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

                                    FORM 10-K
                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


          (Mark One)

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

          For the fiscal year ended December 31, 2002

                                       OR

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

          For the transition period from _________ to _________

               Commission file numbers 333-35183 and 333-35183-01

                           JAMES CABLE PARTNERS, L.P.
                            JAMES CABLE FINANCE CORP.
           (Exact name of Registrants as specified in their charters)

<TABLE>
<S>                                                                               <C>
                             Delaware                                                          38-2778219
                             Michigan                                                          38-3182724
  (State or Other Jurisdiction of Incorporation or Organization)                  (I.R.S. Employer Identification No.)

                 38710 Woodward Avenue, Suite 180                                                 48304
                    Bloomfield Hills, Michigan                                                 (Zip Code)
             (Address of Principal Executive Offices)
</TABLE>

Registrants' telephone number, including area code:  (248) 647-1080

Securities registered pursuant to Section 12(b) of the Act:  None.

Securities registered pursuant to Section 12(g) of the Act:  None.

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/

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

The aggregate market value of the voting and non-voting common equity of James
Cable Partners, L.P. held by non-affiliates of James Cable Partners, L.P. is
estimated to be $0.

The aggregate market value of the voting and non-voting common equity of James
Cable Finance Corp. held by non-affiliates of James Cable Finance Corp. is
estimated to be $0.

The number of shares of James Cable Finance Corp. outstanding as of March 31,
2003 was 1,000.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None.


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page No.
<S>                                                                                                        <C>
                                                     PART I
         Forward Looking Statements...................................................................     3
         Item 1. Business.............................................................................     4
                             General..................................................................     4
                             Business Strategy........................................................     4
                             Industry Overview........................................................     5
                             The Systems..............................................................     7
                             Programming and Subscriber Rates.........................................     10
                             Internet Services........................................................     11
                             Customer Service and Marketing...........................................     12
                             Technical Overview.......................................................     12
                             Franchises...............................................................     13
                             Competition..............................................................     14
                             Legislation and Regulation...............................................     16
                             Insurance................................................................     20
                             Employees................................................................     20
         Item 2. Properties...........................................................................     20
         Item 3. Legal Proceedings....................................................................     20
         Item 4. Submission of Matters to a Vote of Security Holders..................................     21

                                                     PART II
         Item 5. Market for Registrant's Common Equity and Related Shareholder Matters................     21
         Item 6. Selected Financial Data..............................................................     21
         Item 7. Management's Discussion and Analysis of Financial Condition and
                      Results of Operations...........................................................     24
                            Overview..................................................................     24
                            Results of Operations.....................................................     25
                            Financial Condition, Liquidity and Capital Resources......................     27
                            Impact of Inflation and Changing Prices...................................     29
                            Critical Accounting Policies..............................................     29
                            Effects of New Accounting Pronouncements..................................     30
                            Risk Factors..............................................................     31
         Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.......................     34
         Item 8. Financial Statements and Supplementary Data..........................................     34
         Item 9. Changes in and Disagreements with Accountants on
                      Accounting and Financial Disclosure.............................................     34

                                                     PART III
         Item 10.    Directors and Executive Officers.................................................     34
         Item 11.    Executive Compensation...........................................................     35
         Item 12.    Security Ownership of Certain Beneficial Owners and Management...................     36
         Item 13.    Certain Relationships and Related Transactions...................................     37
         Item 14.    Controls and Procedures..........................................................     37

                                                     PART IV
         Item 15.    Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................     38
</TABLE>


                                       -2-

<PAGE>

FORWARD LOOKING STATEMENTS

This annual report on Form 10-K includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the Securities
Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the
Exchange Act), which can be identified by the use of forward-looking terminology
such as: "attempt," "goal," "foreseeable," "may," "might," "could," "would,"
"believe," "expect," "intend," "plan," "seek," "anticipate," "estimate,"
"project" or "continue" or the negative thereof or other variations thereon or
comparable terminology. All statements other than statements of historical fact
included in this annual report on Form 10-K, including without limitation the
statements under "Part I--Item 1. Business" and "Part II--Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
located elsewhere herein regarding our operations, results of operations,
financial position, liquidity and capital resources are forward-looking
statements. These forward-looking statements also include, but are not limited
to:

     -   estimates and expectations regarding our current and future operations
         and markets;
     -   forecasts and expectations regarding our industry, operations,
         services and subscriber base;
     -   statements regarding our current plans and goals for our cable
         systems; and
     -   statements and projections regarding our anticipated revenues, expense
         levels, operating results, financial condition, liquidity, capital
         resources, and our ability to continue as a going concern.

Although we believe the expectations reflected in such forward-looking
statements are reasonable, we can give no assurance such expectations will prove
to have been correct. Important factors with respect to any such forward-looking
statements, including certain risks and uncertainties that could cause actual
results to differ materially from our expectations (Cautionary Statements), are
disclosed in this annual report on Form 10-K, including, without limitation, in
conjunction with the forward-looking statements included in this annual report
on Form 10-K. See, e.g., "Part II--Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations--Risk Factors." Important
factors that could cause actual results to differ materially from those in the
forward-looking statements included herein include, but are not limited to:

     -   whether we can successfully restructure our existing indebtedness (in
         bankruptcy or otherwise);
     -   changes or advances in technology;
     -   competition in the industry and markets in which we operate;
     -   potential fluctuations in our subscriber base and costs that impact
         our results of operations, financial condition and liquidity;
     -   our ability to attract and retain skilled personnel;
     -   changes in government regulation and our cable franchises; and
     -   general economic and business conditions.

Due to the current financial condition and liquidity position of James Cable
Partners, L.P. ("James") and James Cable Finance Corp., a wholly-owned
subsidiary of James ("Finance Corp.," and together with James, the "Company"),
the Company failed to pay the $5.375 million interest payment due February 15,
2003 on its 10 3/4% Notes due August 15, 2004 (the "Notes"). Moreover, because
the Company failed to pay such interest payment on the Notes by March 18, 2003,
an event of default under the Indenture under which the Notes were issued has
occurred. Consequently, either the trustee under the Indenture governing the
Notes, or the holders of 25% in principal amount of the Notes now outstanding,
could declare such Notes to be immediately due and payable.

It is to be noted that the event of default under the Indenture also constitutes
an event of default under the Company's senior credit facility. In addition, the
Company does not expect to be in compliance with the senior credit facility's
senior debt coverage ratio on March 31, 2003 when that ratio decreases from
2.2-to-1 to 2.1-to-1. Such defaults could lead to an acceleration of payment
demand by the Company's senior creditor. Acceleration of payment demands by the
Company's creditors would have a material adverse effect on the Company's
operations, liquidity and capital resources, and would require the Company to
seek restructuring through a Chapter 11 bankruptcy reorganization. The Company
is otherwise paying its day-to-day obligations.

The Company has retained Financo Restructuring Group ("Financo") as a financial
advisor to consider options relating to refinancing and restructuring its
existing debt. In this role, Financo has begun discussions with the Company's
senior lender and certain holders of the Company's subordinated debentures to
pursue a consensual restructuring of the Company's debt. In the event a
consensual restructuring of the Company's debt cannot be achieved, and any of
the Company's outstanding debt is declared immediately due and payable, the
Company would not be able to pay such amounts and would seek to reorganize under
the provisions of the federal bankruptcy laws.

In conjunction with the year end audit of the Company's financial statements,
and due to the current financial condition and liquidity position of the Company
and the other matters described above, the Company's independent accountants
have issued an audit opinion with respect to the Company's 2002 financial
statements that includes an explanatory paragraph that expresses substantial
doubt about the Company's ability to continue as a going concern. The ability of
the Company to continue as a going concern will depend on


                                       -3-

<PAGE>
whether the Company's outstanding debt can be appropriately restructured. The
financial statements and other financial information of the Company included
herein do not include any adjustments that might result from the outcome of such
uncertainties.

THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
AND OTHER FACTORS WHICH MAY CAUSE OUR ACTUAL RESULTS, PERFORMANCE OR
ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. ALL
SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US OR
PERSONS ACTING ON OUR BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE
CAUTIONARY STATEMENTS.

PART I

ITEM 1.  BUSINESS

GENERAL:

James Cable Partners, L.P. owns, operates and develops cable television systems
(the "Systems") serving rural communities in seven geographically and
economically diverse clusters. The Company's Systems are operated under the name
"CommuniComm Services" and are located in Oklahoma, Texas, Georgia, Louisiana,
Colorado, Wyoming, Tennessee, Alabama and Florida. As of December 31, 2002, the
Systems passed an estimated 130,000 homes and served 64,877 basic subscribers,
representing a basic penetration of 49.9%. The Company's goal is to be the
preferred provider of video services, and to become the single hardwire
broadband provider of enhanced video services and advanced telecommunication
services, in the markets that it serves. James' principal executive offices are
located at 38710 Woodward Avenue, Suite 180, Bloomfield Hills, Michigan 48304,
and its telephone number is (248) 647-1080.

James is a Delaware limited partnership that was formed in January 1988 for the
purpose of realizing capital appreciation through the ownership, control and
operation of assets comprising cable television systems. Unless its term is
extended as provided in its limited partnership agreement, James will be
dissolved upon the earliest to occur of (i) December 31, 2005, (ii) a
determination, by the General Partner, of James that James should be dissolved,
with the approval of 51% of its Class A Limited Partner interests, (iii) the
sale or disposition by James of substantially all of its assets, (iv) the
consent of holders of 51% of its Class A Limited Partner interests (v) the
removal of the General Partner pursuant to the terms of the Partnership
Agreement, or (vi) the bankruptcy, insolvency, dissolution or withdrawal of the
General Partner.

Since its inception, James' business and affairs have been managed and
controlled by its general partner, James Communications Partners, a Michigan
co-partnership (the "General Partner"). The General Partner is managed and
controlled by its two general partners, Jamesco, Inc. and DKS Holdings, Inc. See
"Part III-Item 10. Directors and Executive Officers." The General Partner's
principal executive office is located at 38710 Woodward Avenue, Suite 180,
Bloomfield Hills, Michigan 48304, and its telephone number is (248) 647-1080.

James Cable Finance Corp. is a wholly-owned subsidiary of James that was
incorporated under the laws of the State of Michigan on June 19, 1997 for the
purpose of serving as a co-issuer with James of the $100 million principal
amount of Notes that the Company issued during the second-half of 1997. Finance
Corp.'s only asset consists of $1,000 cash and there are substantial contractual
restrictions on its activities. Finance Corp.'s principal executive office is
located at 38710 Woodward Avenue, Suite 180, Bloomfield Hills, Michigan 48304,
and its telephone number is (248) 647-1080.

BUSINESS STRATEGY:

The Company believes that there are competitive and economic advantages to
owning and operating cable television systems in rural markets. Due to lower
population densities and higher per household plant installation costs, rural
markets are more likely than larger urban and suburban markets to have a single
hardwire broadband video and telecommunications service provider. In rural
markets, cable service is often required for adequate reception of a full range
of over-the-air television stations. Moreover, the Company believes there are
fewer entertainment alternatives available, and that cable television provides a
major source of entertainment.

The Company's business strategy has been to (i) selectively upgrade the Systems,
(ii) provide enhanced digital video, and (iii) deliver advanced
telecommunications services, including Internet access. It has also attempted to
maintain and improve system operating results by implementing management,
operational and technical changes that are intended to improve operating
efficiencies, enhance operating cash flow and reduce overhead through economies
of scale. To this end, the Company has "clustered" its Systems in concentrated
geographic areas, which allows fixed costs to be spread over an extended
subscriber base. In an effort to further enhance its operational and financial
performance, the Company may from time to time consider opportunities to acquire
or exchange its assets for cable television systems located near its existing
markets.


                                       -4-


<PAGE>
-     Selectively Upgrade Systems. The Company has upgraded certain of its cable
      television systems to further strengthen its position as the preferred
      provider of video services in the communities it serves. These upgrades,
      which employ fiber optic technology, increase the bandwidth of the
      Company's cable plant generally to 750 megahertz ("MHz"), thereby
      increasing channel capacity, enhancing signal quality and improving
      technical reliability. The Company believes the upgrades will enable it to
      offer comparable or superior video service and quality at attractive
      pricing levels relative to its competitors, such as direct broadcast
      satellite ("DBS"). The Company also believes that the upgrades will
      provide the technical platform necessary for the development and delivery
      of advanced telecommunications services.

      As of December 31, 2002, the Company had completed the 750 MHz upgrades to
      cable plant serving approximately 37% of its basic subscribers and has
      also supplemented a portion of its 450 MHz cable plant with fiber to
      approximately 11% of its subscribers. This gives the Company the ability
      to provide advanced telecommunications services to nearly one-half of its
      basic subscriber base.

      The Company is continually in the process of identifying other areas
      within its Systems which can be upgraded to allow for the introduction of
      advanced telecommunications services. However, the Company will only
      proceed with upgrades which it believes are economically feasible after
      carefully weighing the anticipated revenues against the costs of
      completing the upgrade.

-     Provide Enhanced Digital Video. The Company, in order to provide enhanced
      digital video, launched Headend In The Sky(R) ("HITS"), a digital
      compression service developed by National Digital Television Center, Inc.,
      a subsidiary of AT&T. HITS is currently available to approximately 56% of
      the Company's subscriber base. Alternatively, in Systems that do not offer
      HITS, the Company has launched its digital video solution utilizing either
      Hits2Home ("H2H") or HITS Quick Take ("HQT"). H2H and HQT were developed
      by the same group, and allow for many of the same digital services, as
      HITS, but were specifically developed for smaller headends where the large
      upfront cost of HITS could not be justified. With HITS the Company
      receives the digital signals at its headend sites, which requires a
      significant amount of upfront cost in equipment, and then distributes the
      signal to its subscribers over its cable plant. In addition, HITS allows
      for full two-way communication over the cable plant so that no telephone
      lines are required at the subscriber's home. With H2H there is a dish
      installed at the subscriber's premise and they receive the digital signals
      directly, thus, there is no upfront cost for headend equipment. With HQT
      the Company receives the digital signals at its headend, although with
      less upfront equipment cost than HITS, and then distributes the signal to
      the subscribers over its cable plant. However, both H2H and HQT require
      the installation of a phone line in the subscribers home so that the
      digital converter can communicate back to the host. All three of these
      services allow the Company to deliver video services such as pay-per-view
      programming and tiered niche satellite programming as well as digital
      audio services. The Company believes that these enhanced digital video
      services allow it to provide services comparable to DBS. At December 31,
      2002 digital services were available to nearly all of the Company's basic
      subscribers.

-     Deliver Advanced Telecommunications Services, Including Internet Access.
      The Company believes that upgraded advanced telecommunications services
      will continue to provide additional revenue opportunities. The Company
      further believes that the cable infrastructure provides the fastest, most
      cost-effective delivery mechanism for Internet access and inter- and
      intra-network data services in many of its markets.

      As of December 31, 2002, the Company offered either its two-way or one-way
      high-speed Internet services in portions of each Cluster and had nearly
      8,000 high-speed Internet customers. The Company intends to increase the
      number of high-speed Internet customers by (i) continuing its emphasis on
      marketing and customer based education regarding the benefits of
      high-speed Internet services and (ii) offering its high-speed services to
      additional subscribers as future rebuild and upgrade projects are
      completed. In addition to its high-speed Internet services, the Company is
      also offering traditional dial-up Internet services in many of its
      Systems. At December 31, 2002, the Company had more than 3,800 dial-up
      Internet customers.

The ability of the Company to continue to advance its business strategies will
depend on whether its outstanding debt can be appropriately restructured and it
can continue as a going concern. See "Part I -- Forward Looking Statements" and
"Part II -- Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Risk Factors."

INDUSTRY OVERVIEW:

A cable television system receives television, radio and data signals at its
"headend" site by means of off-air antennas, microwave relay systems and
satellite earth stations. These signals are then modulated, amplified and
distributed, primarily through coaxial and fiber optic distribution systems, to
deliver a wide variety of channels of television programming, primarily
entertainment and informational video programming, to the homes of subscribers
who pay fees for this service, generally on a monthly basis. A cable television
system may also originate its own television programming and other information
services for distribution through the system. Cable television systems generally
are constructed and operated pursuant to non-exclusive franchises or similar
licenses granted by local governmental authorities for a specified period of
time.

                                       -5-
<PAGE>

The cable television industry developed in the United States in the late 1940s
and early 1950s in response to the needs of residents in predominantly rural and
mountainous areas of the country where the quality of off-air television
reception was inadequate due to factors such as topography and remoteness from
television broadcast towers. In the 1960s, cable systems also developed in small
and medium-sized cities and suburban areas that had a limited availability of
clear off-air television station signals. All of these markets are regarded
within the cable industry as "classic" cable television system markets. In more
recent years, cable television systems have been constructed in large urban
cities and nearby suburban areas, where good off-air reception from multiple
television stations usually is already available, in order to offer customers
the numerous satellite-delivered channels typically carried by cable systems
that are not otherwise available through broadcast television reception.

Cable television systems offer customers various levels (or "tiers") of cable
services consisting of broadcast television signals of local network affiliates,
independent and educational television stations, a limited number of television
signals from so-called "super stations" originating from distant cities (such as
WGN), various satellite-delivered, non-broadcast channels (such as Cable News
Network ("CNN"), MTV: Music Television ("MTV"), the USA Network ("USA"), ESPN
and Turner Network Television ("TNT")), programming originated locally by the
cable television system (such as public, governmental and educational access
programs) and informational displays featuring news, weather and public service
announcements. For an extra monthly charge, cable television systems also offer
"premium" television services to customers on a per-channel basis. These
services (such as Home Box Office ("HBO") and Cinemax) are satellite channels
that consist principally of feature films, live sporting events, concerts and
other special entertainment features, usually presented without commercial
interruption.

A subscriber generally pays an initial installation charge and fixed monthly
fees for basic and premium television services and for other services (such as
the rental of converters and remote control devices). Such monthly service fees
constitute the primary source of revenues for cable television systems. In
addition to subscriber revenues, cable television systems also frequently offer
to their subscribers home shopping services, which pay such systems a share of
revenues from products sold in the systems' service areas. Some cable television
systems also receive revenue from the sale of available spots on
advertiser-supported programming.

In addition to the above traditional cable television offerings, many cable
television systems have begun the process of upgrading or rebuilding their cable
plant to allow for the introduction of advanced telecommunications services such
as high-speed Internet, digital compression services and telephony. This allows
the cable television systems to offer their subscriber base more services over
their already existing infrastructure and, of course, collect additional
revenues for installations and monthly fees for these new services.


















                                       -6-


<PAGE>


THE SYSTEMS:

The following table sets forth certain operating statistics for the Systems for
the periods indicated:

<TABLE>
<CAPTION>
                                                           (dollars in thousands except per subscriber data)

                                          1998 (1)            1999 (1)            2000              2001             2002
                                          --------           --------             ----              ----             ----
<S>                                      <C>                <C>                <C>                <C>                <C>
Homes passed (2)                          138,040            129,600            129,600            130,000            130,000
Basic subscribers (3)                      84,755             71,864             69,875             68,492             64,877
Basic penetration (4)                        61.4%              55.5%              53.9%              52.7%              49.9%
Basic revenues (5)                       $ 31,521           $ 30,737           $ 29,990           $ 29,817           $ 30,612
Average monthly basic
   revenues per subscriber (6)           $  33.35           $  34.18           $  35.61           $  35.95           $  38.28
Premium subscriptions (7)                  26,413             23,001             22,713             27,243             24,187
Premium penetration (8)                      31.2%              32.0%              32.5%              39.8%              37.3%
Average monthly total revenues
   per subscriber (6)                    $  39.95           $  41.56           $  44.99           $  48.00           $  52.91
Average annual system operating
   cash flow per subscriber (9)          $    233           $    226           $    226           $    213           $    233
Average annual EBITDA per
   subscriber (10)                       $    195           $    188           $    196           $    183           $    201
Miles of plant                              3,883              3,254              3,282              3,421              3,421
</TABLE>

(1)   The figures shown for 1998 reflect the Company's purchase of its cable
      system serving Tazewell, Tennessee. The figures shown for 1999 reflect the
      Company's March 1999 sales of its cable systems serving Wartburg,
      Tennessee and Forsyth and Monroe County, Georgia.
(2)   Homes passed refers to estimates by the Company of the number of dwelling
      units in a particular community that can be connected to the distribution
      system without any further extension of principal transmission lines. Such
      estimates are based upon a variety of sources, including billing records,
      house counts, city directories and other local sources.
(3)   For purposes of all information presented herein, and unless otherwise
      indicated, the number of basic subscribers for the Systems has been
      computed by adding the actual number of subscribers for all non-bulk
      accounts and the equivalent subscribers for all bulk accounts. The number
      of such equivalent subscribers has been calculated by dividing aggregate
      basic service revenues for bulk accounts by the full basic service rate
      for the community in which the account is located. In addition, the basic
      subscriber number includes subscribers who are receiving the Company's
      services at a promotional rate.
(4)   Basic subscribers as a percentage of homes passed.
(5)   Basic revenues consist of monthly subscription fees for all services
      (other than premium programming, Internet services and digital services)
      and monthly charges for customer equipment rental.
(6)   The average of the monthly revenues divided by the number of basic
      subscribers at the end of such month during the twelve -month periods
      ended December 31 for each year presented.
(7)   A customer may purchase more than one premium service, each of which is
      counted as a separate premium subscription.
(8)   Premium subscriptions as a percentage of basic subscribers.
(9)   System operating cash flow divided by the average number of basic
      subscribers for the period.
(10)  EBITDA divided by the average number of basic subscribers for the period
      (See "Part II -- Item 6. Selected Financial Data (Footnote 3)" for a
      definition of EBITDA).







                                       -7-

<PAGE>

The Company's Systems are divided into seven geographic groups ("Clusters"). The
following table summarizes certain operating data at and for the year ended
December 31, 2002 for the individual clusters:

<TABLE>
<CAPTION>
                                                                                                        Average
                                                                                                         Monthly
                                                 Percent of                                               Total
                        Estimated               All Systems                                             Revenues
                          Homes       Basic        Basic         Basic        Premium       Premium       per
        Cluster          Passed   Subscribers   Subscribers   Penetration  Subscriptions  Penetration  Subscriber
        -------          ------   -----------   -----------   -----------  ------------------------    ----------
<S>                      <C>      <C>           <C>           <C>          <C>                        <C>
Oklahoma / Texas          33,000       14,662         22.5%        44.4%          4,015       27.4%       $54.40
Louisiana                 26,000       11,841         18.2         45.5           4,324       36.5         52.87
Georgia                   20,000       11,072         17.1         55.4           4,883       44.1         56.18
Colorado / Wyoming        15,000        7,911         12.2         52.7           3,223       40.7         56.87
Alabama                   14,000        7,830         12.1         55.9           2,740       35.0         46.74
Florida                   10,000        5,813          9.0         58.1           2,004       34.5         45.74
Tennessee                 12,000        5,748          8.9         47.9           2,998       52.2         52.87
                        --------- ------------ ------------                -------------
        Totals           130,000       64,877        100.0%        49.9%         24,187       37.3%       $52.91
                        ========= ============ ============                =============
</TABLE>

The Oklahoma/Texas Cluster. The Oklahoma/Texas Cluster is comprised of Systems
that were acquired in 1988 and 1989, and serves rural communities in
southeastern Oklahoma north of Dallas, Texas and in northern Texas northwest of
Fort Worth. Since 1988, the Company has made $16.1 million in capital
expenditures improving the plant and operations for this Cluster. These
improvements include upgrading many of the Systems to 450 MHz 60-channel
capacity plant, installing three microwave complexes (eliminating the need for
eight separate headends), upgrading the Durant System to a 750 MHz hybrid fiber
optic-backbone/coaxial ("HFC") cable system, and supplementing its 450 MHz cable
plant in Decatur, Texas with fiber.

