentucky. 5. Investment in Joint Ventures ---------------------------- The unconsolidated subsidiaries of NTS-Properties Plus include: o A 39.05% 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. o A 7.69% joint venture interest in the Lakeshore/University II Joint Venture. A description of the properties owned by the joint venture appears below: o Lakeshore Business Center Phase I - a business center with approximately 103,000 net rentable square feet located in Fort Lauderdale, Florida. o Lakeshore Business Center Phase II - a business center with approximately 97,000 net rentable square feet located in Fort Lauderdale, Florida. o Lakeshore Business Center Phase III - a business center with approximately 39,000 net rentable square feet located in Fort Lauderdale, Florida. For the three months ended March 31, 2001 and 2000, the unconsolidated subsidiaries had total revenues of $1,035,391 and $900,209, respectively and net loss of $20,572 and $99,209, respectively. 6. Note Payable ------------ Note payable consist of the following: March 31, 2001 December 31, 2000 ------------------------- ------------------------- Note payable to a bank, bearing interest at a fixed rate of 8.75%, due January 31, 2002, collateral provided by NTS Financial Partnership, an affiliate of NTS Development Company. $ 258,000 $ 232,000

8 6. Note Payable - Continued ------------------------ Based on the borrowing rates currently available to the Partnership for loans with similar terms and average maturities, the fair value of long-term debt is approximately $258,000. During the three months ended March 31, 2001, and the year ended December 31, 2000, NTS, through an affiliate, provided collateral in the form of a certificate of deposit for the Partnership's note payable. 7. Tender Offer ------------ On November 30, 2000, ORIG, LLC, an affiliate of the Partnership (the "Offeror"), commenced a tender offer (the "Tender Offer") to purchase up to 611,266 limited partnership interests, that are not owned by NTS-Properties Plus Ltd., in a going private transaction. The offering price of $1.15 per limited partnership interest was subsequently amended to $1.30 per limited partnership interest on March 23, 2001. The Tender Offer was also extended from its original expiration date of March 30, 2001, to April 30, 2001. The General Partner of the Partnership believes that the offer is advisable, fair and in the limited partners' best interest, and has recommended that limited partners accept the offer and tender their Units. The purpose of the Tender Offer is to acquire control of the Partnership. If the Offeror acquires a majority, but less than all of the outstanding limited partnership interest, the Offeror may propose and seek to have the Partnership consummate a merger or similar transaction with the Offeror or another entity, such as an affiliated limited partnership. In the event that such merger or similar transaction should occur, limited partners may be required to exchange their interests for the consideration to be paid in such merger or similar transaction, subject to whatever rights they may have under applicable state law. If the Partnership completes a merger or similar transaction, the Partnership will no longer exist or no longer own any of the assets which it presently owns. See Note 11 for information on the expiration of the Tender Offer. 8. Related Party Transactions -------------------------- Pursuant to an agreement, the Partnership was charged for administrative salaries by NTS Development Company. These charges, which have been expensed as professional and administrative expenses - affiliated, totaled $4,886 and $4,807 for the three months ended March 31, 2001 and 2000, respectively. Accounts payable includes approximately $85,600 and $80,700 due NTS Development Company at March 31, 2001 and December 31, 2000, respectively (see Note 2). 9. Commitments and Contingencies ----------------------------- The Partnership, as an owner of real estate, is subject to various environmental laws of federal, state and local governments. Compliance by the Partnership with existing laws has not had a material effect on the Partnership's financial condition and results of operations. However, the Partnership cannot predict the impact of new or changed laws or regulations on its current properties or properties it may acquire in the future. 9 9. Commitments and Contingencies - Continued ----------------------------------------- The Partnership does not believe there is any litigation threatened against the Partnership other than routine litigation arising out of the ordinary course of business, some of which is expected to be covered by insurance, none of which is expected to have a material effect on the balance sheets and statements of operations of the Partnership except as discussed herein. 10. Segment Reporting ----------------- The Partnership's reportable operating segments include only one segment investments in commercial real estate joint ventures. 11. Subsequent Event ---------------- On April 30, 2001, the Tender Offer which ORIG, LLC, an affiliate of the Partnership commenced on November 30, 2000, expired. ORIG purchased 210,683 Units at a cost of $274,579. