SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               ------------------

   
                                   FORM 10-K/A
                                 Amendment No. 1
    


       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, 1998

                                       Or

[ ]       Transition  Report  pursuant to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number 0-18700

                              PRIME CELLULAR, INC.
             (Exact Name of Registrant as specified in its charter)

         Delaware                                          13-3570672
(State or Other Jurisdiction                          (I.R.S. Employer
of Incorporation or Organization)                     Identification No.)

580 Marshall Street,
Phillipsburg, New Jersey                                     08865
(Address of Principal Executive                            (Zip Code)
Offices)

                                 (908) 387-1673
              (Registrant's Telephone Number, Including Area Code)

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

                                                     Name of Each Exchange
Title of each class                                  on Which Registered

         None                                        Not Applicable

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

                          Common Stock, $.01 par value
                                (Title of Class)

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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in

<PAGE>

   
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]

     The aggregate  market value of the Common Stock held by  non-affiliates  of
the  registrant  on April 20,  1999  (based  upon the average of the bid and ask
prices as reported by the OTC Bulletin Board was approximately $2,681,604.

     As of April 20, 1999,  6,108,700 shares of the  registrant's  Common Stock,
par value $.01 per share were outstanding.

     Documents Incorporated By Reference: None
    

<PAGE>

                                     PART I

Item 1. Business

   
     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for forward-looking  statements:  The statements  contained herein which
are not historical facts are  forward-looking  statements that involve known and
unknown risks and uncertainties that could significantly  affect actual results,
performance or achievements of the Company in the future and, accordingly,  such
actual  results,  performance or achievements  may materially  differ from those
expressed or implied in any  forward-looking  statements made by or on behalf of
the  Company.  These risks and  uncertainties  include,  but are not limited to,
risks  associated with the Company's  future growth and operating  results;  the
ability  of the  Company  to  successfully  integrate  newly  acquired  business
operations and personnel into its operations;  changes in customer  preferences;
the ability to hire and retain key personnel;  compliance  with federal or state
environmental   laws  and  other   laws  and   changes  in  such  laws  and  the
administration of such laws; risks associated with government grants and funding
of the Company's clients' projects; dependence on certain significant customers;
protection of trademarks and other  proprietary  rights,  technological  change;
competitive  factors;  unfavorable  general  economic  conditions;  "Year  2000"
compliance and other factors.  Actual results may vary  significantly  from such
forward-looking   statements.   The  words  "believe,"  "expect,"  "anticipate,"
"intend" and "plan" and similar expressions identify forward-looking statements.
Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements which speak only as of the date the statement was made.
    

General

     Prime  Cellular,  Inc.  ("Prime"),  acting  through  two  divisions  of its
wholly-owned  subsidiary,  Cell  &  Molecular  Technologies,  Inc.  ("CMT"  and,
together  with  Prime,  collectively  sometimes  hereinafter  referred to as the
"Company"), is engaged in (1) the provision of contract research and development
services to the  biotechnology  and  pharmaceutical  industries  ("Contract  R&D
Services") and (2) the  manufacture  and wholesale  distribution of cell culture
media and reagents,  as well as other research  products,  for the biotechnology
and pharmaceutical industries ("Specialty Media").

     Prime was incorporated  under the laws of the State of Delaware in May 1990
and, after having engaged in the acquisition and operation of different business
entities subsequent to its initial pubic offering in August 1990,  commenced its
current  business  operations when it acquired CMT, by a reverse merger,  in May
1998.  CMT was  incorporated  on May 6, 1997 to acquire  all of the  outstanding
stock in each of Specialty  Media,  Inc. and Molecular  Cell Science,  Inc., two
entities operating in the biotechnology and pharmaceutical industries since 1987
and 1991, respectively.  Since the reverse merger in May, 1998, CMT has been the
sole operating entity of the Company.

     From June 11, 1996 to November  30,  1997,  Bern  Communications,  Inc.,  a
wholly-owned  subsidiary of Prime formed pursuant to a merger between Prime and
Bern Associates,  Inc. consummated in mid-1996, was the sole operating entity of
Prime.  Bern   Communications,   Inc.  engaged  in  the  design,   installation,
maintenance,  service and  support of computer  systems  enabling  companies  to
provide Internet access to their subscribers.  Prime discontinued the operations
of Bern Communications, Inc. during the quarter ended November 30, 1997.

     The Company  maintains its  executive  offices,  together with  laboratory,
manufacturing  and   office/warehouse   facilities,   at  580  Marshall  Street,
Phillipsburg, New Jersey 08865 (the "Phillipsburg Facility").



                                       -3-


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Molecular Cell Science, Contract Research and Development Division

     CMT provides  contract  research services in molecular and cellular biology
and protein  purification  to  customers in the  biopharmaceutical  research and
development ("R&D") industry, designing and performing sophisticated experiments
for the customer's particular project.

     CMT utilizes a flexible approach, based on collaborative discussions of the
customer research and development goals between  representatives of the customer
and CMT staff  scientists.  Such discussions  lead to detailed,  milestone-based
research proposals that are capable of being periodically  modified based on the
data  collected  during each  experimental  phase.  In this manner,  the Company
believes its dynamic  approach  augments and  complements the customer's own R&D
efforts in a cost- and time-effective manner.

     All  Contract  R&D  Services  are  performed  on a  fee-for-service  basis,
providing for payments only after certain research milestones are reached by CMT
pursuant to the specific research goals arrived at between CMT and its customer.
CMT does not receive residual or royalty payments for future discoveries or uses
involving the materials or services provided by CMT to its contract customers.

     The scientific  areas in which CMT offers its Contract R&D Services include
the  following  areas:  (1)  molecular  biology;   (2)  cell  biology  and  gene
expression;  (3) mouse genetics;  and (4) bioproduction and reagent preparation.
CMT  also  performs  assay  services  for its  R&D  customers  as well as  other
customers  in the  biotechnology  and  pharmaceutical  industries,  as described
below.

     Molecular Biology - CMT engages in state-of-the-art techniques in molecular
biology to  isolate  and  characterize  genes in order to  isolate  proteins  in
connection  with  the  discovery,  testing  and  validation  of  potential  drug
candidates.  Services  performed by CMT range from construction of standard gene
libraries (i.e. compilation of the genes contained in an individual cell) to the
cloning and expression of novel genes (i.e. identification of specific functions
with particular genes or gene sequences).  CMT's staff scientists are experts in
modern  techniques  of  molecular   biology,   including   without   limitation,
construction of cDNA expression libraries,  single cell cDNA libraries,  genomic
DNA libraries, size selected, normalized, subtraction libraries and other custom
gene libraries.  In addition,  CMT's expertise  includes  molecular  cloning and
related  functions,  including the cloning of novel and known cDNAs, the cloning
of promoters and enhancers and the isolation of genomic loci and gene trapping.

     Cell Biology and Gene Expression - CMT's facilities and techniques generate
cell cultures for use in connection  with today's  "high  throughput"  screening
assays,  which testing utilizes  automation or robotics to test large quantities
of cells  very  rapidly.  Employing  increasingly  sophisticated  and  sensitive
molecular  biology  techniques  being  developed  in the  industry,  CMT's staff
scientists  design and  engineer  highly  unique  cell lines for  drug-screening
assays  and the  expression  of novel  genes.  Engineered  cell  lines  are used
throughout  the  biotechnology  and  pharmaceutical  industries to determine the
function of genes and to screen, identify and develop potential drug candidates.
CMT's services include (i) cDNA expression  cloning systems,  (ii) expression of
recombinant  proteins in each of Eschenchia  coli,  yeast,  Mammalian  Cells and
Insect Cells and Baculovirus,  (iii)  preparation of cell-based assays involving
receptor   binding,    transcriptional    activation--reporter   genes,   signal
transduction  pathways and transcription factor  translocation  assays, and (iv)
affinity purification of epitope-tagged proteins.

     Mouse  Genetics - CMT engineers  animal models of human diseases for use in
the  identification  and validation of potential drug candidates.  The advent of
transgenic mouse  technology has allowed  biologists to study the impact of gene
deletions,  mutations, and additions in a whole-animal system whose genetics are
well understood and can be easily manipulated. CMT builds upon this

                                       -4-


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foundation by constructing sophisticated gene deletion and gene insertion models
that can be used to study  normal and  abnormal  gene  functions  by altering or
mutating a specific gene in the animal.

     CMT is proficient in all aspects of applied mouse  genetics,  including (i)
gene  targeting,  involving  generation of Murine  Embryonic Stem Cell lines, of
gene deletion mice and gene  insertion  mice and (ii)  cultivation of Transgenic
mice and mice with specific mutations for use as disease models.

     Bioproduction  and Reagent  Preparation - CMT possesses  multifaceted  cell
culture and  fermentation  capabilities  and expertise,  enabling CMT to produce
whole cells,  cellular fractions or biological  molecules for research and assay
purposes.  These  materials  are  used by  companies  in the  biotechnology  and
pharmaceutical  industries in "high throughput" screening assays to sort through
chemical  libraries for potential  drug  candidates and to identify and validate
probable new drug candidates.

     CMT has developed  bioproduction  techniques and processes to move research
cell  lines to the  manufacturing  floor.  Incorporating  cell  banking  through
upstream and downstream process  development  (including without limitation Cell
Culture Scale-Up and Protein  Purification),  CMT delivers a  well-characterized
process.

     Using its flexible cell culture  facility,  CMT prepares  reagents  derived
from a  broad  range  of  host  cell  types  (including  whole  cells,  cellular
fractions,  or purified  biomolecule  proteins)  properly  formatted for further
characterization or for use in screening assays.  CMT's facilities give CMT both
adherent  (flasks,  roller bottles,  cell  factories) and suspension  (spinners,
bioreactors)  culture capabilities as well as bioreactor capacity to 150 liters,
fractionation  and purification  capabilities.  Its facilities are well-equipped
with dynamic  loop  process  water  system  (including  ultrafiltration,  carbon
adsorption, multiple rounds of ion exchange, and double distillation), warm/cold
rooms,   laminar-flow  hoods,  centrifuges  and  cellular  cryopreservation  and
storage.
 
     CMT has developed  low-enzyme and no-enzyme cell  dissociation  treatments,
which it has sold both  directly and via private label  arrangements  with other
companies  supplying  products  in this  market.  Such  dissociation  techniques
involve  the removal and  transfer of cells from solid  substrates  (such as the
surface of a tissue culture flask or plate) to a new substrate in order that the
cultured  cells can continue to grow normally and avoid the use of enzymes (such
as trypsin) that may over time and overuse sever the protein  complexes  binding
the cell to its substrate and hamper new attachment.

     Assay Services - Accurate  determination of biological  activity,  measured
using assays based on cellular substrates,  is an increasingly important tool in
biopharmaceutical discovery,  development, and quality control. Assays performed
by CMT include,  without limitation,  (i) Enzyme- Linked Immuno-Sorbtion Assays,
(ELISA) (ii) Ligand Binding Assays,  (iii)  Transcriptional  Activation  Assays,
(iv) Cell Proliferation  Assays and (v) Custom Reporter Gene Cell Assays.  These
assays  are  used  for a  variety  of  purposes  including  but not  limited  to
monitoring the production of specific  biomolecules,  determining the biological
function  of  specific  genes  and  screening  and  identifying  small  chemical
compounds as potential drug candidates.

Specialty Media Division

     The Specialty  Media  Division of CMT develops,  manufactures,  and markets
high quality research products,  providing custom-formulated cell culture media,
products for gene transfer and expression, and media and reagents for serum-free
cell  cultures,  mouse embryo  cultures,  and mouse  embryonic  stem cells.  The
Specialty Media Division also identifies and develops research products and


                                       -5-


<PAGE>



reagents  in  response to  customer  feedback  and as a result of the  Company's
activities  in  connection  with  its  Contract  R&D  Services  as  well  as  in
collaboration with academic research institutions through the National Institute
of Health (NIH) funded grant support.

     CMT  manufactures  and  distributes  media and  reagents  in the  following
principal areas:

     Mouse Embryo Media - The genetic  manipulation of early stage mouse embryos
allows  research  scientists to develop animal models for disease states for the
purpose of elucidating  the function of genes which have  similarities  to human
functions.  CMT  manufactures  media and reagents to support the growth of mouse
embryos. In addition to "standard"  formulations,  CMT has developed novel media
formulations  working in collaboration  with Harvard University under NIH funded
grants.  These formulations are licensed to CMT by Harvard pursuant to a license
agreement  expiring  in October  1999.  CMT  believes  that such  license can be
renewed  at such  time.  However,  there  can be no  assurances  that it will be
renewed.  While  mouse  embryo  media have been  traditionally  manufactured  as
liquids, CMT has also developed a powder format greatly extending the shelf life
and opening the possibility for overseas shipment and distribution.

