<PAGE>   1
               FORM 10-K--ANNUAL REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
               (As last amended in Rel. No. 34-29354 eff. 7-1-91.)

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
     ACT OF 1934 [FEE REQUIRED]

                   For the fiscal year ended DECEMBER 31, 1998

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

                For the transition period from ________to________

                         Commission file number 0-16063

               NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP
             -----------------------------------------------------
             (Exact name of registrant as specified in its charter)

               STATE OF WASHINGTON                           91-1318471
        -------------------------------                  -------------------
        (State or other jurisdiction of                   (I.R.S. Employer
        incorporation or organization)                   Identification No.)

         3600 WASHINGTON MUTUAL TOWER
    1201 THIRD AVENUE, SEATTLE, WASHINGTON                      98101
    ----------------------------------------                 ----------
    (Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code: (206) 621-1351

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

Title of each class                    Name of each exchange on which registered
-------------------                    -----------------------------------------
      (NONE)                                            (NONE)

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

                      UNITS OF LIMITED PARTNERSHIP INTEREST
                                (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 [ ]

<PAGE>   2

                       DOCUMENTS INCORPORATED BY REFERENCE
                      (Partially Incorporated into Part IV)

   (1) Form S-1 Registration Statement declared effective on July 10, 1986 (No.
       33-2928).

   (2) Form 10-K Annual Reports for fiscal years ended December 31, 1986,
       December 31, 1988, December 31, 1989, December 31, 1990 and December 31,
       1992, respectively.

   (3) Form 8-A Registration Statement filed July 24, 1987.

   (4) Form 10-Q Quarterly Report for period ended September 30, 1988 and
       September 30, 1996, respectively.

   (5) Form 8-K filed January 15, 1998.

This filing contains ______ pages. Exhibits Index appears on page _____.
Financial Statements/Schedules Index appears on page _____.


                                       2
<PAGE>   3

Cautionary statement for purposes of the "Safe Harbor" provisions of the Private
Litigation Reform Act of 1995. Statements contained or incorporated by reference
in this document that are not based on historical fact are "forward-looking
statements" within the meaning of the Private Securities Reform Act of 1995.
Forward-looking statements may be identified by use of forward-looking
terminology such as "believe", "intends", "may", "will", "expect", "estimate",
"anticipate", "continue", or similar terms, variations of those terms or the
negative of those terms.

                                     PART I

ITEM 1. BUSINESS

   Northland Cable Properties Six Limited Partnership (the "Partnership") is a
Washington limited partnership consisting of two general partners (the "General
Partners") and approximately 1,865 limited partners as of December 31, 1998.
Northland Communications Corporation, a Washington corporation, is the Managing
General Partner of the Partnership (referred to herein as "Northland" or the
"Managing General Partner"). FN Equities Joint Venture, a California general
partnership, is the Administrative General Partner of the Partnership (the
"Administrative General Partner").

   Northland was formed in March 1981 and is principally involved in the
ownership and management of cable television systems. Northland currently
manages the operations and is the General Partner for cable television systems
owned by 4 limited partnerships. Northland is also the parent company of
Northland Cable Properties, Inc. which was formed in February 1995 and is
principally involved in direct ownership of cable television systems and is the
sole member and manager of Northland Cable Ventures, LLC. Northland is a
subsidiary of Northland Telecommunications Corporation ("NTC"). Other
subsidiaries of NTC include:

   NORTHLAND CABLE TELEVISION, INC. - formed in October 1985 and principally
   involved in the direct ownership of cable television systems. Sole
   shareholder of Northland Cable News, Inc.

         NORTHLAND CABLE NEWS, INC. - formed in May 1994 and principally
         involved in the production and development of local news, sports and
         informational programming.

   NORTHLAND CABLE SERVICES CORPORATION - formed in August 1993 and principally
   involved in the development and production of computer software used in
   billing and financial record keeping for Northland-affiliated cable systems.
   Sole shareholder of Cable Ad-Concepts.

         CABLE AD-CONCEPTS, INC. - formed in November 1993 and principally
         involved in the sale, development and production of video commercial
         advertisements that are cablecast on Northland-affiliated cable
         systems.

   NORTHLAND MEDIA, INC. - formed in April 1995 as a holding company. Sole
   shareholder of the following two entities:

         STATESBORO MEDIA, INC. - formed in April 1995 and principally involved
         in operating an AM radio station serving the community of Statesboro,
         Georgia and surrounding areas.

         CORSICANA MEDIA, INC. - purchased in September 1998 from an affiliate
         and principally involved in operating an AM radio station serving the
         community of Corsicana, Texas and surrounding areas.

   The Partnership was formed on January 22, 1986 and began operations in 1986
with the acquisition of the cable television systems serving the communities of
and contiguous areas surrounding Starkville, Maben and Mathiston, Mississippi
(the "Starkville System"), six additional communities in central Mississippi
(the "Philadelphia System"), and the community of and contiguous areas
surrounding Highlands, North Carolina (the "Highlands System"). In July 1988,
the Partnership completed its purchase of the cable television systems serving
Sandersville and Heidelberg, Mississippi and certain areas of Jones County and
Jasper County, Mississippi (the "Sandersville System"). In December 1995, the
Partnership purchased the cable television system serving Sapphire Valley, Cedar
Creek and certain areas of Jackson County, North Carolina (the "Sapphire Valley
System")(collectively herein referred to as the "Systems"). In January, 1998,
the Partnership purchased the cable television systems serving the communities
of Allendale, Bamberg, Barnwell and Bennettsville, all in the state of South
Carolina (the "Barnwell System" and "Bennettsville System" ). As of December 31,
1998, the total number of basic subscribers served by the Systems was 34,091,
and the Partnership's penetration rate (basic subscribers as a percentage of
homes passed) was approximately 64%. The Partnership's properties are located in
rural areas which, to 


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<PAGE>   4

some extent, do not offer consistently acceptable off-air network signals. This
factor, combined with the existence of fewer entertainment alternatives than in
large markets contributes to a larger proportion of the population subscribing
to cable television (higher penetration).

   The Partnership has 38 non-exclusive franchises to operate the Systems. These
franchises, which will expire at various dates through the year 2017, have been
granted by local, county, state and other governmental authorities in the areas
in which the Systems currently operate. Annual franchise fees are paid to the
granting governmental authorities. These fees vary between 2% and 5% of the
respective gross revenues of the system in a particular community. The
franchises may be terminated for failure to comply with their respective
conditions.

   The Partnership serves the communities and surrounding areas of Starkville
and Philadelphia, Mississippi; Highlands, North Carolina; and Barnwell and
Bennettsville, South Carolina. The following is a description of these areas:

   Starkville, MS: The City of Starkville is the home of Mississippi State
University with an enrollment of approximately 12,000 students. The university's
10 colleges and schools comprise 58 departments that offer more than 120 majors.
Mississippi State is also the largest employer in Starkville, with nearly 1,300
faculty members or professionals and 1,450 support staff. Also located in
Starkville is the Mississippi Research and Technology Park, which is a
long-range economic development project initiated through the joint efforts of
the City of Starkville, Oktibbeha County, Mississippi State University and the
local business community. The Park is located on approximately 220 acres across
from the entrance to the university and will enhance high-technology research
for application to the economic sector. The developers and businesses that
comprise the Park intend to work hand in hand with research efforts at the
university, and companies that locate in the Park will have the benefit of
university facilities and faculty. Certain information regarding the Starkville,
MS system as of December 31, 1998 is as follows:

<TABLE>
<S>                                                    <C>  
         Basic Subscribers                             8,102
         Tier Subscribers                              3,478
         Premium Subscribers                           3,290
         Estimated Homes Passed                        11,085
</TABLE>
    
   Philadelphia, MS and Sandersville, MS: The Philadelphia System and the
Sandersville System encompass eight communities and six counties located in
central Mississippi. These systems are operated as three separate profit centers
grouped as follows:

          Profit Center #1 - Philadelphia, Mississippi
          Profit Center #2 - Kosciusko and Carthage, Mississippi
          Profit Center #3 - Forest, Raleigh and Sandersville, Mississippi

   The local economies of the communities included in the Philadelphia System
are based primarily in manufacturing. The region has excellent highway and
railroad transportation, a year-round mild climate, and the availability of a
trained, cost-effective labor force. One of the main industries in the area is
poultry. Nearly two million birds are dressed weekly in the city of Forest,
which ranks as the second-largest producer of broilers in the nation. Other
industries in the area include apparel, ready mix concrete, frozen food
products, lumber, small appliances, electronic assembly, meat processing and
steel. Certain information regarding the Philadelphia, MS and Sandersville, MS
systems as of December 31, 1998 is as follows:

<TABLE>
<CAPTION>
                                       PHILADELPHIA  KOSCIUSKO   FOREST
                                       ------------  ---------   ------
<S>                                      <C>           <C>       <C>  
          Basic Subscribers              3,806         4,338     4,633
          Tier Subscriber                1,370         1,615     1,635
          Premium Subscribers            1,471         1,372     1,925
          Estimated Homes Passed         4,395         5,440     7,120
</TABLE>
                                                                
   Highlands and Sapphire Valley, NC: Located on a high plateau of the Blue
Ridge Mountains where the corners of Georgia, North Carolina and South Carolina
meet, Highlands has long offered a cool and beautiful summer retreat for the
affluent families from such southern cities as Atlanta, New Orleans and Tampa.
The Highlands region is almost encircled by the 200,000 acres of the End
National Forest, and boasts a lush mixture of hardwoods and evergreens because
of an abundant rainfall. Highlands has an average altitude of over 4,000 feet,
and thus maintains a temperate summer climate. The influx of tourists increases
Highland's year-round population of approximately 2,000 to over 20,000 between
May and October.


                                       4
<PAGE>   5

   The Highlands area is perhaps best known for its exclusive golf clubs. There
are three beautiful golf courses in the Highlands area, the oldest being the
Highlands Country Club. About half the land in the Highlands area is under
private ownership; the rest is part of the End National Forest, and is open for
hiking, fishing, hunting, camping and other outdoor activities. The private land
near the golf courses consists largely of exclusive housing developments, many
of which feature rambling, ranch-style vacation homes with values ranging from
$200,000 to a half million dollars. The Great Smokey Mountains National Park and
the Blue Ridge Parkway are within easy driving distance of Highlands. Several
lakes in the area offer swimming, boating, skiing, fishing and other water
sports. Rafting is also popular in the area due to the close proximity of the
Chattooga and Cullasaja Rivers. Certain information regarding the Highlands and
Sapphire Valley, NC Systems as of December 31, 1998 is as follows:

<TABLE>
<S>                                                        <C>  
             Basic Subscribers                             2,671
             Premium Subscribers                             534
             Estimated Homes Passed                        4,190
</TABLE>
              
   Barnwell, SC and Bennettsville, SC: Barnwell, Bamberg and Allendale are lo
cated approximately sixty miles south of Columbia, South Carolina. The economy
is based primarily on agricultural and manufacturing activities. The City of
Bennettsville is located approximately 100 miles northeast of Columbia, South
Carolina and serves as the county seat of Marlboro County. The economy is
primarily driven by agriculture and manufacturing, with three of the largest
employers being Mohawk Carpet, United Technologies Automotive and Williamette
Industries. Certain information regarding the Barnwell and Bennettsville, SC
Systems as of December 31, 1998 is as follows:


<TABLE>
<CAPTION>
                                               BARNWELL  BENNETTSVILLE
                                               --------  -------------
<S>                                              <C>        <C>  
             Basic Subscribers                   5,723      4,818
             Premium Subscribers                 4,008      3,201
             Estimated Homes Passed             12,125      9,090
</TABLE>



   The Partnership had 45 employees as of December 31, 1998. Management of these
systems is handled through offices located in the towns of Starkville, Forest,
Sandersville, Kosciusko and Philadelphia, Mississippi; Highlands, North
Carolina; and Barnwell and Bennettsville, South Carolina. Pursuant to the
Agreement of Limited Partnership, the Partnership reimburses the Managing
General Partner for time spent by the Managing General Partner's accounting
staff on Partnership accounting and bookkeeping matters. (See Item 13(a) below.)

   The Partnership's cable television business is generally not considered
seasonal. The business of the Partnership is not dependent upon a single
customer or a few customers, the loss of any one or more of which would have a
material adverse effect on its business. No customer accounts for 10% or more of
revenues. No material portion of the Partnership's business is subject to
renegotiation of profits or termination of contracts or subcontracts at the
election of any governmental unit, except that franchise agreements may be
terminated or modified by the franchising authorities as noted above. During the
last year, the Partnership did not engage in any research and development
activities.

   Partnership revenues are derived primarily from monthly payments received
from cable television subscribers. Subscribers are divided into three
categories: basic subscribers, tier subscribers and premium subscribers. "Basic
subscribers" are households that subscribe to the basic level of service, which
generally provides access to the three major television networks (ABC, NBC and
CBS), a few independent local stations, PBS (the Public Broadcasting System) and
certain satellite programming services, such as ESPN, CNN or The Discovery
Channel. "Tier subscribers" are households that subscribe to an additional level
of programming services the content of which varies from system to system.
"Premium subscribers" are households that subscribe to one or more "pay
channels" in addition to the basic service. These pay channels include such
services as Showtime, Home Box Office, Cinemax, Disney or The Movie Channel.