The Company is currently offering its two-way high-speed Internet service to
approximately 5,450 subscribers and its one-way high-speed Internet service to
approximately 2,950 subscribers in the Oklahoma/Texas Cluster. In addition to
the high-speed Internet services, the Company is offering traditional dial-up
Internet service to certain portions of the Oklahoma/Texas Cluster. At December
31, 2002, the Oklahoma/Texas Cluster had approximately 1,670 high-speed Internet
customers and approximately 1,200 dial-up Internet customers.

The Company is currently offering its digital services, through HITS, H2H or
HQT, to substantially all of its basic subscribers in the Oklahoma/Texas
Cluster. At December 31, 2002, approximately 1,570 of the basic subscribers in
the Oklahoma/Texas Cluster had digital services.

The administrative, technical, marketing and customer service operations for
this cluster are consolidated into one main office located in Durant, Oklahoma.
The primary employer in the Oklahoma/Texas Cluster's area is the oil and gas
industry. Small manufacturing companies also provide employment, as does farming
and ranching. At December 31, 2002, the number of homes passed in the
Oklahoma/Texas Cluster was estimated to be 33,000 and the number of basic
subscribers and premium subscriptions were 14,662 and 4,015, respectively.

The Louisiana Cluster. The Louisiana Cluster is comprised of Systems that were
acquired in three transactions in 1988 and serves rural communities in Louisiana
and Texas located near Lake Charles, Louisiana. Since its acquisition of the
Systems in this Cluster, the Company has made $15.0 million in capital
expenditures, upgrading virtually all of these Systems to 450 MHz 60-channel
plants, installing a microwave complex, eliminating the need for eight headends
and supplementing its 450 MHz plant in and around Westlake, Vinton and Dequincy
with fiber which has improved picture quality and technical reliability. At
December 31, 2002, the estimated number of homes passed for this Cluster was
26,000 and the number of basic subscribers and premium subscriptions were 11,841
and 4,324, respectively.

The Company is currently offering its two-way high-speed Internet service to
approximately 6,080 subscribers . In addition, the Company offers traditional
dial-up service to certain portions of the Louisiana Cluster. At December 31,
2002, the Louisiana Cluster had approximately 1,240 high-speed Internet
customers and approximately 200 dial-up Internet customers.

The Company is currently offering its digital services, through HITS, H2H or
HQT, to substantially all of its basic subscribers in the Louisiana Cluster. At
December 31, 2002, approximately 1,680 of the basic subscribers in the Louisiana
Cluster had digital services.

Since acquiring the Louisiana Cluster, the Company has consolidated all
administrative, technical, marketing and customer service operations into one
central office located in Westlake, Louisiana.




                                       -8-

<PAGE>

The economy in southwestern Louisiana ranges from the farming and cattle
industry to the petro-chemical industry and gaming. Major employers in the area
include CITGO Petroleum Corporation, PPG Industries, Inc. and Conoco, Inc. The
introduction of riverboat casinos on Lake Charles has become very popular due to
its proximity to Houston, and companies like Casino America, Inc. and Players
International, Inc. have become major employers in the area.

The Georgia Cluster. The Georgia Cluster is comprised of Systems that were
acquired in three transactions in 1988 and serves rural communities in central
Georgia located east of Atlanta and south of Macon. Since 1988, the Company has
made $14.6 million in capital improvements to the Georgia Cluster which has
included the installation of microwave complexes, which eliminated the need for
several headends, as well as improving the plant throughout the majority of the
Cluster. In addition, the Company has completed its 750 MHz upgrades to the
cable plant in Hawkinsville, Cochran, Eatonton, Madison and Gray.

The Company is now offering its two-way high-speed Internet service to
approximately 6,480 subscribers and is offering its one-way high-speed Internet
service to approximately 1,950 subscribers. In addition, the Company is offering
traditional dial-up Internet service to certain portions of the Georgia Cluster.
At December 31, 2002, the Georgia Cluster had approximately 1,080 high-speed
Internet customers and approximately 970 dial-up Internet customers.

The Company is currently offering its digital services, through HITS, H2H or
HQT, to substantially all of its basic subscribers in the Georgia Cluster. At
December 31, 2002, approximately 1,130 of the basic subscribers in the Georgia
Cluster had digital services.

At December 31, 2002, the Georgia Cluster passed an estimated 20,000 homes and
had 11,072 basic subscribers and 4,883 premium subscriptions. The Systems in
this Cluster operate primarily out of one office located in Eatonton, Georgia,
where all administrative, technical, marketing and customer service operations
are centralized.

The Company believes that the economy in the Georgia Cluster's area is very
diversified. There are several large employers in the area, including the
corporate headquarters of Applebee's International, Inc., a regional restaurant
chain, and Warner Robbins Air Force Base.

The Colorado/Wyoming Cluster. The Colorado/Wyoming Cluster is comprised of
Systems that were acquired in 1988 and serves rural communities located east of
Denver, Colorado and north and west of Cheyenne, Wyoming. This geographically
diverse group of Systems is operated from a central office in Douglas, Wyoming.
Since these Systems were acquired, the Company has made $10.0 million in capital
expenditures to improve plant reliability, reception and service, including the
750 MHz HFC upgrade of the Systems serving Douglas, Torrington, Wheatland,
Lingle and Lusk, Wyoming.

The Company is now offering its two-way high-speed Internet service, as well as
traditional dial-up Internet service, to approximately 5,750 subscribers in the
Colorado/Wyoming Cluster. At December 31, 2002, the Colorado/Wyoming Cluster had
approximately 2,020 high-speed Internet customers and approximately 850 dial-up
Internet customers.

The Company is currently offering its digital services, through HITS, H2H or
HQT, to substantially all of its basic subscribers in the Colorado/Wyoming
Cluster. At December 31, 2002, approximately 1,550 of the basic subscribers in
the Colorado/Wyoming Cluster had digital services.

The economy in the Colorado/Wyoming Cluster's area is largely dependent on
ranching and farming, the oil and gas industry, and mining. At December 31,
2002, the estimated number of homes passed in this Cluster was 15,000 and the
number of basic subscribers and premium subscriptions were 7,911 and 3,223,
respectively.

The Alabama Cluster. The Company acquired the Systems comprising the Alabama
Cluster primarily in four transactions in 1988 and 1989. These Systems are
divided into two groups, with one group serving the rural communities located on
the western edge of the state west of Birmingham, Alabama, and the other group
serving communities located south and east of Birmingham, between Birmingham and
Atlanta, Georgia. Since its acquisition of the Systems in this Cluster, the
Company has made $7.4 million in capital expenditures, improving the channel
capacity in many of these Systems and improving reliability and channel
offerings, including the 750 MHz upgrade to the cable plant in Roanoke and
Wadley, Alabama.

The Company is now offering its two-way high-speed Internet service to
approximately 2,300 of its basic subscribers, as well as traditional dial-up
Internet service in certain portions of the Alabama Cluster. At December 31,
2002, the Alabama Cluster had approximately 540 high-speed Internet customers
and approximately 140 dial-up Internet customers.

The Company is currently offering its digital services, through HITS, H2H or
HQT, to substantially all of its basic subscribers in the Alabama Cluster. At
December 31, 2002, approximately 890 of the basic subscribers in the Alabama
Cluster had digital services.



                                       -9-

<PAGE>

The operations of the Alabama Cluster are managed from one main office located
in Roanoke, Alabama. All administrative, technical, marketing and customer
service operations have been centralized into the main office. The Alabama
Cluster, as of December 31, 2002, passed an estimated 14,000 homes and had 7,830
basic subscribers and 2,740 premium subscriptions.

The communities served by the Alabama Cluster benefit from a number of small and
large manufacturing companies in the area, including 3M and Wrangler. In
addition, Mercedes-Benz has a large manufacturing plant in Tuscaloosa, Alabama,
just south of the Company's Systems serving western Alabama.

The Florida Cluster. The Florida Cluster is comprised of Systems that were
acquired in 1988 and serves several rural communities located near Gainesville,
Florida. Since May 1988, the Company has made $7.6 million in capital
expenditures in this Cluster. The Company has installed a microwave complex,
which eliminated the need for three headends, and has upgraded the majority of
its cable television plant in this Cluster to 450 MHz with 60 channels of
capacity. The majority of the Systems in this Cluster have been consolidated
onto one microwave complex, which reduces maintenance and equipment costs.

The Company is currently offering its one-way high-speed Internet service to
approximately 2,480 of its basic subscribers, as well as traditional dial-up
Internet service to certain portions of the Florida Cluster. At December 31,
2002, the Florida Cluster had approximately 70 high-speed Internet customers and
approximately 100 dial-up Internet customers.

The Company is currently offering its digital services, through HITS, H2H or
HQT, to substantially all of its basic subscribers in the Florida Cluster. At
December 31, 2002, approximately 670 of the basic subscribers in the Florida
Cluster had digital services.

The Company's Florida Cluster operates from a centralized office in High
Springs, Florida. All administrative, technical, marketing and customer service
operations are coordinated from this location. The Florida Cluster, as of
December 31, 2002, passed an estimated 10,000 homes and had 5,813 basic
subscribers and 2,004 premium subscriptions.

The University of Florida, located in Gainesville, has contributed to the
economic stability of the communities served by the Florida Cluster. Other
industries providing employment in the area include agriculture, ranching and
tourism.

The Tennessee Cluster. The Company acquired the System comprising the Tennessee
Cluster in 1998. This System serves rural communities located northeast of
Knoxville, Tennessee. All administrative, technical, marketing and customer
service operations are coordinated out of one central office located in
Tazewell, Tennessee.

Since acquiring this Cluster, the Company has spent $10.2 million on capital
expenditures, the majority of which have been for the combined 750 MHz HFC and
two-way 450 MHz upgrades which encompass over 95% of the Tennessee operations.
As of December 31, 2002, the Company was offering its high-speed Internet
service and HITS digital services to approximately 5,530 of its basic
subscribers. In addition, the Company is offering its dial-up Internet service
to all of the basic subscribers in the Tennessee Cluster and is offering H2H
services to those subscribers not on the upgraded plant. At December 31, 2002,
the Tennessee Cluster had approximately 1,370 high-speed Internet customers,
approximately 340 dial-up Internet customers and had its digital services in
approximately 1,540 of its basic subscriber's homes.

The economies of the communities served by the Tennessee Cluster benefit from
many furniture manufacturers as well as medical supply manufacturers and the
agriculture industry. As of December 31, 2002, the Tennessee Cluster passed an
estimated 12,000 homes and had 5,748 basic subscribers and 2,998 premium
subscriptions

PROGRAMMING AND SUBSCRIBER RATES:

The Company has various contracts to obtain basic, satellite, premium and
digital programming for the Systems from program suppliers, including, in
limited circumstances, some broadcast stations, with compensation generally
based on a fixed fee per customer or a percentage of the gross receipts for the
particular service. Some program suppliers provide volume discount pricing
structures and/or offer marketing support. In addition, the Company is a member
of a programming consortium consisting of small to medium sized multiple system
operators and individual cable systems serving, in the aggregate, over twelve
million cable subscribers. The consortium helps create efficiencies in the areas
of securing and administering programming contracts, as well as to establish
more favorable programming rates and contract terms for small and medium sized
cable operators. Programming contracts are generally for fixed periods of time
ranging from three to seven years and are subject to negotiated renewal. While
the loss of contracts with certain of the Company's programming suppliers could
have an adverse effect on its results of operations, management does not believe
the risk of such a loss is particularly great due to the substantial motivation
of programming suppliers to obtain the widest possible audience for their
products.

Cable programming costs are expected to continue to increase primarily due to
additional programming being provided to subscribers, increased costs to
purchase cable programming and inflationary increases. In 2000, 2001 and 2002,
programming costs (not including premium or digital) as a percentage of basic
revenues were 21.9%, 24.0% and 25.2%, respectively. No assurance can be given
that the


                                      -10-

<PAGE>

Company's programming costs will not increase substantially in the near future
or that other materially adverse terms will not be added to its programming
contracts.

The Systems offer their subscribers programming that includes the local network,
independent and educational television stations, a limited number of television
signals from distant cities, numerous satellite-delivered, non-broadcast
channels (such as CNN, MTV, USA, ESPN and TNT) and, in some systems, local
information and public access channels. The programming offered by the Company
varies among the Systems depending upon each System's channel capacity and
viewer interests. In general, the Company offers two tiers of basic cable
television programming: a broadcast basic programming tier (consisting generally
of network and public television signals available over-the-air) and a satellite
programming tier (consisting generally of satellite-delivered programming such
as CNN, USA, ESPN and TNT). However, in some of its Systems the Company offers
only a single level of basic service containing both the broadcast and satellite
delivered programming. The Company also offers premium programming services,
both on a per-channel basis and, in many Systems, as part of premium service
packages as well as multiple tiers of digital satellite service, and
pay-per-view, through HITS, H2H and HQT.

Monthly subscriber rates for services vary from market to market, primarily
according to the amount of programming provided. At December 31, 2002, the
Company's monthly full basic service rates for residential subscribers ranged
from $14.95 to $44.99 and per-channel premium service rates (not including
special promotions) ranged from $9.95 to $13.95 per service. At December 31,
2002, the weighted average price for the Company's monthly full basic service
was approximately $41.20.

A one-time installation fee, which the Company may wholly or partially waive
during a promotional period, is usually charged to new subscribers. The Company
also charges monthly fees for converters and remote control tuning devices and
administrative fees for delinquent payments. Subscribers are free to discontinue
service at any time without additional charge but may be charged a reconnection
fee to resume service. Commercial customers, such as hotels, motels and
hospitals, are charged a negotiated, non-recurring fee for installation of
service and monthly fees. Multiple dwelling unit accounts may be offered a bulk
rate in exchange for single-point billing and basic service to all units.

In addition to subscriber fees, the Company derives a small amount of revenue
from the sale of local spot advertising time on locally originated and
satellite-delivered programming. The Company also derives modest amounts of
revenues from affiliations with home shopping services (which offer merchandise
for sale to subscribers and compensate system operators with a percentage of
their sales receipts).

Other potential sources of revenue for cable television systems include the
lease of tower space to cellular telephone, personal communications services
("PCS"), and paging companies and other transmission businesses and the sale of
programming featuring movies and special events to customers on a pay-per-view
basis, which the Company can now offer through its HITS, H2H and HQT digital
services. Generally, in areas serviced by HITS, the Company offers two separate
levels of digital services, including an Entertainment tier (which offers niche
satellite programming) and a Cinema tier (which offers additional premium
channel offerings such as Encore and Bravo), as well as a variety of digital
music channels. In areas serviced with H2H or HQT, the Company generally offers
only a combined digital service which would include both the Entertainment and
Cinema tiers, as well as a variety of digital music channels.

While the Company also offers advanced telecommunications services (including
Internet services as discussed below), it anticipates that monthly subscriber
fees from cable television will continue to constitute the majority of its total
revenues for the foreseeable future.

INTERNET SERVICES:

As of December 31, 2002 the Company had the capability of providing its
high-speed Internet service, via either one-way or two-way, to approximately 60%
of its basic cable subscribers. In addition, the Company, as of December 31,
2002, was offering its traditional dial-up Internet services to over half of its
cable subscribers.

The two-way high-speed Internet service, which utilizes a cable modem, provides
Internet access at speeds up to 1.5 Megabits per second. The two-way high-speed
Internet service does not require a phone line for access since all
transmissions are through the customers' cable television equipment. The one-way
high-speed Internet service is a hybrid between the two-way high-speed and
traditional dial-up services. With the one-way high-speed Internet service, the
customer sends information over a traditional phone line but receives
information over the cable lines. Thus, while the upstream connection is at a
maximum speed of 56 Kilobits per second, the downstream access can achieve
speeds up to 1.5 Megabits per second. The traditional dial-up Internet service
offered by the Company is similar to dial-up services offered by companies such
as America Online or The Microsoft Network. With dial-up Internet service, the
customer sends and receives information over a traditional phone line with
speeds up to 56 Kilobits per second.

Monthly rates charged to Internet customers vary based on the type of service
they receive. Generally, a discount is given to those Internet customers who
also receive the Company's cable television service. At December 31, 2002, the
Company's monthly Internet


                                      -11-

<PAGE>

rate (not including special promotions) varied from $17.95, for a dial-up
customer who also receives cable television, to $61.95 for high-speed commercial
customers.

CUSTOMER SERVICE AND MARKETING:

The Company emphasizes customer service, which it believes is increasingly
important to the successful operation of its business. To meet its objective of
providing high levels of customer service, the Company offers its customers a
full line-up of programming, timely and reliable service, and good picture
quality. The Company's employees receive ongoing training in customer service,
sales and subscriber retention, and technical support. Customer service
representatives, customer care specialists and technicians are also trained to
market upgrades at the point of sale or service. In addition, the Company has
attempted to establish and maintain a local presence and visibility within the
communities it serves.

As part of its efforts to maximize cash flow, and in response to increasing
competition, the Company has attempted to add and retain subscribers and
increase cash flow per subscriber by aggressively marketing its basic and
premium service offerings as well as its Internet and digital services. To this
end, the Company utilizes a number of coordinated marketing techniques,
including (i) direct door to door sales, (ii) direct mail, (iii) local newspaper
and radio advertising and cable system promotional advertising insertion in
certain satellite programs, and (iv) telemarketing and monthly billing statement
inserts. There can be no assurance that the Company's efforts in this area will
be successful. See "- Competition" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Risk Factors."

TECHNICAL OVERVIEW:

The following table sets forth certain information, as of December 31, 2002,
regarding the analog channel capacities and miles of plant of the Systems:

<TABLE>
<CAPTION>
                                       300 MHZ         330 MHZ         400 MHZ        450 MHZ         750 MHZ
                                      UP TO 36        UP TO 42        UP TO 54        UP TO 62       UP TO 100
                                      CHANNELS        CHANNELS        CHANNELS        CHANNELS       CHANNELS          TOTAL
                                      --------        --------        --------        --------       --------          -----
<S>                                   <C>             <C>             <C>             <C>            <C>               <C>
Number of headends (1)                      10              16               1             12               9              48
Number of subscribers as of
   December 31, 2002 (1)                 6,056           8,635             406         25,484          24,296          64,877
% of subscribers                          9.3%           13.3%            0.6%          39.3%           37.5%          100.0%
Miles of Plant                             369             629               6          1,415           1,002           3,421
% of miles of plant                      10.8%           18.4%            0.2%          41.4%           29.2%          100.0%
</TABLE>


     (1) Some of the Company's headends have subscribers on multiple bandwidth
         levels. In these instances the headend has been included in the highest
         bandwidth category offered but the subscribers have been allocated to
         their actual bandwidth category.

The Company has upgraded certain of its cable television systems to further
strengthen its position as the preferred provider of video services in the
communities it serves. These upgrades, which employ fiber optic technology,
increase the bandwidth of the Company's cable plant generally to 750 MHz,
thereby increasing channel capacity, enhancing signal quality and improving
technical reliability. The Company believes the upgrades enable it to offer
comparable or superior video service and quality at attractive pricing levels
relative to its competitors, such as DBS.

As of December 31, 2002, the Company had completed the 750 MHz upgrades to cable
plant serving approximately 37% of its basic subscribers and has also
supplemented a portion of its 450 MHz cable plant with fiber to approximately
11% of its subscribers. This gives the Company the ability to provide advanced
telecommunications services to nearly one-half of its basic subscriber base.

The Company is continually in the process of identifying other areas within its
Systems which can be upgraded to allow for the introduction of advanced
telecommunications services. However, the Company will only proceed with
upgrades which it believes are economically feasible after carefully weighing
the anticipated revenues against the costs of completing the upgrade.

The Company utilizes a "trap" scheme whereby a technician installs filters, or
traps, at each cabled home enabling the technician to configure the programming
received by each subscriber. Also, the Company will enable digital addressable
technology to as many of its subscribers as possible to take advantage of the
HITS, H2H or HQT services. These services transmit digitally compressed signals
of niche satellite programming, multiplexed premium services, pay-per-view
movies and music.

While some of the Company's Systems are wired exclusively with coaxial cable,
many of the Systems utilize fiber optic cable in conjunction with coaxial cable.
Fiber optic strands are capable of carrying hundreds of video, data and voice
channels over extended




                                      -12-

<PAGE>

distances without the extensive signal amplification typically required for
coaxial cable. The Company plans to use an HFC design across those portions of
its cable plant that serve its highest subscriber densities to most efficiently
upgrade the Systems. Additionally, the Company plans to use fiber optic
technology to interconnect certain headends and install fiber backbones to
reduce amplifier cascades, thereby gaining operational efficiencies and
improving picture quality and system reliability.

FRANCHISES:

Cable television systems are generally constructed and operated under
non-exclusive franchises granted by local governmental authorities. These
franchises typically contain many conditions, including; (i) time limitations on
commencement and completion of construction, (ii) conditions of service,
including number of channels, types of programming and the provision of free
service to schools and certain other public institutions and (iii) the
maintenance of insurance and indemnity bonds. Certain provisions of local
franchises are subject to federal regulation under the Cable Communications
Policy Act of 1984 (the "1984 Cable Act"), the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"), and the
Telecommunications Act of 1996 (the "1996 Telecom Act").

At December 31, 2002, the Company held 118 franchises. These franchises, most of
which are non-exclusive, generally provide for the payment of fees to the
issuing authority. Annual franchise fees range up to 5% of the gross revenues
generated by a System. For the past three years, franchise fee payments made by
the Company have averaged approximately 2.4% of total gross System revenues.
Franchise fees are generally passed directly through to the customers on their
monthly bills. General business or utility taxes may also be imposed in various
jurisdictions. The 1984 Cable Act prohibits franchising authorities from
imposing franchise fees in excess of 5% of gross revenues and also permits the
cable operator to seek renegotiation and modification of franchise requirements
if warranted by significantly changed circumstances. Most of the Company's
franchises can be terminated prior to their stated expirations for uncured
breaches of material provisions.

The following table sets forth the number of franchises by year of franchise
expiration and the number and percentage of basic subscribers at December 31,
2002:

<TABLE>
<CAPTION>
                                                     PERCENTAGE            NUMBER           PERCENTAGE
             Year of                 Number of        of Total            of Basic        of Total Basic
       Franchise Expiration          Franchises      Franchises          Subscribers       Subscribers
       --------------------          ----------      ----------          -----------       -----------
<S>                                  <C>             <C>                 <C>              <C>
Prior to 2005 (1)                        14                   10.6%               9,606              14.8%
2005 - 2009                              42                   31.8               23,275              35.9
2010 - 2013                              27                   20.5                9,431              14.5
2014 and after                           31                   23.5               17,249              26.6
No expiration date                        4                    3.0                1,509               2.3
                                   --------------- ----------------   ------------------ -----------------
     Subtotal                           118                   89.4               61,070              94.1
No franchise required                    14                   10.6                3,807               5.9
                                   --------------- ----------------   ------------------ -----------------
     Total                              132                  100.0%              64,877             100.0%
                                   =============== ================   ================== =================
</TABLE>

         (1)  Included in this category are four franchises that expired prior
              to December 31, 2002. These franchises include Beaverton, AL (34
              subscribers); Atoka / Coal County, OK (710 subscribers), which has
              issued continuous three month extensions; McIntosh, FL (158
              subscribers); and, Newton, TX (250 subscribers). The Company is
              currently in negotiations with each of these franchising
              authorities and believes that each franchise will be renewed
              during 2003 without substantial cost or modification.

The Company believes that it has good relationships with its franchising
authorities. To date, the Company has never had a franchise revoked for any of
its Systems, and no request by the Company for a franchise renewal or extension
has been denied, although such renewals and extensions have frequently entailed
mutually acceptable franchise modifications. The Company is currently in the
process of seeking the renewal of its expiring franchises, however, there can be
no assurance that it will be successful in renewing all of its franchises in the
future.