     Unique  Products for General Cell Cultures - A  significant  portion of the
sales revenue of the  Specialty  Media  Division is derived from several  unique
products   developed  by  CMT.  Cell  culture  freezing  media  allows  research
scientists to cryogenically  archive  important cell lines for future use. CMT's
line of enzyme free cell  dissociation  solutions  allow  researchers  to remove
cells from the vessels on which they are grown while retaining the functionality
of the  proteins on their  surface.  This enables the cells to be used in assays
which rely on cell surface  receptors.  CMT also markets a kit containing all of
the  reagents  necessary  to  introduce  foreign  genes into cells,  genetically
altering the cell line. These unique products are directly marketed by Specialty
Media and are also sold by other companies under private label.

     Custom Media Manufacture - CMT actively engages in the production of custom
formulations,  with a minimum volume of only 2 liters. It is frequently the case
that research  scientists  need to vary the components of the nutrient broths in
which cells are grown.  This need is met by CMT through its ability to formulate
complex media in a timely fashion and in low volumes.  CMT believes that its low
minimum  volume  requirements  have  enabled  it to enter a niche not  otherwise
occupied by the several larger companies advertising such custom capabilities.

Customers

     Molecular Cell Science, Contract Research and Development Division

     CMT  provides  its   Contract   R&D  Services  to   manufacturers   in  the
biotechnology and pharmaceutical  industries and to hospitals,  universities and
other  research  institutions.  For the years ended  December 31, 1998 and 1997,
Merck & Co., Inc. accounted for approximately 11% and 24% of the Company's total
annual  revenues,  respectively.  In addition,  research  projects with Columbia
University  accounted for approximately 5% of the Company's total receivables at
December 31, 1998.  Management  believes  that such  customers  will continue to
account for a significant  portion of the Company's  revenues in the 1999 fiscal
year,  although  there  can be no  assurance.  The loss of  these  or any  other
significant  customers  of CMT's  Contract  R&D  Services  could have a material
adverse effect on the Company's business.

     Specialty Media Division

     CMT provides  Specialty Media to  manufacturers  in the  biotechnology  and
pharmaceutical  industries  and to hospitals,  universities  and other  research
institutions. For the years ended December 31, 1998 and 1997, Life Technologies,
Inc.  accounted  for  approximately  13% and 11% of the  Company's  total annual
revenues,  respectively. In addition, Specialty Media sold to Sigma Biosciences,
Life Technologies, Inc., NIH and Columbia University


                                       -6-


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accounted  for  approximately  20%,  14%,  12%  and  5% of the  Company's  total
receivables at December 31, 1998,  respectively.  Management  believes that such
customers  will continue to account for a  significant  portion of the Company's
revenues in the 1999 fiscal year,  although there can be no assurance.  The loss
of these or any other  significant  customers of CMT's  Specialty Media Division
could have a material adverse effect on that segment of the Company's business.

Sales and Marketing

     Molecular Cell Science, Contract Research and Development Division

     The  Molecular  Cell Science  Division  has focused on providing  basic and
pre-clinical  contract research and development.  Given the rapid development of
molecular  biology  techniques and pace of drug discovery,  the Company believes
that  biotechnology  and  pharmaceutical  companies  are  now  focusing  on drug
discovery  as opposed to basic  research and that there is an  increasing  trend
among  companies  in  the  pharmaceutical  industry  to  outsource  their  R & D
projects.  Such  outsourcing  is due  to  (i)  the  quantity  of R & D  projects
necessary  to stay  competitive  in the  industry,  (ii) the reduced  "in-house"
staffs resulting from corporate down-sizing, (iii) the expense and risk inherent
in  conducting  R & D   internally  and  (iv)  the   expanded  capabilities  and
flexibility  offered by third party  research  companies  without the associated
overhead.

     The pattern for outsourcing  among the large  pharmaceutical  companies has
been to expand from pre- and post- approval activities (including clinical trial
management,  manufacturing,  quality control,  packaging, etc.) toward R & D. At
the  front  end  of  the   development   process,   drug   discovery   based  on
rapid-throughput  synthesis and screening  technologies is typically effected by
very large  companies.  On the other end, smaller  technology  companies tend to
provide access to "enabling"  technologies that facilitate the process of target
identification  and lead compound synthesis and  identification.  CMT intends to
address the perceived  opportunity  for a combination  of these  high-throughput
discovery   technologies   and  the  relatively   mature  market  for  pre-  and
post-approval  services.  Because  of the  broad,  multi-disciplinary  range  of
customer  needs  during  this phase of R & D, the  Company  believes  that CMT's
synthesis of multiple  biologically  based capabilities makes it well positioned
in the industry.

     The   Company   believes   that,   through   rapid   growth  by   expanding
state-of-the-art  facilities,  recruiting world class scientists, and developing
and  acquiring  new  technologies,  CMT can benefit  from the  growing  contract
research market.

     CMT's  sales  efforts  are  coordinated  by  the  management  staff  of the
Molecular Cell Science  Division of CMT, whose duties include client contact and
the preparation and submission of project proposals.

     Specialty Media Division

     CMT's  Specialty  Media  Division has directed its products to  specialized
aspects of the cell culture market. The Company believes that, while the overall
available  revenues  from this area is less than other areas of the market,  the
potential margins are greater.  Moreover,  in serving these areas, CMT has built
up significant customer loyalty and name recognition, despite relatively minimal
marketing activities.

     CMT's  sales  efforts are  coordinated  by the Vice  President  of Research
Products of CMT,  whose  duties  include  oversight of  production  development,
direct  sales and  distributor  arrangements.  The  Company  also  utilizes  the
services  of PGC  Scientifics  and  VWR  Scientific,  national  distributors  of
research  products,  which are responsible  primarily for sales to customers not
serviced  regularly by management.  Such  distributors  are compensated  through
sales commissions.


Manufacturing, Suppliers, and Inventory

     The manufacturing as well as order fulfillment and shipping  functions with
respect to the Specialty  Media Division are  accomplished  at the  Phillipsburg
Facility. The raw materials used in the manufacturing process are purchased from
a variety of third-party  suppliers.  The Company believes that CMT has numerous
alternative

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<PAGE>

sources  of  supplies  with  respect  to all  critical  components  used  in the
manufacturing   process.   CMT  maintains  adequate  inventory  at  the
Phillipsburg Facility to support its direct marketing needs.

Competition

     Generally,  CMT  competes  with a  combination  of  national  and  regional
companies  ranging  from large  companies  engaging  in  contract  research  and
development  or reagent  services to companies  specializing  in one  particular
aspect of R & D or media  production.  Some of these  companies  have captured a
significant,  and in certain cases  controlling,  share of the research products
and the transgenic  mouse  outsourcing  markets.  Many of such  competitors have
achieved  significant  national,  regional  and  local  brand  name and  product
recognition  as as well as engage in  frequent  and  extensive  advertising  and
promotional  programs,  both  generally  and in  response  to  efforts  by other
competitors  entering  the  market  or  existing  competitors   introducing  new
products.   Many  of  these  companies  have  substantially  greater  financial,
technical, marketing, personnel and other resources than CMT.

     The Company  believes that entry barriers to these markets are significant,
involving  the  high  costs of  specialized  scientific  equipment,  the need to
recruit  highly  trained  professional  scientific  staff  with  industrial  and
academic  experience,  and the  ability  to offer a wide range of  services  and
expertise.  The ability to compete  successfully  in the industry is affected by
these and other factors, including without limitation price of services, ease of
use,  reliability,  customer  support,  geographic  coverage and  industrial and
general economic trends. In addition,  much of the R & D work involves customers
dependent on government grants and other institutional funding.

     The Company believes that CMT can compete  effectively based on its ability
to  provide  its  customers  with  both (i)  Contract  R&D  Services  for  early
stage/pre-clinical R & D in the pharmaceutical and biotechnology  industries and
(ii) the preparation of reagents for cell culture,  molecular biology, and mouse
genetics in the  international  academic and industrial  research  markets.  The
Company  believes that,  although there are a number of large  competitors  that
have  substantially  greater  resources  than CMT,  such  competitors  have well
established  businesses  in only  one of these  two  areas.  Available  contract
research  services  have  for  the  most  part  focused  on  delivering  routine
technology at low cost. These services have flourished because by maximizing the
load on their  equipment  and labor  resources,  they can reduce the  customer's
in-house  cost.  However,  such economies of scale are achieved at a cost to the
customer who remains for the most part  responsible  for  defining  protocol and
overseeing  its  implementation  to insure  that the  results are useable to the
customer's in-house projects.  In contrast,  CMT offers, in addition to the full
range  of   R & D  services,  complete   experimental  design  and  consultation
throughout the performance of the Contracted R&D Services.

     Molecular Cell Science, Contract Research and Development Division

     The Company  believes that the Contract R&D Service business can be divided
into four markets,  consisting of the (i) low end R&D, (ii) specialty R&D, (iii)
high end R&D and (iv) technology platform R&D, as follows:

     Low End R&D - Services  performed in this market are  characterized  by low
margins and strong competition and are technical and mechanical in nature. These
services tend not to lead to higher end, more complex  projects.  This market is
comprised  of small  local  vendors,  some of which have  grown to cover  larger
markets.  CMT offers a wide range of  services  in this  area,  including  those
offered by its competitors.

     Specialty  R&D - Services  performed in this market tend to be  technically
and/or  target  focused.  These  services  seldom  lead to new and more  complex
projects.  While a number of CMT's services touch upon this market, CMT tends to
offer a broader focus with its services.

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     High End R&D - Services  performed  in this market tend to be high  margin,
highly  skilled  technical  and  mechanical   matters,   requiring   significant
intellectual input and problem solving and access to well recognized  academics.
These services often require the  development of new high end  technologies  and
lead to more  complex  projects.  Such  projects can be used as a launch pad for
developing  proprietary  technologies.  The  Company  believes  that CMT is well
positioned to participate in this market,  offering  expert  research  services,
consultation at all stages of the project and problem solving abilities.

     Technology  Platform R&D - This market is comprised of companies which have
based  their  business on  performing  drug  screening  and/or  licensing  their
proprietary technology to companies for their in-house screening programs. These
relationships  are generally  associated  with  significant  licensing costs and
downstream  royalties.  The  application  and/or  licensing of such  proprietary
technology   platforms  involve  large  contracts  and  is  highly  competitive.
Competition   arises  from  the   development  of   alternative   and  competing
technologies designed to yield results ever more quickly and inexpensively.  CMT
is active in this market as well,  developing novel technology platforms through
research  performed  for  its own  account,  licensing  arrangements  as well as
through   collaborative  small  business  research  grants.   CMT's  proprietary
technologies are principally focused on the rapid identification, expression and
characterization  of genes and proteins for use in the  screening  and discovery
efforts of potential drug  candidates in the  biotechnology  and  pharmaceutical
industries.

     Specialty Media Division

     The Company  believes that the Specialty Media market is dominated by a few
very large  companies  with a number of minor  participants.  Historically,  the
revenue  producers  in the  Specialty  Media  market have been a limited  number
(fewer that 20) of  manufacturers of public-domain  media  formulations  (mostly
developed in the 1960's) and the Fetal Bovine Serum (FBS) which has been used to
supplement  media.  The Company believes that competition in this area is mostly
on a price basis.

Government Regulation

     The  Company  and its  business  operations  are  subject  to many laws and
governmental  regulations  and changes in these laws and  regulations,  or their
interpretation by agencies and the courts, occur frequently.

     Environmental  Regulation - The Company's operations are subject to various
evolving  federal,  state  and  local  laws  and  regulations  relating  to  the
protection of the environment,  which laws govern, among other things, emissions
to  air,  discharges  to  ground,  surface  water,  and  groundwater,   and  the
generation,  handling,  storage,  transportation,  treatment  and  disposal of a
variety of hazardous and non-hazardous  substances and wastes. Federal and state
environmental laws and regulations often require manufacturers to obtain permits
for these emissions and discharges. Failure to comply with environmental laws or
to obtain,  or comply with, the necessary  state and federal permits can subject
the  manufacturer to substantial  civil and criminal  penalties.  CMT operates a
manufacturing  facility.  Although the Company believes that such facility is in
substantial  compliance with all applicable  material  environmental laws, it is
possible that there are material environmental  liabilities of which the Company
is  unaware.  If the costs of  compliance  with the  various  existing or future
environmental  laws  and  regulations,  including  any  penalties  which  may be
assessed for failure to obtain necessary  permits,  exceed the Company's budgets
for  such  items,  the  Company's  business  could  be  adversely  affected.  In
additions,  liability to third parties could have a material  adverse  effect on
the Company's business.