                                       5
<PAGE>   6

COMPETITION

   Cable Television systems currently experience competition from several
sources.

BROADCAST TELEVISION

   Cable television systems have traditionally competed with broadcast
television, which consists of television signals that the viewer is able to
receive directly on his television without charge using an "off-air" antenna.
The extent of such competition is dependent in part upon the quality and
quantity of signals available by such antenna reception as compared to the
services provided by the local cable system. Accordingly, it has generally been
less difficult for cable operators to obtain higher penetration rates in rural
areas where signals available off-air are limited, than in metropolitan areas
where numerous, high quality off-air signals are often available without the aid
of cable television systems.

OVERBUILDS

   Cable television franchises are not exclusive, so that more than one cable
television system may be built in the same area (known as an "overbuild"), with
potential loss of revenues to the operator of the original cable television
system. Constructing and developing a cable television system is a capital
intensive process, and it is often difficult for a new cable system operator to
create a marketing edge over the existing system. Generally, an overbuilder
would be required to obtain franchises from the local governmental authorities,
although in some instances, the overbuilder could be the local government
itself. In any case, an overbuilder would be required to obtain programming
contracts from entertainment programmers and, in most cases, would have to build
a complete cable system, including headends, trunk lines and drops to individual
subscribers homes, throughout the franchise areas.

   Federal cross-ownership restrictions historically limited entry by local
telephone companies into the cable television business (for a more extensive
discussion of The Act, see Regulation and Legislation). The 1996 Telecom Act
eliminated this cross-ownership restriction, making it possible for companies
with considerable resources to overbuild existing cable operators and enter the
business. Several telephone companies have begun seeking cable television
franchises from local governmental authorities and constructing cable television
systems. The Partnership cannot predict at this time the extent of telephone
company competition that will emerge in areas served by the Partnership's cable
television systems. The entry of telephone companies as direct competitors,
however, is likely to continue over the next several years and could adversely
affect the profitability and market value of the Partnership's systems. The
entry of electric utility companies into the cable television business, as now
authorized by the 1996 Telecom Act, could have a similar adverse effect.

DBS

   High powered direct-to-home satellites have made possible the wide-scale
delivery of programming to individuals throughout the United States using small
roof-top or wall-mounted antennas. Several companies began offering direct
broadcast satellite ("DBS") service over the last few years and recently
announced mergers should strengthen the surviving companies. Companies offering
DBS service use video compression technology to increase channel capacity of
their systems to 100 or more channels and to provide packages of movies,
satellite networks and other program services which are competitive to those of
cable television systems. DBS faces technical and legal obstacles to offering
its customers popular local broadcast programming. At least one DBS provider,
however, is now attempting to do so, and the FCC and Congress are considering
proposals that would enhance the ability of DBS companies to provide popular
broadcast programming, including broadcast network programming. In addition to
emerging high-powered DBS competition, cable television systems face competition
from several low-powered providers, whose service requires use of much larger
home satellite dishes. The ability of DBS service providers to compete
successfully with the cable television industry will depend on, among other
factors, the availability of equipment at reasonable prices and the relative
attractiveness of the programming options offered by the cable television
industry and DBS competitors.

PRIVATE CABLE

   Additional competition is provided by private cable television systems, known
as Satellite Master Antenna Television ("SMATV"), serving multi-unit dwellings
such as condominiums, apartment complexes, and private residential communities.
These private cable systems may enter into exclusive agreements with apartment
owners and homeowners associations, which may preclude 


                                       6
<PAGE>   7

operators of franchised systems from serving residents of such private
complexes. Private cable requirements, that do not cross public rights of way
are free from the federal, state and local regulatory requirements imposed on
franchised cable television operators.

MMDS

   Cable television systems also compete with wireless program distribution
services such as multichannel, multipoint distribution service ("MMDS") systems,
commonly called wireless cable, which are licensed to serve specific areas. MMDS
uses low-power microwave frequencies to transmit television programming
over-the-air to paying subscribers. The MMDS industry is less capital intensive
than the cable television industry, and it is therefore more practical to
construct MMDS systems in areas of lower subscriber penetration.

   Cable television systems are also in competition in various degrees with
other communications and entertainment media, including motion pictures, home
video cassette recorders, internet data delivery and internet video delivery.

REGULATION AND LEGISLATION

   The operation of cable television systems is extensively regulated by the
FCC, some state governments and most local governments. The Telecommunications
Act of 1996 ("1996 Telecom Act") alters the regulatory structure governing the
nation's telecommunications providers. It removes barriers to competition in
both the cable television market and the local telephone market. Among other
things, it also reduces the scope of cable rate regulation.

   The 1996 Telecom Act requires the FCC to undertake a host of implementing
rulemakings, the final outcome of which cannot yet be determined. Moreover,
Congress and the FCC have frequently revisited the subject of cable regulation.
Future legislative and regulatory changes could adversely affect the
Partnership's operations, and there have been recent calls to maintain or even
tighten cable regulation in the absence of widespread effective competition.
This section briefly summarizes key laws and regulations affecting the operation
of the Partnership's cable systems and does not purport to describe all present,
proposed, or possible laws and regulations affecting the Partnership.

CABLE RATE REGULATION

   The 1992 Cable Act imposed an extensive rate regulation regime on the cable
television industry. Under that regime, all cable systems are subject to rate
regulation, unless they face "effective competition" in their local franchise
area. Federal law now defines "effective competition" on a community-specific
basis as essentially requiring either low penetration (less than 30%) by the
incumbent cable operator, appreciable penetration (more than 15%) by competing
multichannel video providers ("MVPs"), or the presence of a competing MVP
affiliated with a local telephone company.

   Although the FCC rules control, local government units (commonly referred to
as local franchising authorities or "LFAs") are primarily responsible for
administering the regulation of the lowest level of cable - the basic service
tier ("BST"), which typically contains local broadcast stations and public,
educational, and government ("PEG") access channels. Before an LFA begins BST
rate regulation, it must certify to the FCC that it will follow applicable
federal rules, and many LFAs have voluntarily declined to exercise this
authority. LFAs also have primary responsibility for regulating cable equipment
rates. Under federal law, charges for various types of cable equipment must be
unbundled from each other and from monthly charges for programming services.

   The FCC itself directly administers rate regulation of any cable programming
service tiers ("CPST"), which typically contain satellite-delivered programming.
Under the 1996 Telecom Act, the FCC can regulate CPST rates only if an LFA first
receives at least two rate complaints from local subscribers and then files a
formal complaint with the FCC. When new CPST rate complaints are filed, the FCC
now considers only whether the incremental increase is justified and will not
reduce the previously established CPST rate.

   Under the FCC's rate regulations, most cable systems were required to reduce
their BST and CPST rates in 1993 and 1994, and have since had their rate
increases governed by a complicated price cap scheme that allows for the
recovery of inflation and certain increased costs, as well as providing some
incentive for expanding channel carriage. The FCC has modified its rate
adjustment regulations to allow for annual rate increases and to minimize
previous problems associated with regulatory lag. Operators also have the
opportunity of bypassing this "benchmark" regulatory scheme in favor of
traditional "cost-of-service" regulation in cases where 


                                       7
<PAGE>   8

the latter methodology appears favorable. Premium cable services offered on a
per-channel or per-program basis remain unregulated, as do affirmatively
marketed packages consisting entirely of new programming product. Federal law
requires that the BST be offered to all cable subscribers, but limits the
ability of operators to require purchase of any CPST before purchasing premium
services offered on a per-channel or per-program basis.

SMALL OPERATORS

   The FCC and Congress have provided various forms of rate relief for smaller
cable systems owned by smaller operators. If requisite eligibility criteria are
satisfied, a cable operator may be allowed to rely on a vastly simplified
cost-of-service rate justification and/or may be allowed to avoid regulation of
CPST rates entirely. Under FCC regulations, cable systems serving 15,000 or
fewer subscribers, which are owned by or affiliated with a cable company serving
in the aggregate no more than 400,000 subscribers, can submit a simplified
cost-of-service filing under which the regulated rate (including equipment
charges) will be presumed reasonable if it equates to no more than $1.24 per
channel. Eligibility for this relief continues if the small cable system is
subsequently acquired by a larger cable operator, but is lost when and if the
individual system serves in excess of 15,000 subscribers. The 1996 Telecom Act
immediately deregulated the CPST rates of cable systems serving communities with
fewer than 50,000 subscribers, which are owned by or affiliated with entities
serving, in the aggregate, no more than one percent of the nation's cable
customers (approximately 617,000) and having no more than $250 million in annual
revenues. The Partnership's systems currently qualify for such regulatory
relief.

   The 1996 Telecom Act sunsets FCC regulation of CPST rates for all systems
(regardless of size) on March 31, 1999. Certain critics of the cable television
industry, however, have called for a delay in the regulatory sunset and some
have even urged more rigorous rate regulation, including limits on operators
passing through to their customers increased programming costs and bundling
together multiple programming services. The 1996 Telecom Act also relaxes
existing uniform rate requirements by specifying that uniform rate requirements
do not apply where the operator faces "effective competition", and by exempting
bulk discounts to multiple dwelling units, although complaints about predatory
pricing still may be made to the FCC.

CABLE ENTRY INTO TELECOMMUNICATIONS

   The 1996 Telecom Act provides that no state or local laws or regulations may
prohibit or have the effect of prohibiting any entity from providing any
interstate or intrastate telecommunications service. States are authorized,
however, to impose "competitively neutral" requirements regarding universal
service, public safety and welfare, service quality, and consumer protection.
State and local governments also retain their authority to manage the public
rights-of-way and may require reasonable, competitively neutral compensation for
management of public rights-of-way when cable operators provide
telecommunications service. The favorable pole attachment rates afforded cable
operators under federal law can be gradually increased by utility companies
owning the poles (beginning in 2001) if the operator provides telecommunications
service, as well as cable service, over its plant.

   Cable entry into telecommunications will be affected by the regulatory
landscape now being fashioned by the FCC and state regulators. One critical
component of the 1996 Telecom Act to facilitate the entry of new
telecommunications providers (including cable operators) is the interconnection
obligation imposed on all telecommunications carriers. The Eighth Circuit Court
of Appeals vacated certain aspects of the FCC's initial interconnection order,
but that decision was reversed by the U.S. Supreme court in January 1999.

 TELEPHONE COMPANY ENTRY INTO CABLE TELEVISION

   The 1996 Telecom Act allows telephone companies to compete directly with
cable operators by repealing the historic telephone company/cable
cross-ownership ban. Local exchange carriers ("LECs"), including the Bell
Operating Companies can now compete with cable operators both inside and outside
their telephone service areas. Because of their resources, LECs could be
formidable competitors to traditional cable operators, and certain LECs have
begun offering cable service.

   Under the 1996 Telecom Act, an LEC (electric utility or other entity)
providing video programming to subscribers through wired facilities will be
regulated as a traditional cable operator (subject to local franchising and
federal regulatory requirements), unless the LEC elects to provide its
programming via an "open video system" ("OVS"). To qualify for OVS status, the
LEC must reserve two-thirds of the system's activated channels for unaffiliated
entities. The Fifth Circuit Court of Appeals recently reversed certain of the
FCC's OVS rules, including the FCC's preemption of local franchising.


                                       8
<PAGE>   9

   Although LECs and cable operators can now expand their offerings across
traditional service boundaries, the general prohibition remains on LEC buyouts
(i.e., any ownership interest exceeding 10 percent) of co-located cable systems,
cable operator buyouts of co-located LEC systems, and joint ventures between
cable operators and LECs in the same market. The 1996 Telecom Act provides a few
limited exceptions to this buyout prohibition, including a carefully
circumscribed "rural exemption". The 1996 Telecom Act also provides the FCC with
the limited authority to grant waivers of the buyout prohibition (subject to LFA
approval).

ELECTRIC UTILITY ENTRY INTO TELECOMMUNICATIONS/CABLE TELEVISION

   The 1996 Telecom Act provides that registered utility holding companies and
subsidiaries may provide telecommunications services (including cable
television) notwithstanding the Public Utilities Holding Company Act. Electric
utilities must establish separate subsidiaries, known as "exempt
telecommunications companies" and must apply to the FCC for operating authority.
Again, because of their resources, electric utilities could be formidable
competitors to traditional cable systems.

ADDITIONAL OWNERSHIP RESTRICTIONS

   The 1996 Telecom Act eliminates statutory restrictions on broadcast/cable
cross-ownership (including broadcast network/cable restrictions), but leaves in
place existing FCC regulations prohibiting local cross-ownership between
co-located television stations and cable systems. The 1996 Telecom Act leaves in
place existing restrictions on cable cross-ownership with SMATV and MMDS
facilities, but lifts those restrictions where the cable operator is subject to
effective competition. The FCC permits cable operators to own and operate SMATV
systems within their franchise area, provided that such operation is consistent
with local cable franchise requirements.

Pursuant to the 1992 Cable Act, the FCC adopted rules precluding a cable system
from devoting more than 40% of its activated channel capacity to the carriage of
affiliated national program services. A companion rule establishing a nationwide
ownership cap on any cable operator equal to 30% of all domestic cable
subscribers has been stayed pending further judicial review, although the FCC
recently expressed an interest in reviewing and reimposing this limit.