The 1984 Cable Act provides for, among other things, an orderly franchise
renewal process in which renewal of franchise licenses issued by governmental
authorities will not be unreasonably withheld, or, if renewal is withheld and
the franchise authority chooses to acquire the system or transfer ownership to
another person, such franchise authority or other person must pay the operator
either (i) the "fair market value" (without value assigned to the franchise) for
the system covered by such franchise if the franchise did not exist before the
effective date of the 1984 Cable Act (December 1984) or the franchise was
pre-existing but the franchise agreement did not provide for a buyout or (ii) in
the case of pre-existing franchises with buyout provisions, the price set forth
in such franchise agreements. In addition, the 1984 Cable Act established
comprehensive renewal procedures which require that an incumbent franchisee's
renewal application be assessed on its own merits and not as part of a
comparative process with competing applications.


                                      -13-

<PAGE>
The 1984 Cable Act also established buyout rates for franchises which post-date
the existence of the 1984 Cable Act or pre-date the 1984 Cable Act but the
franchise agreement does not contain buyout provisions; in the event the
franchise is terminated "for cause" and the franchise authority desires to
acquire the system, the franchise authority must pay the operator an "equitable"
price. To date, none of the Company's franchises has been terminated.

The 1992 Cable Act prohibits the award of exclusive franchises, prohibits
franchising authorities from unreasonably refusing to award additional
franchises and permits them to operate cable systems themselves without
franchises. 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. State and
local authorities retain authority to manage the public rights of way and
"competitively neutral" requirements concerning right of way fees, universal
service, public safety and welfare, service quality, and consumer protection are
permitted with respect to telecommunications services.

COMPETITION:

Cable television systems face competition from alternative methods of receiving
and distributing television signals and from other sources of news, information
and entertainment such as off-air television broadcast programming, DBS
services, wireless cable services, newspapers, movie theaters, live sporting
events, online computer services and home video products, including DVD and
videotape players. The extent to which a cable communications system is
competitive depends, in part, upon the cable system's ability to provide, at a
reasonable price to customers, a greater variety of programming and other
communications services than those which are available off-air or through other
alternative delivery sources and upon superior technical performance and
customer service.

Cable television systems generally operate pursuant to franchises granted on a
nonexclusive basis. The 1992 Cable Act prohibits franchising authorities from
unreasonably denying requests for additional franchises and permits franchising
authorities to operate cable television systems without a franchise. It is
possible that a franchising authority might grant a second franchise to another
company containing terms and conditions more favorable than those afforded the
Company.

Well-financed businesses from outside the cable industry (such as the public
utilities that own the poles to which cable is attached) may become competitors
for franchises or providers of competing services. Congress has repealed the
prohibition against national television networks owning cable systems, and
telephone companies may now enter the cable industry as described below. In
addition, beginning in 1997, there has been a significant increase in the number
of cities that have constructed their own cable television systems in a manner
similar to city-provided utility services. These systems typically will compete
directly with the existing cable operator without the burdens of franchise fees
or other local regulation. Although the total number of municipal overbuild
cable systems remains small, there appears to be an increasing trend in cities
authorizing such direct municipal competition with cable operators.

In recent years, the Federal Communications Commission ("FCC") and Congress have
adopted policies providing a more favorable operating environment for new and
existing technologies that provide, or have the potential to provide,
substantial competition to cable television systems. These technologies include,
among others, DBS service, whereby signals are transmitted by satellite to
satellite dishes as small as eighteen inches located on the customers' premises.
Programming is currently available to the owners of DBS dishes through
conventional, medium and high-powered satellites. DBS systems have increased
capacity to hundreds of channels, enabling them to provide movies, broadcast
stations, high-speed Internet access, and other programming services comparable,
or superior, to those of cable television systems. DBS is currently being
heavily marketed on a nationwide basis by two specific providers and is a
significant competitor to traditional hardline cable service providers,
including the Company.

The 1992 Cable Act contains provisions, which the FCC has implemented with
regulations, to enhance the ability of cable competitors to purchase and make
available to home satellite dish owners certain satellite delivered cable
programming at competitive costs. Digital satellite service ("DSS") offered by
DBS systems has certain advantages over cable systems with respect to
programming and digital quality, as well as disadvantages that include high
costs for additional outlets and a lack of local broadcast programming in
smaller markets, service and equipment distribution. With respect to local
broadcast television programming, recent legislation has removed legal obstacles
to the retransmission of such programming to DBS subscribers. DBS providers are
now making local broadcast programming available in certain larger markets.
Rural loan legislation was recently enacted to make local broadcast programming
available to DBS subscribers in smaller markets. In rural markets it may not be
cost effective for DBS providers to provide local programming unless it is
subsidized by the federal government. DBS companies now need to secure
retransmission consent from the popular broadcast stations they wish to carry,
and in January of 2002 began facing mandatory carriage obligations of less
popular broadcast stations. The DBS industry initiated a judicial challenge to
the 2002 requirement mandating carriage of less popular broadcast stations. This
lawsuit alleges that the requirement (similar to the one applicable to cable
systems) is unconstitutional. The federal district court and circuit court both
rejected the constitutional challenge, but the DBS industry is now seeking
review by the U.S. Supreme Court. The Company's strategy of providing
pay-per-view and satellite niche programming, via its HITS, H2H and HQT
applications, in certain of its Systems is designed to combat DSS competition.
"Bundling" of the Company's video service with Internet services and other
advanced telecommunications services in certain of the Company's Systems may
also be

                                      -14-
<PAGE>
an effective tool for combating DSS competition. The principal DBS systems with
which the Company's Systems compete are DirectTV and Echostar, both of which
continue to grow in popularity through heavy emphasis on marketing and
promotions.

Cable television systems also compete with wireless program distribution
services such as multichannel multipoint distribution service ("MMDS") which
uses low power microwaves to transmit video programming and high-speed data
services, including Internet access, over the air to customers. Wireless
distribution services generally provide many of the programming services
provided by cable systems, and digital compression technology has increased
significantly the channel capacity of the systems. Because MMDS service requires
unobstructed "line of sight" transmission paths, the ability of such wireless
distribution systems to compete may be hampered in some areas by physical
terrain and foliage. Although prohibitive topography and limited "line of sight"
access have limited competition from wireless distribution systems in a majority
of the Company's franchise service areas, the Company has, in the past,
experienced such competition in portions of its Systems in Oklahoma, Texas,
Louisiana and Florida. The FCC has just initiated a proceeding to revise its
rules for these wireless distribution systems (MMDS and ITFS) to enhance their
competitiveness and to encourage investment in wireless broadband services.

The 1996 Telecom Act eliminated the previous prohibition on the provision of
video programming by local exchange telephone companies ("LECs") in their
telephone service areas. Various LECs currently are seeking to provide video
programming services within their telephone service areas through a variety of
distribution methods, primarily through the deployment of broadband wire
facilities, but also through the use of wireless (MMDS) transmission. Cable
television systems could be placed at a competitive disadvantage if the delivery
of video programming services by LECs becomes widespread, since LECs may not be
required, under certain circumstances, to obtain local franchises to deliver
such video services or to comply with the variety of obligations imposed upon
cable television systems under such franchises. Issues of cross-subsidization by
LECs of video and telephony services also pose strategic disadvantages for cable
operators seeking to compete with LECs that provide video services. The Company
believes, however, that the small markets in which it provides, or expects to
provide, cable services are unlikely to support LEC competition in the provision
of video and broadband telecommunications services given the lower population
densities and higher costs per subscriber of installing plant.

Although LECs and cable operators can now expand their offerings across
traditional service boundaries, the general prohibition on LEC buyouts (i.e. any
ownership interest exceeding ten 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 remains in place. The 1996 Telecom Act
provides a few limited exceptions to this buyout prohibition, including a "rural
exemption." The 1996 Telecom Act also provides the FCC with limited authority to
grant waivers of the buyout prohibition (subject to local franchising authority
approval). The Company believes that significant growth opportunities exist by
establishing cooperative, rather than competitive, relationships with LECs
within service areas, to the extent permitted by law.

The entry of electric utility companies into the cable business, which was
authorized by the 1996 Telecom Act, could also have an adverse affect on the
Company's business. Electric utilities have reported recent progress in
developing power line communications that, if successful, would allow the
utilities to provide high-speed Internet access for both residential and
commercial applications. In addition, well capitalized businesses from outside
of the cable industry may become competitors for franchises or providers of
competing services.

Other new technologies may become competitive with non-entertainment services
that cable television systems can offer. The FCC has authorized television
broadcast stations to transmit textual and graphic information useful both to
consumers and businesses. The FCC also permits commercial and noncommercial FM
stations to use their subcarrier frequencies to provide non-broadcast services
including data transmissions. The FCC has established an over-the-air
Interactive Video and Data Service that will permit two-way interaction with
commercial and educational programming along with informational and data
services. The expansion of fiber optic systems, as well as the increase in DSL
services, by LECs and other common carriers provide facilities for the
transmission and distribution to homes and businesses of video services and
high-speed Internet services. In addition, wireless Internet access is now
offered in some markets by cellular, PCS and other mobile service providers.
High-speed Internet access also facilitates the streaming of video into homes
and businesses. As the quality and availability of video streaming over the
Internet improves, it may compete with traditional delivery by cable systems. It
is possible that programming suppliers will consider bypassing cable operators
and market their services directly to the consumer through the Internet.

Advances in communications technology as well as changes in the marketplace and
the regulatory and legislative environments are constantly occurring. Thus, it
is not possible to predict the effect that ongoing or future developments might
have on the cable industry or on the operations of the Company.

As described above, cable television systems face competition from alternative
methods of receiving and distributing television signals, from other sources of
news, information and entertainment, and from other cable television systems
that have authority to build and operate cable television systems within the
same geographic territories as the Company (typically referred to as
"overbuilds"). In such overbuild situations the Company may be in competition
with municipalities or public or private entities that may be better
capitalized. Although the total number of such overbuilt areas with the
Company's operations remains small,

                                      -15-
<PAGE>

overbuilds in Lafayette, Alabama and Alachua, Florida have resulted in a loss of
approximately 600 subscribers as well as reduced subscription rates in these
areas. The Company is responding to this competition through the introduction of
advanced telecommunication services and aggressive marketing campaigns.

LEGISLATION AND REGULATION:

General. The operation of cable television systems is extensively regulated by
the FCC, some state governments and most local governments. The 1996 Telecom Act
altered the regulatory structure governing the nation's telecommunications
providers. It removed 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 required the FCC to undertake a host of implementing
rulemakings. Moreover, Congress and the FCC have frequently revisited the
subject of cable regulation. Future legislative and regulatory changes could
adversely affect the Company's operations. This section briefly summarizes key
laws and regulations affecting the operation of the Company's Systems and does
not purport to describe all present, proposed, or possible laws and regulations
affecting the Company or its Systems.

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 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 formerly administered rate regulation of cable programming service tiers
("CPST"), which typically contain satellite-delivered programming. However, the
1996 Telecom Act eliminated CPST regulation effective March 31, 1999.
Accordingly, the FCC cannot act on CPST rate increases that occur after that
date.

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 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 products. 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.

In an effort to ease the regulatory burden on small cable systems, the FCC
created special rate rules applicable for systems with fewer than 15,000
subscribers owned by an operator with fewer than 400,000 subscribers. The
special rate rules allow for a vastly simplified cost-of-service showing. The
Company is eligible for these simplified cost-of-service rules, and has
calculated its rates generally in accordance with those rules.

Although FCC regulation of CPST rates for all systems (regardless of size)
expired on March 31, 1999, critics of the cable television industry have called
for more rigorous rate regulation (including limits on programming cost
pass-throughs to cable subscribers) until a greater degree of competition to
incumbent cable operators has developed. 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 the 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 if the operator provides telecommunication
services, as well as cable services, over its


                                      -16-

<PAGE>

plant. The FCC clarified that a cable operator's provision of Internet service
through its cable plant does not affect its favorable pole rates and the U.S.
Supreme Court upheld that position. Despite a recent favorable court ruling,
utilities continue to challenge the cable television pole rates under the theory
that they do not provide just compensation (See "Item 3 -- Legal Proceedings").

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
telecommunication carriers. A number of implementation details are subject to
ongoing regulatory and judicial review, but the basic requirement is now well
established.

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. LECs 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, a LEC, utility company, 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 an election is made to provide the video programming via
an "open video system" ("OVS"). To qualify for OVS status, two-thirds of the
system's activated channels must be reserved for unaffiliated entities. In
addition, the FCC has revised its open video system policy to leave franchising
discretion to state and local authorities. It is unclear what effect this ruling
will have on the entities pursuing OVS operation.

Although LECs and cable operators can now expand their offerings across
traditional service boundaries, the general prohibition on LEC buyouts (that is,
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 remains in place. The 1996 Telecom Act
provides a few limited exceptions to this buyout prohibition, including a "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 companies.

Additional Ownership Restrictions. The 1996 Telecom Act eliminated statutory
restrictions on broadcast/cable cross-ownership (including broadcast
network/cable restrictions), but left in place existing FCC regulations
prohibiting local cross-ownership between co-located television stations and
cable systems. The District of Columbia Circuit Court of Appeals subsequently
struck down this remaining cross-ownership prohibition, and, thus, the FCC has
eliminated the prohibition. In the same decision, the Court struck down another
FCC regulation precluding any entity from operating broadcast television
stations serving more than 35% of the nation. The FCC is currently reconsidering
this broadcast ownership cap in connection with a review of other broadcast
ownership regulations. If these restrictions are relaxed they may trigger
additional consolidation among domestic media companies. The 1996 Telecom Act
leaves in place existing restrictions on cable cross-ownership with satellite
master antenna television ("SMATV") and MMDS facilities, but lifts those
restrictions where the cable operator is subject to effective competition. FCC
regulations permit cable operators to own and operate separate 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 established a nationwide
ownership cap on any cable operator equal to 30% of all nationwide subscribers
to multichannel video programming distributors, including cable and DBS
subscribers. The District of Columbia Court of Appeals recently struck down both
rules as unconstitutional. The FCC is now considering revising these rules.

There are no federal restrictions on non-U.S. entities having an ownership
interest in cable television systems or the FCC licenses commonly employed by
such systems.

Must Carry/Retransmission Consent. The 1992 Cable Act conveyed to a commercial
broadcaster the right generally to elect every three years either to require (i)
the local cable operator to carry its signals ("must carry") or (ii) that such
operator obtain the broadcaster's retransmission consent before doing so. In
order to satisfy these requirements the Company has agreed, in limited
circumstances, to the direct payment of nominal fees for carriage and, again in
limited circumstances, to carry satellite-delivered cable programming which is
affiliated with the network carried by such stations. Currently, the Company has
agreements in place for the majority of its broadcast channels and is involved
in ongoing discussions with the balance of the broadcasters to obtain an
agreement. The Company believes that it will be able to reach an agreement with
the majority of the remaining broadcasters so that its compliance



                                      -17-

<PAGE>
with the "retransmission consent" and "must carry" provisions of the 1992 Cable
Act will not have a material effect on its operations, although this result may
change in the future depending on such factors as market conditions, channel
capacity and similar matters when such arrangements are renegotiated. In
particular, the burden associated with must carry obligations could dramatically
increase if television broadcast stations proceed with planned conversions to
digital transmissions and if the FCC determines that cable systems must
simultaneously carry all analog and digital signals transmitted by the
television stations during the multi-year transition in which a single broadcast
licensee is authorized to transmit both an analog and digital signal. The FCC
tentatively decided against imposition of dual digital and analog must carry in
a January 2001 ruling. At the same time, however, it initiated further
fact-gathering which ultimately could lead to a reconsideration of that
tentative conclusion. A rulemaking is now pending at the FCC regarding the
imposition of dual digital and analog must carry provisions. The FCC is also
considering whether it should maintain its initial ruling that, whenever a
digital broadcast signal does become eligible for must carry, a cable operator's
obligation is limited to carriage of a single digital video signal. If the FCC
reverses itself, and cable operators are required to carry ancillary digital
feeds, the burden associated with digital carry could be significantly
increased.

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 this
designated channel capacity, but, to date, use of commercial leased access
channels has been relatively limited.

Access to Programming. To spur the 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 limits the
ability of vertically integrated cable programmers to offer exclusive
programming arrangements to cable companies. The FCC recently extended this
prohibition to October 2007. Both Congress and the FCC have considered proposals
that would expand the program access rights of cable's competitors, including
the possibility of subjecting both terrestrially delivered video programming,
and video programmers who are not affiliated with cable operators, to all
program access requirements. Pursuant to the Satellite Home Viewer Improvement
Act, the FCC has adopted regulations governing retransmission consent
negotiations between broadcasters and all multichannel video programming
distributors, including cable and DBS.

Inside Wiring. The FCC has 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. These rules make it
easier for a MDU complex owner to terminate service from an incumbent cable
operator in favor of a new entrant and make the already competitive MDU sector
even more challenging for incumbent cable operators. In a separate proceeding,
the FCC has preempted restrictions on the deployment of private antennas,
including DBS receivers, 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 cable systems and facilities licensing, maintenance
of various records and public inspection files, frequency usage, lockbox
availability, antenna structure registration, tower marking and lighting,
consumer protection and customer service standards, technical standards,
consumer electronics equipment compatibility, and Emergency Alert Systems
("EAS"). The FCC requires that cable customers be allowed to purchase cable
converters from third party vendors, and established a multi-year phase-in,
which began on July 1, 2000, during which security functions (which would remain
in the operator's exclusive control) would be unbundled from basic converter
functions (which could then be satisfied by third party vendors). 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. The EAS obligations referred to above became effective for small
operators, such as the Company, in October 2002. The expense of installing
equipment capable of providing EAS service in the Company's Systems is
prohibitive, especially in its smaller Systems. As a result, the Company has
obtained waivers, from the FCC, of 12 to 36 months for 38 of its smaller
Systems.

The FCC is currently conducting a rulemaking in which it is considering adopting
rules to help implement a recent agreement between major cable operators and
manufacturers of consumer electronics on "plug and play" digital televisions.
The proposed rules would require cable operators to provide "point of
deployment" security modules and provide support to customer-owned digital
televisions and similar devices already equipped with built-in-set-top box
functionality. The rules would also permit the offering of digital programming
with certain copy controls built into the program, subject to limitations on the
use of those copy controls. These proposed restrictions, if adopted, would apply
equally to cable operators and to other MVPDs, such as DBS.

                                      -18-
<PAGE>

Internet Service Regulation. Following several inconsistent judicial decisions
regarding the proper regulatory treatment of cable delivered Internet service,
in March 2002 the FCC ruled that cable modem service is an interstate
information service, rather than a cable or telecommunications service. This
classification should, at least initially, leave cable modem service exempt from
the burdens associated with traditional cable and telecommunications
regulations. Indeed, the FCC suggested that, regardless of classification,
regulatory forbearance should now apply to cable modem service.

The FCC simultaneously initiated a rulemaking to decide several key issues
relating to state and local regulation of cable modem service. In the
rulemaking, the FCC tentatively concluded that (i) revenues from cable modem
service are not to be included for purposes of calculating cable franchise fees
paid to franchisors and (ii) cable systems offering cable modem service require
no additional franchise authority to access the public rights-of-way. The
rulemaking inquires whether the FCC has jurisdiction and justification to
require forced access to cable facilities by unaffiliated entities to provide
competitive modem service. It also asks whether there are reasons different
regulatory regimes should apply to Internet service offered by a telephone
provider and Internet service offered by a cable operator. The FCC's
classification, and proposed rules, have been appealed by state and local
governments, and it is premature to predict the outcome of these proceedings.

The full consequences of classifying cable modem service as an interstate
information service are not yet fully known. The FCC is already considering
whether providers of cable modem service should contribute to the federal
government's universal service fund. This contribution could more than offset
the savings associated with excluding cable modem services from local franchise
fee assessments. The FCC also initiated a rulemaking proceeding to determine
whether its jurisdiction over information services still might warrant
imposition of open access requirements in the future. Finally, the information
services classification itself is subject to judicial review. If regulators
ultimately were allowed to impose Internet access requirements on cable
operators, it could burden the capacity of cable systems and complicate the
Company's plans for providing Internet services.

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 (which 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 on broadcast
signals. The possible modification or elimination of this compulsory copyright
license is the subject of continuing legislative review and could adversely
affect the Company's ability to obtain desired broadcast programming. In
addition, the cable industry pays music licensing fees to BMI and 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. 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 other than identifying broad
categories of programming. The FCC has tentatively concluded that modem service
revenues should not be included in gross revenues when calculating cable
franchise fees. This is not yet a final ruling and franchisors have appealed the
FCC's position.

Federal law contains renewal procedures designed to protect incumbent
franchisees 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. However, there
can be no assurance that renewal will be granted or that renewals will be made
on similar terms and conditions.

Various proposals have been introduced at the state and local levels with regard
to the regulation of cable television systems, and a number of states have
adopted legislation subjecting cable television systems to the jurisdiction of
state governmental agencies. Tennessee and Florida, states where the Company
operates Systems, have enacted legislation with respect to the regulation of
cable television systems. In addition, a number of communities that the Company
serves have adopted local rate regulation and customer service ordinances.



                                      -19-

<PAGE>
INSURANCE:

The Company has insurance covering risks incurred in the ordinary course of
business, including general liability, property coverage and business
interruption insurance. As is typical in the cable television industry, the
Company does not maintain insurance covering its underground plant. Because of
the industry-wide casualty insurance reductions that resulted from insurers'
loss experience with several hurricanes in the southeastern portion of the
United States, the Company's casualty insurance in Florida and Louisiana was
ultimately reduced to $1 million per occurrence. All of the Company's casualty
insurance coverage is subject to deductibles ranging between $10,000 and
$100,000 per occurrence. The Company believes that its Systems in Florida and
Louisiana are located in areas that are not subject to a high degree of risk
from hurricanes, or from ice storms (which do pose a significant risk for its
Systems in other areas), and that losses in excess of its existing coverage
would be unlikely. If the Company is unable to maintain adequate casualty
insurance it will be subject to a potential reduction in cash flow in the event
of a loss in excess of its policy limits, and if a significant loss were to
occur, it could have a material adverse effect on the Company's financial
condition and results of operations. Notwithstanding the foregoing, the Company
believes that the amounts and types of its insurance coverage are commercially
reasonable given the nature and types of the Company's business and properties.

EMPLOYEES:

At December 31, 2002, the Company had approximately 191 full-time employees and
10 part-time employees. None of the Company's employees are represented by a
labor union. The Company considers its relations with its employees to be good.

ITEM 2. PROPERTIES

A cable television system consists of four principal operating components. The
first component, known as the headend, receives television, radio and
information signals by means of special antennas and satellite earth stations.
The second component, the distribution network, which originates at the headend
and extends throughout the system's service area, consists of microwave relays,
coaxial or fiber optic cables placed on utility poles or buried underground and
associated electronic equipment. The third component of the system is a "drop
cable," which extends from the distribution network into each customer's home
and connects the distribution system to the customer's television set. The
fourth component, a converter, is the home terminal device that either expands
channel capacity to permit reception of more than twelve channels of programming
(for analog channels) or permits the subscriber to receive digital services such
as HITS, H2H or HQT.

The Company's principal physical assets consist of cable television systems,
including signal-receiving, encoding and decoding apparatus, headends,
distribution systems and subscriber house drop equipment for each of its
Systems. The signal receiving apparatus typically includes a tower, antenna,
ancillary electronic equipment and earth stations for reception of satellite
signals. Headends, consisting of associated electronic equipment necessary for
the reception, amplification and modulation of signals, are located near the
receiving devices. The Company's distribution systems consist primarily of
coaxial cable and related electronic equipment. As the upgrades are completed,
the Systems will incorporate fiber optic cable. Subscriber equipment consists of
taps, house drops and converters. The Company owns its distribution systems,
various office fixtures, test equipment and certain service vehicles. The
physical components of the Systems require maintenance and periodic upgrading to
keep pace with technological advances.