     Potential  Environmental  Cleanup  Liability  - The  Federal  Comprehensive
Environmental  Response,  Compensation and Liability Act, as amended ("CERCLA"),
and many  similar  state  statutes,  impose  joint  and  several  liability  for
environmental  damages and cleanup costs on past or current owners and operators
of facilities at which hazardous substances have been discharged,  as well as on
persons who generate,  transport, or arrange for disposal of hazardous wastes at
a particular  site.  In  addition,  the operator of a facility may be subject to
claims by third  parties for  personal  injury,  property  damage or other costs
resulting from contamination  present at or emanating from property on which its
facility  is  located.  Furthermore,  certain  business  operations  of CMT also
involve shipping

                                       -9-


<PAGE>



hazardous waste off-site for disposal. As a result, the Company could be subject
to liability under these statutes.  Furthermore,  there can be no assurance that
Prime  or CMT  will  not be  subject  to  liability  relating  to  manufacturing
facilities owned or operated by them currently or in the past.

     Permits - In  connection  with its  business  operations,  CMT has obtained
permits from the New Jersey  Department of Environmental  Protection  (NJDEP) as
both a hazardous  waste and  medical  waste  generator.  CMT  believes  that its
compliance with such regulations,  however,  is on a voluntary basis inasmuch as
its  operations  produce  insufficient  levels of  chemical  waste.  The Company
further  believes  that  none of its  medical  waste is  deemed  infectious.  In
addition,  CMT has obtained a permit from the Nuclear Regulatory  Commission for
the use of radioisotopes in connection with CMT's research functions.

   
     Other  Regulations  - In  addition  to the  foregoing,  the  Company may be
subject to various  other  federal,  state and local  regulatory  and  licensing
requirements as the same are promulgated from time to time by the  Environmental
Protection Agency, Food and Drug Administration,  Nuclear Regulatory Commission,
the New Jersey Department of Environmental  Protection and other federal,  state
and local  regulatory  agencies.  Failure of the  Company to comply  with any of
these  requirements  could  result in the  imposition  of fines by  governmental
authorities or awards of damages to private litigants.
    

     The  Company  has  made,  and will  continue  to make,  capital  and  other
expenditures necessary to monitor and to comply with any applicable regulations.
For the year ended  December 31, 1998, no material  expenditures  by the Company
were necessary with respect to such matters.

Trademarks, Proprietary Information and Patents

     CMT  utilizes  various  proprietary  information  in  connection  with  the
providing of its services and the manufacture and sale of its products.  In that
connection,  CMT has a trademark application currently pending before the United
States Patent and Trademark Commission with respect to one of its products.  CMT
has also  developed  processes  and  formulas  with  respect  to cell and embryo
culture media and  reagents,  and gene  expression  systems that it believes are
proprietary to it. The Company relies on customary principles of "work-for-hire"
as well as technical measures to establish and protect the ideas,  concepts, and
documentation  of its  proprietary  technology  and  know-how  and,  in  certain
instances, has entered into non-disclosure  agreements with its employees.  Such
methods,  however,  may not  afford  complete  protection,  and  there can be no
assurance  that third  parties will not  independently  develop such know-how or
obtain access to the Company's  know-how,  ideas,  concepts,  and documentation.
Although  the  Company   believes  that  its   technology   has  been  developed
independently and does not infringe on the proprietary  rights of others,  there
can be no  assurance  that the  technology  does not and will not so infringe or
that third parties will not assert  infringement  claims  against the Company in
the future.  In the case of  infringement,  the  Company  would,  under  certain
circumstances, be required to modify its products or obtain a license. There can
be no  assurance  that the Company will have the  financial  or other  resources
necessary to defend  successfully  a patent  infringement  or other  proprietary
rights  infringement  action or that it could  modify its  products  or obtain a
license if it were required to do so.  Failure to do any of the foregoing  could
have a material  adverse  effect on the Company.  If the  Company's  products or
technologies are deemed to infringe upon the rights of others, the Company could
be liable  for  damages,  which  could  have a  material  adverse  effect on the
Company.

Product Liability

     As a  manufacturer  of  certain  products,  the  Company  may be exposed to
product liability claims by consumers. Although the Company has obtained product
liability  insurance  coverage in the  aggregate  amount of $2.0  million  ($1.0
million per occurrence),  and is in the process of procuring an umbrella policy,
there can be no assurance  that such  insurance  will  provide  coverage for any
claim  against  the  Company  or  will  be  sufficient  to  cover  all  possible
liabilities.  In the event a  successful  suit is brought  against the  Company,
unavailability  or  insufficiency  of insurance  coverage  could have a material
adverse effect on the Company. Moreover, any adverse

                                      -10-


<PAGE>



publicity arising from claims made against the Company, even if such claims were
not successful, could adversely affect the reputation and sales of the Company's
products and services.

Employees
   
     As of April 20, 1999, the Company had twenty-one (21) full-time and two (2)
part-time employees.  Of such employees,  five (5) are executive employees,  two
(2) are  engaged in  customer  support,  nine (9) are  engaged in  research  and
development and media production, one (1) is engaged in sales and marketing, two
(2) are engaged in warehouse,  shipping and  receiving,  and four (4) (including
the two part-time employees) are engaged in accounting and administration.  None
of the Company's employees are covered by collective bargaining agreements.  The
Company believes that it has a good relationship with its employees.
    
History of Prime Cellular, Inc.

     Prime was organized in May 1990 to provide management  services,  including
business planning,  marketing,  engineering,  design and construction consulting
services,   to  rural  service  area  cellular  telephone  licensees.   However,
preferences of owners of construction  permits and the  deterioration in general
economic  conditions  subsequent  to Prime's  initial  public  offering in early
August 1990 negatively  impacted Prime's business plan and Prime soon determined
that it was prudent for it to explore other uses for Prime's funds.

     Prime  initially  analyzed   potential   investments  in  debt  and  equity
instruments  of entities  involved in either the cellular or related  industries
and  subsequently   expanded  its  search  to  include   entities   involved  in
non-cellular  operations.  Since 1991, Prime has retained an outside consultant,
who is also a  shareholder  and currently a director and officer of the Company,
under an  agreement  renewable  each July to assist it in finding  new  business
opportunities for the Company.

     On June 11, 1996, a wholly-owned  subsidiary of Prime  consummated a merger
(the "Bern Merger") with Bern Associates, Inc. ("Bern") pursuant to that certain
Merger Agreement, dated May 14, 1996 (the "Bern Agreement"), by and among Prime,
its  subsidiary,  Bern  and all of the  stockholders  of Bern.  Bern's  business
consisted  principally  of  designing,  installing,  maintaining,  servicing and
supporting  computer systems to enable regional  telephone  companies to provide
Internet access to their  subscribers as well as developing  Internet  software.
Bern offered its customers an integrated  Internet access solution  comprised of
off-the-shelf  computer hardware and accessories,  systems integration,  billing
software and twenty-four  hour subscriber  support.  Bern also provided  network
management  services to regional  telephone  companies already offering Internet
access.  After the Bern  Merger,  Prime's  subsidiary  changed its name to "Bern
Communications, Inc." ("Bern Communications"). The Merger was accounted for as a
reverse  acquisition whereby Bern Communications was treated as the acquirer for
financial  reporting  purposes.   During  the  year  ended  May  31,  1997  Bern
Communications was the sole operating entity of Prime.

     On August 28, 1997, Prime entered into a settlement (the "Settlement") with
former  stockholders  of Bern  ("Bern  Stockholders")  for  alleged  breaches of
certain  representations  and  warranties  made by the  Bern  Stockholders  with
respect  to the Bern  Merger as well as for  on-going  disputes  concerning  the
operations and direction of the business of Bern Communications. Pursuant to the
Settlement,  Prime (i) purchased all of the shares of common stock in Prime held
by the Bern Stockholders as a result of the Prime Merger, at a purchase price of
$.50 per share  (the  market  price on the date of such  purchase),  aggregating
676,937  shares  of common  stock for an  aggregate  amount  of  $338,469,  (ii)
transferred to certain Bern Stockholders all right and title to the intellectual
property  rights with respect to the computer  software  program  WEBSITENOW and
certain computer hardware used in the development of such software  program.  In
exchange,  such Bern  Stockholders  signed a general  release and, to the extent
applicable,  confirmed their prior  resignations as officers and/or directors of
the Company and/or Bern  Communications  as well as terminated  their respective
options to purchase  the  Company's  Common  Stock.  All shares  acquired by the
Company  pursuant to the settlement were  cancelled,  effective as of August 28,
1997.

     Following the Settlement,  Bern  Communications  ceased soliciting  further
opportunities or engaging in any further consulting  services in connection with
its integrated Internet access system.  Moreover, all sales of computer hardware
and/or software of Bern Communications were discontinued effective as of the

                                      -11-


<PAGE>



Settlement.  Bern Communications did nevertheless  continue to provide help desk
functions  as well as  network  management  services  pursuant  to its  existing
contractual  arrangements.  All such contractual arrangements were terminated on
or about November, 1997.

     On May 29, 1998, a newly formed wholly-owned  subsidiary of Prime acquired,
by merger,  CMT.  Pursuant  to the Merger  Agreement,  dated May 29,  1998,  the
subsidiary  was  merged  into CMT and all of the  outstanding  shares of capital
stock of CMT were  converted  into an aggregate  of  1,611,000  shares of Common
Stock,  par value $.01 per  share,  of Prime  (the "CMT  Merger"),  representing
approximately  26.4% (after  consummation  of the Merger) of Prime's  issued and
outstanding  Common  Stock.  The  CMT  Merger  was  accounted  for as a  reverse
acquisition  whereby CMT was treated as the  acquirer  for  financial  reporting
purposes. Since the CMT Merger, CMT has been the sole operating entity of Prime.

     In connection with the CMT Merger,  the Company changed its fiscal year end
from May 31, to December 31, which year end corresponds with the fiscal year end
for CMT.

     On December  22,  1998,  each of Prime  Cellular of Florida,  Inc. and Bern
Communications, Inc., as wholly-owned subsidiaries of Prime no longer conducting
business, merged with and into Prime pursuant to a short-form affiliate merger.


Item 2.  Properties

     Since June 1998, the Company's  executive  offices have been located at 580
Marshall  Street,  Phillipsburg,  New Jersey 08865,  which property  consists of
approximately    6,651   square   feet   of   laboratory,    manufacturing   and
office/warehouse  space.  The  property  is owned by the  Company,  having  been
acquired in connection with the CMT Merger subject to a mortgage and note, dated
February 10, 1997, in the aggregate  principal  amount of $287,600.  As of March
31, 1999, the balance due under the note is $275,974.

     During the 1998 fiscal  year,  the Company  ceased  using the office  space
located at 100 First Stamford  Place,  Stamford CT 06902 and the  administration
offices and executive  research  laboratory located at 406 Grand Central Avenue,
Lavallette,  NJ 08735 (the "Lavallette  Facility").  The Lavallette  Facility is
leased from a stockholder of the Company pursuant to a sublease.  The underlying
lease does not expire until November 1999. The Company has  nonetheless  entered
into an oral  agreement  with the landlord to  terminate  the lease at April 30,
1999. Until the lease is terminated,  the Company is continuing to pay rent. The
monthly rent for the  Lavallette  Facility is $1,200.  Payments of rent are made
directly to the landlord on behalf of the sublessor.

Item 3.  Legal Proceedings

     Not Applicable

Item 4.  Submission of Matters to a Vote of Security Holders.

     Not Applicable




                                      -12-


<PAGE>

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

     The  Company's  Common Stock is traded on the OTC Bulletin  Board under the
symbol PCEL. The following table sets forth, for the periods indicated, the high
and low bid  quotations  for the Company's  Common Stock for the last two fiscal
years as reported on the OTC Bulletin Board. The quotations reflect prices among
dealers, do not reflect retail markups,  markdowns or other fees or commissions,
and do not necessarily  represent actual  transactions.