MUST CARRY/RETRANSMISSION CONSENT

   The 1992 Cable Act contains broadcast signal carriage requirements that allow
local commercial television broadcast stations to elect once every three years
between (a)requiring a cable system to carry the station ("must carry") or
(b)negotiating for payments of granting permission to the cable operator to
carry the station ("retransmission consent"). Less popular stations typically
elect "must carry", and more popular stations typically elect "retransmission
consent". Must carry requests can dilute the appeal of a cable system's
programming offerings and retransmission consent demands may require substantial
payments or other concessions. Either option has a potentially adverse affect on
the Partnership's business. The burden associated with "must carry" may increase
substantially if broadcasters proceed with planned conversion to digital
transmission and the FCC determines that cable systems must carry all analog and
digital broadcasters in their entirety. A rulemaking is now pending at the FCC
regarding the imposition of dual digital and analog must carry.

ACCESS CHANNELS

   LFAs can include franchise provisions requiring cable operators to set aside
certain channels for public, educational and governmental access programming.
Federal law also requires cable systems to designate a portion of their channel
capacity (up to 15% in some cases) for commercial leased access by unaffiliated
third parties. The FCC has adopted rules regulating the terms, conditions and
maximum rates a cable operator may charge for use of the designated channel
capacity, but use of commercial leased access channels has been relatively
limited to date.

ACCESS TO PROGRAMMING

   To spur development of independent cable programmers and competition to
incumbent cable operators, the 1992 Cable Act imposed restrictions on the
dealings between cable operators and cable programmers. Of special significance
from a competitive business posture, the 1992 Cable Act precludes video
programmers affiliated with cable companies from favoring cable operators over
competitors and requires such programmers to sell their programming to other
multichannel video distributors. This provision 


                                       9
<PAGE>   10

limits the ability of vertically integrated cable programmers to offer exclusive
programming arrangements to cable companies. There recently has been increased
interest in further restricting the marketing practices of cable programmers,
including subjecting programmers who are not affiliated with cable operators to
all of the existing program access requirements. In addition, some cable critics
have argued that vertically integrated, non-satellite programming (such as
certain regional sports networks) which is now exempt from the ban on exclusive
programming, should be subjected to this prohibition.


INSIDE WIRING

   The FCC determined that an incumbent cable operator can be required by the
owner of a multiple dwelling unit ("MDU") complex to remove, abandon or sell the
"home run" wiring it initially provided. In addition, the FCC is reviewing the
enforceability of contracts to provide exclusive video service within a MDU
complex. The FCC has proposed abrogating all such contracts held by incumbent
cable operators, but allowing such contracts when held by new entrants. These
changes, and others now being considered by the FCC, would, if implemented, make
it easier for an MDU complex owner to terminate service from an incumbent cable
operator in favor of a new entrant and leave the already competitive MDU sector
even more challenging for incumbent operators. In a separate proceeding, the FCC
has preempted restrictions on the deployment of private antennas, including
satellite dishes, on rental property within the exclusive use of a tenant (such
as balconies and patios).

OTHER FCC REGULATIONS

   In addition to the FCC regulations noted above, there are other FCC
regulations covering such areas as equal employment opportunity, subscriber
privacy, programming practices (including, among other things, syndicated
program exclusivity, network program nonduplication, local sports blackouts,
indecent programming, lottery programming, political programming, sponsorship
identification, children's programming advertisements and closed captioning),
registration of frequency usage, lockbox availability, antenna structure
notification, tower marking and lighting, consumer protection and customer
service standards, technical standards, consumer electronics equipment
compatibility and Emergency Alert Systems. The FCC recently stated that cable
customers must be allowed to purchase cable converters from third party vendors,
and established a multi-year phase-in during which signal security functions
(which remain in the operator's exclusive control) would be unbundled from basic
converter functions (which could then be satisfied by third party vendors).
Details regarding this phase-in are still under FCC review. The FCC has the
authority to enforce its regulations through the imposition of substantial
fines, the issuance of cease and desist orders and/or the imposition of other
administrative sanctions, such as the revocation of FCC licenses needed to
operate certain transmission facilities used in connection with cable
operations.

COPYRIGHT

   Cable television systems are subject to federal copyright licensing covering
carriage of television and radio broadcast signals. In exchange for filing
certain reports and contributing a percentage of their revenues to a federal
copyright royalty pool (that varies depending on the size of the system and the
number of distant broadcast television signals carried), cable operators can
obtain blanket permission to retransmit copyrighted material contained in
television broadcast signals. The possible modification or elimination of this
compulsory copyright license is the subject of continuing legislative review and
could adversely affect the Partnership's ability to obtain desired broadcast
programming. In addition, the cable industry pays music licensing fees to BMI
and is negotiating a similar arrangement with ASCAP. Copyright clearances for
nonbroadcast programming services are arranged through private negotiations.

STATE AND LOCAL REGULATION

   Cable television systems generally are operated pursuant to nonexclusive
franchises granted by a municipality or other state or local government entity
in order to cross public rights-of-way. Federal law now prohibits franchise
authorities from granting exclusive franchises or from unreasonably refusing to
award additional franchises. Cable franchises generally are granted for fixed
terms and in many cases include monetary penalties for non-compliance and may be
terminable if the franchisee fails to comply with material provisions.

   The terms and conditions of franchises vary materially from jurisdiction to
jurisdiction. Each franchise generally contains provisions governing cable
operations, service rates, franchise fees, system construction and maintenance
obligations, system channel capacity, design and technical performance, customer
service standards, and indemnification protections. A number of states subject


                                       10
<PAGE>   11

cable television systems to the jurisdiction of centralized state governmental
agencies, some of which impose regulation of a character similar to that of a
public utility. Although LFAs have considerable discretion in establishing
franchise terms, there are certain federal limitations. For example, LFAs cannot
insist on franchise fees exceeding 5% of the system's gross revenues, cannot
dictate the particular technology used by the system, and cannot specify video
programming that must be carried on the system other than identifying broad
categories of programming.

   Federal law contains renewal procedures designed to protect incumbent
franchises against arbitrary denials of renewal. Even if a franchise is renewed,
the franchise authority may seek to impose new and more onerous requirements
such as significant upgrades in facilities and services or increased franchise
fees as a condition of renewal. Similarly, if a franchise authority's consent is
required for the purchase or sale of a cable system or franchise, such authority
may attempt to impose more burdensome or onerous franchise requirements in
connection with a request for consent. Historically, franchises have been
renewed for cable operators that have provided satisfactory services and have
complied with the terms of their franchises.

INTERNET SERVICE

Although there is no significant federal regulation of cable system delivery of
Internet services at the current time and the FCC recently issued a report to
Congress finding no immediate need to impose such regulation, this situation may
change as cable systems expand their broadband delivery of Internet services. In
particular, proposals have been advanced at the FCC that would require cable
operators to provide access to unaffiliated Internet service providers and
online service providers. Certain Internet service providers also are attempting
to use existing commercial leased access provisions to gain the imposition of
mandatory Internet access requirements as part of cable franchise renewals or
transfer approvals.

SUMMARY

   The foregoing does not purport to be a summary of all present and proposed
federal, state and local regulations and legislation relating to the cable
television industry. Other existing federal legislation and regulations,
copyright licensing and, in many jurisdictions, state and local franchise
requirements are currently the subject of a variety of judicial proceedings,
legislative hearings and administrative and legislative proposals which could
change, in varying degrees, the manner in which cable television systems
operate. Neither the outcome of these proceedings nor their impact upon the
cable television industry or the Partnership can be predicted at this time.

   The Partnership expects to adapt its business to adjust to the changes that
may be required under any scenario of regulation. At this time, the Partnership
cannot assess the effects, if any, that present regulation may have on the
Partnership's operations and potential appreciation of its Systems. There can be
no assurance that the final form of regulation will not have a material adverse
impact on Partnership operations.

ITEM 2. PROPERTIES

   The Partnership's cable television systems are located in and around
Starkville, Philadelphia, Kosciusko, Carthage, Forest, Raleigh and Sandersville,
Mississippi; Highlands and Sapphire Valley, North Carolina; and Barnwell,
Bamberg, Allendale and Bennettsville, South Carolina. The principal physical
properties of the Systems consist of system components (including antennas,
coaxial cable, electronic amplification and distribution equipment), motor
vehicles, miscellaneous hardware, spare parts and real property, including
office buildings and land on which towers and antennas are located. The
Partnership's cable plant passed approximately 53,445 homes as of December 31,
1998. Management believes that the Partnership's plant passes all areas which
are currently economically feasible to service. Future line extensions depend
upon the density of homes in the area as well as available capital resources for
the construction of new plant. (See Part II. Item 7.
Liquidity and Capital Resources.)

ITEM 3. LEGAL PROCEEDINGS

   None.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

   None.


                                       11
<PAGE>   12

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   (a) There is no established public trading market for the Partnership's units
of limited partnership interest.

   (b) The approximate number of equity holders as of December 31, 1998, is as
follows:

<TABLE>
<S>                                                   <C>  
                         Limited Partners:            1,865
                         General Partners:               2
</TABLE>

   (c) The Partnership made no cash distributions during 1998 and 1997. The
limited partners have received in the aggregate in the form of cash
distributions $3,817,998 on total initial contributions of $15,000,000 as of
December 31, 1998. As of December 31, 1998, the Partnership had repurchased
$96,475 of limited partnership units (165 units at $500 per unit and 43 units at
$325 per unit). Future distributions depend upon results of operations, leverage
ratios and compliance with financial covenants required by the Partnership's
lender, but are expected to remain at their current level.

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                   YEARS ENDED DECEMBER 31,
                         ----------------------------------------------------------------------------
                             1998            1997            1996            1995            1994
                         ------------    ------------    ------------    ------------    ------------
<S>                      <C>             <C>             <C>             <C>             <C>         
SUMMARY OF OPERATIONS:                                                        
Revenue                  $ 14,746,766    $  9,644,320    $  9,262,702    $  8,611,947    $  7,888,216
Operating income            1,621,138       2,061,496       1,394,255       1,123,277         995,174
Loss on retirement
  of assets                  (229,940)          7,095        (152,698)              0         (22,067)
Net income (loss)          (1,369,601)      1,215,899         381,451         206,173          (4,367)
Net income (loss)per
  limited partner unit
  (weighted average)              (46)             40              13               7               0
Cumulative tax losses
  per limited partner
  unit                           (342)           (342)           (342)           (345)           (355)
</TABLE>

<TABLE>
<CAPTION>
                                                         DECEMBER 31,
                         ----------------------------------------------------------------------------
                             1998            1997            1996            1995            1994
                         ------------    ------------    ------------    ------------    ------------
<S>                      <C>             <C>             <C>             <C>             <C>         
BALANCE SHEET DATA:
Total assets             $ 32,971,969    $ 13,609,386    $ 13,253,610    $ 14,778,671    $ 15,023,419
Notes payable              31,372,848      10,899,421      11,920,821      13,914,689      14,224,201
Total liabilities          33,249,571      12,513,387      13,365,510      15,196,729      15,346,477
General partners'
  deficit                    (129,831)       (116,135)       (128,294)       (131,356)       (130,406)
Limited partners'
  (deficit)capital           (147,771)      1,212,134          16,394        (286,702)       (192,652)
Distributions per
  limited partner unit              0               0               3              10              10
Cumulative distribu-
  tions per limited
  partner unit                    128             128             128             125             115
</TABLE>


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

RESULTS OF OPERATIONS

1998 AND 1997

   Total revenue reached $14,746,766 for the year ended December 31, 1998,
representing an increase of approximately 53% over 1997. Of the 1998 revenue,
$10,772,905 (73%) is derived from subscriptions to basic services, $1,581,530
(11%) from subscriptions to premium services, $685,200 (5%) from subscriptions
to tier services, $456,007 (3%) from advertising, $396,381 (3%) from service
maintenance revenue, $356,404 (2%) from installation charges and $498,339 (3%)
from other sources. The January, 1998 addition of 


                                       12
<PAGE>   13

approximately 11,200 subscribers acquired in the purchase of cable systems
serving the communities of Bennettsville, Barnwell, Bamberg and Allendale, South
Carolina increased revenues 49%. The remaining 4% of revenue growth is primarily
attributable to rate increases placed into effect in August of 1998.

   The following table displays historical average rate information for various
services offered by the Partnership's systems (amounts per subscriber per
month):

<TABLE>
<CAPTION>
                                1998      1997     1996     1995     1994
                             ---------  -------  -------  -------  -------
<S>                          <C>        <C>      <C>      <C>      <C>    
        Basic Rate           $   24.20  $ 23.00  $ 22.24  $ 21.53  $ 20.67
        Tier Rate                 7.65     6.90     6.35     5.95     5.60
        HBO Rate                 10.50    11.35    11.25    11.10    10.75
        Cinemax Rate              7.30     8.70     8.50     8.25     8.10
        Showtime Rate             6.30     4.50     8.45     8.45     8.45
        Movie Channel Rate        6.60    --       --        7.00     7.00
        Disney Rate               6.20     5.10     6.00     6.75     7.40
        Encore Rate               1.50    --       --       --       --
        Starz Rate                8.50    --       --       --       --
        Service Contract
          Rate                    2.35     2.60     2.65     2.65     2.80
</TABLE>

   Operating expenses totaled $1,262,672 for the year ended December 31, 1998,
representing an increase of approximately 38% as compared to 1997. The
acquisition of the Bennettsville, Barnwell, Bamberg and Allendale, South
Carolina systems increased operating expenses 43%. The expenses for the other
systems decreased approximately 5% primarily related to a reduction in regional
management costs offset by increased salary and benefit costs. Salary and
benefit costs are a major component of operating expenses. Employee wages are
reviewed annually and, in most cases, increased based on cost of living
adjustments and other factors. Therefore, Management expects operating expenses
to increase in future years.