The Company's cables generally are attached to utility poles under pole rental
agreements with local public utilities, although in some areas the distribution
cable is buried in underground ducts or trenches. The FCC regulates most pole
attachment rates under the federal Pole Attachment Act (See "Part I -- Item 3.
Legal Proceedings" and "Part I -- Item 1. Business -- Legislation and
Regulation").

The Company owns or leases parcels of real property for signal reception sites
(antenna towers and headends), microwave complexes and business offices. The
Company believes that its properties, both owned and leased, are in good
condition and are suitable and adequate for the Company's business operations as
presently conducted.

ITEM 3.  LEGAL PROCEEDINGS

The Company is a party to ordinary and routine litigation proceedings that are
incidental to the Company's business. Management believes that the outcome of
all pending legal proceedings will not, in the aggregate, have a material
adverse effect on the financial condition or results of operations of the
Company.

In 2001, the FCC granted a pole attachment complaint brought by the Company, and
other Alabama cable operators, against Alabama Power Company ("APC"). The
Company initiated the complaint as a result of APC's imposition of significant
pole rental rate increases (more than 500% for the Company), APC's refusal to
engage in good faith negotiations and the threat, by APC, to terminate existing
pole attachment agreements. APC, and other pole companies, appealed the FCC
order to the U.S. Court of Appeals for the Eleventh Circuit. On November 14,
2002, the Eleventh Circuit issued its decision rejecting APC's appeal and
reaffirming the rulings of the FCC in favor of the Company. Although the
Eleventh Circuit denied APC's request to re-hear the case, the Court
nevertheless stayed the effect of the decision outside of the Eleventh Circuit
while APC appeals to the United States Supreme Court. It is anticipated that the
United State Supreme Court will decide whether it will hear the case by the Fall
of 2003.

                                      -20-
<PAGE>

Other electric utilities have also proposed substantial pole attachment rental
rate increases. For example, Georgia Power Company, an affiliate of APC, which
also provides pole attachments to the Company, has proposed an even greater
increase than APC, as well as an onerous new pole attachment agreement. A
complaint, filed by the Company and other Georgia cable operators, is currently
pending at the FCC. On October 8, 2002, the FCC rejected the same Georgia Power
pole rental rate in a separate legal proceeding not involving the Company.
Depending on the final outcome of these proceedings, as well as other disputes
that may arise in the future, the Company could experience a significant
increase in its pole attachment rental costs. Such an increase, if ultimately
supported by a final, non-appealable order by a court of competent jurisdiction,
could negatively affect the Company's operations.

On October 31, 2001, Echostar Satellite Corporation ("ESC") filed a suit against
James Cable Partners, L.P. in U.S. District Court for the District of Colorado
alleging, among other things, unfair trade practices, and violations of the
Federal Communications Act of 1934 and The Digital Millennium Copyright Act.

In February 2002, the parties agreed to settle the case and entered into a
Confidential Settlement Agreement, which requires the Company to pay ESC
monetary consideration. The parties filed a Consent Motion for Entry of Final
Judgment and Permanent Injunction. On February 25, 2002, the court granted the
Consent Motion and entered the Final Judgment and Permanent Injunction as
submitted by the parties. The Final Judgment and Permanent Injunction included
only prospective injunctive relief and did not include any monetary judgment.
Under the Injunction, the Company will be enjoined in the future from taking
certain actions relating to Echostar's signals and satellites.

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

There were no matters submitted to a vote of James' limited partners or Finance
Corp.'s sole shareholder during the fourth quarter of 2002.

PART II

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

EQUITY INTERESTS:

Equity interests in James consist of a general partnership interest and limited
partnership interests. The general partnership interest represents 0.95% of
James' total partnership interest and the limited partnership interests
represent the balance of James' total partnership interest. James has been a
privately held entity since its formation in 1988 and no trading market exists
for either the general partnership interest or the limited partnership
interests. At December 31, 2002, there was one holder of the general partnership
interest and 17 holders of the limited partnership interests. See also "Part III
- Item 10. Directors and Executive Officers" and " - Item 12. Security Ownership
of Certain Beneficial Owners and Management." James has not made any
distributions of cash or property to any of its partners since the date of its
inception.

Equity interests in Finance Corp. consist of shares of its common stock, no par
value per share. Finance Corp. has been a privately held entity since its
formation and no trading market exists for such common stock. At December 31,
2002, 1,000 shares of common stock were issued and outstanding, all of which
were owned of record and beneficially by James. Finance Corp. has never paid or
declared a dividend.

ITEM 6.  SELECTED FINANCIAL DATA

The following table sets forth certain historical financial data for the Company
for each of the years in the five-year period ended December 31, 2002. The
financial data for the years ended December 31, 1998 to 2002 were derived from
the financial statements of the Company which have been audited by Deloitte &
Touche LLP, independent auditors. The financial statements of the Company at
December 31, 2001 and 2002 and for each of the years in the three-year period
ended December 31, 2002, together with the report of Deloitte & Touche LLP
thereon, appear elsewhere in this Form 10-K.


                                      -21-

<PAGE>

                             SELECTED FINANCIAL DATA
                 (AMOUNTS IN THOUSANDS, EXCEPT SUBSCRIBER DATA)

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31,
                                              1998 (14)        1999 (14)           2000             2001             2002
                                              ---------        ---------           ----             ----             ----
<S>                                        <C>                 <C>                 <C>              <C>              <C>
STATEMENT OF OPERATIONS DATA:
Revenues                                         $37,758          $37,372          $37,893          $39,807          $42,312
System operating expenses (1)                     19,410           20,445           22,011           25,064           26,817
Non-system operating expenses (2)                  2,960            2,831            2,134            2,091            2,124
Depreciation and amortization                      7,561            8,013            9,164           10,165            9,686
                                           ----------------------------------------------------------------------------------
Operating income                                   7,827            6,083            4,584            2,487            3,685
Interest expense, net                             11,026           11,020           11,213           12,340           13,451
General partner incentive payment                    ---              540              ---              ---              ---
Other expenses, net                                  112              109              109               17              ---
                                           ----------------------------------------------------------------------------------
Loss before gains on sales and
   extraordinary items                            (3,311)          (5,586)          (6,738)          (9,870)          (9,766)
Gains on sales of cable
   systems                                           ---           15,886              ---              ---              ---
Extraordinary gain due to
   extinguishment of debt                            ---              ---              ---            1,925              ---
                                           ----------------------------------------------------------------------------------
Net (loss) income                                ($3,311)         $10,300          ($6,738)         ($7,945)         ($9,766)
                                           ==================================================================================

OTHER DATA:
EBITDA (3)                                       $15,388          $14,096          $13,748          $12,652          $13,371
System operating cash flow (4)                    18,348           16,927           15,882           14,743           15,495
Capital expenditures                               9,171           11,767            9,181           11,601            3,050
EBITDA margin (5)                                  40.8%            37.7%            36.3%            31.8%            31.6%

CASH FLOW DATA:
Cash provided by operating
   activities                                     $5,133           $3,706           $2,579             $960             $435
Cash (used in) provided by
   investing activities                          (16,971)           3,671           (9,323)         (11,601)          (3,050)
Cash provided by (used in)
   financing activities                            3,400           (3,500)           2,500           10,110            6,418
                                           ----------------------------------------------------------------------------------
Net (decrease) increase in cash                  ($8,438)          $3,877          ($4,244)           ($531)          $3,803
                                           ==================================================================================

SUMMARY SUBSCRIBER DATA:
Homes passed (6)                                 138,040          129,600          129,600          130,000          130,000
Basic subscribers (7)                             84,755           71,864           69,875           68,492           64,877
Basic penetration (8)                              61.4%            55.5%            53.9%            52.7%            49.9%
Premium subscriptions (9)                         26,413           23,001           22,713           27,243           24,187
Premium penetration (10)                           31.2%            32.0%            32.5%            39.8%            37.3%
Average monthly total revenues
   per subscriber (11)                            $39.95           $41.56           $44.99           $48.00           $52.91
System operating cash flow per
   subscriber (12)                                  $233             $226             $226             $213             $233
EBITDA per subscriber (13)                          $195             $188             $196             $183             $201



<CAPTION>
                                                                            AT DECEMBER 31,
                                                   1998             1999             2000             2001             2002
                                                   ----             ----             ----             ----             ----
<S>                                            <C>                <C>             <C>              <C>              <C>
BALANCE SHEET DATA:
Cash and cash equivalents                         $1,465           $5,342           $1,099             $567           $4,370
Total assets                                      44,367           51,799           47,321           49,059           45,449
Total debt                                       103,500          100,000          102,500          111,500          118,000
Partners' deficit                                (69,022)         (58,183)         (64,914)         (72,859)         (82,625)
</TABLE>



                                      -22-

<PAGE>

NOTES TO SELECTED FINANCIAL DATA

(1)   System operating expenses exclude depreciation and amortization.
(2)   Non-system operating expenses consist primarily of management fees payable
      to the General Partner of the Company.
(3)   EBITDA represents operating income before depreciation and amortization.
      The Company has included EBITDA data (which are not a measure of financial
      performance under Generally Accepted Accounting Principles ("GAAP"))
      because it understands such data are used by certain investors to
      determine a company's historical ability to service its indebtedness. In
      addition, EBITDA is used by the Company to determine its compliance with
      certain debt related covenants (See "Item 7. Management's Discussion and
      Analysis of Financial Condition and Results of Operations -- Financial
      Condition, Liquidity and Capital Resources"). EBITDA should not be
      considered as an alternative to net income as an indicator of the
      Company's performance or as an alternative to cash flow as a measure of
      liquidity as determined in accordance with GAAP. In addition, the
      calculation of EBITDA for the Company (as detailed in the table below) may
      differ from EBITDA calculations of other companies.



<TABLE>
<CAPTION>
                       Calculation of EBITDA for the Company

                              (Amounts in thousands)

                                              Year Ended December 31,
                               1998        1999         2000        2001        2002
                               ----        ----         ----        ----        ----
<S>                            <C>         <C>          <C>         <C>         <C>
Operating income                $ 7,827     $ 6,083      $ 4,584     $ 2,487     $ 3,685
Add back depreciation and
     amortization                 7,561       8,013        9,164      10,165       9,686
                            -------------------------------------------------------------
EBITDA                          $15,388     $14,096      $13,748     $12,652     $13,371
                            =============================================================
</TABLE>

(4)   System operating cash flow represents revenues less system operating
      expenses. System operating cash flow should not be considered as an
      alternative to net income as an indicator of the Company's performance or
      as an alternative to cash flow as a measure of liquidity as determined in
      accordance with GAAP.
(5)   EBITDA margin represents EBITDA divided by revenues.
(6)   Homes passed refers to estimates by the Company of the number of dwelling
      units in a particular community that can be connected to the distribution
      system without any further extension of principal transmission lines. Such
      estimates are based upon a variety of sources, including billing records,
      house counts, city directories and other local sources.
(7)   For purposes of all information presented herein, unless otherwise
      indicated, the number of basic subscribers for the Systems has been
      computed by adding the actual number of subscribers for all non-bulk
      accounts and the equivalent subscribers for all bulk accounts. The number
      of such equivalent subscribers has been calculated by dividing aggregate
      basic service revenues for bulk accounts by the full basic service rate
      for the community in which the account is located. In addition, the basic
      subscriber number includes subscribers who are receiving the Company's
      services at promotional rates.
(8)   Basic subscribers as a percentage of homes passed.
(9)   A customer may purchase more than one premium service, each of which is
      counted as a separate premium subscription.
(10)  Premium subscriptions as a percentage of basic subscribers.
(11)  The average of the monthly total revenues divided by the number of basic
      subscribers at the end of such month during the twelve-month periods ended
      December 31 for each year presented.
(12)  System operating cash flow divided by the average number of basic
      subscribers for the period.
(13)  EBITDA divided by the average number of basic subscribers for the period.
(14)  The figures shown for 1998 reflect the Company's December 1998 purchase of
      its cable system serving Tazewell, Tennessee. The figures shown for 1999
      reflect the Company's March 1999 sales of its cable systems serving
      Wartburg, Tennessee and Forsyth and Monroe County, Georgia.



                                      -23-


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

The following discussion provides information regarding the Company's financial
condition at December 31, 2001 and 2002, and its results of operations for each
of the years ended December 31, 2000, 2001 and 2002. This discussion should be
read in conjunction with the consolidated financial statements of the Company,
and the notes thereto, which appear elsewhere herein.

OVERVIEW:

Due to its current financial condition and liquidity position, the Company
failed to pay the $5.375 million interest payment due February 15, 2003 on its
Notes. Moreover, because the Company failed to pay such interest payment on the
Notes by March 18, 2003, an event of default under the Indenture under which the
Notes were issued has occurred. Consequently, either the trustee under the
Indenture governing the Notes, or the holders of 25% in principal amount of the
Notes now outstanding, could declare such Notes to be immediately due and
payable.

It is to be noted that the event of default under the Indenture also constitutes
an event of default under the Company's senior credit facility. In addition, the
Company does not expect to be in compliance with the senior credit facility's
senior debt coverage ratio on March 31, 2003 when that ratio decreases from
2.2-to-1 to 2.1-to-1. Such defaults could lead to an acceleration of payment
demand by the Company's senior creditor. Acceleration of payment demands by the
Company's creditors would have a material adverse effect on the Company's
operations, liquidity and capital resources, and would require the Company to
seek restructuring through a Chapter 11 bankruptcy reorganization. The Company
is otherwise paying its day-to-day obligations.

The Company has retained Financo as a financial advisor to consider options
relating to refinancing and restructuring its existing debt. In this role,
Financo has begun discussions with the Company's senior lender and certain
holders of the Company's subordinated debentures to pursue a consensual
restructuring of the Company's debt. In the event a consensual restructuring of
the Company's debt cannot be achieved, and any of the Company's outstanding debt
is declared immediately due and payable, the Company would not be able to pay
such amounts and would seek to reorganize under the provisions of the federal
bankruptcy laws.

In conjunction with the year end audit of the Company's financial statements,
and due to the current financial condition and liquidity position of the Company
and the other matters described above, the Company's independent accountants
have issued an audit opinion with respect to the Company's 2002 financial
statements that includes an explanatory paragraph that expresses substantial
doubt about the Company's ability to continue as a going concern. The ability of
the Company to continue as a going concern will depend on whether the Company's
outstanding debt can be appropriately restructured. The financial statements and
other financial information of the Company included herein do not include any
adjustments that might result from the outcome of such uncertainties.

Revenues. The Company's revenues are primarily attributable to subscription fees
charged to subscribers to the Company's basic cable television programming
services. Basic revenues consist of monthly subscription fees for all services
(other than premium programming, Internet services and digital services) as well
as monthly charges for customer equipment rental. Premium revenues consist of
monthly subscription fees for programming provided on a per-channel basis.
Internet revenues consist of monthly subscription fees and cable modem
installation charges. Digital services revenue includes monthly subscription
fees for tiers of digital programming and fees charged for pay-per-view movies,
concerts and sporting events. In addition, other revenues are derived from
installation and reconnection fees charged to subscribers to commence service,
late payment fees, franchise fees, advertising revenues and commissions related
to the sale of goods by home shopping services. At December 31, 2002, the
Company had 64,877 basic subscribers and 24,187 premium subscriptions,
representing basic penetration of 49.9% and premium penetration of 37.3%. The
table below sets forth, for the periods indicated, the percentage of the
Company's total revenues attributable to the various sources:

<TABLE>
<CAPTION>
                                     YEAR ENDED DECEMBER 31,
                              2000             2001            2002
                              ----             ----            ----
<S>                     <C>              <C>             <C>
Basic                           79.1 %           74.9 %          72.3 %
Premium                          7.4              7.3             7.1
Internet                         5.1              8.2            10.2
Digital                          0.9              2.6             3.8
Other                            7.5              7.0             6.6
                        -------------    -------------   -------------
                               100.0 %          100.0 %         100.0 %
                        =============    =============   =============
</TABLE>

System Operating Expenses. System operating expenses are comprised of variable
operating expenses and fixed selling, service and administrative expenses
directly attributable to the Systems. Variable operating expenses consist of
costs directly attributable to providing cable, digital and Internet services to
customers and therefore generally vary directly with revenues. Variable
operating expenses include programming fees paid to suppliers of programming the
Company includes in its basic, premium and digital cable television services, as
well as expenses related to copyright fees, franchise operating fees and bad
debt expenses. Satellite

                                      -24-
<PAGE>

programming fees have historically increased at rates in excess of inflation due
in part to improvements in the quality of programming. Selling, service and
administrative expenses directly attributable to the Systems include the
salaries and wages of the field and office personnel, plant operating expenses,
office and administrative expenses and sales costs.

Non-System Operating Expenses. Non-system operating expenses consist primarily
of general overhead expenses which are not directly attributable to any one
System. These expenses include legal, audit and tax fees, an incentive bonus
pool accrual for the General Managers of the Systems and amounts paid to the
General Partner for management expenses.

Significant Leverage. At December 31, 2002, the Company's debt was $118.0
million, its total assets were $45.4 million, and its partners' deficit was
$82.6 million. During the period from December 31, 2000 to March 2, 2001, the
Company was in default of a debt to EBITDA ratio covenant under its credit
facility. During the period from February 15, 2001 to March 2, 2001, the Company
was also in default of its obligation to pay interest on its Notes. On March 2,
2001, the Company amended and restated its secured credit facility with new
lenders which will permit it to borrow up to $30 million. To date, all $30
million of the available credit has been drawn down to pay accrued interest on
the Company's Notes and to purchase $12 million (face amount) of those Notes
from affiliates of the lenders.

As a result of its significant leverage and its current financial condition, the
Company failed to make the February 15, 2003 interest payment due on its Notes.
Because the Company failed to make the interest payment on the Notes by March
18, 2003, an event of default occurred under the Indenture which governs the
Notes. Such event of default also constitutes an event of default under the
Company's senior credit facility. In addition, the Company expects that it will
fail to satisfy the facility's senior debt coverage ratio on March 31, 2003 when
that ratio decreases to 2.1-to-1 (See " -- Financial Condition, Liquidity and
Capital Resources" section for more details).

RESULTS OF OPERATIONS:

The following table sets forth the percentage relationship that the various
items bear to revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                        2000              2001              2002
                                                        ----              ----              ----
<S>                                                 <C>               <C>               <C>
     Revenues                                               100.0%            100.0%            100.0%
     System operating expenses                               58.1              63.0              63.4
     Non-system operating expenses                            5.6               5.3               5.0
     Depreciation and amortization                           24.2              25.5              22.9
                                                    --------------    --------------    --------------
     Operating income                                        12.1               6.2               8.7
     Interest expense, net                                   29.6              31.0              31.8
     Other expenses, net                                      0.3               0.0               0.0
                                                    --------------    --------------    --------------
     Loss before extraordinary item                         (17.8)            (24.8)            (23.1)
     Extraordinary gain due to
        extinguishment of debt                                 ---              4.8                ---
                                                    --------------    --------------    --------------
     Net loss                                               (17.8)%           (20.0)%           (23.1)%
                                                    ==============    ==============    ==============
     EBITDA margin                                           36.3%             31.8%             31.6%
</TABLE>

RESULTS OF OPERATIONS -- YEAR ENDED DECEMBER 31, 2002 VERSUS YEAR ENDED DECEMBER
31, 2001:

Revenues. Revenues increased by $2.5 million, or 6.3%, from $39.8 million in
2001 to $42.3 million in 2002. This increase is primarily the result of an
increase in the Company's basic, Internet and digital revenues from 2001 to
2002. Basic revenues increased by $800,000, or 2.7%, from 2001 to 2002 primarily
as a result of rate increases the Company has taken since January 1, 2001.
Internet revenues increased by $1.1 million, or 32.8%, from 2001 to 2002 as a
result of both an increase in Internet subscribers and a rate increase taken on
most high-speed Internet services during 2002. Digital revenues increased by
$600,000, or 56.6%, from 2001 to 2002 as a result of both an increase in digital
subscribers and a rate increase taken on most digital services during 2002. The
rate increases discussed above, as well as the increase in Internet and digital
subscribers, have caused the average total revenues per subscriber per month to
go from $48.00 in 2001 to $52.91 in 2002. Average basic revenues per subscriber
also increased going from $35.95 in 2001 to $38.28 in 2002.

Subscribers. At December 31, 2002 the Company had 64,877 subscribers which
represents a decrease of 3,615 from the 68,492 subscribers at December 31, 2001.
The Company believes that this decrease is largely the result of the increased
availability and affordability of competitive video services from satellite
dishes and other alternatives to traditional hardline cable service (See "Item
1. Business -- Competition"). The Company continues to respond to this
competition with the introduction of advanced telecommunications services and
aggressive marketing campaigns.








                                      -25-


<PAGE>
At December 31, 2002 the Company had approximately 8,000 high-speed Internet
customers and approximately 3,800 dial-up Internet customers, for a total of
approximately 11,800 Internet customers. This represents an increase of
approximately 1,400, or 14%, from the approximately 10,400 Internet customers at
December 31, 2001. In addition, the Company's digital services were in
approximately 9,000 of its basic subscribers' homes as of December 31, 2002 as
compared to a total of approximately 8,100 homes at December 31, 2001.

System Operating Expenses. System operating expenses increased 7.0% from $25.1
million in 2001 to $26.8 million in 2002. The primary reasons for this increase
are expenses associated with the Company's launch of digital services in many of
its systems, cost increases associated with higher programming rates and new
programming launched in conjunction with rate increases, and an increase in
technical expenses associated with additional staff and equipment repair costs
necessary to provide better customer service. As a percentage of revenues,
system operating expenses increased by .4% from 63.0% in 2001 to 63.4% in 2002.

Non-System Operating Expenses. Non-system operating expenses remained constant
at $2.1 million in 2001 and 2002.

EBITDA. As a result of the foregoing, EBITDA in 2002 was $13.4 million, an
increase of 5.7% from EBITDA in 2001 of $12.7 million.

Depreciation and Amortization. Depreciation and amortization decreased 4.7% from
$10.2 million in 2001 to $9.7 million in 2002. This net decrease resulted from a
$1.6 million reduction in amortization expense which is primarily the result of
the amortization on goodwill and franchise operating rights being terminated as
of January 1, 2002 pursuant to Statement of Financial Account Standards ("SFAS")
No. 142 (See "--Effect of New Accounting Pronouncements" below). The decrease in
amortization expense was partially offset by a $1.1 million increase in
depreciation expense resulting primarily from the capital expenditures made as a
part of the Company's Tennessee System upgrade as well as equipment costs
associated with Internet and digital installations.

Interest Expense, Net. Interest expense, net was $13.5 million in 2002 which
represents an increase of $1.1 million, or 8.9%, from 2001. This increase was
primarily the result of an increase of $1.0 million in the interest on
borrowings the Company had outstanding against its credit facility from 2001 to
2002.

Loss before Extraordinary Item. As a result of the foregoing factors, the
Company's loss before extraordinary item decreased from $9.9 million in 2001 to
$9.8 million in 2002.