                                                 High                 Low
                                                 ----                 ---
       Year Ended December 31, 1998

      First Quarter..........................   $ 3.875             $ 0.625
      Second Quarter.........................     3.50                1.25
      Third Quarter..........................     2.75                1.00
      Fourth Quarter.........................     1.50                0.25

      Year Ended December 31, 1997

      First Quarter..........................   $ 4.25              $ 2.00
      Second Quarter.........................     4.75                1.00
      Third Quarter..........................     1.50                0.50
      Fourth Quarter.........................     0.75                0.375


   
     On April 20, 1999,  the average of the bid and ask prices for the Company's
Common Stock was $1.1875, as reported by the OTC Bulletin Board. As of April 20,
1999,  there were  6,108,700  shares of Common  Stock  outstanding.  The Company
believes that there are in excess of 450 beneficial  owners of its Common Stock,
whose shares are held of record or in street name.
    

Dividend Policy

     To date,  the Company has not  declared or paid any cash  dividends  on its
Common  Stock.  The  payment of  dividends,  if any, in the future is within the
discretion  of the  Board of  Directors  and  will  depend  upon  the  Company's
earnings,  its capital  requirements and financial  condition and other relevant
factors.  The  Company  currently  intends to retain all  earnings,  if any,  to
finance the Company's  continued growth and development of its business and does
not expect to declare or pay any cash dividends in the foreseeable future.

Recent Sales of Unregistered Shares

   
     In connection  with the CMT Merger  consummated on May 29, 1998, all of the
outstanding  shares of capital stock of CMT were  converted into an aggregate of
1,611,000  shares of the Company's  Common Stock.  The exchange of shares by the
Company was made in reliance upon Section 4(2) of the Securities Act of 1933, as
amended (the "Act").
    




                                      -13-



<PAGE>



Item 6. Selected Financial Data

     The following  selected  financial data at and for the years ended December
31, 1998, 1997, 1996, 1995 and 1994 has been derived from the Company's  audited
financial  statements  for each of the years other than the year ended  December
31, 1994.  Such  information  should be read in conjunction  with  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
the  financial  statements  and the notes  thereto  appearing  elsewhere in this
Report.

Statement of Income Data:

<TABLE>
<CAPTION>
                                                                 Year Ended December 31,
                                      -------------------------------------------------------------------------------
                                         1998             1997             1996             1995             1994
                                      -----------      -----------      -----------      -----------      -----------
<S>                                   <C>              <C>              <C>              <C>              <C>
Revenue .........................     $ 2,127,233      $ 2,180,190      $ 1,471,221      $ 1,526,391      $ 1,021,840
                                      ===========      ===========      ===========      ===========      ===========
Net income (loss) ...............       (698,674)        (209,621)          (62,617)     $    56,709      $    22,068
                                      ===========      ===========      ===========      ===========      ===========
Income (loss) per share
Basic and Diluted ...............          $(.16)           $(.17)           $(.07)      $       .06      $       .02
                                      ===============================================================================
<CAPTION>

Balance Sheet Data:
                                                                              At December 31,
                                                       --------------------------------------------------------
                                                       1998          1997          1996         1995       1994
                                                       ----          ----          ----         ----       ----
<S>                                                 <C>           <C>            <C>           <C>        <C>
   
       Total assets..............................   11,825,683    2,028,457      706,964       443,191    460,600
       Long-Term debt............................      826,024      748,738        3,872       120,152    168,614
</TABLE>
    

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

     In conjunction with the consummation of the CMT Merger on May 29, 1998, all
of the  outstanding  shares  of  capital  stock  of CMT were  converted  into an
aggregate of 1,611,000  shares of common  stock,  par value of $.01 per share of
Prime,  representing  approximately  26.4% (after consummation of the Merger) of
Prime's issued and outstanding  common stock. This transaction was accounted for
as a reverse acquisition whereby

                                      -14-


<PAGE>



CMT was the acquirer for accounting  purposes.  The assets and liabilities  were
recorded  at  their  historical  amounts  from  the  date  of  acquisition.  The
historical  consolidated financial statements prior to May 29, 1998 are those of
CMT with all common stock data restated into the equivalent capital structure of
Prime.

Comparison of Year Ended December 31, 1998 to Year Ended December 31, 1997

     Revenue for the year ended  December 31, 1998 was $2,127,233 as compared to
$2,180,190 for the year ended December 31, 1997. This 2% or $52,957  decrease in
revenue was a result of a $144,212 or 14% increase in sales of goods, reduced by
a $197,169 or 18% decrease in contract revenue. The decrease in contract revenue
was due to the Company's  decision in early 1998 to  transition  the majority of
the research work from subcontractors to in-house. This staffing up of personnel
and building out additional laboratory space was a major focus in 1998.

     Income after direct costs for the year ended December 31, 1998 was $668,976
as compared to $838,476 for the year ended  December 31, 1997.  This $169,500 or
20%  decrease  in income  after  direct  costs was a result of a $147,421 or 36%
increase  from  sales of goods,  reduced  by a  $316,921  or 74%  decrease  from
contract  revenue.  This  decrease in income after direct costs for the contract
revenue  segment  resulted   principally  from  the  Company  hiring  additional
personnel to  accommodate an  anticipated  large  increase in contract  revenue,
which increase in business did not materialize in 1998.

     Corporate activities for the year ended December 31, 1998 resulted in a net
expense of  $148,765  as  compared  to a net income of $9,897 for the year ended
December 31, 1997. This net increase in expense  resulted from selling,  general
and administrative  expenses,  partially offset by interest income,  realized in
connection with the CMT Merger.

     As a result of the foregoing,  the net loss increased to ($698,674) for the
year ended  December  31, 1998 as compared to a net loss of  ($209,621)  for the
year ended December 31, 1997.

Comparison of Year Ended December 31, 1997 to Year Ended December 31, 1996

     Revenue for the year ended  December 31, 1997 was $2,180,190 as compared to
$1,471,221 for the year ended December 31, 1996.  This 48% or $708,969  increase
in revenue  was a result of $523,019 or 87%  increase in contract  revenue.  The
increase in contract  revenue was due to  management's  decision to aggressively
market  the   Company's   Contract  R&D  Services  to  the   biotechnology   and
pharmaceutical industries.

   
     Income after direct costs for the year ended December 31, 1997 was $838,476
as compared to $537,983 for the year ended  December 31, 1996.  This $300,493 or
56%  increase  in income  after  direct  costs was a result of a $95,598  or 31%
increase  from sales of goods  plus a $204,895  or 91%  increase  from  contract
revenue. The increase in contract revenue was due to the aggressive marketing of
this segment's services to the pharmaceutical and biotechnology industries while
controlling direct costs.
    

     Corporate activities for the year ended December 31, 1997 resulted in a net
income of $9,897 as  compared  to a net  expense of  $42,449  for the year ended
December 31, 1996.  This net increase in income  resulted  from $44,375 of other
income for the year ended  December 31, 1997  whereas  other income for the year
ended  December  31, 1996 was a net expense of $36,554.  This net  increase  was
reduced  by an  increase  of  interest  expense  to  $47,427  for the year ended
December 31, 1997 as compared to $7,077 for the year ended  December 31, 1996 as
a result of increased borrowings in 1997.


                                      -15-

<PAGE>



     Net loss for the year ended December 31, 1997 was ($209,621) as compared to
a net loss of ($62,617)  for the year ended  December 31, 1996.  The increase in
net  loss  was the  result  of  other  operating  expenses  -  contract  revenue
increasing to $610,388 or 123% for the year ended  December 31, 1996 as a result
of the contract  revenue  segment  expanding its support  structure to sustain a
larger volume of business.

Liquidity and Capital Resources

     At December 31, 1998, the Company had approximately  $5,400,000 in cash and
short term investments and  stockholders'  equity of  approximately  $5,100,000.
Although the Company had a working  capital deficit of  approximately  $100,000,
the Company had, as of March 1999, readily marketable  investment  securities of
approximately $5,000,000 in other assets.

     Net cash used by/provided by operating activities aggregated ($746,523) and
$359,684  for the years  ended  December  31, 1998 and 1997,  respectively.  The
$1,106,207  increase  in  cash  used by  operating  activities  was  principally
attributable  to  increased  losses  for the year  ended  December  31,  1998 as
compared to 1997 as well as due to a reduction  in customer  deposits  partially
offset by an increase in accounts payable and accrued expenses.

   
     Net cash used in investing  activity  aggregated  ($5,015,267) for the year
ended December 31, 1998 as compared with  ($447,936) for the year ended December
31,  1997.  The  increase  in cash  used was  attributable  to the  purchase  of
approximately  $5,200,000 in investment  securities and  certificates of deposit
reduced by  approximately  $546,000 of cash acquired in connection  with the CMT
Merger and a decrease of  approximately  $100,000 of purchased  fixed assets for
the year ended December 31, 1998.
    

     Cash flow from  financing  activities  aggregated  $5,102,253  for the year
ended  December 31, 1998 as compared to $698,213 for the year ended December 31,
1997.  The  increase  was  due  primarily  to  the  $5,000,000   proceeds  of  a
collateralized investment loan in 1998 offset by approximately $500,000 in loans
from stockholders in 1997 which was not repeated in 1998.

Inflation

     Inflation  has  historically  not had a  material  effect on the  Company's
operations.

Year 2000

     The Company  continues to explore new  operations  and  financial  software
packages  that are Year 2000  compliant  and  intends to install  such  software
during the second and third  quarters of the 1999  fiscal  year with  respect to
CMT. The system for Prime was updated  prior to the end of the 1998 fiscal year.
The  Company is also  currently  assessing  the  compatibility  with third party
suppliers  and  customers  of any  proposed  software  package  to  minimize  or
eliminate any adverse effect on the Company's business in the event customers or
suppliers systems have a Year 2000 problem. Although the Company does not expect
significant  costs or disruptions to its operations as a result of the inability
of any of its  suppliers  and  customers  to achieve Year 2000  compliance,  the
Company  cannot  predict  what  effect  such  noncompliance  may  have  upon the
operations of the Company.

     The Company does not expect  expenditures  relating to the Year 2000 issues
to be material and does not expect costs associated with the Year 2000 to have a
significant impact on the Company's results of operations or financial position.
However,  there  can be no  assurance  that  the  Company  will  not  experience
unexpected  difficulties in connection with the Year 2000 or that the systems of
other companies on which the Company's systems rely will be timely converted.


                                      -16-


<PAGE>


Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     Not applicable.


Item 8.  Financial Statements and Supplementary Data

     This  information  appears in a separate  section of this report  following
Part IV.


Item 9. Changes in and Disagreement with Accountants on Accounting and Financial
Disclosure.

     Information with respect to matters set forth in Item 304 of Regulation S-K
was previously reported by the Company in its reports on Forms 8-K and 8-K/A for
the event dated  December  23,  1998,  filed with the  Securities  and  Exchange
Commission pursuant to Section 13 of the Securities Exchange Act of 1934.


                                      -17-


<PAGE>


   
                                    Part III

Item 10. Directors and Executive Officers of the Registrant.

     The current directors and executive officers of the Company are as follows:

<TABLE>
<CAPTION>
Name                                 Age        Position
----                                 ---        --------
<S>                                  <C>        <C>
Joseph K. Pagano                     53         President and Chairman of the Board

Robert A. Reinhart                   49         Vice-President of Finance, Chief Financial Officer,
                                                Treasurer and Secretary

Frederick R. Adler                   73         Director


Thomas Livelli                       46         Director


Richard Malavarca                    46         Director


Dr. Paul A. Marks                    72         Director


Samuel A. Rozzi                      53         Director
</TABLE>

Joseph K. Pagano has served as President of the Company since June 1994 and as a
director  since 1991. He also served as Chief  Financial  Officer from June 1994
until July 1996.  Since 1991,  he has also been engaged as a  consultant  to the
Company.  Mr.  Pagano  has been a private  investor  for more than the past five
years.

Robert A.  Reinhart is a  certified  public  accountant  and has served as Chief
Financial  Officer and Vice  President - Finance of the Company  since July 1996
and as  Vice-President  and  Treasurer/Secretary  since May 1997.  Mr.  Reinhart
served  as  Vice  President,  Finance  and  Chief  Executive  Officer  for  Bern
Communications,  Inc. from July 1996 until its dissolution in 1998. Prior to his
employment by the Company,  Mr. Reinhart  served as the Chief Operating  Officer
and Chief Financial Officer of DeBoles  Nutritional  Foods, Inc. from 1992 until
1996. Prior to being engaged by De Boles  Nutritional  Foods,  Inc. in 1992, Mr.
Reinhart  was a senior  manager/engagement  executive  with a  certified  public
accounting firm located on Long Island, New York.