   General and administrative expenses totaled $3,790,975 for the year ended
December 31, 1998, representing an increase of approximately 61% over 1997. The
acquisition of the Bennettsville, Barnwell, Bamberg and Allendale, South
Carolina systems increased general and administrative expenses 60%. The expenses
for the remaining systems increased 1% primarily due to higher revenue based
expenses such as franchise fees, copyright fees and management fees as a result
of revenue gains discussed above, offset by a one time adjustment to copyright
fees. Significant general and administrative expenses are based on revenues. As
the Partnership's revenue increases, the trend of increased administrative
expenses is expected to continue.

   Programming expenses totaled $3,784,358 for the year ended December 31, 1998,
representing an increase of approximately 64% over 1997. Approximately 9% of the
increase is the result of increased costs charged by various program suppliers
and new channel launches, as well as additional salary and benefit costs related
to local programming and production support. The acquisition of the
Bennettsville, Barnwell, Bamberg and Allendale, South Carolina systems resulting
in the remaining 55% increase. Programming expenses consist mainly of payments
made to the suppliers of various cable programming services. Since these costs
are based on the number of subscribers served, future subscriber increases will
cause the trend of increasing programming costs to continue. Additionally, rate
increases from program suppliers, as well as new fees associated with the launch
of additional channels will also contribute to increased programming costs.

   Depreciation and amortization expenses totaled $4,287,623 for the year ended
December 31, 1998, representing an increase approximately 113% over 1997.
Excluding the effects of the acquisition of the Bennettsville, Barnwell, Bamberg
and Allendale, South Carolina systems, depreciation and amortization decreased
2% as a result of assets becoming fully depreciated and amortized in 1998,
offset by depreciation and amortization on current year purchases. The addition
of assets acquired in the purchase of the Bennettsville, Barnwell, Bamberg and
Allendale, South Carolina systems increased depreciation and amortization
expense 115%.

   Interest expense increased from $846,609 in 1997 to $2,566,743 in 1998
(approximately 203%). The Partnership's average debt balance increased from
approximately $11,410,121 during 1997 to $21,136,135 during 1998. The
Partnership's effective interest rate decreased from approximately 8.75% in 1997
to 7.88% in 1998. The increase in average debt outstanding was a result of
borrowings to finance the acquisition of the Bennettsville, Barnwell, Bamberg
and Allendale, South Carolina systems.


                                       13
<PAGE>   14

1997 AND 1996

   Total revenue reached $9,644,320 for the year ended December 31, 1997,
representing an increase of approximately 4% over 1996. This increase was due to
rate increases placed into effect in August of 1997. Of the 1997 revenue,
$6,907,000 (72%) is derived from subscriptions to basic services, $925,400 (10%)
from subscriptions to premium services, $502,585 (5%) from subscriptions to tier
services, $441,307 (4%) from advertising, $320,982 (3%) from service maintenance
revenue, $243,400 (3%) from installation charges and $303,646 (3%) from other
sources.

   Operating expenses totaled $913,361 for the year ended December 31, 1997,
representing an increase of approximately 4% as compared to 1996. The increase
is primarily attributable to higher salary and benefit costs which are the major
component of operating expenses. Employee wages are reviewed annually and, in
most cases, increased based on cost of living adjustments and other factors.
Therefore, Management expects operating expenses to increase in future years.

   General and administrative expenses totaled $2,357,842 for the year ended
December 31, 1997, representing an increase of approximately 5% over 1996. This
net increase is due to higher revenue based expenses such as franchise fees,
copyright fees and management fees as a result of revenue gains discussed above.
Significant general and administrative expenses are based on revenues. As the
Partnership's revenue increases the trend of increased administrative expenses
is expected to continue.

   Programming expenses totaled $2,301,320 for the year ended December 31, 1997,
representing an increase of approximately 13% over 1996. This is mainly the
result of increased costs charged by various program suppliers and new channel
launches, as well as additional salary and benefit costs related to local
programming and production support. Programming expenses consist mainly of
payments made to the suppliers of various cable programming services. Since
these costs are based on the number of subscribers served, future subscriber
increases will cause the trend of increasing programming costs to continue. Rate
increases from program suppliers, as well as new fees associated with the launch
of additional channels will also contribute to increased programming costs.

   Depreciation and amortization expense decreased from $2,697,358 in 1996 to
$2,010,301 in 1997 (approximately 25%). This is mainly due to certain assets
becoming fully depreciated during the year.

   Interest expense decreased from $1,010,190 in 1996 to $846,609 in 1997
(approximately 19%). The Partnership's average senior debt balance decreased
from approximately $12,985,821 during 1996 to $11,410,121 during 1997. The
Partnership's effective interest rate increased to approximately 8.75% in 1997
compared to 7.36% in 1996.

EFFECTS OF REGULATION

   On October 5, 1992, Congress enacted the Cable Television Consumer Protection
and Competition Act of 1992 (the "1992 Act"). The 1992 Act and subsequent
revisions and rulemakings substantially re-regulated the cable television
industry. The regulatory aspects of the 1992 Act included giving the local
franchising authorities and the FCC the ability to regulate rates for basic
services, equipment charges and additional CPST's when certain conditions were
met. All of the Partnership's cable systems were potentially subject to rate
regulation. The most significant impact of rate regulation was the inability to
raise rates for regulated services as costs of operation rose during an FCC
imposed rate freeze from April 5, 1993 to May 15, 1994.

   On February 8, 1996, the Telecommunications Act of 1996 (the "1996 Act")
became law. The 1996 Act eliminates all rate regulation on CPST's of small cable
systems, defined by the 1996 Act as systems serving fewer than 50,000
subscribers owned by operators serving fewer than 1% of all subscribers in the
United States (approximately 600,000 subscribers). All of the Partnership's
cable systems qualify as small cable systems. Many of the changes called for by
the 1996 Act will not take effect until the FCC issues new regulations, a
process that could take from several months to a few years depending on the
complexity of the required changes and the statutory time limits. Because of
this, the full impact of the 1996 Act on the Partnership's operations cannot be
determined at this time.

   As of the date of this filing, the Partnership has received formal requests
for rate justifications from local franchising authorities with jurisdiction
over approximately 23% of total subscribers. Based on Management's analysis, the
basic service tier rates charged by these systems are within the maximum rates
allowed under FCC rate regulations.


                                       14
<PAGE>   15

LIQUIDITY AND CAPITAL RESOURCES

   During 1998, the Partnership's primary source of liquidity was cash provided
from operations and credit available under its revolving credit and term loan
agreement. The Partnership generates cash on a monthly basis through the monthly
billing of subscribers for cable services. Losses from uncollectible accounts
have not been material. During 1998, cash generated from monthly billings was
sufficient to meet the Partnership's needs for working capital, capital
expenditures (excluding acquisitions) and debt service. Management's estimates
for 1999 show that the cash generated from monthly subscriber billings is
expected to be sufficient to meet the Partnership's working capital needs, as
well as meeting the debt service obligations of its bank loan.

   On December 31, 1997, the Partnership amended and restated its credit
agreement with its current lender to finance the acquisition of the Barnwell,
Bamberg, Allendale and Bennettsville, SC systems. The Credit Facility provides
for borrowings up to $33,000,000 including a $25,000,000 term loan, and an
$8,000,000 revolving credit facility which mature December 31, 2000. At 
December 31, 1998, $1,627,152 was available for borrowing by the Partnership 
subject to compliance with certain financial covenants contained in the credit 
agreement.

   The Partnership has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well-defined interest rate risks. The Partnership enters into interest rate swap
agreements with major banks or financial institutions (typically its bank) in
which the Partnership pays a fixed rate and receives a floating rate with the
interest payments being calculated on a notional amount. Gains or losses
associated with changes in fair values of these swaps and the underlying
notional principal amounts are deferred and recognized against interest expense
over the term of the agreements in the Partnership's statements of operations.

   The Partnership is exposed to credit-related losses in the event of
nonperformance by counterparties to financial instruments, but does not expect
any counterparties to fail to meet their obligations, as the Partnership
currently deals only with its bank. The notional amounts of these interest rate
swaps is $23,000,000 at December 31, 1998. These notional amounts do not
represent amounts exchanged by the parties and, thus, are not a measure of
exposure to the Partnership through its use of derivatives. The exposure in a
derivative contract is the net difference between what each party is required to
pay based on the contractual terms against the notional amount of the contract,
which in the Partnership's case are interest rates. The use of derivatives does
not have a significant effect on the Partnership's result of operations or its
financial position.

<TABLE>
<CAPTION>
                                    Expected Maturity Date
                                    ----------------------
                              1999           2000          Total
                              ----           ----          -----
<S>                        <C>            <C>            <C> 
Liabilities
Debt Maturity               1,250,000     30,122,848     31,372,848
Debt Interest Payments      2,427,641      2,292,626      4,720,267
Average Interest Rate            7.86%          7.86%          7.86%

Interest Rate Swaps
  Variable to Fixed
  Notional Amount          23,000,000                    23,000,000
  Average Pay Rate*              5.77%                         5.77%
  Average Receive Rate*          5.28%                         5.28%
</TABLE>

   *plus an applicable margin, currently 2.25%

It is the Partnership's policy to renegotiate swap agreements on or near 
expiration.    

   As of the date of this filing, the Partnership's loan balance was
$31,372,848. As of the date of this filing, interest rates on the credit
facility were as follows: $23,000,000 fixed at 8.02% under the terms of a
self-amortizing interest rate swap agreement with the Partnership's lender
expiring December 31, 1999; and $6,200,000 at Libor based rate of 7.40813%
expiring June 30, 1999; and $2,000,000 at Libor based rate of 7.25% expiring May
4, 1999. The balance of $172,848 bears interest at the prime rate plus 1.00%
(currently 8.75%). The above rates include a margin paid to the lender based on
overall leverage, and may increase or decrease as overall leverage fluctuates.

   At December 31, 1998, the Partnership was required under the terms of its
credit agreement to maintain certain financial ratios including a maximum ratio
of Senior Debt to Annualized Operating Cash Flow of 5.25 to 1, and a minimum
ratio of Annual Operating Cash Flow to Interest Expense of 2.00 to 1, among
other covenants. The Partnership was in compliance with its required covenants
at December 31, 1998.

CAPITAL EXPENDITURES

   During 1998, the Partnership incurred approximately $2,800,000 in capital
expenditures. These expenditures included the continued construction of a fiber
backbone in the Starkville System, the completion of a system upgrade to 450 MHz
in the Koscuisko System, vehicle replacements and a continued system upgrade to
450 MHz in the Philadelphia System, the continued deployment of fiber in the
Highlands System, computer hardware and software upgrades in the Bennettsville
System and the purchase of a new office building and system upgrade to 450 MHz
in the Barnwell System, as well as various line extensions in all of the
systems.

   Management estimates that the Partnership will spend approximately $2,948,000
on capital expenditures during 1999. These expenditures include the continuation
of the fiber network for data transmission and ongoing system upgrade
construction to 450 MHz in the Starkville System, continued system upgrades and
vehicle purchases in the Philadelphia System, the continued deployment of fiber
in the Highlands System, a continued system upgrade to 450 MHz in the Barnwell
System, a vehicle replacement in the Bennettsville System and various line
extensions and channel additions in all of the systems.

ACQUISITION

   On January 2, 1998, the Partnership purchased cable television systems
serving approximately 11,200 subscribers in and around the communities of
Allendale, Bamberg, Barnwell and Bennettsville, all in the state of South
Carolina. The purchase price of these systems was $20,500,000. The Partnership
borrowed and additional $20,473,427 under an amended and restated revolving
credit and term loan agreement with its lender to finance the acquisition of the
South Carolina cable systems.

   Pro forma operating results of the Partnership for the year ending December
31, 1997, assuming the acquisition of the Allendale, Bamberg, Barnwell and
Bennettsville, South Carolina systems had been completed as of the beginning of
the year, are as follows:

                                       15
<PAGE>   16
<TABLE>
<CAPTION>
                                                    1997
                                                ------------
<S>                                             <C>         
                  Revenue                       $ 14,320,695
                                                ============
                  Net loss                      $ (1,140,110)
                                                ============ 
                  Net loss per limited          $        (38)
                     partnership unit           ============
</TABLE>



YEAR 2000 ISSUES

   The efficient operation of the Partnership's business is dependent in part on
its computer software programs and operating systems (collectively, Programs and
Systems). These Programs and Systems are used in several key areas of the
Partnership's business, including subscriber billing and collections and
financial reporting. Management has evaluated the Programs and Systems utilized
in the conduct of the Partnership's business for the purpose of identifying year
2000 compliance problems. Failure to remedy these issues could impact the
ability of the Partnership to timely bill its subscribers for service provided
and properly report its financial condition and results of operations which
could have a material impact on its liquidity and capital resources.