Extraordinary Gain due to Debt Extinguishment. On March 2, 2001 the Company
purchased $12 million (face value) of its 10- 3/4% Series B Senior Notes from
affiliates of its credit facility lenders. These Notes were purchased at a
discounted price of .81 and, thus, the Company recognized an extraordinary gain
due to debt extinguishment in 2001 as follows:



<TABLE>
<S>                                                       <C>                <C>
Face value of Notes purchased                                                      $12,000,000
Purchase price of Notes                                           9,720,000
Unamortized value of costs associated
   with Notes                                                       354,688
                                                          ------------------
                        Subtotal                                                    10,074,688
                                                                             ------------------
Extraordinary gain on extinguishment of debt                                        $1,925,312
                                                                             ==================
</TABLE>



Net Loss.  As a result of the foregoing factors, the Company had a net loss of
$9.8 million in 2002 as compared to a net loss of $7.9 million in 2001.

RESULTS OF OPERATIONS -- YEAR ENDED DECEMBER 31, 2001 VERSUS YEAR ENDED DECEMBER
31, 2000:

Revenues. Revenues increased by $1.9 million, or 5.1%, from $37.9 million in
2000 to $39.8 million in 2001. This increase is primarily the result of an
increase in the Company's Internet and digital revenues of $2.0 million from
2000 to 2001 which was offset by a reduction in basic revenues for the same
periods. The decrease in the Company's basic revenues is a function of the
decrease in the Company's subscriber base discussed below as offset by rate
increases the Company has implemented over the past two years. These rate
increases have also increased the average basic revenues per subscriber per
month from $35.61 in 2000 to $35.95 in 2001.

Subscribers. At December 31, 2001 the Company had 68,492 subscribers which
represents a decrease of 1,383 from the 69,875 subscribers at December 31, 2000.
Of this total decrease in the Company's subscriber base, the Company estimates
that approximately 600 are attributable to overbuilds it has experienced in its
Lafayette, Alabama and Alachua, Florida systems by other franchised cable
operators. The Company believes that the remaining decrease of approximately 800
subscribers is a result of the increased availability and affordability of
competitive video services from satellite dishes and other alternatives to
traditional hardline

                                      -26-
<PAGE>




cable service (See "Item 1. Business -- Competition" for a discussion of both
items). The Company continues to respond to this competition with the
introduction of advanced telecommunications services and aggressive marketing
campaigns.

At December 31, 2001 the Company had approximately 6,400 high-speed Internet
customers and approximately 4,000 dial-up Internet customers, for a total of
approximately 10,400 Internet customers. This represents an increase of
approximately 3,200, or 44%, from the approximately 7,200 Internet customers at
December 31, 2000. In addition, the Company's digital services, either HITS, H2H
or HQT, were in approximately 8,100 of its basic subscribers' homes as of
December 31, 2001 as compared to a total of approximately 4,000 homes at
December 31, 2000.

System Operating Expenses. System operating expenses increased 13.9% from $22.0
million in 2000 to $25.1 million in 2001. The primary reasons for this increase
are expenses associated with the Company's marketing campaigns, expenses
associated with the Company's launch of digital services in many of its systems,
Internet cost increases associated with an increase in Internet customers, cost
increases associated with higher programming rates and new programming launched
in conjunction with rate increases, and an increase in the technical staff in
order to provide better customer service. As a percentage of revenues, system
operating expenses increased by 4.9% from 58.1% in 2000 to 63.0% in 2001.

Non-System Operating Expenses. Non-system operating expenses remained constant
at $2.1 million in 2000 and 2001.

EBITDA. As a result of the foregoing, EBITDA in 2001 was $12.7 million, a
decrease of 8.0% from EBITDA in 2000 of $13.8 million.

Depreciation and Amortization. Depreciation and amortization increased 10.9%
from $9.2 million in 2000 to $10.2 million in 2001, due primarily to the capital
expenditures made as a part of the Company's Tennessee System upgrade as well as
equipment costs associated with Internet and digital installations.

Interest Expense, Net. Interest expense, net was $12.4 million in 2001 which
represents an increase of $1.0 million, or 9.1%, from 2000. This increase was
primarily the result of an increase of $1.9 million in the interest on
borrowings the Company had outstanding against its credit facility from 2000 to
2001. This increase was partially offset by a reduction in interest expense of
$1.1 million on the 10- 3/4% Senior Notes due to the $12 million (face value) of
the Notes held by the Company since March 2, 2001. Both of these changes in
interest expense, net are a direct result of the credit facility amendment dated
March 2, 2001 as described in the "Financial Condition, Liquidity and Capital
Resources" section below.

Loss before Extraordinary Item. As a result of the foregoing factors, the
Company's loss before extraordinary item increased from $6.7 million in 2000 to
$9.9 million in 2001.

Extraordinary Gain due to Debt Extinguishment. On March 2, 2001 the Company
purchased $12 million (face value) of its 10-3/4% Series B Senior Notes from
affiliates of its credit facility lenders. These Notes were purchased at a
discounted price of .81 and, thus, the Company recognized an extraordinary gain
due to debt extinguishment in 2001 as follows:
<TABLE>
<S>                                                      <C>                 <C>
        Face value of Notes purchased                                              $12,000,000
        Purchase price of Notes                                   9,720,000
        Unamortized value of costs associated
          with Notes                                                354,688
                                                          ------------------
                        Subtotal                                                    10,074,688
                                                                             ------------------
        Extraordinary gain on extinguishment of debt                                $1,925,312
                                                                             ==================
</TABLE>



Net Loss.  As a result of the foregoing factors, the Company had a net loss of
$7.9 million in 2001 as compared to a net loss of $6.7 million in 2000.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES:

General. Liquidity describes the ability to generate sufficient cash flows to
meet the cash requirements of continuing operations and to pay obligations as
they mature. Liquidity, in the context of the Company's operations, is typically
determined by the cash flows from operating activities (e.g. initial
installation charges and monthly service fees paid by subscribers) and the cash
flows used in investing activities (e.g. spending associated with capital
projects). The Company continuously monitors available cash and cash equivalents
in relation to projected cash needs in an effort to maintain adequate balances
for current payments.

Due to its current financial condition and liquidity position, the Company
failed to pay the $5.375 million interest payment due February 15, 2003 on its
Notes. Moreover, because the Company failed to pay such interest payment on the
Notes by March 18, 2003, an event of default under the Indenture under which the
Notes were issued has occurred. Consequently, either the trustee under the

                                      -27-
<PAGE>

Indenture governing the Notes, or the holders of 25% in principal amount of the
Notes now outstanding, could declare such Notes to be immediately due and
payable.

It is to be noted that the event of default under the Indenture also constitutes
an event of default under the Company's senior credit facility. In addition, the
Company does not expect to be in compliance with the senior credit facility's
senior debt coverage ratio on March 31, 2003 when that ratio decreases from
2.2-to-1 to 2.1-to-1. Such defaults could lead to an acceleration of payment
demand by the Company's senior creditor. Acceleration of payment demands by the
Company's creditors would have a material adverse effect on the Company's
operations, liquidity and capital resources, and would require the Company to
seek restructuring through a Chapter 11 bankruptcy reorganization. The Company
is otherwise paying its day-to-day obligations.

The Company has retained Financo as a financial advisor to consider options
relating to refinancing and restructuring its existing debt. In this role,
Financo has begun discussions with the Company's senior lender and certain
holders of the Company's subordinated debentures to pursue a consensual
restructuring of the Company's debt. In the event a consensual restructuring of
the Company's debt cannot be achieved, and any of the Company's outstanding debt
is declared immediately due and payable, the Company would not be able to pay
such amounts and would seek to reorganize under the provisions of the federal
bankruptcy laws.

In conjunction with the year end audit of the Company's financial statements,
and due to the current financial condition and liquidity position of the Company
and the other matters described above, the Company's independent accountants
have issued an audit opinion with respect to the Company's 2002 financial
statements that includes an explanatory paragraph that expresses substantial
doubt about the Company's ability to continue as a going concern. The ability of
the Company to continue as a going concern will depend on whether the Company's
outstanding debt can be appropriately restructured. The financial statements and
other financial information of the Company included herein do not include any
adjustments that might result from the outcome of such uncertainties.

Net cash from operating activities were $2.6 million, $1.0 million and $400,000
for the years ended December 31, 2000, 2001 and 2002, respectively. Net cash
used in investing activities, the majority of which was used for capital
expenditures, was $3.0 million for the year ended December 31, 2002 as compared
to $11.6 million for the year ended December 31, 2001. This decrease is
primarily the result of a decrease in the number of rebuild / upgrade projects
that the Company had in progress during the two years as well as a reduction in
equipment costs associated with Internet and digital service installations. Cash
flows from operating activities amounted to $6.4 million for the year ended
December 31, 2002 which was comprised almost entirely of debt borrowings on the
Company's credit facility. Cash flows from financing activities for the year
ended December 31, 2001 were $10.1 million, which consisted of $23.5 million of
borrowings the Company made against its credit facility net of $2.5 million of
principal payments made on the credit facility, $1.2 million in costs associated
with amending and restating the credit facility and $9.7 million used to
repurchase $12 million (face value) of the Notes. Cash flows from financing
activities for the year ended December 31, 2000 amounted to $2.5 million which
consisted of $4.0 million of borrowings the Company made against its credit
facility net of $1.5 million of principal payments on the credit facility.

Total assets decreased from $49.1 million at December 31, 2001 to $45.4 million
at December 31, 2002. This decrease resulted primarily from a reduction in net
property and equipment of $6.4 million as offset by a $3.8 million increase in
cash and cash equivalents. The decrease in net property and equipment results
from the 2002 depreciation expense as well as a substantial reduction in the
amount of capital spending the company made in 2002 as compared to 2001, which
is also the reason for the increase in cash and cash equivalents.

Total debt increased from $111.5 million at December 31, 2001 to $118.0 million
at December 31, 2002. During the period from December 31, 2000 to March 2, 2001,
the Company was in default of a debt to EBITDA ratio covenant under its credit
facility. During the period from February 15, 2001 to March 2, 2001, the Company
was also in default of its obligation to pay interest on its Notes. As discussed
below, on March 2, 2001, the Company amended and restated its secured credit
facility with new lenders which will permit it to borrow up to $30 million. At
December 31, 2002 all $30 million of the available credit had been drawn down to
pay accrued interest on the Company's Notes and to purchase $12 million (face
amount) of those Notes from affiliates of the lenders.

The Notes. The Company has outstanding an aggregate principal amount of
$88,000,000 of its 10-3/4% Series B Senior Notes due 2004. The Notes are
general senior unsecured obligations of the Company that mature on August 15,
2004 and rank equally in right of payment with all other existing and future
unsubordinated indebtedness of the Company and senior in right of payment to any
subordinated obligations of the Company. The Notes are effectively subordinated
in right of payment to all secured indebtedness of the Company. Interest on the
Notes accrues at the rate of 10-3/4% per annum and is payable semi-annually in
arrears on February 15 and August 15, which commenced on February 15, 1998, to
holders of record on the immediately preceding February 1 and August 1. Interest
on the Notes accrues from the most recent date to which interest has been paid.
Interest is computed on the basis of a 360-day year comprised of twelve 30-day
months.

There is no public market for the Notes. The Company has not and does not intend
to list the Notes on any securities exchange or to seek approval for quotation
through any automated quotation system.


                                      -28-
<PAGE>




As indicated above, because the Company failed to pay the $5.375 million
interest payment due February 15, 2003 on its Notes, an event of default under
the Indenture under which the Notes were issued has occurred. Consequently,
either the trustee under the Indenture governing the Notes, or the holders of
25% in principal amount of the Notes now outstanding, could declare such Notes
to be immediately due and payable. Acceleration of payment demands by the
Company's creditors would have a material adverse effect on the Company's
operations, liquidity and capital resources, and would require the Company to
seek restructuring through a Chapter 11 bankruptcy reorganization.

The Credit Facility. The Company has a $30 million secured credit facility with
various independent lenders that matures on March 2, 2004. To date, all $30
million of the available credit has been drawn down to pay accrued interest on
the Company's Notes and to purchase $12 million (face value) of the Notes from
affiliates of the lenders.

The Credit Facility, which is secured by a first priority lien on and security
interest in substantially all of the assets of the Company, accrues interest at
a fixed rate of 11.5% which is payable on a quarterly basis in arrears. The
Credit Facility contains certain covenants, and provides for certain events of
default, customarily contained in facilities of a similar type. Among other
things, the Credit Facility requires the Company to (i) maintain the ratio of
its total debt to annualized six-month EBITDA of no more than 9.20 to 1 and (ii)
maintain a senior debt ratio (that is, the ratio of debt under the Credit
Facility to annualized six-month EBITDA) of no more than 2.20 to 1. In addition,
the Credit Facility imposes limitations on the amount of capital expenditures
that the Company can make for the remainder of the term. Generally, capital
expenditures are limited to $12 million per annum plus any unused portion of the
capital expenditure allowance from the previous year.

As indicated above, the failure of the Company to pay the $5.375 million
interest payment due February 15, 2003 on its Notes constitutes an event of
default under the Company's senior credit facility. In addition, the Company
does not expect to be in compliance with the facility's senior debt coverage
ratio on March 31, 2003 when that ratio decreases from 2.2-to-1 to 2.1-to-1.
Such defaults could lead to an acceleration of payment demand by the Company's
senior creditor. Acceleration of payment demands by the Company's creditors
would have a material adverse effect on the Company's operations, liquidity and
capital resources, and would require the Company to seek restructuring through a
Chapter 11 bankruptcy reorganization.

OUR ABILITY TO CONTINUE AS A GOING CONCERN IS QUESTIONABLE

In conjunction with the year end audit of the Company's financial statements,
and due to the current financial condition and liquidity position of the Company
and the other matters described above, the Company's independent accountants
have issued an audit opinion with respect to the Company's 2002 financial
statements that includes an explanatory paragraph that expresses substantial
doubt about the Company's ability to continue as a going concern. The ability of
the Company to continue as a going concern will depend on whether its
outstanding debt can be appropriately restructured. The financial statements and
other financial information of the Company included herein do not include any
adjustments that might result from the outcome of such uncertainties.

IMPACT OF INFLATION AND CHANGING PRICES:

The Company's costs and expenses are subject to inflation and price
fluctuations. However, because changes in costs are generally passed through to
subscribers, such changes historically have not had, and in the future are not
expected to have, a material effect on the Company's results of operations.

CRITICAL ACCOUNTING POLICIES:

The management of the Company has evaluated the accounting policies used in the
preparation of the accompanying financial statements and related notes and
believes those policies to be reasonable and appropriate. In applying accounting
principles in accordance with generally accepted accounting standards, the
Company is required to make estimates and assumptions about future events that
affect the amounts reported in our financial statements and the accompanying
notes. Future events and their effects cannot be determined with absolute
certainty. Therefore, the management of the Company must make estimates which
require the exercise of judgment. Actual results could differ from these
estimates, and any such differences may be material to the financial statements.

The Company considers an accounting estimate to be critical if: 1) the
accounting estimate requires us to make assumptions about matters that were
highly uncertain at the time the accounting estimate was made, and 2) changes in
the estimate that are reasonably likely to occur from period to period, or use
of different estimates that we reasonably could have used in the current period,
would have a material impact on our financial condition or results of
operations.

There are other items within our financial statements that require estimation,
but are not deemed critical as defined above. Changes in estimates used in these
and other items could have a material impact on our financial statements.

The Company believes the following represent its critical accounting policies:


                                      -29-
<PAGE>




LONG LIVED ASSETS

The Company reviews the recoverability of its long-lived assets, when events or
changes in circumstances occur that indicate that the carrying value of the
assets may not be recoverable. The measurement of possible impairment is based
on the Company's ability to recover the carrying value of the asset from the
expected future cash flows. If an impairment loss existed, the amount of the
loss would be recorded in the consolidated statements of operations. It is
possible that future events or circumstances could cause these estimates to
change.

GOODWILL IMPAIRMENT

The Company annually tests goodwill for impairment. The Company tests goodwill
utilizing a discounted cash flow method as well as assessing a fair market value
based on current per subscriber market conditions.

EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS:

On July 20, 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets."  SFAS No. 142 requires that goodwill and other intangible assets with
indefinite useful lives no longer be amortized, but be tested for impairment at
least annually.

The Company adopted SFAS No. 142 on January 1, 2002, as required by the new
statement. Upon adoption, the Company no longer amortizes goodwill and other
indefinite lived intangible assets, which consist of cable franchise operating
rights. The Company has tested its goodwill utilizing a discounted cash flow
method as well as assessing a fair market value based on current per subscriber
market conditions. After reviewing both of these methodologies, the Company
believes that no impairment existed at December 31, 2002.

The effect of the adoption of SFAS No. 142 as of December 31, 2002 and 2001 is
presented in the following table (in thousands) which includes only those assets
which were not fully amortized prior to December 31, 2001:

<TABLE>
<CAPTION>

        (in thousands)                          December 31, 2002                         December 31, 2001
                                         Gross        Accum.      Carrying          Gross       Accum.      Carrying
                                         Value        Amort.        Value           Value       Amort.        Value
                                         -----        ------        -----           -----       ------        -----
        Indefinite-lived intangibles:
<S>                                   <C>          <C>           <C>            <C>          <C>           <C>
          Goodwill                      $7,457         $567        $6,890          $7,457         $567       $6,890
          Franchise operating rights    16,656       11,682         4,974          16,656       11,682        4,974
                                      ---------    ---------     ---------      ----------   ----------    ---------
        Totals                         $24,113      $12,249       $11,864         $24,113      $12,249      $11,864
                                      =========    =========     =========      ==========   ==========    =========

        Other intangible assets:
          Subscriber lists and non-
            compete agreements          $1,243         $877          $366          $1,243         $628         $615
                                      =========    =========     =========      ==========   ==========    =========
</TABLE>




Amortization expense on the other intangible assets for 2002 was $248,640 and is
expected to be $246,000, $110,000 and $11,000 in 2003, 2004 and 2005,
respectively.

Since the Company was not required to adopt SFAS No. 142 until January 1, 2002,
the 2001 and 2000 net losses include amortization of goodwill and franchise
operating rights. Thus, the table below presents comparative net loss amounts
for the years ended December 31, 2002, 2001 and 2000.

<TABLE>
<CAPTION>
                                                              Year Ended           Year Ended           Year Ended
                                                             December 31,         December 31,         December 31,
                                                                 2002                 2001                 2000
                                                                 ----                 ----                 ----
<S>                                                      <C>                  <C>                 <C>
        Loss before extraordinary item                         ($9,765,776)         ($9,870,193)        ($6,737,892)
        Add back:
          Amortization of goodwill                                                      186,442             187,108
          Amortization of franchise operating rights                                  1,432,852           1,722,197
                                                         ------------------   ------------------   -----------------
        Adjusted loss before extraordinary item                 (9,765,776)          (8,250,899)         (4,828,587)
        Extraordinary gain due to debt extinguishment                                 1,925,312

                                                         ------------------   ------------------   -----------------
        Adjusted net loss                                      ($9,765,776)         ($6,325,587)        ($4,828,587)
                                                         ==================   ==================   =================
</TABLE>




                                      -30-
<PAGE>


In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The new standard requires one model of
accounting for long-lived assets to be disposed of, and broadens the definition
of discontinued operations to include a component of a segment. The Company
adopted SFAS No. 144 in the first quarter of 2002 and does not expect that it
will have a material impact on its financial position and/or results of
operations.

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others." Interpretation No. 45 requires the guarantor to
recognize a liability for the non-contingent component of a guarantee; that is,
the obligation to stand ready to perform in the event that specified triggering
events or conditions occur. The initial measurement of this liability is the
fair value of the guarantee at inception. The recognition of the liability is
required even if it is not probable that payments will be required under the
guarantee or if the guarantee was issued with a premium payment or as part of a
transaction with multiple elements. Interpretation No. 45 also requires
additional disclosures related to guarantees. The disclosure requirements are
effective for interim and annual financial statements for periods ending after
December 15, 2002. The recognition and measurement provisions are effective for
all guarantees entered into, or modified, after December 31, 2002. The Company
is in the process of evaluating the effect of this Interpretation on its
financial statements.

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities." The Interpretation may have an effect on existing
practice because it requires existing variable interest entities to be
consolidated if those entities do not effectively disperse risks among the
parties involved. The Interpretation is effective immediately for all variable
interest entities created after January 31, 2003. All variable interest entities
created before February 1, 2003 shall apply the provisions of this
Interpretation no later than the beginning of the first interim or annual
reporting period after June 15, 2003. The Company is in the process of
evaluating the effect of this Interpretation on its Financial Statements.

RISK FACTORS:

WE ARE HIGHLY LEVERAGED, HAVE SIGNIFICANT DEBT SERVICE REQUIREMENTS AND
CURRENTLY ARE IN DEFAULT

As of December 31, 2002, our total debt outstanding was $118.0 million,
comprised of $30.0 million borrowed under our secured credit facility and $88
million due under our Notes.

Due to our current financial condition and liquidity position, we failed to pay
the $5.375 million interest payment due February 15, 2003 on our Notes.
Moreover, because we failed to pay such interest payment on the Notes by March
18, 2003, an event of default under the Indenture under which the Notes were
issued has occurred. Consequently, either the trustee under the Indenture
governing the Notes, or the holders of 25% in principal amount of the Notes now
outstanding, could declare such Notes to be immediately due and payable.

It is to be noted that the event of default under the Indenture also constitutes
an event of default under our senior credit facility. In addition, we do not
expect to be in compliance with the facility's senior debt coverage ratio on
March 31, 2003 when that ratio decreases from 2.2-to-1 to 2.1-to-1. Such
defaults could lead to an acceleration of payment demand by our senior creditor.
Acceleration of payment demands by our creditors would have a material adverse
effect on our operations, liquidity and capital resources, and would require us
to seek restructuring through a Chapter 11 bankruptcy reorganization. We are
otherwise paying our day-to-day obligations.

We have retained Financo as a financial advisor to consider options relating to
refinancing and restructuring existing debt. In this role, Financo has begun
discussions with our senior lender and certain holders of our subordinated
debentures to pursue a consensual restructuring of our debt. In the event a
consensual restructuring of our debt cannot be achieved, and any of our
outstanding debt is declared immediately due and payable, we would not be able
to pay such amounts and would seek to reorganize under the provisions of the
federal bankruptcy laws.

OUR ABILITY TO CONTINUE AS A GOING CONCERN IS QUESTIONABLE

In conjunction with the year end audit of our financial statements, and due to
our current financial condition and liquidity position and the other matters
described above, our independent accountants have issued an audit opinion with
respect to our 2002 financial statements that includes an explanatory paragraph
that expresses substantial doubt about our ability to continue as a going
concern. Our ability to continue as a going concern will depend on whether our
outstanding debt can be appropriately restructured. Our financial statements and
other financial information included herein do not include any adjustments that
might result from the outcome of such uncertainties.

WE COULD LOSE SUBSCRIBERS TO NEW TECHNOLOGIES

Since 1996, we have experienced increased competition from new technologies such
as wireless cable services and DBS services. Due to regulatory changes, we also
face potential competition from telephone companies. Also, many of our
competitors have significantly

                                      -31-
<PAGE>




greater financial resources than us. Thus, we have experienced significant
subscriber loss during the past five years. We believe that one of the primary
reasons for this loss in our subscriber base is the increased availability,
affordability and increased marketing efforts of competitive video services from
satellite dishes and other alternatives to traditional hardline cable service.
Specifically, DBS has emerged as a significant competitor due to several factors
including (i) a much heavier emphasis on marketing campaigns, (ii) a significant
reduction in the cost of the equipment necessary for a customer to receive the
DBS service and (iii) recent legislation that allows certain DBS customers to
receive local broadcast programming (See "Part 1. Business -- Competition").
While we believe our strategy of upgrading certain Systems to provide enhanced
video programming, Internet access and other advanced telecommunications
services will allow us to remain competitive in most of our markets, there can
be no assurance that this will be the case.

OUR NEW LINES OF BUSINESS INVOLVE ADDITIONAL RISK

While we do not have extensive experience providing Internet access and other
advanced telecommunications services, at December 31, 2002 we had successfully
launched commercial Internet service in certain portions of every Cluster.