Frederick R. Adler has been a director of the Company since May 1996.  Mr. Adler
is Managing  Director of Adler & Company,  a venture capital  management firm he
organized in 1968, and a general partner of its related  investment funds. Since
January 1, 1996,  Mr.  Adler has been of counsel to the law firm of  Fulbright &
Jaworski  L.L.P.  and,  for more than five  years  prior  thereto,  was a senior
partner in the firm. Mr. Adler is also Chairman of the Executive Committee and a
director of Data General  Corporation,  Chairman and director of Shells  Seafood
Restaurants, Inc., and a director of USA Detergents, Inc., as well as a director
of various private companies.

Thomas  Livelli has been a director of the Company  since June 1998.  He is also
the President and Chief Executive  Officer of the Company's  subsidiary,  Cell &
Molecular  Technologies,  Inc. ("CMT"). Mr. Livelli was the founder of Molecular
Cell Sciences,  Inc., the predecessor to the Molecular Cell Science  Division of
CMT, and the  co-founder  of the Specialty  Media  Division of CMT. From January
1986 until July 1997, Mr. Livelli was a Laboratory  Manager at the Howard Hughes
Medical Institute at Columbia  University.  Prior to 1986, Mr. Livelli worked at
Merck Research  Laboratories  ("Merck") and Cistron  Biotechnology  ("Cistron"),
directing  their  respective  gene expression  programs.  While at Cistron,  Mr.
Livelli was a Visiting  Scholar at  Columbia  University.  Mr.  Livelli has also
served in the capacity of a scientific consultant for Merck,  Cistron,  Synaptic
Pharmaceutical,  and Life  Technologies,  Inc.  In  addition  to his  duties  as
President and Chief Executive  Officer of CMT, Mr. Livelli maintains a part-time
faculty  appointment at Columbia  University College of Physicians & Surgeons in
the Department of Neurobiology and Behavior.
    

                                      -18-
<PAGE>

   
Richard Malavarca has been a director of the Company since June 1998. He is also
the Vice President - Research  Products of CMT, where he is responsible  for the
day to day operations, product development and marketing for the Specialty Media
Division of CMT. Mr.  Malavarca was  aco-founder of Specialty  Media,  Inc., the
predecessor  to the  Specialty  Media  Division  of CMT  where he served as Vice
President from 1987 until May 1997. Mr. Malavarca has also worked at the Harvard
Medical  School,  The Roche  Institute for  Molecular  Biology,  Merck  Research
Laboratories  and Cistron in basic  research  involving  developmental  biology,
molecular and cell biology.  He left Cistron in 1987 to start  Specialty  Media,
Inc.
    

Dr. Paul A. Marks has been a director of the Company since June 1998. Since 1980
Dr. Marks also served as President and Chief  Executive  Officer of the Memorial
Sloan-Kettering  Cancer  Center.  He is  also a  Member  of the  Sloan-Kettering
Institute for Cancer Research,  and Attending Physician of Memorial Hospital for
Cancer  and  Allied  Diseases.  He has  served  as an  advisor  to the  National
Institutes  of Health,  the National  Science  Foundation  and other  government
bodies.  He  was a  member  of  the  President's  Cancer  Panel  (1976-77),  the
President's  Biomedical Research Panel (1976-77) and the President's  Commission
on the Accident on Three Mile Island  (1979).  He was a member of the Council of
the  National  Academy of Sciences  (1985-87),  the Council of the  Institute of
Medicine (1973-76),  chaired the Division of Medical Sciences, National Research
Council of the National Academy of Sciences (1973-76) served as President of the
American Society for Clinical  Investigation  (1971-72) and the President of the
American Society of Hematology  (1983-84),  and co-chaired the External Advisory
Committee of the  National  Institutes  of Health  Intramural  Research  Program
(1993- 94),  and chaired the Search  Committee  for  Director,  National  Cancer
Institute  (1994-95).   Dr.  Marks  is  a  Director  Emeritus  of  Pfizer,  Inc.
(pharmaceutical  manufacturer)  and a director of Tularik,  Inc.  (biotechnology
company) and Genos (genomic company).

   
Samuel A. Rozzi has been a director of the Company most  recently  since January
1997.  He  previously  served as a director of the Company  from 1991 until June
1996.  Mr. Rozzi has been the President of Corporate  National  Realty,  Inc., a
corporate real estate brokerage and services firm, since September 1988.

     Messrs. Livelli, Marks and Malavarca were appointed directors following the
increase in the size of the board of  directors of the Company from three to six
members effected in connection with the CMT Merger consummated on May 29, 1998.
    
     Directors are elected  annually by the  stockholders.  Officers are elected
annually by the Board of Directors  and serve at the  discretion of the Board of
Directors.
       


                                      -19-
<PAGE>



Compliance with Section 16(a) of the Securities Exchange Act of 1934

   
     Section  16(a)  of the  Securities  Exchange  Act  of  1934  requires  that
Company's officers and directors,  and persons who beneficially own more than 10
percent of a registered class of the Company's equity  securities,  file certain
reports of ownership and changes in ownership  with the  Securities and Exchange
Commission ("SEC"). Officers,  directors, and greater than 10 percent beneficial
stockholders  are required by SEC  regulation to furnish the Company with copies
of all Section 16(a) forms they file.
    

     Based solely on the Company's  review of the copies of such forms  received
by the Company, or representations  obtained from certain reporting persons, the
Company  believes  that  during  the year  ended  December  31,  1998 all filing
requirements applicable to its officers,  directors, and greater than 10 percent
beneficial stockholders were complied with.

   
Item 11.  Executive Compensation

     The following  table discloses the  compensation  awarded by the Company to
(i) each of the  President  and Chief  Financial  Officer  of the  Company  (the
"Company  Executives")  for the period from June 1, 1998 until December 31, 1998
(the "Stub Period") and for the twelve (12) month period ended May 31 in each of
the three fiscal years ended May 31, 1998, 1997 and 1996, and (ii) the President
of  CMT  (the  "CMT  Executive"  and,  together  with  the  Company  Executives,
hereinafter  collectively  referred to as the "Named Executives") for the twelve
(12) month  period  ended  December 31 in each of the three  fiscal  years ended
December  31,  1998,  1997 and 1996.  During the most  recent  twelve (12) month
period ended May 31, 1998 and  December  31, 1998,  as the case may be, no other
officer of the Company or CMT, as the case may be,  received a total  salary and
bonus that exceeded $100,000 during such twelve (12) month period.

                                            SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                           Annual Compensation
                                                                         -----------------------
                               Principal                 Fiscal                                       Long-Term and Other
      Name                     Position                   Year           Salary ($)    Bonus ($)      Compensation
      ----                     --------                  ------          ----------    ---------      -------------------

<S>                     <C>                           <C>             <C>              <C>            <C>
Joseph K. Pagano        President and Chairman of     Stub Period            --             --        $ 43,750 (2)
                        the Board (1)                 1998                   --             --          75,000
                                                      1997                   --             --          75,000
                                                      1996                   --             --          75,000; Options (3)

Robert A. Reinhart      Chief Financial Officer,      Stub Period     $    70,369(2)        --              --
                        Vice-President, Treasurer     1998                125,000           --        Options (4)
                        and Secretary                 1997                 86,000(5)   $ 25,000       Options (6)

Thomas Livelli          President and Chief           1998 (8)        $   138,462(9)        --              --
                        Executive Officer of CMT (7)  1997 (8)             63,462      $181,000             --
                                                      1996 (8)            101,212           --              --
</TABLE>

----------

(1)  Mr.  Pagano,  who was elected  President  of the Company on June 15,  1994,
     receives  a  consulting  fee of  $75,000  per  annum and  reimbursement  of
     documented  expenses  incurred on behalf of the Company in connection  with
     his  position  as a  consultant  to the  Company.  See  "Item  13.  Certain
     Relationships and Related Transactions"
    


                                      -20-
<PAGE>


   
(2)  Reflects the respective compensation or consulting fee, as the case may be,
     of the  Named  Executive,  pro  rated  for the  seven  month  Stub  Period.
     Following the CMT Merger,  the Company  adopted the calendar fiscal year of
     CMT. The Company previously operated under a fiscal year ended May 31st.

(3)  On May 14, 1996, the Company granted Mr. Pagano non-qualified stock options
     to purchase up to 217,000  shares of the Common Stock of the Company  under
     the Company's 1990 Stock Option Plan, at $1.625 per share,  in substitution
     for an existing option held by Mr. Pagano.

(4)  On April 20, 1998, the Company granted Mr. Reinhart incentive stock options
     to purchase up to 25,000 shares of the Common Stock of the Company at $2.25
     per share,  which options vest in two equal  installments  on each of April
     20, 1999 and April 20, 2000.

(5)  Reflects Mr.  Reinhart's salary rate of $100,000 for the year ended May 31,
     1997,  pro rated from July 22, 1996,  when he was elected  Chief  Financial
     Officer of the Company.

(6)  On October 25,  1996,  the Company  granted Mr.  Reinhart  incentive  stock
     options to purchase up to 40,000  shares of the Common Stock of the Company
     at $2.50 per share,  which options  became  immediately  exercisable on the
     date of grant.  Such  options  were  subsequently  re-priced on January 16,
     1998,  to an exercise  price of $0.75 (the fair market  value of the Common
     Stock at such time).

(7)  Mr. Livelli is President and Chief Executive Officer of CMT, a wholly-owned
     subsidiary of Prime.

(8)  Reflects  salary paid for the calendar years ended December 31, 1998,  1997
     and 1996.  Because  the Company  adopted as its fiscal year CMT's  calendar
     year at the time of the CMT Merger, no Stub Period  calculation is required
     when disclosing the compensation paid to CMT's executive officers.

(9)  Reflects Mr. Livelli's (i) effective salary rate of $135,000 (as amended at
     May 29, 1998  following  the CMT Merger)  for the year ended  December  31,
     1998, pro rated from May 29, 1998, when he was elected  President of CMT in
     conjunction with the CMT Merger, and (ii) effective salary rate of $150,000
     for the year ended  December 31, 1998,  pro rated for the five months ended
     May 29, 1998.
    


                                      -21-
<PAGE>


   
     The following table discloses information concerning options granted during
the year ended December 31, 1998 to the Named Executives.

<TABLE>
<CAPTION>
                                            OPTION/SAR GRANTS IN LAST FISCAL YEAR
                                                                                                             Potential Realizable
                                                                                                               Value at Assumed
                                                Percent of                                                  Annual Rates of Stock
                       Number of Securities       Total                                                     Price Appreciation for
                           Underlying          Options/SARs      Exercise or                                     Option Term
Name                   Option/SARs Granted       Granted         Base Price          Expiration Date          5%             10%
----                   --------------------    ------------      -----------         ---------------        ------------------------
<S>                         <C>                   <C>          <C>                   <C>                 <C>             <C>
Robert A. Reinhart           25,000                8.5%         $2.25 /share          April 20, 2002        $ 12,122        $ 26,106
</TABLE>                                          
                                                 

     The following table sets forth information concerning the number of options
owned by the  Named  Executives  and the value of any  in-the-money  unexercised
options  as of  December  31,  1998.  No  options  were  exercised  by the Named
Executives during fiscal 1998.

<TABLE>
<CAPTION>
                                AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                                       AND FISCAL YEAR END OPTION/SAR VALUES



                                              Number of Securities                    Value of Unexercised
                                             Underlying Unexercised                   In-the-Money Options
                                          Options at December 31, 1998               at December 31, 1998 (1)
                                          ----------------------------               ------------------------

Name                                   Exercisable           Unexercisable        Exercisable       Unexercisable
----                                   -----------           -------------        -----------       -------------
<S>                                     <C>                       <C>               <C>                  <C>
Joseph K. Pagano                        217,000(2)                   -0-                -0-              -0-

Robert A. Reinhart                       40,000(3)                25,000(4)         $10,000              -0-
</TABLE>

----------
(1)  Year-end values for unexercised in-the-money options represent the positive
     spread  between the exercise  price of such options and the fiscal year end
     market value of the common stock. An Option is "in-the-money" if the fiscal
     year end fair market value of the Common Stock exceeds the option  exercise
     price.  At December  31,  1998,  the closing  price per share of the Common
     Stock as reported by the OTC Bulletin Board was $1.00.

(2)  Stock options  granted by the board of directors as of May 14, 1996,  under
     the Company's  1990 Stock Option Plan,  having an exercise  price of $1.625
     per share, which options became immediately vested and exercisable from the
     date of grant and, as amended, expire May 14, 2001.