   The Programs and Systems utilized in subscriber billing and collections has
been modified to address year 2000 compliance issues. These modifications were
substantially complete at the end of 1998. Management has completed the process
of replacing Programs and Systems related to financial reporting which resolve
year 2000 compliance issues. The aggregate cost to the Partnership to address
year 2000 compliance issues is not expected to be material to its results of
operations, liquidity and capital resources.

   Management is currently focusing its efforts on the impact of the year 2000
compliance issue on service delivery and has established an internal team to
address this issue. The internal team is identifying and testing all date
sensitive equipment involved in delivering service to its customers. In
addition, management will assess its options regarding repair or replacement of
affected equipment during this testing. The aggregate cost to the Partnership to
address year 2000 compliance issues is not expected to be material to its 
results of operations, liquidity and capital resources. 

   The provision of cable television services is significantly dependent on the
Partnership's ability to adequately receive programming signals via satellite
distribution or off air reception from various programmers and broadcasters. The
Partnership has inquired of certain significant programming vendors with respect
to their year 2000 issues and how they might impact the operations of the
Partnership. As of the date of this filing no significant programming vendor has
communicated a year 2000 issue that would affect materially the operations of
the Partnership. However, if significant programming vendors identify year 2000
issues in the future and are unable to resolve such issues in a timely manner,
it could result in a material financial risk.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   The audited financial statements of the Partnership for the years ended
December 31, 1998, 1997 and 1996 are included as a part of this filing (see Item
14(a)(1) below).

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

        None.


                                       16
<PAGE>   17

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   The Partnership has no directors or officers. The Managing General Partner of
the Partnership is Northland Communications Corporation, a Washington
corporation; the Administrative General Partner of the Partnership is FN
Equities Joint Venture, a California general partnership.

   Certain information regarding the officers and directors of Northland is set
forth below.

   JOHN S. WHETZELL (AGE 57). Mr. Whetzell is the founder of Northland
Communications Corporation and has been President since its inception and a
Director since March 1982. Mr. Whetzell became Chairman of the Board of
Directors in December 1984. He also serves as President and Chairman of the
Board of Northland Telecommunications Corporation and each of its subsidiaries.
He has been involved with the cable television industry for over 23 years.
Between March 1979 and February 1982, he was in charge of the Ernst & Whinney
national cable television consulting services. Mr. Whetzell first became
involved in the cable television industry when he served as the Chief Economist
of the Cable Television Bureau of the Federal Communications Commission (FCC)
from May 1974 to February 1979. He provided economic studies to support the
deregulation of cable television both in federal and state arenas. He
participated in the formulation of accounting standards for the industry and
assisted the FCC in negotiating and developing the pole attachment rate formula
for cable television. His undergraduate degree is in economics from George
Washington University, and he has an MBA degree from New York University.

   JOHN E. IVERSON (AGE 62). Mr. Iverson is the Assistant Secretary of Northland
Communications Corporation and has served on the Board of Directors since
December 1984. He also serves on the Board of Directors of Northland
Telecommunications Corporation and each of its subsidiaries. He is currently a
member in the law firm of Ryan, Swanson & Cleveland P.L.L.C., Northland's
general counsel. He is a member of the Washington State Bar Association and
American Bar Association and has been practicing law for more than 35 years. Mr.
Iverson is the past president and a Trustee of the Pacific Northwest Ballet
Association. Mr. Iverson has a Juris Doctor degree from the University of
Washington.

   RICHARD I. CLARK (AGE 41). Mr. Clark has served as Vice President of
Northland since March 1982. He has served on the Board of Directors of both
Northland Communications Corporation and Northland Telecommunications
Corporation since July 1985. He also serves as Vice President and Director of
all subsidiaries of Northland Telecommunications Corporation. Mr. Clark was
elected Treasurer in April 1987, prior to which he served as Secretary from
March 1982. Mr. Clark was an original incorporator of Northland and is
responsible for the administration and investor relations activities of
Northland, including financial planning and corporate development. From July
1979 to February 1982, Mr. Clark was employed by Ernst & Whinney in the area of
providing cable television consultation services and has been involved with the
cable television industry for nearly 19 years. He has directed cable television
feasibility studies and on-site market surveys. Mr. Clark has assisted in the
design and maintenance of financial and budget computer programs, and he has
prepared documents for major cable television companies in franchising and
budgeting projects through the application of these programs. In 1979, Mr. Clark
graduated cum laude from Pacific Lutheran University with a Bachelor of Arts
degree in accounting.

   JAMES E. HANLON (AGE 65). Since June 1985, Mr. Hanlon has been a Divisional
Vice President for Northland and is currently responsible for the management of
systems serving subscribers in Texas, Alabama and parts of Mississippi. Prior to
his association with Northland, he served as Chief Executive of M.C.T.
Communications, a cable television company, from 1981 to June 1985. His
responsibilities included supervision of the franchise, construction and
operation of a cable television system located near Tyler, Texas. From 1979 to
1981, Mr. Hanlon was President of the CATV Division of Buford Television, Inc.,
and from 1973 to 1979, he served as President and General Manager of Suffolk
Cablevision in Suffolk County, New York. Mr. Hanlon has also served as Vice
President and Corporate Controller of International, Inc. and Division
Controller of New York Yankees, Inc. Mr. Hanlon has a Bachelor of Science degree
in Business Administration from St. Johns University.

   JAMES A. PENNEY (AGE 44). Mr. Penney is Vice President and General Counsel
for Northland Telecommunications Corporation and each of its subsidiaries and
has served in this role since September 1985. He was elected Secretary in April
1987. Mr. Penney is responsible for advising all Northland systems with regard
to legal and regulatory matters, and also is involved in the acquisition and
financing of new cable systems. From 1983 until 1985 he was associated with the
law firm of Ryan, Swanson & 


                                       17
<PAGE>   18

Cleveland P.L.L.C., Northland's general counsel. Mr. Penney holds a Bachelor of
Arts Degree from the University of Florida and a Juris Doctor from The College
of William and Mary, where he was a member of The William and Mary Law Review.

   GARY S. JONES (AGE 41). Mr. Jones is Vice President for Northland. Mr. Jones
joined Northland in March 1986 as Controller and has been Vice President of
Northland Telecommunications Corporation and each of its subsidiaries since
October 1986. Mr. Jones is responsible for cash management, financial reporting
and banking relations for Northland and is involved in the acquisition and
financing of new cable systems. Prior to joining Northland, Mr. Jones was
employed as a Certified Public Accountant with Laventhol & Horwath from 1980 to
1986. Mr. Jones received his Bachelor of Arts degree in Business Administration
with a major in accounting from the University of Washington in 1979.

   RICHARD J. DYSTE (AGE 53). Mr. Dyste has served as Vice President-Technical
Services of Northland Telecommunications Corporation and each of its
subsidiaries since April 1987. Mr. Dyste is responsible for planning and
advising all Northland cable systems with regard to technical performance as
well as system upgrades and rebuilds. He is a past president and current member
of the Mount Rainier Chapter of the Society of Cable Television Engineers, Inc.
Mr. Dyste joined Northland in 1986 as an engineer and served as Operations
Consultant to Northland Communications Corporation from August 1986 until April
1987. From 1977 to 1985, Mr. Dyste owned and operated Bainbridge TV Cable. He is
a graduate of Washington Technology Institute.

   H. LEE JOHNSON (AGE 55). Mr. Johnson has served as Divisional Vice President
for Northland's Statesboro, Georgia regional office since March 1994. He is
responsible for the management of systems serving subscribers in Georgia,
Mississippi, North Carolina and South Carolina. Prior to his association with
Northland he served as Regional Manager for Warner Communications, managing four
cable systems in Georgia from 1968 to 1973. Mr. Johnson has also served as
President of Sunbelt Finance Corporation and was employed as a System Manager
for Statesboro CATV when Northland purchased the system in 1986. Mr. Johnson has
been involved in the cable television industry for over 29 years and is a
current member of the Society of Cable Television Engineers. He is a graduate of
Swainsboro Technical Institute and has attended numerous training seminars,
including courses sponsored by Jerrold Electronics, Scientific Atlanta, The
Society of Cable Television Engineers and CATA.

   Certain information regarding the officers and directors of FN Equities Joint
Venture is set forth below:

   MILES Z. GORDON (AGE 51). Mr. Gordon is President of FNE and President and
Chief Executive Officer of Financial Network Investment Corporation (FNIC), and
has held those positions since 1983. From 1979 through April 1983 he was
President of University Securities Corporation. In 1978, Mr. Gordon was engaged
in the private practice of law, and from 1973 through 1978 he was employed by
the Securities and Exchange commission. He presently serves as Chairman of the
Securities Industry Association Independent Contractor Firms Committee. Mr.
Gordon was also Chairman and a member of the NASD District Business Conduct
Committee and a former member of the NASD Board of Governors. He is past
president of the California Syndication Forum and has also served on several
committees for the Securities Industry Association.

   JOHN S. SIMMERS (AGE 48). Mr. Simmers is Vice President and Secretary of FNE
and Executive Vice President and Chief Operating Officer of FNIC and has held
those positions since 1983. From June 1980 through April 1983, he was Executive
Vice President of University Securities Corporation, Vice President of
University Capital Corporation, and Vice President of University Asset
Management Group. From 1974 through May 1980 he was employed by the National
Association of Securities Dealers.

ITEM 11. EXECUTIVE COMPENSATION

   The Partnership does not have executive officers. However, compensation was
paid to the Managing General Partner during 1998 as indicated in Note 3 of the
Notes to Financial Statements--December 31, 1998 (see Items 13(a) and
14(a)(1)below).

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   (a) CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Security ownership of
management as of December 31, 1997 is as follows:

<TABLE>
<CAPTION>
                                                     AMOUNT AND NATURE     
                          NAME AND ADDRESS             OF BENEFICIAL              PERCENT OF
TITLE OF CLASS            OF BENEFICIAL OWNER            OWNERSHIP                   CLASS
--------------         ---------------------------   -----------------            ----------
<S>                    <C>                           <C>                          <C>
</TABLE>


                                       18
<PAGE>   19

<TABLE>
<S>                    <C>                           <C>                          <C>
  General Partner's    Northland Communications        (See Note A)               (See Note A)
      Interest         Corporation
                       1201 Third Avenue
                       Suite 3600
                       Seattle, Washington  98101

  General Partner's    FN Equities Joint Venture       (See Note B)               (See Note B)
      Interest         2780 Skypark Dr.
                       Suite 300
                       Torrance, California  90505
</TABLE>

   Note A: Northland has a 1% interest in the Partnership, which increases to a
20% interest in the Partnership at such time as the limited partners have
received 100% of their aggregate cash contributions. The natural person who
exercises voting and/or investment control over these interests is John S.
Whetzell.

   Note B: FN Equities Joint Venture has no interest in the Partnership until
such time as the limited partners have received 100% of their aggregate cash
contributions, at which time FN Equities Joint Venture will have a 5% interest
in the Partnership. The natural person who exercises voting and/or investment
control over these interests is John S. Simmers.

   (b) CHANGES IN CONTROL. Northland has pledged its ownership interest as
Managing General Partner of the Partnership to the Partnership's lender as
collateral pursuant to the terms of the term loan agreement between the
Partnership and its lender.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   (a) TRANSACTIONS WITH MANAGEMENT AND OTHERS. The Managing General Partner
receives a management fee equal to 6% of the gross revenues of the Partnership,
not including revenues from any sale or refinancing of the Partnership's
Systems. The Managing General Partner also receives reimbursement of normal
operating and general and administrative expenses incurred on behalf of the
Partnership.

   The Partnership entered into an operating agreement with Northland Premier
Cable Limited Partnership ("Premier"), an affiliated partnership organized and
managed by Northland. Under the terms of this agreement, Premier serves as the
exclusive managing agent for the Highlands NC system, and is reimbursed for
certain operating and administrative costs.

   Northland Cable Services Corporation ("NCSC"), an affiliate of Northland,
provides software installation and billing services to the Partnership's
Systems.

   Northland Cable News, Inc. ("NCN"), an affiliate of Northland, provides
programming to certain of the Partnership's systems for which it is compensated.

   Cable Ad-Concepts, Inc. ("CAC"), an affiliate of Northland, provides the
production and development of video commercial advertisements and advertising
sales support for which it is compensated.

   See Note 3 of the Notes to Financial Statements--December 31, 1998 for
disclosures regarding transactions with the General Partners and affiliates.

   The following schedule summarizes these transactions:

<TABLE>
<CAPTION>
                                              FOR THE YEARS ENDED DECEMBER 31,
                                            ------------------------------------
                                              1997          1997          1996
                                            --------      --------      --------
<S>                                         <C>           <C>           <C>     
Partnership management fees                 $884,806      $578,720      $555,762
Operating expense reimbursements             663,191       497,964       511,719
Software installation and
  billing service fees to NCSC                79,590        68,685        69,750
Programming fees to NCN                      165,147       176,333       165,297
Reimbursements to CAC for                     57,611        70,777        39,656
</TABLE>


                                       19
<PAGE>   20

<TABLE>
<S>                                          <C>           <C>           <C>    
services
Reimbursements to Premier                    290,147       179,807       139,408
Amounts due to General Partner
   and affiliates at year end                142,746       154,836       212,498
</TABLE>

   Management believes that all of the above transactions are on terms as
favorable to the Partnership as could be obtained from unaffiliated parties for
comparable goods or services.