         Some of the uncertainties associated with our offering Internet access
through cable are:

         -   customer acceptance of cable as an alternative to traditional dial
             up Internet access;

         -   the competitive response of traditional ISPs, online services (such
             as The Microsoft Network and America Online) and long distance
             inter-exchange carriers (such as AT&T Corp., MCI Communications
             Corporation and Sprint Corporation), all of which currently offer
             Internet access on a large scale; and

         -   the possibility that new technologies (including improved DBS
             offerings) may be developed which offer improved performance or
             other desirable features.

While we are optimistic about the prospects for these new lines of business,
there can be no assurance that we will be successful or that additional cash
flow will be generated.

OUR BUSINESS IS EXTENSIVELY REGULATED

The cable television industry is subject to extensive governmental regulation,
principally by the FCC and local franchising authorities. Many aspects of such
regulation have recently been extensively revised and are currently the subject
of judicial proceedings and administrative rulemakings, which are potentially
significant to us. Moreover, the regulation of cable television systems,
including the rates charged for cable services, remains a matter of interest to
Congress, the FCC and local regulatory officials. These regulations, which have
removed some barriers to competition and added materially to the regulatory
burdens of cable operators, are related to:

         -   cable system rates for both basic and certain nonbasic services;

         -   programming access and exclusivity arrangements;

         -   access to cable channels by unaffiliated programming services;

         -   leased access terms and conditions;

         -   horizontal and vertical ownership of cable systems;

         -   customer service requirements;

         -   franchise renewals;

         -   television broadcast signal carriage and retransmission consent;

         -   technical standards;

         -   customer privacy;

         -   consumer protection issues;

         -   cable equipment compatibility;


                                      -32-
<PAGE>





         -   obscene or indecent programming; and

         -   rules against requiring subscribers to subscribe to tiers of
             service other than basic service as a condition of purchasing
             premium services.

Under the FCC's rate regulations, most cable systems were required to reduce
their basic service and CPST rates in 1993 and 1994, and have since had their
rate increases governed by a complicated price cap scheme. However, operators
also have the opportunity of bypassing this "benchmark" regulatory scheme in
favor of traditional "cost of service" in cases where the latter methodology
appears favorable.

Because we qualify as a small cable company under FCC rules and have elected to
rely on the cost-of-service rules as and when our Systems are required to
justify their rates for regulated services, we have not implemented the rate
reductions that would otherwise have been required if we were subject to the
FCC's benchmarks. Instead, we were allowed to establish permitted rates under a
simple formula that considers total operating expenses (including amortization
expenses), net rate base, rate of return, channel count and subscribers. So long
as the per channel rate resulting from these inputs for one of our Systems is no
more than $1.24, that System's rates will be presumed reasonable. If the
formula-generated rate exceeds the $1.24, then we will be required to prove the
reasonableness of our calculations.

In addition, Systems which face "effective competition" in their local franchise
area are not subject to any rate regulation. Federal law defines "effective
competition" on a community specific basis as requiring either low penetration
(less than 30%) by the incumbent cable operator, appreciable penetration (more
than 15%) by competing MVPs, or the presence of a competing MVP affiliated with
a local telephone company.

FCC rules permit local franchise authorities to review basic service rates. An
adverse ruling in any such proceeding could require us to reduce our rates and
pay refunds. A reduction in our rates or the payment of refunds could have a
material adverse effect on us. Once the maximum permitted rate allowed by FCC
rules is being charged by us in regulated communities, future rate increases may
not exceed an inflation-indexed amount, plus increases in certain costs beyond
the cable operator's control, such as taxes, franchise fees and increased
programming costs. Although the regulation of the CPST expired for all cable
systems on March 31, 1999, critics of the cable television industry have called
for the reinstatement of this regulation and further have urged more rigorous
rate regulation (including limits on programming cost pass-throughs to cable
subscribers) until a greater degree of competition to incumbent cable operators
has developed.

OUR FRANCHISES ARE NON-EXCLUSIVE AND ARE SUBJECT TO RENEWAL

We operate our Systems under franchises granted by local authorities which are
generally non-exclusive and subject to renewal and renegotiation from time to
time. Each franchise is generally granted for a fixed term ranging from five to
fifteen years but may be terminated if the franchisee fails to comply with the
material provisions thereof. Our franchises typically impose conditions relating
to the use and operation of the cable television system, including requirements
relating to the payment of fees, system bandwidth capacity, customer service
requirements, franchise renewal and termination. As of December 31, 2002, we had
10 franchises (representing 13.0% of our basic subscribers) expiring prior to
2005 and 42 franchises (representing 35.9% of our basic subscribers) expiring
between 2005 and 2009. In addition, we had 4 franchises (representing 1.8% of
our basic subscribers) which had expired prior to December 31, 2002 and are
currently in renewal negotiations (See "Item 1. Business -- Franchises").

Although we believe that we generally have good relationships with our
franchising authorities, no assurance can be given that we will be able to
retain or renew such franchises or that the terms of any such renewals will be
on terms as favorable to us as our existing franchises. The non-renewal or
termination of franchises relating to a significant portion of our subscribers
could have a material adverse effect on our results of operations.

OUR INSURANCE COVERAGE HAS BEEN REDUCED IN FLORIDA AND LOUISIANA

Because of industry-wide casualty insurance reductions that resulted from
insurers' loss experience with several hurricanes in the southeastern portion of
the United States, our casualty insurance in Florida and Louisiana has been
reduced to $1 million per occurrence. We believe that our Systems in Florida and
Louisiana are located in areas that are not subject to a high degree of risk
from hurricanes, or from ice storms (which do pose a significant risk for our
Systems in other areas), and that losses in excess of our existing coverage
would be unlikely. However, if such casualty insurance is inadequate, we could
experience a potential reduction in cash flow in the event of a loss in excess
of our policy limits. If a significant loss were to occur, it could have a
material adverse effect on our financial condition and results of operations.




                                      -33-
<PAGE>




OUR OPERATIONS ARE DEPENDENT UPON THE SERVICES OF MANAGEMENT

We rely significantly on the services of the General Partner and the personnel
employed by or on behalf of the General Partner, including William R. James, who
functions as our principal executive officer, Daniel K. Shoemaker, who functions
as our principal financial and accounting officer, and Scott A. Madison, who
functions as our director of engineering. We could be adversely affected,
however, if any of Messrs. James, Shoemaker and Madison were unwilling or unable
to continue to make their services available to us.

THERE ARE POTENTIAL CONFLICTS OF INTEREST

The General Partner, which is controlled by Mr. William R. James, is the sole
general partner of the Company. With certain limitations, the General Partner
has exclusive authority for the management and control of our business and
operations. It performs management services for us, for which it is paid an
annual fee.

We are subject to possible conflicts of interest arising out of our relationship
with the General Partner and Mr. James. Because we were organized and are
operated by the General Partner, these conflicts will not necessarily be
resolved through arm's-length negotiations but rather may be resolved through
the exercise of the General Partner's judgment consistent with its fiduciary
responsibilities to us and our limited partners. Our Partnership Agreement
provides for a Partnership Advisory Board, one of the functions of which is to
review any potential conflicts of interest involving the General Partner, and
provides that the General Partner may be removed by the limited partners but (so
long as the General Partner is controlled by Mr. James) only if the General
Partner has been found by an independent party to have been engaged in
malfeasance, criminal conduct, wanton, willful neglect or a material breach of
the Partnership Agreement. There are no other procedures for resolving conflicts
between us and the General Partner. The Indenture contains certain restrictions
on transactions between James and Finance Corp. and their subsidiaries and
affiliates.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company did not hold, either during the years ended December 31, 2002 and
2001, or at December 31, 2002 or 2001, any market risk sensitive instruments.
The Company has outstanding $88 million of its Notes with a fixed interest rate
of 10.75%. In addition, at December 31, 2002, the Company had borrowings
outstanding against its credit facility of $30.0 million with a fixed interest
rate of 11.5%.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Pages FS-1 through FS-18 which are included in Item 14. Exhibits, Financial
Statement Schedules, and Reports on Form 8-K of this Annual Report on Form 10-K
for the fiscal year ended December 31, 2002.

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

None.

PART III

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS

Since its inception in 1988, the Company's business and affairs have been
managed and controlled by the General Partner. The General Partner is managed
and controlled by its two partners, Jamesco Inc., a Michigan corporation (of
which William R. James is the sole shareholder, sole executive officer and sole
director) and DKS Holdings, Inc., a Michigan corporation (of which Daniel K.
Shoemaker is the sole shareholder, sole executive officer and sole director). By
virtue of these arrangements, Messrs. James and Shoemaker (each a "Director")
perform functions for the Company which are similar to those generally performed
for a corporation by its board of directors. The Directors also constitute all
of the directors of Finance Corp. Through the General Partner, the persons named
below (collectively, the "Executive Officers") perform for the Company functions
similar to those generally performed for a corporation by executive officers
having the titles set forth below:
<TABLE>
<CAPTION>
                         NAME                               AGE      FUNCTIONS PERFORMED
                 ------------------                         ---     ---------------------

<S>                                                         <C>     <C>
                 William R. James........................   69      President and
                                                                    Chief Executive Officer
                 Daniel K. Shoemaker.....................   40      Chief Financial Officer
                 Scott A. Madison........................   45      Director of Engineering
</TABLE>

Messrs. James and Shoemaker also constitute all of the executive officers and
directors of Finance Corp.


                                      -34-
<PAGE>



William R. James has been the sole shareholder and sole director of Jamesco, and
Jamesco has been a partner in the General Partner, since the Company was formed
in 1988. He has performed the functions of President and Chief Executive Officer
for the Company throughout the same period. He has been the President of Finance
Corp. since its formation in 1997.

In January 1986, Mr. James founded James Communications, Inc. ("JCI"), a cable
television company. He served as President and Chief Executive Officer of JCI
from its inception until it was sold in December 1987. From 1979 to 1986, Mr.
James was employed by Capital Cities Communications (which became Capital
Cities/ABC Inc.), during which time he oversaw the development of its cable
division ("Capital Cities Cable"). At the time he left Capital Cities
Communications to found JCI, Mr. James was an Executive Vice President of
Capital Cities Communications and the President of Capital Cities Cable. Prior
to joining Capital Cities Communications, Mr. James was a partner at Touche Ross
& Co. in charge of national manufacturing consulting. Mr. James is a graduate of
Princeton University and graduated from the Harvard University Business School
with distinction.

Daniel K. Shoemaker was a partner in the General Partner from 1989 until July 1,
1997, when he contributed his partnership interest to his wholly-owned
corporation, DKS Holdings, Inc. He has performed the functions of Chief
Financial Officer for the Company since 1993, and from 1988 to 1993, he served
as its Director of Management Information Systems. He has also been the
Treasurer and Secretary of Finance Corp. since its formation in 1997. From 1985
to 1988, Mr. Shoemaker was a systems engineer in a management consulting group
of Electronic Data Systems Corporation.

Scott A. Madison has served as the Company's Director of Engineering since 1991.
From 1988 to 1991 he was Director of Engineering for C4 Media Companies (cable
television operators), and from 1986 to 1988 he was a Regional Engineer for C4
Media Cable South, L.P.I.

ITEM 11.   EXECUTIVE COMPENSATION

The Company does not pay any compensation to the Directors or Executive
Officers. The Partnership Agreement provides compensation to the General Partner
for management services. Under the terms of the Partnership Agreement, the
General Partner is entitled to an annual management fee equal to 4% of the
Company's annual revenues, plus $5 multiplied by the average aggregate number of
subscribers to the Systems owned by the Company during such year. The amount of
the management fee was approximately $1,567,000, $1,638,000 and $1,500,000 in
2000, 2001 and 2002, respectively. No other amounts were paid to the General
Partner by the Company in those years.

Effective December 29, 1999, with the consent of James' Partnership Advisory
Board and more than 96% of the limited partners of James, the limited
partnership agreement was amended and restated in its entirety. In connection
with the adoption of the Partnership Agreement, and with the approval of James'
Partnership Advisory Board and its limited partners, (i) the incentive
compensation payable by James to the general partner pursuant to the 1994
General Partner Incentive Compensation Agreement dated December 29, 1994 was
converted to a 2% Class A limited partnership interest, and (ii) the general
partner was issued an option to acquire a Class B limited partnership interest
of not more than 3.125% and not less than 2.5%.


                                      -35-
<PAGE>






ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

James is the record and beneficial owner of all of the issued and outstanding
shares of Finance Corp. The following table sets forth, at December 31, 2002,
the partnership interests in James beneficially owned by: (a) each person known
to James to beneficially own 5% or more of James' total partnership interests;
and (b) each Director, each Executive Officer, and all Directors and Executive
Officers as a group:


<TABLE>
<CAPTION>
                         NAME AND ADDRESS OF
                          BENEFICIAL OWNER                                     TYPE OF INTEREST(1)     % OF CLASS
         -------------------------------------------------                     -------------------     ----------
<S>                                                                            <C>                     <C>
         William R. James(2)...............................................    General partnership          *
         38710 Woodward Avenue, Suite 180                                      Limited partnership         3.2%
         Bloomfield Hills, Michigan 48304
         Daniel K. Shoemaker(3)............................................    General partnership          *
         38710 Woodward Avenue, Suite 180                                      Limited partnership          *
         Bloomfield Hills, Michigan 48304
         Scott A. Madison..................................................    None
         38710 Woodward Avenue, Suite 180
         Bloomfield Hills, Michigan 48304
         SCP Acquisition LLC...............................................    Limited partnership        88.1%
         767 Fifth Avenue, 45th Floor
         New York, New York  10153
         All Directors and Executive Officers as a group...................    General partnership          *
                                                                               Limited partnership         3.2%
</TABLE>
----------
 * Less than 1.00%.
(1)   The general partnership interest represents 0.95% of the Company's total
      partnership interest.
(2)   Reflects ownership of all of the capital stock of Jamesco Inc., which
      holds a 99.0% interest in the General Partner. Mr. James performs the
      functions of a Director of the Company. He also performs the functions of
      Chief Executive Officer of the Company.
(3)   Reflects ownership of all of the capital stock of DKS Holdings, Inc.,
      which holds a 1.0% interest in the General Partner. Mr. Shoemaker performs
      the functions of a Director of the Company. He also performs the functions
      of Chief Financial Officer of the Company.

                      EQUITY COMPENSATION PLAN INFORMATION
<TABLE>
<CAPTION>

                                                                                                NUMBER OF SECURITIES
                                                                                              REMAINING AVAILABLE FOR
                                                                                               FUTURE ISSUANCE UNDER
                               NUMBER OF SECURITIES TO BE     WEIGHTED-AVERAGE EXERCISE      EQUITY COMPENSATION PLANS
                                ISSUED UPON EXERCISE OF     PRICE OF OUTSTANDING OPTIONS,      (EXCLUDING SECURITIES
                                  OUTSTANDING OPTIONS,           WARRANTS AND RIGHTS                 REFLECTED
       PLAN CATEGORY              WARRANTS AND RIGHTS            -------------------               IN COLUMN (a))
       -------------              -------------------                                              --------------

<S>                           <C>                           <C>                               <C>
Equity compensation plans     A Class A limited             An amount not greater than                   0
approved by security          partnership interest of not   .625% of the aggregate fair
holders . . . . . . . . . .   less than 2.5% and not more   market value of all Class A
.. . . . .                     than 3.125%                   limited partnership interests
                                                            on the date immediately
                                                            preceding the date of exercise
Equity compensation plans                  0                              0                              0
not approved by security
holders . . . . . . . . . .
.. . . . .
          Total . . . . . .   A Class A limited             An amount not greater than                   0
                              partnership interest of not   .625% of the aggregate fair
                              less than 2.5% and not more   market value of all Class A
                              than 3.125%                   limited partnership interests
                                                            on the date immediately
                                                            preceding the date of exercise
</TABLE>



                                      -36-
<PAGE>




ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as otherwise described in the response to "Item 11.  Executive
Compensation," none.

ITEM 14.  CONTROLS AND PROCEDURES

INTERNAL CONTROLS. The Company maintains a system of internal controls designed
to provide reasonable assurance that: (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles, and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

Under the supervision and with the participation of the Company's management,
including the principal executive officer and principal financial officer, the
Company has evaluated the effectiveness of the design and operation of the
Company's internal controls and procedures. Such evaluation was conducted within
the 90 days prior to the date of filing of this report. There have been no
significant changes in the Company's internal controls or in other factors that
could significantly affect these controls subsequent to the date of such
evaluation.

DISCLOSURE CONTROLS AND PROCEDURES. The Company maintains disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) that are
designed (i) to collect the information it is required to disclose in the
reports it files with the SEC, and (ii) to process, summarize and disclose this
information within the time periods specified in the rules of the SEC. Under the
supervision and with the participation of the Company's management, including
the principal executive officer and the principal financial officer, the Company
has evaluated the effectiveness of the design and operation of its disclosure
controls and procedures. Such evaluation was conducted within the 90 days prior
to the date of filing of this report. Based on such evaluation, the Company's
management, including the principal executive officer and the principal
financial officer have concluded that these procedures are effective.




                                      -37-
<PAGE>






  PART IV

  ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

  EXHIBITS:

    ITEM 601
    REGULATION S-K
    EXHIBIT REFERENCE
         NUMBER                         EXHIBIT DESCRIPTION

    (3)(a)/(10)(a)                      Second Amended and Restated Agreement of
                                        Limited Partnership of James Cable
                                        Partners, L.P. dated as of December 29,
                                        1999, as amended by a First Amendment to
                                        Second Amended and Restated Agreement of
                                        Limited Partnership dated as of March 1,
                                        2001 (incorporated by reference to
                                        Exhibit (3)(a)/(10)(a) of the
                                        registrant's Annual Report on Form 10-K
                                        for the year ended December 31, 2000 as
                                        filed with the Securities and Exchange
                                        Commission).

    (3)(b)                              Certificate of Limited Partnership of
                                        the Company (incorporated by reference
                                        to Exhibit 3.2 of the registrant's
                                        Registration Statement on Form S-4 as
                                        filed with the Securities and Exchange
                                        Commission on September 8, 1997
                                        (registration no. 333-35183)).

    (3)(c)                              Articles of Incorporation of Finance
                                        Corp. (incorporated by reference to
                                        Exhibit 3.3 of the registrant's
                                        Registration Statement on Form S-4 as
                                        filed with the Securities and Exchange
                                        Commission on September 8, 1997
                                        (registration no. 333-35183)).

    (3)(d)                              Bylaws of Finance Corp. (incorporated by
                                        reference to Exhibit 3.4 of the
                                        registrant's Registration Statement on
                                        Form S-4 as filed with the Securities
                                        and Exchange Commission on September 8,
                                        1997 (registration no. 333-35183)).

    (4)(a)                              Indenture dated as of August 15, 1997
                                        among the Company, Finance Corp., and
                                        United States Trust Company of New York,
                                        as Trustee (including form of Notes)
                                        (incorporated by reference to Exhibit
                                        4.1 of the registrant's Registration
                                        Statement on Form S-4 as filed with the
                                        Securities and Exchange Commission on
                                        September 8, 1997 (registration no.
                                        333-35183)).

    (4)(b)                              Credit Agreement dated as of March 2,
                                        2001 between James Cable Partners, L.P.,
                                        as Borrower, and the Lenders listed
                                        therein (incorporated by reference to
                                        Exhibit (4)(b) of the registrant's
                                        Annual Report on Form 10-K for the year
                                        ended December 31, 2000 as filed with
                                        the Securities and Exchange Commission).

    (4)(c)                              Company Security Agreement dated as of
                                        March 2, 2001 between James Cable
                                        Partners, L.P., as Grantor, and
                                        GoldenTree Asset Management LLC, as
                                        agent for the Lenders (incorporated by
                                        reference to Exhibit (4)(c) of the
                                        registrant's Annual Report on Form 10-K
                                        for the year ended December 31, 2000 as
                                        filed with the Securities and Exchange
                                        Commission).

    (4)(d)                              Guaranty Agreement dated as of March 2,
                                        2001 by James Cable Finance Corp., in
                                        favor of each of the Lenders
                                        (incorporated by reference to Exhibit
                                        (4)(d) of the registrant's Annual Report
                                        on Form 10-K for the year ended December
                                        31, 2000 as filed with the Securities
                                        and Exchange Commission).

    (4)(e)                              Guarantor Security Agreement dated as of
                                        March 2, 2001 between James Cable
                                        Finance Corp., as Grantor, and
                                        GoldenTree Asset Management LLC, as
                                        agent for the Lenders (incorporated by
                                        reference to Exhibit (4)(e) of the
                                        registrant's Annual Report on Form 10-K
                                        for the year ended December 31, 2000 as
                                        filed with the Securities and Exchange
                                        Commission).

    (4)(h)                              Option Agreement / Option Certificate
                                        dated as of December 29, 1999 by and
                                        between James Cable Partners, L.P. and
                                        James Communications Partners
                                        (incorporated by reference to Exhibit
                                        (4)(h) of the registrant's Annual Report
                                        on Form 10-K for the year ended December
                                        31, 1999 as filed with the Securities
                                        and Exchange Commission).

                                      -38-
<PAGE>


    ITEM 601
    REGULATION S-K
    EXHIBIT REFERENCE
         NUMBER                         EXHIBIT DESCRIPTION

    12                                  Statement re computation of ratios.*

    21                                  List of subsidiaries of James: James
                                        Cable Finance Corp. (James Cable Finance
                                        Corp. has no subsidiaries.)

    24                                  Powers of Attorney.*

    (99)(a)                             Certification of Principal Executive
                                        Officer of James Cable Partners, L.P.,
                                        pursuant to Section 906 of the
                                        Sarbanes-Oxley Act of 2002.*

    (99)(b)                             Certification of Principal Financial
                                        Officer of James Cable Partners, L.P.,
                                        pursuant to Section 906 of the
                                        Sarbanes-Oxley Act of 2002.*

    (99)(c)                             Certification of Principal Executive
                                        Officer of James Cable Finance Corp.,
                                        pursuant to Section 906 of the
                                        Sarbanes-Oxley Act of 2002.*

    (99)(d)                             Certification of Principal Financial
                                        Officer of James Cable Finance Corp.,
                                        pursuant to Section 906 of the
                                        Sarbanes-Oxley Act of 2002.*

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

   *    Filed herewith.

Management contracts and compensatory plans or arrangements:

The management contracts and compensatory plans or arrangements required to be
filed as exhibits and included in such list of exhibits are as follows:

    (3)(a)/(10)(a)   Second Amended and Restated Agreement of Limited
                     Partnership of James Cable Partners, L.P. dated as of
                     December 29, 1999, as amended by a First Amendment to
                     Second Amended and Restated Agreement of Limited
                     Partnership dated as of March 1, 2001 (incorporated by
                     reference to Exhibit (3)(a)/(10)(a) of the registrant's
                     Annual Report on Form 10-K for the year ended December 31,
                     2000 as filed with the Securities and Exchange Commission).

    (3)(b)           Certificate of Limited Partnership of the Company
                     (incorporated by reference to Exhibit 3.2 of the
                     registrant's Registration Statement on Form S-4 as filed
                     with the Securities and Exchange Commission on
                     September 8, 1997 (registration no. 333-35183)).

    (4)(h)           Option Agreement / Option Certificate dated as of December
                     29, 1999 by and between James Cable Partners, L.P. and
                     James Communications Partners (incorporated by reference to
                     Exhibit (4)(h) of the registrant's Annual Report on Form
                     10-K for the year ended December 31, 1999 as filed with the
                     Securities and Exchange Commission).


REPORTS ON FORM 8-K:

During the fourth quarter of 2002, the Company filed a Current Report on Form
8-K dated November 13, 2002, relating to certifications, pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, by the Company's chief executive officer and chief financial officer for
the Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.