(3)  Incentive  stock options  granted  pursuant to Agreement  dated October 25,
     1996,  having an exercise  price of $2.50 per share,  which options  became
     immediately  vested and exercisable  from the date of grant and expire five
     (5) years after the date of grant. Such options were subsequently re-priced
    


                                      -22-
<PAGE>


   
     on  January  16,  1998,  to $0.75 per share (the fair  market  value of the
     Common Stock at such time).

(4)  Incentive stock options granted pursuant to Agreement dated April 20, 1998,
     having an  exercise  price of $2.25 per share,  which  options  vest in two
     equal  installments on each of April 20, 1999 and April 20, 2000 and expire
     four (4) years after the date of grant.

Employment Agreements

     In  conjunction  with the CMT Merger,  the Company  assumed the  three-year
employment  agreement,  dated May 22, 1997 and amended as of May 29, 1998,  with
Thomas J. Livelli,  pursuant to which Mr.  Livelli serves as President and Chief
Executive Officer of CMT. The employment  agreement  provides for an annual base
compensation of $135,000.  The employment  agreement  provides for Mr. Livelli's
employment on a full-time  basis and contains a provision that the employee will
not compete or engage in a business  competitive with the current or anticipated
business of the Company  during the term of the  employment  agreement and for a
period of one year thereafter.
    


                                      -23-
<PAGE>


   
Director Compensation

     Directors  receive  no  cash  compensation  for  serving  on the  Board  of
Directors  or for  attending  Board or  Committee  (if any)  meetings.  However,
non-employee  directors are eligible to be granted  non-qualified  stock options
under the Company's  1990 Stock Option Plan.  Nonqualified  stock options may be
exercised for up to 10 years from the date of grant at such  exercise  prices as
the Board of Directors may determine.

Compensation  Committee  Interlocks and Insider  Participation  in  Compensation
Decisions

     The Company did not have a Compensation Committee of its Board of Directors
during fiscal 1998. Decisions as to compensation during fiscal 1998 were made by
the Company's Board of Directors.  Mr. Pagano, who is an officer of the Company,
and Messrs. Livelli and Malavarca, who are officers of CMT, served as members of
the Board of Directors during fiscal 1998. None of the other executive  officers
of the Company served on the Board of Directors or the compensation committee of
any other entity,  any of whose officers served on the Board of Directors during
fiscal 1998.

Stock Option Plans

     The Company adopted the 1990 Stock Option Plan (the "Plan"), which provides
for grants of options to purchase up to  1,000,000  shares of Common  Stock,  as
amended by  resolution  dated  June 12,  1996 of the Board of  Directors,  which
options  may be  granted to  employees,  consultants,  agents and other  persons
deemed valuable to the Company or any of its subsidiaries.  The Plan permits the
Board of  Directors or the  Committee of the Plan,  as the case may be, to issue
incentive  stock  options  ("ISOs"),  as defined in Section 422 of the  Internal
Revenue  Code  (the  "Code"),  and  stock  options  that do not  conform  to the
requirements of that Code section  ("non-ISOs").  The exercise price of each ISO
may not be less than 100% of the fair  market  value of the Common  Stock at the
time of  grant,  except  that in the  case of a grant  to an  employee  who owns
(within the meaning of Code Section 422) 10% or more of the outstanding stock of
the Company or any subsidiary (a "10% Stockholder"),  the exercise price may not
be less than 110% of such fair market value.  The exercise price of each non-ISO
also may not be less than 100% of the fair market  value of the Common  Stock at
the time of grant.  Options may not be exercised prior to the first anniversary,
or on or after the tenth  anniversary  (fifth  anniversary in the case of an ISO
granted to a 10%  Stockholder)  of their grant.  Options may not be  transferred
during the lifetime of the option holder.  No stock options may be granted under
the Plan after May 2000.

     The Plan is  administered by the Board of Directors and may be administered
by a Committee  chosen by the Board of Directors.  Subject to the  provisions of
the Plan,  the Board of  Directors or such  Committee,  as  applicable,  has the
authority  to  determine  the  individuals  to whom the stock  options are to be
granted,  the number of shares to be covered by each option,  the option  price,
the type of option, the option period, the restrictions, if any, on the exercise
of the option, the terms for the payment of the option price and other terms and
conditions. Payment by option holders upon exercise of an option may be made (as
determined by the Board of Directors or the  Committee) in cash,  or, in certain
instances, by shares of Common Stock.

     Under the terms of the CMT Merger,  the Company  issued options to purchase
115,200  shares of its  Common  Stock  under the Plan to  holders  of options to
purchase shares of CMT's stock, which options
    


                                      -24-
<PAGE>


   
had been granted  under the stock  option plan of CMT. In addition,  the Company
reserved shares of its Common Stock with respect to options to purchase up to an
additional  273,800  shares of Common  Stock for future grant under the Plan for
employees  of CMT.  Of these  reserved  shares,  options  to  purchase  up to an
aggregate of 44,250  shares of Common  Stock were granted  January 1, 1999 under
the 1990 Plan to  fourteen  (14)  employees  of CMT.  The terms of such  options
provide for a four (4) year vesting period by which all the options shall become
exercisable.  To the extent not exercised,  the options shall expire on December
31, 2008.

     At the year ended  December 31,  1998,  options to purchase an aggregate of
350,000 shares of the Company's Common Stock were outstanding under the Plan and
7,200 options had been exercised.

     The Company from time to time has also granted  non-plan options to certain
officers, employees and consultants. Options to purchase an aggregate of 308,000
shares of the Company's  Common Stock were  outstanding at December 31, 1998, of
which options to purchase an aggregate of 208,000 shares of the Company's Common
Stock were granted to Messrs.  Reinhart,  Adler and Marks during the 1998 fiscal
year.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

     The following table sets forth information, as of April 20, 1999 (except as
otherwise  noted in the  footnotes),  regarding the beneficial  ownership of the
Company's  Common Stock of: (i) each person or group known by the Company to own
beneficially  more than five percent of the outstanding  shares of the Company's
Common Stock; (ii) each director of the Company; (iii) the Named Executives; and
(iv) all directors and executive  officers of the Company as a group.  Except as
otherwise  specified,  the Company  believes that all persons named in the chart
have sole voting and investment power over the shares listed.

<TABLE>
<CAPTION>
                                               Amount and Nature of       Percentage of
Name and Address of Beneficial Owner           Beneficial Ownership       Common Stock
------------------------------------           --------------------       -------------
<S>                                            <C>                           <C>
Frederick R. Adler
1520 S. Ocean Blvd
Palm Beach, FL  33480                             704,673(1)                 11.26%

Joseph K. Pagano
P.O. Box 7785
Aspen, CO  81612                                1,454,450(2)                 22.99%

Samuel A. Rozzi
c/o Corporate National Realty
7600 Jericho Turnpike
Woodbury, NY  11797                               447,525                     7.33%

D.H. Blair Investment Banking Corp.
44 Wall Street
New York, NY  10005                             1,124,859(3)                 18.41%

J. Morton Davis
44 Wall Street
New York, NY  10005                             1,124,859(3)(4)              18.41%

Robert A. Reinhart
c/o Cell & Molecular Technologies, Inc.
580 Marshall Street
Phillipsburg, New Jersey 08865                     52,500(5)                    *


Thomas Livelli
c/o Cell & Molecular Technologies, Inc.
580 Marshall Street
Phillipsburg, New Jersey 08865                    306,000                     5.01%

Paul A. Marks
7 Rossiter Road
Washington, Connecticut 06793                      18,000(6)                    *
</TABLE>
    


                                      -25-
<PAGE>

   
<TABLE>
<S>                                             <C>                          <C>   
Richard Malavarca
c/o Cell & Molecular Technologies, Inc.
580 Marshall Street
Phillipsburg, New Jersey 08865                    180,000                     2.95%

All directors and officers as a group (seven    3,163,148(7)                 48.32%
persons)
</TABLE>


----------
(*)  Less than 1%.

(1)  Includes  options to purchase up to 150,000 shares of the Company's  Common
     Stock,  at an  exercise  price of $0.75 per share. 

(2)  Includes  options to purchase up to 217,000 shares of the Company's  Common
     Stock,  at an exercise  price of $1.625 per share. 

(3)  The  information  with  respect  to D.H.  Blair  Investment  Banking  Corp.
     ("Blair")  and J. Morton Davis is based upon  Amendment No. 7, dated May 1,
     1996,  to the Schedule 13D,  dated January 31, 1992,  filed by such persons
     with the SEC.  The  Schedule  13D  states  that  Blair  shares  voting  and
     investment power over 1,124,859  shares,  and Mr. Davis has sole voting and
     investment power over such 1,124,859.

(4)  Includes  8,500  shares  owned by Mr.  Davis'  wife.  Mr.  Davis  disclaims
     beneficial ownership of the 8,500 shares owned by his wife.

(5)  Represents  options to purchase up to 40,000  shares and 25,000  shares (of
     which options are currently exercisable with respect to only 12,500 shares)
     of the Company's Common Stock, at an exercise price of $0.75 and $.2.25 per
     share, respectively.

(6)  Represents  options to purchase up to 18,000 shares of the Company's Common
     Stock, at an exercise price of $2.00 per share.
    


                                      -26-
<PAGE>


   
(7)  Includes  options to purchase up to an aggregate  of 437,500  shares of the
     Company's Common Stock,  which options are exercisable at April 20, 1999 or
     within  60  days of such  date,  previously  granted  to the  directors  or
     officers of the Company.


Item 13. Certain Relationships and Related Transactions.

     In October 1998, the Company entered into a 180-day note payable  agreement
with a bank  for a  maximum  of  $200,000,  which  note is  collateralized  by a
$200,000  certificate  of deposit as well as a personal  guarantee  of Joseph K.
Pagano,  the  President  and Chairman of the Board of the  Company.  In December
1998, the bank advanced the Company  $160,000 under this  agreement,  which note
bears interest at 6.25% per annum and is payable monthly.  During February 1999,
$60,000 was repaid. The principal and any accrued interest is currently due June
29, 1999,  following  the 90 day renewal  period agreed to by the bank as of the
original April 1, 1999 maturity date.

     On May 29, 1998, the Company consummated the CMT Merger pursuant to which a
wholly-owned  subsidiary  of Prime merged with and into CMT.  Under the terms of
the CMT  Merger,  all of the  outstanding  shares of  capital  stock of CMT were
converted into an aggregate of 1,611,000  shares of Common Stock, par value $.01
per share, of the Company,  representing approximately 26.4% (after consummation
of the CMT Merger) of the Company's issued and outstanding  Common Stock. Of the
shares  issued  pursuant  to the CMT Merger,  393,000 and 202,500  shares of the
Company's  Common  Stock were  issued to Joseph K.  Pagano,  the  President  and
Chairman of the Board of the Company,  and Frederick R. Adler, a director of the
Company, respectively,  each of whom was a stockholder of CMT at the time of the
CMT Merger.

     At the time of the CMT Merger, there were loans outstanding from CMT to six
of its shareholders, in the aggregate principal amount of $500,000, as evidenced
by promissory notes from CMT to each such shareholder.  Messrs. Pagano and Adler
were  among  these  shareholders  and,  at the  time  of the  CMT  Merger,  held
promissory   notes  in  the   principal   amounts  of  $218,333  and   $112,500,
respectively. These notes currently bear interest at a rate of 5% and mature May
1, 2000 (as adjusted in connection with the CMT Merger).

     In July 1991, the Company  entered into a consulting  agreement with Joseph
K. Pagano,  effective through July 2, 1993 (the "Consulting  Agreement"),  which
Consulting  Agreement was renewed in each of the last six years.  Mr. Pagano was
retained  to assist the  Company in finding a business  to acquire and to advise
the Company in the  investment  of its funds pending any such  acquisition.  The
Consulting  Agreement  initially  provided  for a  monthly  consulting  fee  and
non-accountable  expense allowance of $6,250 in the aggregate.  In May 1992, the
Consulting  Agreement  was  amended to provide for a monthly  consulting  fee of
$6,250  and  reimbursement  of  documented  expenses  incurred  on behalf of the
Company and approved by an officer of the Company. The Consulting Agreement also
provides for Mr.  Pagano to  participate  in employee  benefit plans and receive
fringe  benefits  generally  provided to the  Company's  senior  management  and
permits the payment to Mr. Pagano of bonuses  within the discretion of the Board
of Directors.  Mr. Pagano was elected President and a director of the Company on
June 15, 1994.
    