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results ------------------------------------------------------------------------ of Operations ------------- Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is structured in four major sections. The first section provides information related to occupancy levels and rental and other income generated by the Partnership's properties. The second analyzes results of operations on a consolidated basis. The final sections address consolidated cash flows and financial condition. A discussion of certain market risks also follows. Management's analysis should be read in conjunction with the Financial Statements in Item 1 and the Cautionary Statements below. Cautionary Statements --------------------- The Partnership currently holds minority interests in four properties and thus cannot effect decisions made by NTS affiliate partnerships holding a majority position in these properties. The Partnership does not possess the resources to contribute to improvements of any significant amount and has seen its minority interests further decline as a result of the contributions made by the financially stronger majority interest affiliated partnerships. Prior to December 31, 1999, NTS Development Company, an affiliate of the General Partner ("NTS"), agreed to defer amounts owed to it by the Partnership. NTS, prior to January 1, 2000, also agreed to provide the financial support necessary for the Partnership to pay its non-affiliated operating expenses as they came due through January 1, 2000. NTS did not extend the commitment past January 1, 2000. NTS, after January 1, 2000, will not defer amounts owed to it or renew its commitment to provide financial support for non-affiliated expenses of the Partnership. During the three months ended March 31, 2001, and the twelve months ended December 31, 2000, NTS, through an affiliate, provided collateral in the form of a certificate of deposit for the Partnership's note payable. Accordingly, without an infusion of cash or a sale of Partnership assets, the Partnership may not be able to meet its obligations as they come due in the normal course of business. As a result, the auditors' report in the Partnership's 2000 Form 10-K was qualified with respect to the Partnership continuing as a going concern. These conditions continue to exist and may exist at December 31, 2001. Given these conditions, it is anticipated that the auditors' report included in the Partnership's 2001 Form 10-K may be qualified with respect to the Partnership continuing as a going concern. The Partnership is evaluating alternatives with its assets, debt and capital structure to remedy this situation. On November 30, 2000, ORIG, LLC, an affiliate of the Partnership (the "Offeror"), commenced a tender offer (the "Tender Offer") to purchase up to 611,266 limited partnership interests, that are not owned by NTS-Properties Plus Ltd., in a going private transaction. The offering price of $1.15 per limited partnership interest was subsequently amended to $1.30 per limited partnership interest on March 23, 2001. The Tender Offer was also extended from its original expiration date of March 30, 2001, to April 30, 2001. The General Partner of the Partnership believes that the offer is advisable, fair and in the limited partners' best interest, and has recommended that limited partners accept the offer and tender their Units. The purpose of the Tender Offer is to acquire control of the Partnership. If the Offeror acquires a majority, but less than all of the outstanding limited partnership interest, the Offeror may propose and seek to have the Partnership 11 Cautionary Statements - Continued --------------------------------- consummate a merger or similar transaction with the Offeror or another entity, such as an affiliated limited partnership. In the event that such merger or similar transaction should occur, limited partners may be required to exchange their interests for the consideration to be paid in such merger or similar transaction, subject to whatever rights they may have under applicable state law. If the Partnership completes a merger or similar transaction, the Partnership will no longer exist or no longer own any of the assets which it presently owns. Some of the statements included in this Item 2 may be considered to be "forward-looking statements" since such statements relate to matters which have not yet occurred. For example, phrases such as "the Partnership anticipates," "believes" or "expects," indicate that it is possible that the event anticipated, believed or expected may not occur. Should such event not occur, then the result which the Partnership expected also may not occur or occur in a different manner, which may be more or less favorable to the Partnership. The Partnership does not undertake any obligations to publicly release the result of any revision 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 liquidity, capital resources and results of operations are subject to a number of risks and uncertainties including, but not limited to the following: the ability of the Partnership to achieve planned revenues; the ability of the Partnership to make payments due under its debt agreement; the ability of the Partnership to negotiate and maintain terms with vendors and service providers for operating expenses; competitive pressures from other real estate companies, including large commercial real estate companies, which may affect the nature and viability of the Partnership's business strategy; trends in the economy as a whole which may affect consumer confidence and demand for the types of rental property held by the Partnership; the ability of the Partnership to predict the demand for specific rental properties; the ability of the Partnership to attract and retain