                                      -39-
<PAGE>






    INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES:

<TABLE>
<CAPTION>
                                                                                                   10-K
                                                                                                   Report
                                                                                                   page(s)
                                                                                                   -------
<S>                                                                                                <C>
    James Cable Partners, L.P. and Subsidiary:
       Independent Auditors' Report.............................................................     FS-1
       Consolidated balance sheets as of December 31, 2001 and 2002.............................     FS-2
       Consolidated statements of operations for each of the years ended December 31, 2000,
       2001 and 2002............................................................................     FS-3
       Consolidated statements of partners' deficit for each of the years ended December 31,
       2000, 2001 and 2002......................................................................     FS-4
       Consolidated statements of cash flows for each of the years ended December 31, 2000,
       2001 and 2002............................................................................     FS-5
       Notes to consolidated financial statements...............................................     FS-6
    James Cable Finance Corp.:
       Independent Auditors' Report.............................................................     FS-16
       Balance sheets as of December 31, 2001 and 2002..........................................     FS-17
       Notes to balance sheets..................................................................     FS-18
</TABLE>

    Financial Statement Schedules:
         Any schedules for which provision is made in Regulation S-X either (i)
         are not required under the related instructions or are inapplicable
         and, therefore, have been omitted, or (ii) the information required is
         included in the consolidated financial statements or the notes thereto
         that are a part hereof.




                                      -40-
<PAGE>
INDEPENDENT AUDITORS' REPORT



To the Partners of
James Cable Partners, L.P.
Bloomfield Hills, Michigan

We have audited the accompanying consolidated balance sheets of James Cable
Partners, L.P. (the "Partnership") (a Delaware Limited Partnership) as of
December 31, 2002 and 2001, and the related consolidated statements of
operations, partners' deficit and cash flows for each of the three years ended
December 31, 2002. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of James Cable Partners,
L.P. and subsidiaries at December 31, 2002 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that James Cable Partners, L.P. and subsidiaries will continue as a going
concern. As discussed in Note 1, the Partnership is in default of its obligation
to pay interest on their Series B Senior Notes, which raises substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to this matter are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for goodwill in 2002.



Detroit, Michigan
February 28, 2003



                                      FS-1
<PAGE>


                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                    December 31,
                                                                                         -----------------------------------
                                                                                            2001                   2002
                                                                                            ----                   ----
                                     ASSETS
<S>                                                                                     <C>                    <C>
Cash and cash equivalents                                                               $     567,404          $   4,370,013
Accounts receivable - Subscribers (net of allowance for doubtful
   accounts of $15,852 in 2001 and $90,301 in 2002)                                         4,024,248              4,186,246
Prepaid expenses and other assets (Note 5)                                                    549,900                415,409
Property and equipment:
   Cable television distribution systems and equipment                                    104,257,833            106,671,591
   Land and land improvements                                                                 333,958                334,708
   Buildings and improvements                                                               1,053,242              1,053,242
   Office furniture and fixtures                                                            4,549,932              4,943,071
   Vehicles                                                                                 5,083,292              5,325,389
                                                                                        -------------          -------------
       Total                                                                              115,278,257            118,328,001
   Less accumulated depreciation                                                          (85,999,799)           (95,436,827)
                                                                                        -------------          -------------
       Total                                                                               29,278,458             22,891,174
Deferred financing costs (net of accumulated amortization of $2,407,372
   in 2001 and $3,293,146 in 2002)                                                          2,094,469              1,291,064
Goodwill  (Note 1)                                                                          6,890,588              6,890,588
Other indefinite lived intangible assets (Note 1)                                           4,973,797              4,973,797
Intangible assets, net (Note 2)                                                               614,892                366,254
Deposits                                                                                       65,260                 64,080
                                                                                        -------------          -------------
        Total assets                                                                    $  49,059,016          $  45,448,625
                                                                                        =============          =============

                        LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
       Debt (Note 3)                                                                    $ 111,500,000          $ 118,000,000
       Accounts payable                                                                       701,812                179,821
       Accrued expenses (Note 5)                                                            2,739,611              2,808,937
       Accrued interest on debt (Note 3)                                                    3,547,499              3,547,499
       Unearned revenue                                                                     3,411,759              3,521,696
       Subscriber deposits                                                                     17,703                 15,816
                                                                                        -------------          -------------
        Total                                                                             121,918,384            128,073,769
Commitments and contingencies (Notes 4 and 6)                                                 --                     --
Partners' deficit:
   Limited Partners ("L.P.")                                                              (66,597,103)           (76,270,270)
   General Partner ("G.P.")                                                                (6,262,265)            (6,354,874)
                                                                                        -------------          -------------
        Total                                                                             (72,859,368)           (82,625,144)
                                                                                        -------------          -------------
        Total liabilities and partners' deficit                                         $  49,059,016          $  45,448,625
                                                                                        =============          =============
</TABLE>

                 See notes to consolidated financial statements.



                                      FS-2
<PAGE>



                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                                                                  Year Ended December 31,
                                                                   ------------------------------------------------------
                                                                         2000              2001               2002
                                                                         ----              ----               ----


<S>                                                                <C>                <C>                <C>
Revenues                                                           $     37,893,244   $    39,807,095    $    42,312,066
System operating expenses (excluding
       depreciation and amortization)                                    22,010,978        25,063,710         26,816,774

Non-system operating expenses:
       Management fee (Note 5)                                            1,566,644         1,638,487          1,500,000
       Other                                                                568,059           452,641            624,107
                                                                   -----------------  ----------------   ----------------
            Total non-system operating expenses                           2,134,703         2,091,128          2,124,107

Depreciation and amortization                                             9,163,834        10,164,982          9,685,668
                                                                   -----------------  ----------------   ----------------
            Operating income                                              4,583,729         2,487,275          3,685,517
Interest and other:
       Interest expense                                                 (11,309,334)      (12,369,276)       (13,479,192)
       Interest income                                                       96,394            28,718             27,899
       Other (Note 3)                                                      (108,681)          (16,910)                 0
                                                                   -----------------  ----------------   ----------------
            Total interest and other                                    (11,321,621)      (12,357,468)       (13,451,293)
                                                                   -----------------  ----------------   ----------------

Loss before extraordinary item                                           (6,737,892)       (9,870,193)        (9,765,776)

Extraordinary gain due to extinguishment
       of debt (Note 3)                                                           0         1,925,312                  0
                                                                   -----------------  ----------------   ----------------

            Net loss                                               $     (6,737,892)  $    (7,944,881)   $    (9,765,776)
                                                                   =================  ================   ================
</TABLE>
                 See notes to consolidated financial statements.


                                      FS-3
<PAGE>


                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                  CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT

<TABLE>
<CAPTION>
                                                                     Limited               General
                                                                     Partners              Partner                 Total
                                                                -------------------   -------------------    ------------------

<S>                                                             <C>                   <C>                    <C>
Balance, January 1, 2000                                        $      (52,314,823)   $       (5,867,993)    $     (58,182,816)
       Net loss                                                         (6,418,961)             (318,931)           (6,737,892)
       Capital contribution                                                  6,221                     0                 6,221
                                                                -------------------   -------------------    ------------------
Balance, December 31, 2000                                             (58,727,563)           (6,186,924)          (64,914,487)
       Net loss                                                         (7,869,540)              (75,341)           (7,944,881)
                                                                -------------------   -------------------    ------------------
Balance, December 31, 2001                                             (66,597,103)           (6,262,265)          (72,859,368)
       Net loss                                                         (9,673,167)              (92,609)           (9,765,776)
                                                                -------------------   -------------------    ------------------
Balance, December 31, 2002                                      $      (76,270,270)   $       (6,354,874)    $     (82,625,144)
                                                                ===================   ===================    ==================
</TABLE>

                 See notes to consolidated financial statements.


                                      FS-4
<PAGE>


                    JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                               Year Ended December 31,
                                                                 -----------------------------------------------------
                                                                        2000               2001              2002
                                                                        ----               ----              ----
<S>                                                              <C>                <C>               <C>
Cash Flows from Operating Activities:
       Net loss                                                  $    (6,737,892)   $    (7,944,881)  $    (9,765,776)
       Adjustments to reconcile net loss to net
            cash from operating activities:
            Depreciation                                               7,016,364          8,297,048         9,437,028
            Amortization                                               2,147,470          1,867,934           248,640
            Noncash interest expense                                     630,885            826,807           885,774
            Capital contribution                                           6,221
            Extraordinary gain on extinguishment of debt                                 (1,925,312)
            (Increase) decrease in assets:
                 Accounts receivable                                    (273,358)          (394,446)         (161,998)
                 Prepaid expenses                                         29,591           (398,856)          134,491
                 Deposits                                                  6,900            (51,318)            1,180
            (Decrease) increase in liabilities:
                 Accounts payable                                       (156,295)           585,519          (521,991)
                 Accrued expenses                                       (152,519)           307,463            69,326
                 Accrued interest on debt                                      0           (483,750)                0
                 Unearned revenue                                         63,764            275,690           109,937
                 Subscriber deposits                                      (1,772)            (1,976)           (1,887)
                                                                 ----------------   ----------------  ----------------
                    Total adjustments                                  9,317,251          8,904,803        10,200,500
                                                                 ----------------   ----------------  ----------------

Net cash flows from operating activities                               2,579,359            959,922           434,724

Cash Flows used in Investing Activities:
       Purchase of Internet businesses                                   (41,600)
       Purchase of Lusk, Wyoming fiber                                  (225,000)
       Additions to property and equipment                            (9,056,289)       (11,601,331)       (3,049,744)
                                                                 ----------------   ----------------  ----------------

Net cash flows used in operating activities                           (9,322,889)       (11,601,331)       (3,049,744)

Cash Flows from Financing Activities:
       Principal payments on debt                                     (1,500,000)        (2,500,000)
       Proceeds from debt borrowings                                   4,000,000         23,500,000         6,500,000
       Costs associated with credit facility amendment                                   (1,170,077)          (82,371)
       Purchase of 10-3/4% Senior Notes                                                  (9,720,000)
                                                                 ----------------   ----------------  ----------------

Net cash flows from financing activities                               2,500,000         10,109,923         6,417,629
                                                                 ----------------   ----------------  ----------------

Net (Decrease) Increase in Cash and
       Cash Equivalents                                               (4,243,530)          (531,486)        3,802,609

Cash and Cash Equivalents, Beginning of Year                           5,342,420          1,098,890           567,404
                                                                 ----------------   ----------------  ----------------

Cash and Cash Equivalents, End of Year                           $     1,098,890    $       567,404   $     4,370,013
                                                                 ================   ================  ================

Supplemental Disclosure of Cash Flow Information -
       Cash paid for interest during the period
       (Net of amounts capitalized and amounts paid
       on Company owned Senior Notes)                            $    10,644,220    $    12,086,188   $    12,593,417
                                                                 ================   ================  ================
</TABLE>

                 See notes to consolidated financial statements.


                                      FS-5
<PAGE>




                   JAMES CABLE PARTNERS, L.P. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      NATURE OF OPERATIONS - James Cable Partners, L.P., a Delaware limited
      partnership ("James"), was formed on January 12, 1988. James has system
      locations in Alabama, Colorado, Wyoming, Oklahoma, Texas, Florida,
      Tennessee, Louisiana and Georgia. James' principal investment objective is
      to realize capital appreciation through the acquisition, ownership,
      control, and operations of cable television systems.

          James Cable Finance Corp., a Michigan corporation ("Finance Corp."),
      was organized on June 19, 1997 and became a wholly-owned subsidiary of
      James for the sole purpose of acting as co-issuer with James of the Notes
      referred to below in Note 3. References to the "Company" herein are to
      James and Finance Corp. consolidated, or to James prior to the
      organization of Finance Corp., as appropriate.

      PARTNERSHIP AGREEMENT -- The following represents certain provisions of
      the James Cable Partners, L.P. Second Amended and Restated Agreement of
      Limited Partnership dated as of December 29, 1999, as amended by a First
      Amendment to Second Amended and Restated Agreement of Limited Partnership
      dated as of March 1, 2001 (the "Partnership Agreement"):

          Term of Agreement -- Unless its term is extended as provided in the
      Partnership Agreement, James will be dissolved upon the earliest to occur
      of (i) December 31, 2005, (ii) a determination by the general partner that
      James should be dissolved, with the approval of 51% of the Class A Limited
      Partner interests, (iii) the sale or disposition by James of substantially
      all of its assets, (iv) the consent of holders of 51% of the Class A
      Limited Partner interests, (v) the removal of the general partner pursuant
      to the terms of the Partnership Agreement, or (vi) the bankruptcy,
      insolvency, dissolution or withdrawal of the general partner.

          Voting Rights -- Except as to matters for which consent or approval is
      expressly required under the Partnership Agreement, the Limited Partners
      have no right to vote on any partnership matters. Where a vote or consent
      is required, each Partner is entitled to vote based on its percentage
      interest in James.

          Contributions -- Under the Partnership Agreement, the partners have
      made certain contributions to James. The general partner is not required
      to lend or advance any funds to James or to make any additional capital
      contributions to James. No limited partner is required to lend any funds
      to James or to make any capital contributions to James. The Partnership
      Agreement provides that no partner of James shall have the right to
      withdraw or demand the return of its capital contribution during the term
      of James' existence. The general partner is not personally liable for the
      return of the capital contributions made by Limited Partners.

          Distributions -- James has not made distributions to any of the
      partners, cash or property, from the date of inception to the current
      date. While James does not have plans to make any distributions in the
      near future, any distributions made would be subject to the provisions of
      both the Partnership Agreement and James' various debt agreements.


                                      FS-6
<PAGE>




      PROPERTY, PLANT AND EQUIPMENT are recorded at cost. For the years ended
      December 31, 2001 and 2002, the Company capitalized interest of $181,245
      and $91,869, respectively. Depreciation is computed using accelerated
      methods. Estimated useful lives for major categories are as follows:


                                                                   YEARS
      Buildings and improvements                               31.5 and 39
      Cable television distribution systems                          7
      Office furniture and fixtures                                5 - 7
      Vehicles                                                       5





      INTANGIBLE ASSETS consist of subscriber lists, franchise operating rights
      and covenants not to compete acquired in connection with acquisitions.
      Also included is goodwill, which is the amount by which the cost of
      acquisitions exceeded the fair values assigned to assets acquired.
      Intangible assets are amortized using the straight-line method over
      periods up to 40 years. Pursuant to Statement of Financial Accounting
      Standards ("SFAS") No. 142, and as discussed below, the Company, effective
      January 1, 2002, no longer amortizes its franchise operating rights and
      goodwill.

      DEFERRED FINANCING COSTS in connection with the refinancing (Note 3) are
      being amortized on the straight-line method over 3 years for the credit
      facility and 7 years for the 10-3/4% Senior Notes due 2004.

      REVENUES are recognized in the period in which the related services are
      provided to the subscribers.

      PROFITS AND LOSSES are generally allocated in accordance with James'
      Partnership Agreement. Currently, profits and losses are allocated
      approximately 99.0% to the limited partners and 1.0% to the general
      partner.

      STATEMENT OF CASH FLOWS - For purposes of the statement of cash flows, the
      Company considers all highly liquid debt instruments purchased with
      maturities of ninety days or less at date of purchase to be cash
      equivalents.

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

      INCOME TAXES - The financial statements include only those assets,
      liabilities and results of operations of the Company which relate to the
      business of James Cable Partners, L.P. No recognition has been made of
      income taxes since these taxes are the personal responsibility of the
      partners.

      IMPACT OF RECENTLY ADOPTED ACCOUNTING PRINCIPLES -- On July 20, 2001, the
      FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No.
      142 requires that goodwill and other intangible assets with indefinite
      useful lives no longer be amortized, but be tested for impairment at least
      annually.


                                      FS-7
<PAGE>




        The Company adopted SFAS No. 142 on January 1, 2002, as required by the
      new statement. Upon adoption, the Company no longer amortizes goodwill and
      other indefinite lived intangible assets, which consist of cable franchise
      operating rights. The Company has tested its goodwill utilizing a
      discounted cash flow method as well as assessing a fair market value based
      on current per subscriber market conditions. After reviewing both of these
      methodologies, the Company believes that no impairment existed at December
      31, 2002.

        The effect of the adoption of SFAS No. 142 as of December 31, 2002 and
      2001 is presented in the following table (in thousands) which includes
      only those assets which were not fully amortized prior to December 31,
      2001:
<TABLE>
<CAPTION>

 (in thousands)                             December 31, 2002                          December 31, 2001
                                     Gross        Accum.       Carrying         Gross       Accum.       Carrying
                                     Value        Amort.        Value           Value       Amort.        Value
                                     -----        ------        -----           -----       ------        -----
<S>                               <C>           <C>           <C>            <C>          <C>           <C>
 Indefinite-lived intangibles:
   Goodwill                            $7,457         $567        $6,890          $7,457         $567       $6,890
   Franchise operating rights          16,656       11,682         4,974          16,656       11,682        4,974
                                  ------------  -----------   -----------    ------------ ------------  -----------
 Totals                               $24,113      $12,249       $11,864         $24,113      $12,249      $11,864
                                  ============  ===========   ===========    ============ ============  ===========

 Other intangible assets:
   Subscriber lists and non-
      compete agreements               $1,243         $877          $366          $1,243         $628         $615
                                  ============  ===========   ===========    ============ ============  ===========
</TABLE>




        Amortization expense on the other intangible assets for 2002 was
      $248,640 and is expected to be $246,000, $110,000 and $11,000 in 2003,
      2004 and 2005, respectively.

        Since the Company was not required to adopt SFAS No. 142 until January
      1, 2002, the 2001 and 2000 net losses include amortization of goodwill and
      franchise operating rights. Thus, the table below presents comparative net
      loss amounts for the years ended December 31, 2002, 2001 and 2000.

<TABLE>
<CAPTION>
                                                           Year Ended           Year Ended           Year Ended
                                                          December 31,         December 31,         December 31,
                                                              2002                 2001                 2000
                                                              ----                 ----                 ----
<S>                                                    <C>                  <C>                  <C>
 Loss before extraordinary item                              ($9,765,776)         ($9,870,193)        ($6,737,892)
 Add back:
   Amortization of goodwill                                                           186,442             187,108
   Amortization of franchise operating rights                                       1,432,852           1,722,197
                                                       ------------------   ------------------   -----------------
 Adjusted loss before extraordinary item                      (9,765,776)          (8,250,899)         (4,828,587)
 Extraordinary gain due to debt extinguishment                                      1,925,312

                                                       ------------------   ------------------   -----------------
 Adjusted net loss                                           ($9,765,776)         ($6,325,587)        ($4,828,587)
                                                       ==================   ==================   =================
</TABLE>



         In October 2001, the FASB issued SFAS No. 144, "Accounting for the
      Impairment or Disposal of Long-Lived Assets." The new standard requires
      one model of accounting for long-lived assets to be disposed of, and
      broadens the definition of discontinued operations to include a component
      of a segment. The Company adopted SFAS No. 144 in the first quarter of
      2002 and does not expect that it will have a material impact on its
      financial position and/or results of operations.

        In November 2002, the FASB issued Interpretation No. 45, "Guarantor's
      Accounting and Disclosure Requirements for Guarantees, Including Indirect
      Guarantees of Indebtedness of Others."

                                      FS-8
<PAGE>






      Interpretation No. 45 requires the guarantor to recognize a liability
      for the non-contingent component of a guarantee; that is, the obligation
      to stand ready to perform in the event that specified triggering events or
      conditions occur. The initial measurement of this liability is the fair
      value of the guarantee at inception. The recognition of the liability is
      required even if it is not probable that payments will be required under
      the guarantee or if the guarantee was issued with a premium payment or as
      part of a transaction with multiple elements. Interpretation No. 45 also
      requires additional disclosures related to guarantees. The disclosure
      requirements are effective for interim and annual financial statements for
      periods ending after December 15, 2002. The recognition and measurement
      provisions are effective for all guarantees entered into, or modified,
      after December 31, 2002. The Company is in the process of evaluating the
      effect of this Interpretation on its financial statements.

         In January 2003, the FASB issued Interpretation No. 46, "Consolidation
      of Variable Interest Entities." The Interpretation may have an effect on
      existing practice because it requires existing variable interest entities
      to be consolidated if those entities do not effectively disperse risks
      among the parties involved. The Interpretation is effective immediately
      for all variable interest entities created after January 31, 2003. All
      variable interest entities created before February 1, 2003 shall apply the
      provisions of this Interpretation no later than the beginning of the first
      interim or annual reporting period after June 15, 2003. The Company is in
      the process of evaluating the effect of this Interpretation on its
      Financial Statements.

      FAIR VALUES OF FINANCIAL INSTRUMENTS - The carrying values of cash and
      cash equivalents, accounts receivable, accounts payable and the Credit
      Facility (Note 3) approximate fair market value due to the short-term of
      maturities of these instruments.

          The estimated fair value of the Company's Notes (Note 3) have been
      determined using available market information. However, considerable
      judgement is required in interpreting market data to develop the estimates
      of fair value. Accordingly, the estimates presented herein may not be
      indicative of the amounts that the Company could realize in a current
      market exchange. The use of different assumptions or valuation
      methodologies may have a material effect on the estimated fair value
      amounts. In addition, the circumstances discussed below in "Going Concern
      and Management's Plans" may have a substantial impact on the fair value of
      the Notes. The fair value of the Notes (in millions):

<TABLE>
<CAPTION>
                          December 31, 2001                December 31, 2002
                     -----------------------------    -----------------------------
                        Carrying        Fair             Carrying        Fair
                         Amount         Value             Amount         Value
                         ------         -----             ------         -----

<S>                     <C>             <C>              <C>             <C>
          The Notes         $88           $62                $88           $44
</TABLE>



      GOING CONCERN AND MANAGEMENT'S PLANS

          The accompanying financial statements have been prepared assuming that
      the Company will continue as a going concern, which contemplates the
      realization of assets and the satisfaction of liabilities in the normal
      course of business. Due to its current financial condition and liquidity
      position, the Company failed to pay the $5.375 million interest payment
      due February 15, 2003 on its 10 3/4% Notes due August 15, 2004 (the
      "Notes"). Moreover, because the Company failed to pay such interest
      payment on the Notes by March 18, 2003, an event of default under the
      Indenture under which the Notes were issued has occurred. Consequently,
      either the trustee under the

                                      FS-9
<PAGE>
      Indenture governing the Notes, or the holders of 25% in principal amount
      of the Notes now outstanding, could declare such Notes to be immediately
      due and payable.

         It is to be noted that the event of default under the Indenture also
      constitutes an event of default under the Company's senior credit
      facility. In addition, the Company does not expect to be in compliance
      with the senior credit facility's senior debt coverage ratio on March 31,
      2003 when that ratio decreases from 2.2-to-1 to 2.1-to-1. Such defaults
      could lead to an acceleration of payment demand by the Company's senior
      creditor. Acceleration of payment demands by the Company's creditors would
      have a material adverse effect on the Company's operations, liquidity and
      capital resources, and would require the Company to seek restructuring
      through a Chapter 11 bankruptcy reorganization. The Company is otherwise
      paying its day-to-day obligations. The Company's event of default raises
      substantial doubt about its ability to continue as a going concern.

         The Company has retained Financo Restructuring Group ("Financo") as a
      financial advisor to consider options relating to refinancing and
      restructuring its existing debt. In this role, Financo has begun
      discussions with the Company's senior lender and certain holders of the
      Company's subordinated debentures to pursue a consensual restructuring of
      the Company's debt. In the event a consensual restructuring of the
      Company's debt cannot be achieved, and any of the Company's outstanding
      debt is declared immediately due and payable, the Company would not be
      able to pay such amounts and would seek to reorganize under the provisions
      of the federal bankruptcy laws. The financial statements do not include
      any adjustments relating to the recoverability of recorded assets or
      amounts of liabilities that might be necessary if the Company is unable to
      continue as a going concern.