   As disclosed in the Partnership's Prospectus (which has been incorporated by
reference), certain conflicts of interest may arise between the Partnership and
the General Partners and their affiliates. Certain conflicts may arise due to
the allocation of management time, services and functions between the
Partnership and existing and future partnerships as well as other business
ventures. The General Partners have sought to minimize these conflicts by
allocating costs between systems on a reasonable basis. Each limited partner may
have access to the books and non-confidential records of the Partnership. A
review of the books will allow a limited partner to assess the reasonableness of
these allocations. The Agreement of Limited Partnership provides that any
limited partner owning 10% or more of the Partnership units may call a special
meeting of the Limited Partners, by giving written notice to the General
Partners specifying in general terms the subjects to be considered. In the event
of a dispute between the General Partners and Limited Partners which cannot be
otherwise resolved, the Agreement of Limited Partnership provides steps for the
removal of a General Partner by the Limited Partners.

   (b) CERTAIN BUSINESS RELATIONSHIPS. John E. Iverson, a Director and Assistant
Secretary of the Managing General Partner, is a member of the law firm of Ryan,
Swanson & Cleveland P.L.L.C., which has rendered and is expected to continue to
render legal services to the Managing General Partner and the Partnership.

   (c) INDEBTEDNESS OF MANAGEMENT.  None.


                                       20
<PAGE>   21

                                           PART IV

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

         (a)   DOCUMENTS FILED AS A PART OF THIS REPORT:

<TABLE>
<CAPTION>
                                                                                     SEQUENTIALLY
                                                                                       NUMBERED
                                                                                         PAGE
                                                                                     ------------
<S>                                                                                  <C>
 (1)     FINANCIAL STATEMENTS:

         Report of Independent Public Accountants................................        ____

         Balance Sheets--December 31, 1998 and 1997...............................       ____

         Statements of Operations for the years ended  December 31, 1998,  1997 and
         1996....................................................................

         Statements of Changes in Partners' Capital (Deficit) for the years ended
         December 31, 1998, 1997 and 1996........................................        ____

         Statements of Cash Flows for the years ended  December 31, 1998,  1997 and      ____
         1996....................................................................

         Notes to Financial Statements--December 31, 1998.........................       ____

   (2) EXHIBITS:

     4.1    Amended and Restated Certificate and Agreement of Limited
            Partnership dated November 3, 1986(3)

    10.1    Agreement of Purchase and Sale with Highlands Community Cable Television, Inc.(2)

    10.2    Mississippi State University Contract(2)

    10.3    Mathiston Franchise(2)

    10.4    Maben Franchise(2)

    10.5    Starkville Franchise(2)

    10.6    Oktibbeha County Franchise(2)

    10.7    Raleigh Franchise(2)

    10.8    Philadelphia Franchise(2)

    10.9    Neshoba Franchise(2)

   10.10    Mississippi Band of Choctaw Indians Franchise(2)

   10.11    Carthage Franchise(2)

   10.12    Kosciusko Franchise(2)

   10.13    Morton Franchise(2)

   10.14    Forest Franchise(2)

   10.15    Scott County Franchise(2)
</TABLE>

                                       21
<PAGE>   22

<TABLE>
<S>         <C>
   10.16    Highlands Franchise(2)

   10.17    Macon County Franchise(2)

   10.18    Jackson County Franchise(2)

   10.19    Heidelberg Franchise(2)

   10.20    Jasper County Franchise(2)

   10.21    Jones County Franchise(2)

   10.22    Sandersville Franchise(2)

   10.23    Golf Properties Franchise(2)

   10.24    Management Agreement dated as of October 10, 1986(2)

   10.25    Credit Agreement with National Westminster Bank USA dated as of October 31, 1986
            ("Credit Agreement")(1)

   10.26    First Amendment to Credit Agreement dated as of December 12, 1986(5)

   10.27    Second Amendment to Credit Agreement dated as of October 26, 1987(5)

   10.28    Third Amendment to Credit Agreement dated as of September 26, 1988(5)

   10.29    Agreement of Purchase and Sale with Starkville TV Cable Company(1)

   10.30    Agreement of Purchase and Sale between Northland Telecommunications
            Corporation and Seemore TV, Inc.(1)

   10.31    Agreement of Purchase  and Sale  between  Northland  Telecommunications  Corporation  and
            Central Cable TV, Inc.(1)

   10.32    Agreement of Purchase  and Sale  between  Northland  Telecommunications  Corporation  and
            Clear Vision TV Company of Kosciusko, A Corporation(1)

   10.33    Agreement of Purchase  and Sale  between  Northland  Telecommunications  Corporation  and
            Scott Cable TV, Inc.(1)

   10.34    Agreement of Purchase and Sale with SCAN,  Inc. and South  Central  Antenna  Network Inc.
            dated July 18, 1988(4)

   10.35    Fourth Amendment to Credit Agreement dated as of March 31, 1989(6)

   10.36    Fifth Amendment to Credit Agreement dated as of February 15, 1990(6)

   10.37    Leake County Franchise(7)

   10.38    Sixth Amendment to Credit Agreement dated as of May 28, 1992(8)

   10.39    Loan Agreement with First Union Bank of North Carolina dated as of February 16, 1993(8)

   10.40    Asset Purchase  Agreement  between TCI  Cablevision of Georgia,  Inc. and Northland Cable
            Properties Six Limited Partnership, dated July 19, 1996(9)
</TABLE>


                                       22
<PAGE>   23

<TABLE>
<S>         <C>
   10.41    Asset Purchase and Sale Agreement between InterMedia Partners of Carolina, L.P. and
            Robin Cable Systems, L.P. as Sellers and Northland Cable Television, Inc. as Buyer,
            dated August 27, 1997(10)

   10.42    Assignment and Assumption of Asset Purchase and Sale Agreement between Northland Cable
            Television, Inc. and Northland Cable Properties Six Limited Partnership, dated October
            27, 1997(10)

   10.43    Amended and Restated Credit  Agreement with First Union National Bank, dated December 31,
            1997(10)


   10.44    First  Amendment  to the  Asset  Purchase  and Sale  Agreement  between  Northland  Cable
            Television,  Inc.  and  InterMedia  Partners of Carolina,  L.P. and Robin Cable  Systems,
            L.P., dated December 31, 1997(10)
</TABLE>

------------

(1)  Incorporated by reference from the Partnership's Form S-1 Registration
     Statement declared effective on July 10, 1986 (No. 33-2928).

(2)  Incorporated by reference from the partnership's Form 10-K Annual Report
     for the fiscal year ended December 31, 1986.

(3)  Incorporated by reference from the partnership's Form 8-A Registration
     Statement filed July 24, 1987.

(4)  Incorporated by reference from the partnership's Form 10-Q Quarterly Report
     for the period ended September 30, 1988.

(5)  Incorporated by reference from the partnership's Form 10-K Annual Report
     for the fiscal year ended December 31, 1988.

(6)  Incorporated by reference from the partnership's Form 10-K Annual Report
     for the fiscal year ended December 31, 1989.

(7)  Incorporated by reference from the partnership's Form 10-K Annual Report
     for the fiscal year ended December 31, 1990.

(8)  Incorporated by reference from the partnership's Form 10-K Annual Report
     for the fiscal year ended December 31, 1992.

(9)  Incorporated by reference from the partnership's Form 10-Q Quarterly Report
     for the period ended September 30, 1996.

(10) Incorporated by reference from the partnership's Form 8-K filed January 15,
     1998.

   (b) REPORTS ON FORM 8-K. No Partnership reports on Form 8-K have been filed
for the fourth quarter of the fiscal year ended December 31, 1998.


                                       23
<PAGE>   24

                                   SIGNATURES

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

                      NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP

                      By:  NORTHLAND COMMUNICATIONS CORPORATION
                                     (Managing General Partner)

                      By:  /s/ John S. Whetzell            Date: March 30, 1999
                           -----------------------------         --------------
                               John S. Whetzell, President

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          SIGNATURES                                    CAPACITIES                                DATE

<S>                            <C>                                                               <C>
/s/ John S. Whetzell           Chief executive officer of registrant; chief executive         March 30, 1999
----------------------------        officer and chairman of the board of directors
John S. Whetzell                    of Northland Communications Corporation


/s/ Richard I. Clark           Director of Northland Communications Corporation               March 30, 1999  
----------------------------
Richard I. Clark


/s/ John E. Iverson            Director of Northland Communications Corporation               March 30, 1999 
----------------------------
John E. Iverson


/s/ Gary S. Jones              Principal financial officer and principal accounting officer   March 30, 1999
----------------------------       of the registrant; vice President, principal financial
Gary S. Jones                      officer and principal accounting officer of Northland
                                   Communications Corporation
                                                                                            
                                                                                            
                                                                                            
                                                                                            
</TABLE>


                                       24
<PAGE>   25
                          NORTHLAND CABLE PROPERTIES SIX LIMITED
                          PARTNERSHIP

                          FINANCIAL STATEMENTS
                          AS OF DECEMBER 31, 1998 AND 1997
                          TOGETHER WITH AUDITORS' REPORT



<PAGE>   26















                           REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Partners of
Northland Cable Properties Six Limited Partnership:

We have audited the accompanying balance sheets of Northland Cable Properties
Six Limited Partnership (a Washington limited partnership) as of December 31,
1998 and 1997, and the related statements of operations, changes in partners'
capital (deficit) and cash flows for each of the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements 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 Northland Cable Properties Six
Limited Partnership 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.







Seattle, Washington,
  February 5, 1999



<PAGE>   27
               NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP


                                 BALANCE SHEETS

                           DECEMBER 31, 1998 AND 1997


                                     ASSETS

<TABLE>
<CAPTION>
                                                     1998            1997
                                                 ------------    ------------
<S>                                              <C>             <C>         
CASH                                             $    706,907    $    173,034

ACCOUNTS RECEIVABLE, including $43,766 due
   from affiliates in 1998
                                                      722,919         400,963

PREPAID EXPENSES AND OTHER ASSETS                     109,387         262,758

INVESTMENT IN CABLE TELEVISION PROPERTIES:
      Property and equipment, at cost              28,835,350      19,867,258
      Less- Accumulated depreciation              (14,744,674)    (13,328,036)
                                                 ------------    ------------
                                                   14,090,676       6,539,222

      Franchise agreements (net of accumulated
         amortization of $11,179,542 in 1998
         and $10,293,124 in 1997)
                                                   16,047,851       5,442,597
      Acquisition costs (net of accumulated
         amortization of $60,545 in 1998 and
         $1,502,475 in 1997)
                                                      177,026         208,115
      Loan fees and other intangibles (net of
         accumulated amortization of $609,832
         in 1998 and $897,084 in 1997)
                                                    1,117,203         582,697
                                                 ------------    ------------
            Total investment in cable
               television properties               31,432,756      12,772,631
                                                 ------------    ------------


            Total assets                         $ 32,971,969    $ 13,609,386
                                                 ============    ============




                LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
                                                     1998            1997
                                                 ------------    ------------
LIABILITIES:
   Accounts payable                              $    399,031    $    198,865
   Other current liabilities                          782,712         758,220
   Due to General Partner and affiliates              142,746         154,836
   Deposits                                            57,057          92,093
   Subscriber prepayments                             495,177         409,952
   Note payable                                    31,372,848      10,899,421
                                                 ------------    ------------
            Total liabilities                      33,249,571      12,513,387
                                                 ------------    ------------


COMMITMENTS AND CONTINGENCIES (Note 8)

PARTNERS' CAPITAL (DEFICIT):
   General partners-
       Contributed capital, net                       (37,565)        (37,565)
       Accumulated deficit                            (92,266)        (78,570)
                                                 ------------    ------------
                                                     (129,831)       (116,135)
                                                 ------------    ------------
   Limited partners-
      Contributed capital, net -
         29,792 units in 1998 and 29,800 in
         1997                                       8,986,444       8,990,444
      Accumulated deficit                          (9,134,215)     (7,778,310)
                                                 ------------    ------------
                                                     (147,771)      1,212,134
                                                 ------------    ------------
            Total liabilities and partners'
               capital (deficit)                 $ 32,971,969    $ 13,609,386
                                                 ============    ============
</TABLE>



      The accompanying notes are an integral part of these balance sheets.