                                      -27-
<PAGE>


                                     PART IV

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

              (a)    Exhibits

         Exhibit No.

       3.1    Certificate  of   Incorporation,   as  amended,   incorporated  by
              reference to Exhibit 3.1 of the Company's  Registration  Statement
              on Form S-18 (Registration No. 33-35537-NY)

       3.2    By-laws of the Company,  incorporated  by reference to Exhibit 3.2
              of the Company's Registration Statement on Form S-18 (Registration
              No. 33-35537-NY)

       10.1   1990 Stock Option Plan,  incorporated by reference to Exhibit 10.1
              of the Company's Registration Statement on Form S-18 (Registration
              No. 33-35537-NY)

       10.2   Consulting Agreement, dated July 2, 1991, among the Company, Prime
              Cellular of Florida,  Inc.  and Joseph K. Pagano (the  "Consulting
              Agreement") (1)

       10.3   Amendment to Consulting Agreement (1)

       10.4   Agreement  and Plan of Merger,  dated as of May 14,  1996,  by and
              among  the  Company,   Prime  Cellular   Acquisition  Corp.,  Bern
              Associates, Inc. and the stockholders of Bern (2)

       10.5   Registration  Rights  Agreement,  dated  June  10,  1996,  between
              Registrant and the Bern Stockholders (2)

       10.6   Escrow Agreement,  dated June 10, 1996, between Registrant and the
              Bern Stockholders (2)

       10.7   Indemnification  Agreement, dated June 10, 1996 between Registrant
              and the Bern Stockholders (2)

       10.8   Amendment to Merger Agreement, dated October 1, 1996 (3)

       10.9   Settlement Agreement, dated August 28, 1997 (3)

       10.10  Agreement  and Plan of Merger,  dated as of May 29,  1998,  by and
              among  the  Company,  CMT  Acquisition  Corp.,  Cell  &  Molecular
              Technologies,  Inc.  and  the  stockholders  of  Cell &  Molecular
              Technologies, Inc. (4)

       10.11  Mortgage dated February 6, 1997, with respect to premises  located
              at 580  Marshll  Street,  Phillipsburg,  NJ 08865,  assumed by the
              Company in connection with the CMT Merger (*)

       10.12  Form of  Employment  Agreement  dated May 22, 1997  between Cell &
              Molecular Technologies, Inc. and Thomas Livelli (*)




                                      -28-
<PAGE>

   
     10.13     Form of Amendment  to  Employment  Agreement  dated as of May 29,
               1998  between  Cell &  Molecular  Technologies,  Inc.  and Thomas
               Livelli (**) 

     27        Financial Data Schedule (for SEC use only)(*)
    
----------
     (1)  Incorporated by reference to the comparable  exhibit  contained in the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1992.

     (2)  Previously  filed  with the  Securities  and  Exchange  Commission  as
Exhibits to, and incorporated  herein by reference from, the Company's Report on
Form 8-K dated June 11, 1996.

     (3)  Incorporated by reference to the applicable  exhibit  contained in the
Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1997.

     (4)  Previously  filed  with the  Securities  and  Exchange  Commission  as
Exhibits to, and incorporated  herein by reference from, the Company's Report on
Form 8-K for the event dated May 29, 1998.

   
     (*)  Previously  filed  with the  Securities  and  Exchange  Commission  as
          Exhibits to, and incorporated  herein by reference from, the Company's
          Report on Form 10-K for the fiscal year ended December 31, 1998.

     (**) Filed Herewith
    


          (b)  Report on Form 8-K.

     Form 8-K with respect to the event dated December 23, 1998 was filed by the
Company  during its fiscal quarter ended December 31, 1998 (and followed by Form
8-K/A in the first  quarter  of 1999) to report on the  change in the  Company's
principal independent accountants.



                                      -29-
<PAGE>

PRIME CELLULAR, INC. AND SUBSIDIARIES
Table of Contents
================================================================================


                                                                         Page
                                                                         ----


Independent Auditors' Report                                                 F-1


Consolidated Financial Statements
    Balance Sheets
         December 31, 1998 and 1997                                    F-2 - F-3

    Statements of Operations
         For the Years Ended December 31, 1998, 1997 and 1996                F-4

    Statements of Changes in Stockholders' Equity
         For the Years Ended December 31, 1998, 1997 and 1996                F-5

    Statements of Cash Flows
         For the Years Ended December 31, 1998, 1997 and 1996          F-6 - F-7


Notes to Consolidated Financial Statements                            F-8 - F-22




<PAGE>



                          Independent Auditors' Report



To the Board of Directors and Stockholders
Prime Cellular, Inc. and Subsidiaries


We have audited the accompanying  consolidated balance sheets of Prime Cellular,
Inc.  and  Subsidiaries  as of  December  31,  1998 and  1997,  and the  related
consolidated statements of operations,  changes in stockholders' equity and cash
flows for the years ended December 31, 1998, 1997 and 1996.  These  consolidated
financial  statements are the  responsibility of the Company'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  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Prime Cellular, Inc.
and  Subsidiaries  as of  December  31,  1998 and 1997  and the  results  of its
operations  and its cash flows for the years ended  December 31, 1998,  1997 and
1996, in conformity with generally accepted accounting principles.



/s/ RAICH ENDE MALTER LERNER & CO.

RAICH ENDE MALTER LERNER & CO.
East Meadow, New York
April 1, 1999




                                       F-1

<PAGE>



PRIME CELLULAR, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
================================================================================

<TABLE>
<CAPTION>
                                                                           December 31,
                                                                    -------------------------
                                                                        1998          1997
                                                                    -------------------------
<S>                                                                 <C>           <C>
Assets
     Current Assets
       Cash                                                         $    84,146   $   743,683
       Certificate of deposit - restricted                              200,000            --
       Investment securities                                          5,096,557            --
       Accounts receivable - net of allowance for doubtful
         accounts of $20,000 and $10,000 for 1998 and 1997,
         respectively                                                   305,575       281,332
       Unbilled services                                                 23,799        65,188
       Inventory                                                        116,991       135,077
       Prepaid expenses                                                   8,728            --
                                                                    -----------   -----------

                                                                      5,835,796     1,225,280
                                                                    -----------   -----------

     Property, Plant and Equipment                                    1,522,516     1,117,639
     Less:  Accumulated depreciation and amortization                   518,792       321,868
                                                                    -----------   -----------

                                                                      1,003,724       795,771
                                                                    -----------   -----------
     Other Assets
       Investment securities receivable                               4,978,947            --
       Deferred financing costs - net of accumulated amortization
         of $365 and $175 for 1998 and 1997, respectively                 7,216         7,406
                                                                    -----------   -----------

                                                                      4,986,163         7,406
                                                                    -----------   -----------







                                                                    $11,825,683   $ 2,028,457
                                                                    ===========   ===========
</TABLE>



                                       F-2

<PAGE>


================================================================================

<TABLE>
<CAPTION>
                                                                                        December 31,
                                                                                ----------------------------
                                                                                    1998            1997
                                                                                ----------------------------
<S>                                                                             <C>             <C>
Liabilities and Stockholders' Equity
     Current Liabilities
       Collateralized investment loan                                           $  5,000,000    $         --
       Note payable - bank                                                           160,000              --
       Line of credit                                                                   --            31,295
       Current maturities of long-term debt                                           25,533          27,038
       Accounts payable and accrued expenses                                         427,313         263,229
       Customer deposits                                                             270,143         614,640
       Unearned revenue                                                               42,387          52,648
                                                                                ------------    ------------

                                                                                   5,925,376         988,850

     Long-Term Debt - net of current maturities                                      324,164         351,111

     Stockholder Loans - net of unamortized discount
       of $37,515 and $116,748 for 1998 and 1997,
       respectively                                                                  501,860         397,627
                                                                                ------------    ------------

                                                                                   6,751,400       1,737,588
                                                                                ------------    ------------

     Stockholders' Equity
       Preferred Stock - $.01 par value, 5,000,000 shares
         authorized - none issued                                                         --              --
       Common Stock - $.01 par value, 20,000,000 shares authorized, 6,108,700
         and 1,611,000 shares issued
         and oustanding in 1998 and 1997, respectively                                61,087          16,110
       Additional paid-in capital                                                  5,813,710         376,599
       Accumulated (deficit)                                                        (800,514)       (101,840)
                                                                                ------------    ------------

                                                                                   5,074,283         290,869
                                                                                ------------    ------------

                                                                                $ 11,825,683    $  2,028,457
                                                                                ============    ============
</TABLE>




See notes to consolidated financial statements.

                                       F-3

<PAGE>



PRIME CELLULAR, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
================================================================================

<TABLE>
<CAPTION>
                                                               For the Years Ended
                                                                   December 31,
                                                    -----------------------------------------
                                                        1998          1997           1996
                                                    -----------------------------------------
<S>                                                 <C>            <C>            <C>
Revenue
     Contract revenue                               $   928,686    $ 1,125,855    $   602,836
     Sales of goods                                   1,198,547      1,054,335        868,385
                                                    -----------    -----------    -----------

                                                      2,127,233      2,180,190      1,471,221
                                                    -----------    -----------    -----------

Direct Costs
     Contract revenue                                   815,947        696,195        378,071
     Sales of goods                                     642,310        645,519        555,167
                                                    -----------    -----------    -----------

                                                      1,458,257      1,341,714        933,238
                                                    -----------    -----------    -----------

Income After Direct Costs
     Contract revenue                                   112,739        429,660        224,765
     Sales of goods                                     556,237        408,816        313,218
                                                    -----------    -----------    -----------

                                                        668,976        838,476        537,983
                                                    -----------    -----------    -----------

Other Operating Expenses
     Contract revenue                                   699,977        610,388        273,133
     Sales of goods                                     434,728        427,606        272,380
                                                    -----------    -----------    -----------

                                                      1,134,705      1,037,994        545,513
                                                    -----------    -----------    -----------

Research and Development
     Contract revenue                                    38,307         10,000          5,000
     Sales of goods                                      35,360         10,000          5,000
                                                    -----------    -----------    -----------

                                                         73,667         20,000         10,000
                                                    -----------    -----------    -----------

(Loss) from Segment Operations
     Contract revenue                                  (625,545)      (190,728)       (53,368)
     Sales of goods                                      86,149        (28,790)        35,838
                                                    -----------    -----------    -----------

                                                       (539,396)      (219,518)       (17,530)
                                                    -----------    -----------    -----------

Corporate Activities
     Selling, general and administrative expenses      (267,761)            --             --
     Other income                                            --         44,375        (36,554)
     Interest income                                    223,381         12,949          1,182
     Interest expense                                  (104,385)       (47,427)        (7,077)
                                                    -----------    -----------    -----------

                                                       (148,765)         9,897        (42,449)
                                                    -----------    -----------    -----------

(Loss) Before Provision for Income Taxes               (688,161)      (209,621)       (59,979)

Provision for Income Taxes                               10,513             --          2,638
                                                    -----------    -----------    -----------

Net (Loss)                                          $  (698,674)   $  (209,621)   $   (62,617)
                                                    ===========    ===========    ===========


Basic and Diluted Net (Loss) Per Share              $      (.16)   $      (.17)   $      (.07)
                                                    ===========    ===========    ===========


Weighted Average Shares Outstanding                   4,308,180      1,255,500        900,000
                                                    ===========    ===========    ===========
</TABLE>



See notes to consolidated financial statements.

                                       F-4

<PAGE>



PRIME CELLULAR, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
                            For the Years Ended December 31, 1998, 1997 and 1996
================================================================================

<TABLE>
<CAPTION>
                                                        Common Stock           Additional       Retained
                                                 --------------------------     Paid-In         Earnings
                                                    Shares         Amount       Capital         (Deficit)        Total
                                                 ------------------------------------------------------------------------
<S>                                                <C>          <C>            <C>             <C>            <C>
Balance - January 1, 1996                            900,000    $     9,000    $    (8,990)*   $   170,398    $   170,408
   Net (loss)                                             --             --             --         (62,617)       (62,617)
                                                 -----------    -----------    -----------     -----------    -----------

Balance - December 31, 1996                          900,000          9,000         (8,990)        107,781        107,791
   Issuance of stock                                 900,000          9,000        241,000              --        250,000
   Discount on stockholder loan                           --             --        120,199              --        120,199
   Contribution of shares back to the Company       (270,000)        (2,700)         2,700              --             --
   Stock grants                                       81,000            810         21,690              --         22,500
   Net (loss)                                             --             --             --        (209,621)      (209,621)
                                                 -----------    -----------    -----------     -----------    -----------

Balance - December 31, 1997                        1,611,000         16,110        376,599        (101,840)       290,869
   Options exercised                                   7,200             72          1,928              --          2,000
   Recapitalization resulting from merger          4,490,500         44,905      5,494,092              --      5,538,997
   Adjustment of discount on stockholder loans            --             --        (58,909)             --        (58,909)
   Net (loss)                                             --             --             --        (698,674)      (698,674)
                                                 -----------    -----------    -----------     -----------    -----------

Balance - December 31, 1998                        6,108,700    $    61,087    $ 5,813,710     $  (800,514)   $ 5,074,283
                                                 ===========    ===========    ===========     ===========    ===========
</TABLE>


*  Negative  additional  paid-in  capital results from the restatement of common
   stock related to the issuance of shares resulting from the merger.