2.    INTANGIBLE ASSETS

      Intangible assets consist of the following:
<TABLE>
<CAPTION>

                                                                      2001                2002
<S>                                                              <C>                 <C>
         Subscriber lists                                        $ 12,122,320        $ 12,122,320
         Covenants not to compete                                  13,104,200          13,104,200
         Organization costs                                         1,248,020           1,248,020
                                                                 -------------       -------------
               Total                                               26,474,540          26,474,540
         Less accumulated amortization                            (25,859,648)        (26,108,286)
                                                                 -------------       -------------

         Total                                                   $    614,892           $ 366,254
                                                                 =============       =============
</TABLE>





3.    DEBT

         At December 31, 2002 the Company's total debt was $118.0 million,
      comprised of $30.0 million borrowed under its secured credit facility and
      $88.0 million due under the Notes (see discussion below for more details
      on both the credit facility and the Notes).

      Debt consists of the following:





                                     FS-10

<PAGE>
<TABLE>
<CAPTION>
                                                                            2001                2002
<S>                                                                 <C>                 <C>
10-3/4% Series B Senior Notes due 2004                              $     88,000,000    $     88,000,000
Bank Credit Facility                                                      23,500,000          30,000,000
                                                                    ----------------    ----------------

Total                                                               $    111,500,000    $    118,000,000
                                                                    ================    ================
</TABLE>

      THE NOTES -- The Company has outstanding an aggregate principal amount of
      $88,000,000 of its Notes. The Notes are general senior unsecured
      obligations of the Company that mature on August 15, 2004 and rank equally
      in right of payment with all other existing and future unsubordinated
      indebtedness of the Company and senior in right of payment to any
      subordinated obligations of the Company. The Notes are effectively
      subordinated in right of payment to all secured indebtedness of the
      Company. Interest on the Notes accrues at the rate of 10 3/4% per annum
      and is payable semi-annually in cash in arrears on February 15 and August
      15, which commenced on February 15, 1998, to holders of record on the
      immediately preceding February 1 and August 1. Interest on the Notes
      accrues from the most recent date to which interest has been paid.
      Interest is computed on the basis of a 360-day year comprised of twelve
      30-day months.

         There is no public market for the Notes. The Company has not and does
      not intend to list the Notes on any securities exchange or to seek
      approval for quotation through any automated quotation system.

         As indicated in Note 1 above, because the Company failed to pay the
      $5.375 million interest payment due February 15, 2003 on its Notes, an
      event of default under the Indenture under which the Notes were issued has
      occurred. Consequently, either the trustee under the Indenture governing
      the Notes, or the holders of 25% in principal amount of the Notes now
      outstanding, could declare such Notes to be immediately due and payable.
      Acceleration of payment demands by the Company's creditors would have a
      material adverse effect on the Company's operations, liquidity and capital
      resources, and would require the Company to seek restructuring through a
      Chapter 11 bankruptcy reorganization.

      THE CREDIT FACILITY -- The Company has a $30 million secured credit
      facility with various independent lenders that matures on March 2, 2004.
      To date, all $30 million of the available credit has been drawn down to
      pay accrued interest on the Company's Notes and to purchase $12 million
      (face value) of the Notes from affiliates of the lenders.

         The Credit Facility, which is secured by a first priority lien on and
      security interest in substantially all of the assets of the Company,
      accrues interest at a fixed rate of 11.5% which is payable on a quarterly
      basis in arrears. The Credit Facility contains certain covenants, and
      provides for certain events of default, customarily contained in
      facilities of a similar type. Among other things, the Credit Facility
      requires the Company to (i) maintain the ratio of its total debt to
      annualized six-month EBITDA (EBITDA, for the Company, is calculated in the
      table below) of no more than 9.20 to 1 and (ii) maintain a senior debt
      ratio (that is, the ratio of debt under the Credit Facility to annualized
      six-month EBITDA) of no more than 2.20 to 1. In addition, the Credit
      Facility imposes limitations on the amount of capital expenditures that
      the Company can make for the remainder of the term. Generally, capital
      expenditures are limited to $12 million per annum plus any unused portion
      of the capital expenditure allowance from the previous year.




                                    FS - 11
<PAGE>

                      Calculation of EBITDA for the Company
                             (Amounts in thousands)


<TABLE>
<CAPTION>
                                         2000          2001          2002
                                         ----          ----          ----
<S>                                 <C>              <C>           <C>
Operating income                       $  4,584      $  2,487      $  3,685
Add back depreciation and
     amortization                         9,164        10,165         9,686
                                    -------------------------------------------
EBITDA                                 $ 13,748      $ 12,652      $ 13,371
                                    ===========================================
</TABLE>

         As indicated in Note 1 above, the failure of the Company to pay the
      $5.375 million interest payment due February 15, 2003 on its Notes
      constitutes an event of default under the Company's senior credit
      facility. In addition, the Company does not expect to be in compliance
      with the facility's senior debt coverage ratio on March 31, 2003 when that
      ratio decreases from 2.2-to-1 to 2.1-to-1. Such defaults could lead to an
      acceleration of payment demand by the Company's senior creditor.
      Acceleration of payment demands by the Company's creditors would have a
      material adverse effect on the Company's operations, liquidity and capital
      resources, and would require the Company to seek restructuring through a
      Chapter 11 bankruptcy reorganization.

         As discussed above, the Company purchased $12 million (face amount) of
      its 10-3/4% Senior Notes from affiliates of its credit facility lenders.
      These Notes were purchased at a discounted price of .81 and, thus, the
      Company recognized an extraordinary gain on the extinguishment of debt as
      follows:

<TABLE>
<S>                                                  <C>                <C>
Face value of Notes purchased                                             $  12,000,000
Purchase price of Notes                                      9,720,000
Unamortized value of costs associated
    with the Notes                                             354,688
                                                     ------------------
                      Subtotal                                               10,074,688
                                                                        -----------------
Extraordinary gain on extinguishment of debt                              $   1,925,312
                                                                        =================
</TABLE>

         In addition, the Company has paid administrative and other fees to the
      debt holders for maintenance and services related to the debt. Amounts
      paid in the years ended December 31, 2000, 2001 and 2002 were $109,531,
      $16,910 and $0, respectively.

4.    COMMITMENTS AND CONTINGENCIES

          The Company leases office space under operating leases which expire at
      varying dates through 2004. Total rental expense, including month-to-month
      rentals, was approximately $112,600, $125,700 and $121,300 for the years
      ended December 31, 2000, 2001 and 2002, respectively.

          The Company is committed to monthly pole rentals of approximately
      $54,600 as of December 31, 2002, to various utilities and cities. These
      agreements are subject to termination rights by both parties.

5.    RELATED PARTY TRANSACTIONS

      The Company has an agreement with the general partner to operate and
      manage its cable systems. The fee for management services, in accordance
      with the Company's Partnership Agreement, is equal to 4% of annual
      revenues plus $5.00 per average annual subscriber.


                                    FS - 12
<PAGE>

         Management fees paid by the Company to the general partner amounted to
      $1,566,644, $1,638,487 and $1,500,000 in the years ended December 31,
      2000, 2001 and 2002, respectively.

          Included in prepaid expenses and other assets are amounts receivable
      from related parties which total $20,292 and $14,809 for the years ended
      December 31, 2001 and 2002, respectively.

6.    REGULATORY AND LEGAL MATTERS

          The cable television industry is subject to extensive governmental
      regulation on the federal, state and local levels (but principally by the
      Federal Communications Commission ("FCC") and by local franchising
      authorities). Many aspects of such regulation have recently been
      extensively revised and are currently the subject of judicial proceedings
      and administrative rulemakings, which are potentially significant to the
      Company. In this regard, the Company believes that the regulation of cable
      television systems, including the rates charged for cable services,
      remains a matter of interest to Congress, the FCC and local regulatory
      officials. Critics of the cable television industry continue to seek to
      maintain or even tighten cable rate regulation in the absence of
      widespread effective competition. Accordingly, no assurance can be given
      as to what future actions such parties or the courts may take or the
      effect thereof on the Company.

         The Cable Television Consumer Protection and Competition Act of 1992
      (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 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 formerly administered rate regulation of cable programming
      service tiers ("CPST"), which typically contain satellite-delivered
      programming. However, the Telecommunications Act of 1996 (the "1996
      Telecom Act") eliminated CPST regulation effective March 31, 1999.
      Accordingly, the FCC cannot act on CPST rate increases that occur after
      that date.

         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 the latter


                                    FS - 13
<PAGE>
      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 products. 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.

         In an effort to ease the regulatory burden on small cable systems, the
      FCC created special rate rules applicable for systems with fewer than
      15,000 subscribers owned by an operator with fewer than 400,000
      subscribers. The special rate rules allow for a vastly simplified
      cost-of-service showing. The Company is eligible for these simplified
      cost-of-service rules, and has calculated its rates generally in
      accordance with those rules.

         Although FCC regulation of CPST rates for all systems (regardless of
      size) expired on March 31, 1999, critics of the cable television industry
      have called for more rigorous rate regulation (including limits on
      programming cost pass-throughs to cable subscribers) until a greater
      degree of competition to incumbent cable operators has developed. 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.

         In addition, certain provisions of the 1992 Cable Act could, in the
      future, have a material adverse effect on the Company's business. In
      particular, the 1992 Cable Act conveyed to broadcasters the right
      generally to elect either to require (i) the local cable operator to carry
      their signal or (ii) that such operator obtain the broadcaster's consent
      before doing so. To date, compliance with these provisions has not had a
      material effect on the Company, although this result may change in the
      future depending on such factors as market conditions, channel capacity
      and similar matters when such arrangements are renegotiated. In this
      regard, a rulemaking is now pending at the FCC regarding the imposition of
      dual digital and analog must carry provisions.

         In 2001, the FCC granted a pole attachment complaint brought by the
      Company, and other Alabama cable operators, against Alabama Power Company
      ("APC"). The Company initiated the complaint as a result of APC's
      imposition of significant pole rental rate increases (more than 500% for
      the Company), APC's refusal to engage in good faith negotiations and the
      threat, by APC, to terminate existing pole attachment agreements. APC, and
      other pole companies, appealed the FCC order to the U.S. Court of Appeals
      for the Eleventh Circuit. On November 14, 2002, the Eleventh Circuit
      issued its decision rejecting APC's appeal and reaffirming the rulings of
      the FCC in favor of the Company. Although the Eleventh Circuit denied
      APC's request to re-hear the case, the Court nevertheless stayed the
      effect of the decision outside of the Eleventh Circuit while APC appeals
      to the United States Supreme Court. It is anticipated that the United
      State Supreme Court will decide whether it will hear the case by the Fall
      of 2003.

         Other electric utilities have also proposed substantial pole attachment
      rental rate increases. For example, Georgia Power Company, an affiliate of
      APC, which also provides pole attachments to the Company, has proposed an
      even greater increase than APC, as well as an onerous new pole attachment
      agreement. A complaint, filed by the Company and other Georgia cable
      operators, is currently pending at the FCC. On October 8, 2002, the FCC
      rejected the same Georgia Power pole rental rate in a separate legal
      proceeding not involving the Company. Depending on the final outcome of
      these proceedings, as well as other disputes that may arise in the future,
      the Company could experience a significant increase in its pole attachment
      rental costs. Such an increase, if


                                    FS - 14
<PAGE>

      ultimately supported by a final, non-appealable order by a court of
      competent jurisdiction, could negatively affect the Company's operations.

         On October 31, 2001, Echostar Satellite Corporation ("ESC") filed a
      suit against James Cable Partners, L.P. in U.S. District Court for the
      District of Colorado alleging, among other things, unfair trade practices,
      and violations of the Federal Communications Act of 1934 and The Digital
      Millennium Copyright Act.

         In February 2002, the parties agreed to settle the case and entered
      into a Confidential Settlement Agreement, which requires the Company to
      pay ESC monetary consideration. The parties filed a Consent Motion for
      Entry of Final Judgment and Permanent Injunction. On February 25, 2002,
      the court granted the Consent Motion and entered the Final Judgment and
      Permanent Injunction as submitted by the parties. The Final Judgment and
      Permanent Injunction included only prospective injunctive relief and did
      not include any monetary judgment. Under the Injunction, the Company will
      be enjoined in the future from taking certain actions relating to
      Echostar's signals and satellites.

         The Company is a party to ordinary and routine litigation proceedings
      that are incidental to the Company's business. Management believes that
      the outcome of all pending legal proceedings will not, in the aggregate,
      have a material adverse effect of the financial condition or results of
      operations of the Company.

7.    QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         The following is a condensed summary of the Company's unaudited
      quarterly results of operations for the years ended December 31, 2002 and
      2001.

<TABLE>
<CAPTION>
                                                                 Year Ended December 31, 2002
                                                   First      Second       Third       Fourth       Total
                                                   -----      ------       -----       ------       -----
                                                                  (in thousands of dollars)
<S>                                               <C>         <C>          <C>         <C>         <C>
Revenues                                          $  10,458   $  10,756    $  10,511   $  10,587   $  42,312
System operating expenses (excluding
   depreciation and amortization)                     6,651       6,786        6,717       6,663      26,817
Net loss                                             (2,183)     (2,217)      (2,021)     (3,345)     (9,766)

<CAPTION>
                                                                 Year Ended December 31, 2001
                                                   First      Second       Third       Fourth       Total
                                                   -----      ------       -----       ------       -----
                                                                  (in thousands of dollars)
<S>                                               <C>         <C>          <C>         <C>         <C>
Revenues                                          $   9,881   $   9,950    $   9,886   $  10,090   $  39,807
System operating expenses (excluding
   depreciation and amortization)                     5,966       6,156        6,495       6,447      25,064
Net income (loss)                                        94      (2,192)      (2,834)     (3,013)     (7,945)
</TABLE>

         First quarter 2001 net income included an extraordinary gain due to
         debt extinguishment of $1.9 million (see Note 3).






                                    FS - 15
<PAGE>
INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholder of
James Cable Finance Corp.
Bloomfield Hills, Michigan

We have audited the accompanying balance sheets of James Cable Finance Corp. (a
wholly owned subsidiary of James Cable Partners, L.P., a Delaware Limited
Partnership) (the "Finance Corp.") as of December 31, 2002 and 2001. These
balance sheets are the responsibility of the Finance Corp.'s management. Our
responsibility is to express an opinion on these balance sheets based on our
audits.

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

In our opinion, such balance sheets present fairly, in all material respects,
the financial position of Finance Corp. at December 31, 2002 and 2001 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that Finance
Corp. will continue as a going concern. As discussed in Note 1, James Cable
Partners, L.P. and Finance Corp. are in default of their obligation to pay
interest on the Series B Senior Notes, which raises substantial doubt about
Finance Corp.'s ability to continue as a going concern. Management's plans in
regard to this matter are also described in Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.






Detroit, Michigan
February 28, 2003




                                     FS-16
<PAGE>
                            JAMES CABLE FINANCE CORP.
      (A wholly owned subsidiary of James Cable Partners, L.P., a Delaware
                              Limited Partnership)

                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                                      DECEMBER 31,
                                                                                                 2001            2002
                                                                                                 ----            ----
<S>                                                                                          <C>             <C>
                                                        ASSETS
                                                        ------
Cash and cash equivalents                                                                          $1,000          $1,000
                                                                                             =============   =============

                                                 SHAREHOLDER'S EQUITY
                                                 --------------------
Shareholder's equity - Common stock, no par value  (1,000 shares issued and outstanding)           $1,000          $1,000
                                                                                             =============   =============
</TABLE>


                          See notes to balance sheets.






                                      FS-17
<PAGE>

                           JAMES CABLE FINANCE CORP.
      (A WHOLLY-OWNED SUBSIDIARY OF JAMES CABLE PARTNERS, L.P., A DELAWARE
                              LIMITED PARTNERSHIP)

                             NOTES TO BALANCE SHEETS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

      James Cable Finance Corp. ("Finance Corp."), a Michigan corporation, is a
wholly-owned subsidiary of James Cable Partners, L.P. ("James" and together the
"Company"), a Delaware limited partnership, and was organized on June 19, 1997
(the "Date of Inception") for the sole purpose of acting as co-issuer with James
of $100 million aggregate principal amount of the 10-3/4% Senior Notes due
August 15, 2004 (the "Notes"). Finance Corp. has nominal assets and does not
have (and is not expected to have) any material operations.

GOING CONCERN AND MANAGEMENT'S PLANS

      The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. Due
to its current financial condition and liquidity position, the Company failed to
pay the $5.375 million interest payment due February 15, 2003 on its Notes.
Moreover, because the Company failed to pay such interest payment on the Notes
by March 18, 2003, an event of default under the Indenture under which the Notes
were issued has occurred. Consequently, either the trustee under the Indenture
governing the Notes, or the holders of 25% in principal amount of the Notes now
outstanding, could declare such Notes to be immediately due and payable.

      It is to be noted that the event of default under the Indenture also
constitutes an event of default under the Company's senior credit facility. In
addition, the Company does not expect to be in compliance with the senior credit
facility's senior debt coverage ratio on March 31, 2003 when that ratio
decreases from 2.2-to-1 to 2.1-to-1. Such defaults could lead to an acceleration
of payment demand by the Company's senior creditor. Acceleration of payment
demands by the Company's creditors would have a material adverse effect on the
Company's operations, liquidity and capital resources, and would require the
Company to seek restructuring through a Chapter 11 bankruptcy reorganization.
The Company is otherwise paying its day-to-day obligations. The Company's event
of default raises substantial doubt about its ability to continue as a going
concern.

      The Company has retained Financo Restructuring Group ("Financo") as a
financial advisor to consider options relating to refinancing and restructuring
its existing debt. In this role, Financo has begun discussions with the
Company's senior lender and certain holders of the Company's subordinated
debentures to pursue a consensual restructuring of the Company's debt. In the
event a consensual restructuring of the Company's debt cannot be achieved, and
any of the Company's outstanding debt is declared immediately due and payable,
the Company would not be able to pay such amounts and would seek to reorganize
under the provisions of the federal bankruptcy laws. The financial statements do
not include any adjustments relating to the recoverability of recorded assets or
amounts of liabilities that might be necessary if the Company is unable to
continue as a going concern.

2. STATEMENTS OF OPERATIONS, SHAREHOLDER'S EQUITY AND CASH FLOWS

      Since there were no operations in the Finance Corp. from the Date of
Inception through December 31, 2002, a Statement of Operations, a Statement of
Shareholder's Equity and a Statement of Cash Flows have not been presented.


                                    FS - 18
<PAGE>
                           JAMES CABLE PARTNERS, L.P.

                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, James Cable Partners, L.P. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                   JAMES CABLE PARTNERS, L.P.

                                   By:  James Communications Partners
                                        General Partner

                                   By:  Jamesco, Inc.
                                        Partner


                                   By:  /s/ William R. James
                                        --------------------
                                        William R. James
                                        President

                                        Date: March 28, 2003

Pursuant to the requirements of the Securities and 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>
    Signature                           Title                                     Date
    ---------                           -----                                     ----
<S>                                     <C>                                       <C>
     /s/ William R. James               Person performing functions similar to
    ---------------------               a director and a principal executive      March 28, 2003
    William R. James                    officer

     /s/ Daniel K. Shoemaker            Person performing functions similar to    March 28, 2003
    ------------------------            a director, a principal financial
    Daniel K. Shoemaker                 officer, and a principal accounting
                                        officer
</TABLE>

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

    (c)  No annual report to security holders covering the registrants' last
         fiscal year or proxy material has been sent to security holders. If
         such report or proxy material is furnished to security holders
         subsequent to the filing of this form, the registrants will furnish
         copies of such material to the Commission when it is sent to security
         holders.





                                      -41-
<PAGE>
                           JAMES CABLE PARTNERS, L.P.
                    PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, William R. James, certify that:

1. I have reviewed this annual report on Form 10-K of James Cable Partners,
L.P.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003                      /s/  William R. James
                                          ---------------------
                                          William R. James
                                          President of Jamesco, Inc., a general
                                          partner of James Communications
                                          Partners, the general partner of James
                                          Cable Partners, L.P.
                                          (Principal Executive Officer)



                                      -42-
<PAGE>
                           JAMES CABLE PARTNERS, L.P.
                    PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, Daniel K. Shoemaker, certify that:

1. I have reviewed this annual report on Form 10-K of James Cable Partners,
L.P.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003                      /s/  Daniel K. Shoemaker
                                          ------------------------
                                          Daniel K. Shoemaker
                                          President of DKS Holdings, Inc., a
                                          general partner of James
                                          Communications Partners, the general
                                          partner of James Cable Partners, L.P.
                                          (Principal Financial Officer)





                                      -43-
<PAGE>
                            JAMES CABLE FINANCE CORP.

                                   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.

                                   James Cable Finance Corp.


                                   By:  /s/ William R. James
                                        --------------------
                                        William R. James
                                        President

                                        Date: March 28, 2003

Pursuant to the requirements of the Securities and 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>
    Signature                             Title                                  Date
    ---------                             -----                                  ----
<S>                                       <C>                                    <C>
     /s/ William R. James                 Director; President (principal         March 28, 2003
    ---------------------                 executive officer)
    William R. James

     /s/ Daniel K. Shoemaker              Director; Treasurer (principal         March 28, 2003
    ------------------------              financial officer and principal
    Daniel K. Shoemaker                   accounting officer)
</TABLE>

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.

    (c)  No annual report to security holders covering the registrants' last
         fiscal year or proxy material has been sent to security holders. If
         such report or proxy material is furnished to security holders
         subsequent to the filing of this form, the registrants will furnish
         copies of such material to the Commission when it is sent to security
         holders.



                                      -44-
<PAGE>
                            JAMES CABLE FINANCE CORP.
                    PRINCIPAL EXECUTIVE OFFICER CERTIFICATION

I, William R. James, certify that:

1. I have reviewed this annual report on Form 10-K of James Cable Finance Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003                      /s/ William R. James
                                          --------------------
                                          William R. James
                                          President
                                          (Principal Executive Officer)



                                      -45-
<PAGE>
                            JAMES CABLE FINANCE CORP.
                    PRINCIPAL FINANCIAL OFFICER CERTIFICATION

I, Daniel K. Shoemaker certify that:

1. I have reviewed this annual report on Form 10-K of James Cable Finance Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

         a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
         being prepared;

         b) evaluated the effectiveness of the registrant's disclosure controls
         and procedures as of a date within 90 days prior to the filing date of
         this annual report (the "Evaluation Date"); and

         c) presented in this annual report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
the registrant's board of directors (or persons performing the equivalent
functions):

         a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

         b) any fraud, whether or not material, that involves management or
         other employees who have a significant role in the registrant's
         internal controls; and

6. The registrant's other certifying officer and I have indicated in this annual
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003                      /s/ Daniel K. Shoemaker
                                          -----------------------
                                          Daniel K. Shoemaker
                                          Treasurer
                                          (Principal Financial Officer)




                                      -46-
<PAGE>
                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
    EXHIBIT NUMBER                 EXHIBIT DESCRIPTION
<S>                                <C>
    12                             Statement re computation of ratios
    24                             Powers of Attorney
    (99)(a)                        Certification of Principal Executive Officer of James Cable Partners, L.P.,
                                   pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    (99)(b)                        Certification of Principal Financial Officer of James Cable Partners, L.P.,
                                   pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    (99)(c)                        Certification of Principal Executive Officer of James Cable Finance Corp.,
                                   pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
    (99)(d)                        Certification of Principal Financial Officer of James Cable Finance Corp.,
                                   pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>













                                      -47-