<PAGE>   28



               NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP

                            STATEMENTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                            1998            1997            1996
                                                        ------------    ------------    ------------
<S>                                                        <C>             <C>             <C>      
REVENUE                                                 $ 14,746,766    $  9,644,320    $  9,262,702
                                                        ------------    ------------    ------------
EXPENSES:
   Operating (including $285,212, $238,691 and
      $159,470 paid to affiliates in 1998, 1997 and
      1996, respectively)                                  1,262,672         913,361         879,045
   General and administrative (including $1,632,936,
      $1,075,881 and $1,057,206 paid to affiliates in
      1998, 1997 and 1996, respectively)                   3,790,975       2,357,842       2,250,200
   Programming (including $241,521, $258,388 and
      $205,316 paid to affiliates in 1998, 1997 and
      1996, respectively)                                  3,784,358       2,301,320       2,041,844
   Depreciation and amortization                           4,287,623       2,010,301       2,697,358
                                                        ------------    ------------    ------------
                                                          13,125,628       7,582,824       7,868,447
                                                        ------------    ------------    ------------
            Operating income                               1,621,138       2,061,496       1,394,255

OTHER INCOME (EXPENSE):
   Interest income                                            17,932           9,074          16,855
   Insurance recovery                                             --              --         148,318
   Interest expense                                       (2,566,743)       (846,609)     (1,010,190)
   (Loss) gain on disposal of fixed assets                  (229,940)          7,095        (152,698)
   Other expense                                            (211,988)        (15,157)        (15,089)
                                                        ------------    ------------    ------------
            Net (loss) income                           $ (1,369,601)   $  1,215,899    $    381,451
                                                        ============    ============    ============
ALLOCATION OF NET (LOSS) INCOME:
   General partners                                     $    (13,696)   $     12,159    $      3,815
                                                        ============    ============    ============

   Limited partners                                     $ (1,355,905)   $  1,203,740    $    377,636
                                                        ============    ============    ============

NET (LOSS) INCOME PER LIMITED PARTNERSHIP UNIT          $        (46)   $         40    $         13
                                                        ============    ============    ============
</TABLE>

        The accompanying notes are an integral part of these statements.


<PAGE>   29



               NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP


              STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)

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


<TABLE>
<CAPTION>
                                                         General       Limited
                                                         Partners      Partners         Total
                                                       -----------    -----------    -----------
<S>                                                    <C>            <C>            <C>      
BALANCE, December 31, 1995                             $  (131,356)   $  (286,702)   $  (418,058)

   Cash distributions ($2.50 per limited partnership
      unit)                                                   (753)       (74,540)       (75,293)

   Net income                                                3,815        377,636        381,451
                                                       -----------    -----------    -----------
BALANCE, December 31, 1996                                (128,294)        16,394       (111,900)

   Repurchase of limited partnership units                      --         (8,000)        (8,000)

   Net income                                               12,159      1,203,740      1,215,899
                                                       -----------    -----------    -----------
BALANCE, December 31, 1997                                (116,135)     1,212,134      1,095,999

   Repurchase of limited partnership units                      --         (4,000)        (4,000)

   Net loss                                                (13,696)    (1,355,905)    (1,369,601)
                                                       -----------    -----------    -----------
BALANCE, December 31, 1998                             $  (129,831)   $  (147,771)   $  (277,602)
                                                       ===========    ===========    ===========
</TABLE>




        The accompanying notes are an integral part of these statements.


<PAGE>   30

               NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP


                            STATEMENTS OF CASH FLOWS

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


<TABLE>
<CAPTION>
                                                                      1998            1997            1996
                                                                  ------------    ------------    ------------
<S>                                                               <C>             <C>             <C>         
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss) income                                              $ (1,369,601)   $  1,215,899    $    381,451
   Adjustments to reconcile net (loss) income to net cash
     provided by operating activities-
         Depreciation and amortization expense                       4,287,623       2,010,301       2,697,358
         Amortization of loan costs                                    182,859          15,157          15,089
         Insurance recoveries                                               --              --        (148,318)
         Loss (gain) on disposal of assets                             229,940          (7,095)        152,698
         (Increase) decrease in operating assets:
           Accounts receivable                                        (278,190)        (74,688)        (38,185)
           Prepaid expenses and other assets                           153,371        (181,817)          5,830
         Increase (decrease) in operating liabilities:
           Accounts payable and other current liabilities              224,658         254,763          75,112
           Due to General Partner and affiliates                       (12,090)        (57,662)         72,654
           Deposits                                                    (35,036)        (22,106)        (17,497)
           Subscriber prepayments                                       85,225          (5,718)            880
                                                                  ------------    ------------    ------------
            Net cash provided by operating activities                3,468,759       3,147,034       3,197,072
                                                                  ------------    ------------    ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment, net                          (2,820,143)     (1,662,999)     (1,058,030)
   Acquisition of cable system                                     (20,500,000)             --              --
   Insurance recoveries                                                     --              --         148,318
   Proceeds from disposal of assets                                        500           9,475              --
   Purchase of other intangibles                                       (77,199)       (210,414)       (183,414)
                                                                  ------------    ------------    ------------
            Net cash used in investing activities                  (23,396,842)     (1,863,938)     (1,093,126)
                                                                  ------------    ------------    ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from notes payable                                      20,473,427         760,000              --
   Principal payments on notes payable                                      --      (1,781,400)     (1,962,368)
   Distributions to partners                                                --              --         (75,293)
   Repurchase of limited partnership units                              (4,000)         (8,000)             --
   Loan fees and other costs                                            (7,471)       (495,637)             --
                                                                  ------------    ------------    ------------
            Net cash provided by (used in) financing activities     20,461,956      (1,525,037)     (2,037,661)
                                                                  ------------    ------------    ------------

INCREASE (DECREASE) IN CASH                                            533,873        (241,941)         66,285

CASH, beginning of year                                                173,034         414,975         348,690
                                                                  ------------    ------------    ------------
CASH, end of year                                                 $    706,907    $    173,034    $    414,975
                                                                  ============    ============    ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Cash paid during the year for interest                         $  2,562,492    $    847,682    $  1,051,135
                                                                  ============    ============    ============
</TABLE>


        The accompanying notes are an integral part of these statements.

<PAGE>   31

               NORTHLAND CABLE PROPERTIES SIX LIMITED PARTNERSHIP


                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1998




1.  ORGANIZATION AND PARTNERS' INTERESTS:

Formation and Business

Northland Cable Properties Six Limited Partnership (the Partnership), a
Washington limited partnership, was formed on January 22, 1986. The Partnership
was formed to acquire, develop and operate cable television systems. The
Partnership began operations on November 3, 1986 by acquiring a cable television
system in Mississippi. Subsequently, additional cable television systems were
acquired in Mississippi, North Carolina and South Carolina. The Partnership has
38 nonexclusive franchises to operate cable systems for periods which will
expire at various dates through 2017.

Northland Communications Corporation is the Managing General Partner (the
General Partner) of the Partnership. Certain affiliates of the Partnership also
own and operate other cable television systems. In addition, the General Partner
manages cable television systems for other limited partnerships for which it is
General Partner.

FN Equities Joint Venture, a California joint venture, is the Administrative
General Partner of the Partnership.

Contributed Capital, Commissions and Offering Costs

The capitalization of the Partnership is set forth in the accompanying
statements of changes in partners' capital (deficit). No limited partner is
obligated to make any additional contribution to Partnership capital.

The general partners purchased their 1% interest in the Partnership by
contributing $1,000 to Partnership capital.

Pursuant to the Partnership Agreement, brokerage fees paid to an affiliate of
the Administrative General Partner and other offering costs paid to the General
Partner were recorded as a reduction of limited partners' capital. The
Administrative General Partner received a fee for providing certain
administrative services to the Partnership.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Property and Equipment

Property and equipment are stated at cost. Replacements, renewals and
improvements are capitalized. Maintenance and repairs are charged to expense as
incurred.

<PAGE>   32

Depreciation of property and equipment is provided using the straight-line
method over the following estimated service lives:

<TABLE>
<S>                                                         <C>        
            Buildings                                          20 years
            Distribution plant                                 10 years
            Other equipment and leasehold
              improvements                                   5-20 years
</TABLE>

The Partnership periodically reviews the carrying value of its long-lived
assets, including property, equipment and intangible assets, whenever events or
changes in circumstances indicate that the carrying value may not be
recoverable. To the extent the estimated future cash inflows attributable to the
asset, less estimated future cash outflows, is less than the carrying amount, an
impairment loss would be recognized.

Allocation of Cost of Purchased Cable Television Systems

The Partnership allocated the total contract purchase price of cable television
systems acquired as follows: first, to the estimated fair value of net tangible
assets acquired; then, to the franchise and other determinable intangible costs;
then any excess is allocated to goodwill.

Intangible Assets

Costs assigned to franchise agreements, loan fees, acquisition costs and other
intangibles are being amortized using the straight-line method over the
following estimated useful lives:

      Franchise agreements                                10-20 years
      Acquisition costs                                       5 years
      Loan fees and other intangibles                      1-10 years

Revenue Recognition

Cable television service revenue is recognized in the month service is provided
to customers. Advance payments on cable services to be rendered are recorded as
subscriber prepayments. Revenues resulting from the sale of local spot
advertising are recognized when the related advertisements or commercials appear
before the public. Local spot advertising revenues earned were $456,007,
$441,308 and $363,132 respectively, in 1998, 1997 and 1996.

Derivatives

The Partnership has only limited involvement with derivative financial
instruments and does not use them for trading purposes. They are used to manage
well-defined interest rate risks. The Partnership periodically enters into
interest rate swap agreements with major banks or financial institutions
(typically its bank) in which the Partnership pays a fixed rate and receives a
floating rate with the interest payments being calculated on a notional amount.
Gains or losses associated with changes in fair values of these swaps and the
underlying notional principal amounts are deferred and recognized against
interest expense over the term of the agreements in the Partnership's statements
of operations.

<PAGE>   33

The Partnership is exposed to credit-related losses in the event of
nonperformance by counterparties to financial instruments, but does not expect
any counterparties to fail to meet their obligations, as the Partnership
currently deals only with its bank. Notional amounts do not represent amounts
exchanged by the parties and, thus, are not a measure of exposure to the
Partnership through its use of derivatives. The exposure in a derivative
contract is the net difference between what each party is required to pay based
on the contractual terms against the notional amount of the contract, which in
the Partnership's case are interest rates. The use of derivatives does not have
a significant effect on the Partnership's result of operations or its financial
position.

Reclassifications

Certain reclassifications have been made to conform prior years' financial
statements with the current year presentation.

Recently Issued Accounting Pronouncements

Statement of Financial Accounting Standards (SFAS) No. 130 - In 1998, the
Partnership adopted SFAS No. 130, "Reporting Comprehensive Income." This
statement establishes rules for the reporting of comprehensive income and its
components. Comprehensive income (loss) consists of net income (loss), foreign
currency translation adjustments and unrealized gains or losses on investment
securities available-for-sale. As of December 31, 1998, the Partnership had no
comprehensive income to report, therefore the adoption of SFAS No. 130 had no
impact on equity.

Statement of Position 98-5 - In April 1998, the AICPA released Statement of
Position 98-5, "Reporting on Start-Up Activities" (SOP 98-5). The new standard
requires that all entities expense costs of start-up activities as those costs
are incurred. SOP 98-5 defines "start-up costs" as those costs directly related
to pre-operating, pre-opening, and organization activities. This standard must
be adopted in fiscal years beginning after December 15, 1998.

The Partnership previously capitalized pre-opening costs and amortized such
costs over a five-year period. As of December 31, 1998, all pre-opening costs
have been amortized. As a result, the adoption of SOP 98-5 will not have an
effect on the Partnership's financial position or results of its operations.

Statement of Financial Accounting Standards No. 133 - In June 1998, the
Financial Accounting Standards Board issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. The statement requires that changes in the derivative's fair value
be recognized currently in earnings unless specific hedge accounting criteria
are met. Special accounting for qualifying hedges allows a derivative's gains
and losses to offset related results on the hedged item in the statement of
operations, and requires that a company must formally document, designate, and
assess the effectiveness of transactions that receive hedge accounting.

<PAGE>   34

SFAS No. 133 is effective for fiscal years beginning after June 15, 1999. A
company may also implement the statement as of the beginning of any fiscal
quarter after issuance (that is, fiscal quarters beginning June 16, 1998 and
thereafter). SFAS No. 133 cannot be applied retroactively. SFAS No. 133 must be
applied to (a) derivative instruments and (b) certain derivative instruments
embedded in hybrid contracts that were issued, acquired, or substantively
modified after December 31, 1997 (and, at the company's election, before January
1, 1998).

The Partnership has not yet quantified the impacts of adopting SFAS No. 133 on
the financial statements and has not determined the timing of or method of
adoption of SFAS No. 133. However, the statement could increase volatility in
earnings and other comprehensive income.

Estimates Used in Financial Statement Presentation

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

3.  TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES:

Management Fees

The General Partner receives a fee for managing the Partnership equal to 6% of
the gross revenues of the Partnership, excluding revenues from the sale of cable
television systems or franchises. The amount of management fees charged by the
General Partner was $884,806, $578,720 and $555,762 in 1998, 1997 and 1996,
respectively.

Income Allocation

All items of income, loss, deduction and credit are allocated 99% to the limited
partners and 1% to the general partners until the limited partners have received
aggregate cash distributions in an amount equal to aggregate capital
contributions. Thereafter, the general partners receive 25% and the limited
partners are allocated 75% of partnership income and losses. Prior to the
general partners receiving a distribution in any year, the limited partners must
receive distributions equal to at least 50% of their allocable share of net
income for such year, based on projections by the Managing General Partner of
the net income of the Partnership for the year. If cash distributions to the
general partners are deferred because of this 50% limitation, those deferred
cash distributions will be paid to the general partners in subsequent years or
upon liquidation of the Partnership. Any distributions other than from cash
flow, such as from the sale or refinancing of a system or upon dissolution of
the Partnership, will be determined according to contractual stipulations in the
Partnership Agreement.