tenants; availability and costs of management and labor employed; real estate occupancy and development costs, including the substantial fixed investment costs associated with renovations necessary to obtain new tenants and retain existing tenants; and the risk of a major commercial tenant defaulting on its lease due to risks generally associated with real estate, many of which are beyond the control of the Partnership, including general or local economic conditions, competition, interest rates, real estate tax rates, other operating expenses and acts of God. 12 Investment in Joint Venture --------------------------- The Emerging Issues Tasks Force ("EITF") of the Financial Accounting Standards Board ("FASB") has reached a consensus on Issue No. 00-1, "Applicability of the Pro Rata Method of Consolidation to Investments in Certain Partnerships and Other Unincorporated Joint Ventures." The EITF reached a consensus that a proportionate gross financial statement presentation (referred to as "proportionate consolidation" in the Notes to Financial Statements) is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting, unless the investee is in either the construction industry or an extractive industry where there is a longstanding practice of its use. The consensus is applicable to financial statements for annual periods ending after June 15, 2000. The Partnership now uses the equity method to account for its joint venture investment for the three months ending March 31, 2001. The Partnership has applied the consensus to all comparative financial statements, restating them to conform with the consensus for all periods presented. The application of this consensus did not result in a restatement of previously reported partners' equity or net results of operations, but did result in a recharacterization or reclassification of certain financial statements' captions and amounts. Results of Operations --------------------- The occupancy levels at the Partnership's properties as of March 31 were as follows: Three Months Ended March 31, ----------------------------------------- 2001 (1) 2000 ------------------- ----------------- Property Owned in Joint Venture with NTS-Properties IV and NTS-Properties VII, Ltd. (Ownership % at March 31, 2001) Blankenbaker Business Center 1A (39.05%) 100% 100% Property Owned through Lakeshore/University II Joint Venture (L/U II Joint Venture) Lakeshore Business Center Phase I (3) 85% 76% Lakeshore Business Center Phase II (2)(3) 78% 79% Lakeshore Business Center Phase III (4) 28% N/A

(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 occupancy is only a temporary fluctuation and does not represent a permanent downward occupancy trend. (3) Ownership percentage was 7.69% as of March 31, 2001 and 8.4% as of March 31, 2000. (4) Ownership percentage was 7.69% as of March 31, 2001 and 8.4% as of March 31, 2000. Construction of the building commenced December 1999 and occupancy was certified November 2000. 13 Results of Operations - Continued --------------------------------- The average occupancy levels at the Partnership's properties during the three months ended March 31 were as follows: Three Months Ended March 31, ------------------------------------------- 2001 2000 ------------------ ------------------ Property Owned in Joint Venture with NTS-Properties IV and NTS-Properties VII, Ltd. (Ownership % at March 31, 2001) Blankenbaker Business Center 1A (39.05%) 100% 100% Property Owned through Lakeshore/University II Joint Venture (L/U II Joint Venture) Lakeshore Business Center Phase I (1) 84% 76% Lakeshore Business Center Phase II (1) 78% 78% Lakeshore Business Center Phase III (2) 22% N/A

(1) Ownership percentage was 7.69% for the three months ended March 31, 2001, and 8.4% for the three months ended March 31, 2000. (2) Ownership percentage was 7.69% as of March 31, 2001 and 8.4% as of March 31, 2000. Construction of the building commenced December 1999 and occupancy was certified November 2000. The following is an analysis of material changes in results of operations for the periods ending March 31, 2001 and 2000. Items that did not have a material impact on operations for the periods listed above have been excluded from this discussion. Professional and administrative expenses decreased approximately $6,300, or 40% for the three months ended March 31, 2001, as compared to the same period in 2000, as a result of a decrease in data processing fees and a reduction in legal fees due to a decrease in general securities matters. Consolidated Cash Flows and Financial Condition ----------------------------------------------- In the next 12 months, the Partnership expects the demand on future liquidity to increase as a result of future leasing activity at Lakeshore Business Center Phases I, II and III. At this time, the future leasing and tenant finish costs, which will be required to renew the current leases or obtain new tenants, are unknown. Cash flows provided by (used in): Three Months Ended March 31, ----------------------------------------------------- 2001 2000 ------------------------- ------------------------- Operating activities $ 43,799 $ 58,271 Investing activities (68,975) (84,608) Financing activities 26,000 20,000 ------------------------- ------------------------- Net increase (decrease) in cash and equivalents $ 824 $ (6,337) ========================= =========================

Net cash provided by operating activities decreased approximately $14,500, or 25%, in 2001. The decrease was primarily driven by changes in accounts payable which was partially offset by increased net income. 14 Consolidated Cash Flows and Financial Condition - Continued ----------------------------------------------------------- Net cash used in investing activities for the three months ended March 31, 2001, decreased approximately $15,600, as compared to the same period in 2000. The decrease is due to decreased investments in joint ventures. Net cash provided by financing activities increased $6,000 for the three months ended March 31, 2001, as compared to the same period in 2000. The increase is the result of advances on the Partnership's note payable to cover the operating costs of the Partnership. The Partnership has not made any cash distributions since the quarter ended June 30, 1991. Cash reserves (which are unrestricted cash and equivalents as shown on the Partnership's balance sheet) as of March 31, 2001 were $2,217. Due to the fact that no distributions were made during the three months ended March 31, 2001 or 2000, the table which presents that portion of the distribution that represents a return of capital on a GAAP basis has been omitted. Currently, the Partnership's plans for renovations and other major capital expenditures include tenant improvements at the Partnership's properties as required by lease negotiations. 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 costs of the improvements are determined by the size of the space being leased and whether the improvements are for a new tenant or incurred because of a lease renewal. The tenant finish improvements will be funded by cash flow from operations and cash reserves. The Partnership has no material commitments for renovations or capital improvements as of March 31, 2001. The following describes the efforts being taken by the Partnership to increase the occupancy levels at the Partnership's properties. At Lakeshore Business Center Phases I, II and III, the Partnership has an on-site leasing agent, an employee of NTS Development Company (an affiliate of the General Partner), who makes calls to potential tenants, negotiates lease renewals with current tenants and manages local advertising with the assistance of NTS Development Company's marketing staff. Leases at the Partnership's properties provide for tenants to contribute toward the payment of increases in common area expenses, insurance and real estate taxes. These lease provisions should protect the Partnership's operations from the impact of inflation and changing prices. On November 30, 2000, ORIG, LLC, an affiliate of the Partnership (the "Offeror"), commenced a tender offer (the "Tender Offer") to purchase up to 611,266 limited partnership interests, that are not owned by NTS-Properties Plus Ltd., in a going private transaction. The offering price of $1.15 per limited partnership interest was subsequently amended to $1.30 per limited partnership interest on March 23, 2001. The Tender Offer was also extended from its original expiration date of March 30, 2001, to April 30, 2001. The General Partner of the Partnership believes that the offer is advisable, fair and in the limited partners' best interest, 15 Consolidated Cash Flows and Financial Condition - Continued ----------------------------------------------------------- and has recommended that limited partners accept the offer and tender their Units. The purpose of the Tender Offer is to acquire control of the Partnership. If the Offeror acquires a majority, but less than all of the outstanding limited partnership interest, the Offeror may propose and seek to have the Partnership consummate a merger or similar transaction with the Offeror or another entity, such as an affiliated limited partnership. In the event that such merger or similar transaction should occur, limited partners may be required to exchange their interests for the consideration to be paid in such merger or similar transaction, subject to whatever rights they may have under applicable state law. If the Partnership completes a merger or similar transaction, the Partnership will no longer exist or no longer own any of the assets which it presently owns. See Note 11 for information on the expiration of the Tender Offer. 16 Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- Our primary market risk exposure with regards to financial instruments is changes in interest rates. The Partnership's debt bears interest at a fixed rate. At March 31, 2001, a hypothetical 100 basis point increase in interest rates would not result in a significant change in the fair value of debt. 17 PART II. OTHER INFORMATION ----------------- Item 1. Legal Proceedings ----------------- Not applicable. Item 2. Changes in Securities --------------------- Not applicable. Item 3. Defaults Upon Senior Securities ------------------------------- Not applicable. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Not applicable. Item 5. Other Information ----------------- Not applicable. Item 6. Exhibits and Reports on Form 8-K -------------------------------- a) Reports on Form 8-K: Not applicable. 18 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NTS-Properties Plus Ltd. --------------------------------------------------- (Registrant) By: NTS-Properties Plus Associates, General Partner By: NTS Capital Corporation, General Partner /s/ Gregory A. Wells --------------------------------------------------- Gregory A. Wells Senior Vice President and Chief Financial Officer of NTS Capital Corporation Date: May 15, 2001 19

NTS PROPERTIES PLUS LTD 10-Q