The limited partners' total initial contributions to capital were $15,000,000
($500 per partnership unit). As of December 31, 1998, $3,817,997 ($127.50 per
partnership unit) has been distributed to the limited partners, and the
Partnership has repurchased $96,475 of limited partnership units (165 units at
$500 per unit and 43 units at $325 per unit).

<PAGE>   35

Reimbursements

The General Partner provides or causes to be provided certain centralized
services to the Partnership and other affiliated entities. The General Partner
is entitled to reimbursement from the Partnership for various expenses incurred
by it or its affiliates on behalf of the Partnership allocable to its management
of the Partnership, including travel expenses, pole and site rental, lease
payments, legal expenses, billing expenses, insurance, governmental fees and
licenses, headquarters supplies and expenses, pay television expenses, equipment
and vehicle charges, operating salaries and expenses, administrative salaries
and expenses, postage and office maintenance.

The amounts billed to the Partnership are based on costs incurred by affiliates
in rendering the services. The costs of certain services are charged directly to
the Partnership, based upon the personnel time spent by the employees rendering
the service. The cost of other services is allocated to the Partnership and
affiliates based upon relative size and revenue. Management believes that the
methods used to allocate services to the Partnership are reasonable. Amounts
charged for these services were $663,191, $497,964 and $511,719 for 1998, 1997
and 1996, respectively.

In 1998, 1997 and 1996, the Partnership paid installation charges and
maintenance fees for billing system support provided by an affiliate, amounting
to $79,590, $68,685 and $69,750, respectively.

The Partnership has entered into operating management agreements with affiliates
managed by the General Partner. Under the terms of these agreements, the
Partnership or an affiliate serves as the executive managing agent for certain
cable television systems and is reimbursed for certain operating and
administrative expenses. The Partnership paid $290,147, $179,807 and $139,408,
net, under the terms of these agreements during 1998, 1997 and 1996,
respectively.

The Partnership pays monthly program license fees to Northland Cable News, Inc.
(NCN), an affiliate of the General Partner, for the rights to distribute
programming developed and produced by NCN. Total license fees paid to NCN during
1998, 1997 and 1996 were $165,147, $176,333 and $165,297, respectively.

Cable Ad Concepts, Inc. (CAC), an affiliate of the General Partner, was formed
in 1993 and began operations in 1994. CAC was organized to assist in the
development of local advertising markets and management and training of local
sales staff. CAC billed the Partnership $57,611, $70,777 and $39,656 in 1998,
1997 and 1996, respectively, for these services.

Due to General Partner and Affiliates

<TABLE>
<CAPTION>
                                                         December 31,
                                                   ----------------------
                                                     1998          1997
                                                   --------      --------
<S>                                                <C>           <C>     
       Management fees                             $ 68,187      $ 43,502
       Reimbursable operating costs and other        45,940        64,265
       Other amounts due to affiliates, net          28,619        47,069
                                                   --------      --------
                                                   $142,746      $154,836
                                                   ========      ========
</TABLE>

<PAGE>   36

4.  PROPERTY AND EQUIPMENT:

<TABLE>
<CAPTION>
                                                 December 31,
                                         ----------------------------
                                             1998             1997
                                         -----------      -----------
<S>                                      <C>              <C>        
           Land and buildings            $   881,669      $   760,090
           Distribution plant             26,424,483       17,939,452
           Other equipment                 1,488,648        1,125,332
           Leasehold improvements             40,550           38,945
           Construction in progress               --            3,439
                                         -----------      -----------
                                         $28,835,350      $19,867,258
                                         ===========      ===========
</TABLE>

5.  OTHER CURRENT LIABILITIES:

<TABLE>
<CAPTION>
                                             1998          1997
                                           --------      --------
<S>                                        <C>           <C>     
              Programmer license fees      $363,130      $321,928
              Bank overdraft                     --       200,194
              Accrued franchise fees        245,867        99,823
              Other                         173,715       136,275
                                           --------      --------
                                           $782,712      $758,220
                                           ========      ========
</TABLE>

6.  NOTE PAYABLE:

Note payable consists of the following:

<TABLE>
<CAPTION>
                                                                          December 31,
                                                                  ----------------------------
                                                                      1998             1997
                                                                  -----------      -----------
<S>                                                               <C>              <C>        
Revolving credit and term loan agreement, collateralized by
   a first lien position on all present and future assets of
   the Partnership. Interest rates vary based on certain
   financial covenants; currently 7.88%. Graduated principal
   payments due quarterly until maturity on December 31,
   2000                                                           $31,372,848      $10,899,421
                                                                  ===========      ===========
</TABLE>

Annual maturities of notes payable after December 31, 1998 based on amounts
outstanding at December 31, 1998 are as follows:

<TABLE>
<S>                                          <C>        
                       1999                  $ 1,250,000
                       2000                   30,122,848
                                             -----------
                                             $31,372,848
                                             ===========
</TABLE>

<PAGE>   37

Under the terms of the revolving credit and term loan agreement, the Partnership
has agreed to restrictive covenants which require the maintenance of certain
ratios, including an Annual Operating Cash Flow to Interest Expense Ratio
greater than 2.00 to 1, a Fixed Charge Ratio of 1.1 to 1, and a Senior Debt to
Annualized Operating Cash Flow Ratio of 5.25 to 1, among other restrictions. The
General Partner submits quarterly debt compliance reports to the Partnership's
creditor under this agreement. As of December 31, 1998, the Partnership was in
compliance with the terms of the loan agreement.

On January 8, 1998 the Partnership entered into an interest rate swap agreement,
notional amount of $23,000,000, to reduce the impact of changes in interest
rates. This agreement effectively changes the Partnership's interest rate
exposure to a fixed rate of 5.77%, plus an applicable margin based on certain
financial covenants (the margin at February 6, 1998, was 2.25%). The maturity
date of the swap is December 31, 1999.

At December 31, 1998, the Partnership would have been required to pay the
counterparty approximately $194,999 to settle this agreement based on fair value
estimates received from the financial institution.

7.  INCOME TAXES:

Income taxes payable have not been recorded in the accompanying financial
statements because they are obligations of the partners. The federal and state
income tax returns of the Partnership are prepared and filed by the General
Partner.

The tax returns, the qualification of the Partnership as such for tax purposes,
and the amount of distributable partnership income or loss are subject to
examination by federal and state taxing authorities. If such examinations result
in changes with respect to the Partnership's qualification or in changes with
respect to the income or loss, the tax liability of the partners would likely be
changed accordingly.

Taxable income to the limited partners was approximately $0, $0 and $74,540 for
the three years in the periods ended December 31, 1998 and is different from
that reported in the statements of operations principally due to the difference
in depreciation expense allowed for tax purposes and the amount recognized under
generally accepted accounting principles. There were no other significant
differences between taxable income and the net income reported in the statements
of operations.

The Partnership agreement provides that tax losses may not be allocated to the
Limited Partners if such loss allocation would create a deficit in the Limited
Partners' Capital Account. Such excess losses are reallocated to the General
Partner ("Reallocated Limited Partner Losses"). In general, in subsequent years,
100% of the Partnership's net income is allocated to the General Partner until
the General Partner has been allocated net income in amounts equal to the
Reallocated Limited Partner Losses.

In general, under current federal income tax laws, a partner's allocated share
of tax losses from a partnership is allowed as a deduction on his individual
income tax return only to the extent of the partner's adjusted basis in his
partnership interest at the end of the tax year. Any excess losses over adjusted
basis may be carried forward to future tax years and are allowed as a deduction
to the extent the partner has an increase in his adjusted basis in the
Partnership through either an allocation of partnership income or additional
capital contributions to the Partnership.

<PAGE>   38

In addition, the current tax law does not allow a taxpayer to use losses from a
business activity in which he does not materially participate (a "passive
activity," e.g., a limited partner in a limited partnership) to offset other
income such as salary, active business income, dividends, interest, royalties
and capital gains. However, such losses can be used to offset income from other
passive activities. In addition, disallowed losses can be carried forward
indefinitely to offset future income from passive activities. Disallowed losses
can be used in full when the taxpayer recognizes gain or loss upon the
disposition of his entire interest in the passive activity.

8.  COMMITMENTS AND CONTINGENCIES:

Lease Arrangements

The Partnership leases certain tower sites, office facilities and pole
attachments under leases accounted for as operating leases. Rental expense
included in operations amounted to $209,627, $123,776 and $132,342 in 1998, 1997
and 1996, respectively. Minimum lease payments through the end of the lease
terms are as follows:

<TABLE>
<S>                                               <C>    
                      1999                        $15,583
                      2000                         15,583
                      2001                         12,431
                      2002                          3,133
                      2003                          1,083
                      Thereafter                    2,237
                                                  -------
                                                  $50,050
                                                  =======
</TABLE>

Effects of Regulation

On February 8, 1996, the Telecommunications Act of 1996 (the 1996 Act) was
enacted. This act dramatically changed federal telecommunications laws and the
future competitiveness of the industry. Many of the changes called for by the
1996 Act will not take effect until the Federal Communications Commission (FCC)
issues new regulations which, in some cases, may not be completed for a few
years. Because of this, the full impact of the 1996 Act on the Partnership's
operations cannot be determined at this time. A summary of the provisions
affecting the cable television industry, more specifically those affecting the
Partnership's operations, follows.

Cable Programming Service Tier Regulation. FCC regulation of rates for cable
programming service tiers has been eliminated for small cable systems owned by
small companies. Small cable systems are those having 50,000 or fewer
subscribers which are owned by companies with fewer than 1% of national cable
subscribers (approximately 600,000) and having no more than $250 million in
annual revenue. The Partnership qualifies as a small cable company and all of
the Partnership's cable systems qualify as small cable systems. Basic tier rates
remain subject to regulations by the local franchising authority under most
circumstances until effective competition exists. The 1996 Act expands the
definition of effective competition to include the offering of video programming
services directly to subscribers in a franchised area served by a local
telephone exchange carrier, its affiliates or any multichannel video programming
distributor which uses the facilities of the local exchange carrier. The FCC has
not yet determined the penetration criteria that will trigger the presence of
effective competition under these circumstances.

<PAGE>   39

Telephone Companies. The 1996 Act allows telephone companies to offer video
programming services directly to customers in their service areas immediately
upon enactment. They may provide video programming as a cable operator fully
subject to any provision of the 1996 Act, or a radio-based multichannel
programming distributor not subject to any provisions of the 1996 Act, or
through nonfranchised "open video systems" offering nondiscriminatory capacity
to unaffiliated programmers, subject to select provisions of the 1996 Act.
Although management's opinion is that the probability of competition from
telephone companies in rural areas is unlikely in the near future, there are no
assurances that such competition will not materialize.

The 1996 Act encompasses many other aspects of providing cable television
service including prices for equipment, discounting rates to multiple dwelling
units, lifting of anti-trafficking restrictions, cable-telephone cross ownership
provisions, pole attachment rate formulas, rate uniformity, program access,
scrambling and censoring of Public, Educational and Governmental and leased
access channels.

Self-Insurance

The Partnership began self-insuring for aerial and underground plant in 1996.
Beginning in 1997, the Partnership began making quarterly contributions into an
insurance fund maintained by an affiliate which covers all Northland entities
and defrays a portion of any loss should the Partnership be faced with a
significant uninsured loss. To the extent the Partnership's losses exceed the
fund's balance, the Partnership absorbs any such loss. If the Partnership were
to sustain a material uninsured loss, such reserves could be insufficient to
fully fund such a loss. The capital cost of replacing such equipment and
physical plant, could have a material adverse effect on the Partnership, its
financial condition, prospects and debt service ability.

Amounts paid to the affiliate, which maintains the fund for the Partnership and
its affiliates, are expensed as incurred and are included in the statements of
operations. To the extent a loss has been incurred related to risks that are
self-insured, the Partnership records an expense and an associated liability for
the amount of the loss, net of any amounts to be drawn from the fund. For 1998
and 1997, respectively, the Partnership was charged $20,878 and $14,324 by the
fund. As of December 31, 1998, the fund had a balance of $249,617.

9.  CABLE TELEVISION SYSTEM ACQUISITION:

On January 2, 1998, the Partnership purchased cable television systems located
in and around the communities of Allendale, Bamberg, Barnwell and Bennettsville,
all in the state of South Carolina. The purchase price of these systems was
$20,500,000. The systems are operated from four headends and serve 11,200
subscribers.

The Partnership borrowed an additional $20,473,427 under an amended and restated
revolving credit and term loan agreement with its lender to finance the
acquisition of the South Carolina cable systems.

<PAGE>   40

Pro Forma operating results of the Partnership for the years ended December 31,
1997, assuming the acquisition of Allendale, Bamberg, Barnwell and
Bennettsville, South Carolina systems had been completed as of the beginning of
1997 follows:

<TABLE>
<CAPTION>
                                                            1997
                                                        ------------
                                                        (unaudited)
<S>                                                     <C>         
          Revenue                                       $ 14,320,695
                                                        ============

          Net loss                                      $ (1,140,110)
                                                        ============

          Net loss per limited partnership unit                  (38)
                                                        ============
</TABLE>