See notes to consolidated financial statements.

                                       F-5

<PAGE>



PRIME CELLULAR, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows                                Page 1 of 2
================================================================================

<TABLE>
<CAPTION>
                                                                   For the Years Ended
                                                                      December 31,
                                                       -----------------------------------------
                                                           1998           1997           1996
                                                       -----------------------------------------
<S>                                                    <C>            <C>            <C>
Cash Flows from Operating Activities
     Net (loss)                                        $  (698,674)   $  (209,621)   $   (62,617)
     Adjustments to reconcile net (loss) to
       net cash provided by (used for)
       operating activities:
         Depreciation                                      183,959        112,078         68,302
         Amortization                                          190            175             --
         Loss on sale of fixed assets                           --             --         41,258
         Increase in allowance for doubtful accounts        10,000         10,000             --
         Accrued interest on stockholder loans              45,324         17,826             --
         Stock-based compensation                               --         22,500             --
         (Increase) decrease in:
           Accounts receivable                             (34,243)       (16,428)       (99,581)
           Unbilled services                                41,389        (31,578)       (33,610)
           Inventory                                        18,086        (57,375)       (20,542)
           Prepaid expenses                                   (765)        14,713         (9,967)
         Increase (decrease) in:
           Accounts payable and accrued expenses            42,969        (44,374)        245,192
           Customer deposits                              (344,497)       614,640             --
           Taxes payable                                        --           (800)       (13,394)
           Unearned revenue                                (10,261)       (72,072)       124,720
                                                       -----------    -----------    -----------

                                                          (746,523)       359,684        239,761
                                                       -----------    -----------    -----------


Cash Flows from Investing Activities
     Acquisitions of property and equipment               (347,173)      (447,936)      (100,774)
     Proceeds from sale of fixed assets                         --             --         21,675
     Cash acquired in connection with merger               546,484             --             --
     Purchase of certificate of deposit                   (200,000)            --             --
     Purchase of investment securities                  (5,014,578)            --             --
                                                       -----------    -----------    -----------

                                                        (5,015,267)      (447,936)       (79,099)
                                                       -----------    -----------    -----------
</TABLE>


See notes to consolidated financial statements.

                                       F-6

<PAGE>



PRIME CELLULAR, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows                                Page 2 of 2
================================================================================


<TABLE>
<CAPTION>
                                                                  For the Years Ended
                                                                      December 31,
                                                       -----------------------------------------
                                                           1998          1997           1996
                                                       -----------------------------------------
<S>                                                    <C>            <C>            <C>
Cash Flows from Financing Activities
     Net borrowings (repayments) on line of credit     $   (31,295)   $     5,605    $     2,591
     Proceeds of notes payable                             160,000        100,000             --
     Payment of deferred financing costs                        --         (7,581)            --
     Repayments of notes payable                           (28,452)       (16,754)       (42,799)
     Loans from stockholders                                    --        517,150             --
     Repayments of loans from stockholders                      --       (150,207)       (30,806)
     Issuance of stock                                          --        250,000             --
     Proceeds of collateralized investment loan          5,000,000             --             --
     Options exercised                                       2,000             --             --
                                                       -----------    -----------    -----------

                                                         5,102,253        698,213        (71,014)
                                                       -----------    -----------    -----------

Increase (Decrease) in Cash                               (659,537)       609,961         89,648

Cash - beginning                                           743,683        133,722         44,074
                                                       -----------    -----------    -----------

Cash - end                                             $    84,146    $   743,683    $   133,722
                                                       ===========    ===========    ===========


Supplemental Disclosures Cash paid during the year:
       Interest                                        $    58,742    $     9,565    $     7,077
                                                       ===========    ===========    ===========


       Income taxes                                    $    11,935    $        --    $     2,638
                                                       ===========    ===========    ===========


     Non-cash investing and financing activities:
       Land and building acquired with mortgage        $        --    $   287,600    $        --
                                                       ===========    ===========    ===========


     Inconnection with the merger on May 29,
       1998, the following assets (liabilities) were
       acquired by the acquiring entity for
       accounting purposes:
         Cash                                          $   546,484
         Investment in U.S. Treasury Note                5,060,926
         Other current assets                                7,963
         Property and equipment                             57,704
         Accumulated depreciation                          (12,965)
         Accounts payable and accrued expenses            (121,115)
                                                       -----------

                                                       $ 5,538,997
                                                       ===========
</TABLE>



See notes to consolidated financial statements.

                                       F-7

<PAGE>



PRIME CELLULAR, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements      December 31, 1998, 1997 and 1996
================================================================================

1 -  Organization of the Company and Nature of its Operations

     On May 29, 1998, Prime Cellular,  Inc. ("Prime"),  a Delaware  corporation,
     consummated  a merger (the  "Merger")  with Cell & Molecular  Technologies,
     Inc. and subsidiary,  pursuant to which a wholly-owned  subsidiary of Prime
     was merged with and into CMT  (collectively,  Prime and CMT are referred to
     hereinafter as the  "Company").  Under the terms of the Merger,  all of the
     outstanding shares of capital stock of CMT were converted into an aggregate
     of 1,611,000 shares of common stock, par value of $.01 per share, of Prime,
     representing  approximately  26.4%  (after  consummation  of the Merger) of
     Prime's issued and outstanding common stock. This transaction was accounted
     for as a reverse  acquisition  whereby CMT was the acquirer for  accounting
     purposes.  The assets and  liabilities  were  recorded at their  historical
     amounts from the date of acquisition. The historical consolidated financial
     statements  prior to May 29,  1998 are those of CMT with all  common  stock
     data restated into the equivalent capital structure of Prime.

     The Company is comprised of two separate divisions  (segments) that provide
     goods  and  services  in  the  domestic  biotechnology  and  pharmaceutical
     industries.  The Specialty  Media  Division  ("SM") is a  manufacturer  and
     wholesaler of cell culture media and reagents.  The Molecular  Cell Science
     Division ("MCS") provides research services to pharmaceutical companies and
     other molecular and cell biology research and development entities.

2-   Summary of Significant Accounting Policies

     a.   Principles of  Consolidation - The consolidated  financial  statements
          include the  accounts of Prime  Cellular,  Inc.  and its  wholly-owned
          subsidiaries  after  elimination  of  all  intercompany  accounts  and
          transactions.

     b.   Cash and Cash Equivalents - Cash and cash  equivalents  include liquid
          investments  with  maturities  of three  months or less at the time of
          purchase.

     c.   Investment Securities - Investment securities consist of U.S. Treasury
          Notes and U.S.  Treasury  Notes  Receivable  from  counter  parties in
          repurchase  agreements.  All  investment  securities  are  defined  as
          held-to-maturity  under  the  provisions  of  Statement  of  Financial
          Accounting  Standards 115,  Accounting for Certain Investments in Debt
          and Equity  Securities  and, as such,  have been reported at amortized
          cost plus accrued interest.

     d.   Inventory - Inventory,  consisting of cell culture media, reagents and
          related packaging material,  is stated at the lower of cost (first-in,
          first-out method) or market.



                                                                       Continued

                                       F-8

<PAGE>



     e.   Property,  Plant and  Equipment - Property,  plant and  equipment  are
          stated at cost.  Depreciation is provided on the straight-line  method
          over the estimated useful lives of the assets,  which range from three
          to forty years.  Amortization of leasehold improvements is provided on
          the  straight-line  basis over the lesser of the estimated useful life
          of the asset or the  remaining  lease term.  Repairs  and  maintenance
          which do not  extend  the  useful  lives  of the  related  assets  are
          expensed as incurred.

     f.   Deferred  Financing Costs - Financing costs,  principally  incurred in
          connection with the mortgage on Company  premises,  are amortized on a
          straight-line basis over the duration of the related loan.

     g.   Revenue  Recognition - The Company records  revenues from  fixed-price
          contracts  extending  over  more  than  one  accounting  period  on  a
          percentage-of-completion basis. Percentage of completion is determined
          based on the proportion of completed costs to total  anticipated costs
          on each contract. If it is determined that a loss will result from the
          performance  of a contract,  the entire  amount of  estimated  loss is
          charged  against  income in the period in which the  determination  is
          made.  In general,  prerequisites  for  billings  are  established  by
          contractual provisions including predetermined payment schedules,  the
          achievement  of  contract  milestones  or  submission  of  appropriate
          billing  detail.  Unbilled  services  arise  when  services  have been
          rendered but clients have not been billed. Similarly, unearned revenue
          represents amounts billed in excess of revenue recognized.

     h.   Research and Development  Costs - Research and  development  costs are
          expensed as incurred unless they are reimbursed  under specific grants
          in which case the grant reduces the cost of research and  development.
          Total expenditures on research and development for 1998, 1997 and 1996
          were approximately  $213,000,  $20,000 and $10,000,  respectively,  of
          which  approximately  $140,000 was refunded by government agencies for
          1998.

     i.   Income  Taxes - The Company  accounts  for certain  income and expense
          items  differently  for  financial  reporting and income tax purposes.
          Deferred  tax  assets  and  liabilities  are  determined  based on the
          difference  between the  financial  statement  and income tax basis of
          assets and  liabilities  and the tax effect of net operating  loss and
          tax credit  carryforwards  applying the enacted statutory tax rates in
          effect for the year in which the differences are expected to reverse.

     j.   Advertising  Costs - All costs relating to  advertising  and marketing
          are expensed in the period  incurred.  Advertising  costs during 1998,
          1997 and 1996 were $24,099, $12,726, and $56,342.

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




                                                                       Continued

                                       F-9

<PAGE>



     l.   Earnings Per Share - The  accompanying  financial  statements  include
          earnings  per share  calculated  as required by  Financial  Accounting
          Standards No. 128 Earnings Per Share which replaced the calculation of
          primary and fully  diluted  earnings  per share with basic and diluted
          earnings per share. Basic earnings per share is calculated by dividing
          net income (loss) by the weighted  average  number of shares of common
          stock  outstanding.  Diluted earnings per share include the effects of
          securities convertible into common stock to the extent such conversion
          would be  dilutive.  Common  stock  equivalents,  consisting  of stock
          options,  were  excluded  from the  computation  for the  years  ended
          December 31, 1998 and 1997 because of their anti-dilutive effect.

     m.   Stock-Based Compensation - Statement of Financial Accounting Standards
          No. 123 Accounting for Stock-Based Compensation,  encourages, but does
          not require  companies  to record  compensation  cost for  stock-based
          employee  compensation  plans at fair value. The Company has chosen to
          continue to account for stock-based  compensation  using the intrinsic
          value method prescribed in Accounting Principles Board Opinion No. 25,
          Accounting  for Stock  Issued to  Employees.  APB No. 25  requires  no
          recognition of compensation  expense for the stock-based  compensation
          arrangements provided by the Company where the exercise price is equal
          to the market price at the date of the grants.

     n.   Segments  - The  accompanying  financial  statements  include  segment
          disclosure  as  required by  Financial  Accounting  Standards  No. 131
          Disclosures  about Segments of an Enterprise and Related  Information,
          which  expands  and  modifies   disclosures   but  has  no  impact  on
          consolidated financial position, results of operations or cash flows.

     o.   Reclassification  - Certain  amounts  from the prior  years  have been
          restated  to  conform  to  the  current  year's  presentation.   These
          reclassifications have no effect on previously reported income.

3 -  Inventory

     Inventory consists of the following:

                                                         December 31,
                                                  -------------------------
                                                    1998             1997
                                                  -------------------------

     Finished Goods                               $ 55,784         $ 74,469
     Packaging Materials                            31,566           32,458
     Raw Materials                                  29,641           28,150
                                                  --------         --------

                                                  $116,991         $135,077
                                                  ========         ========




                                                                       Continued

                                      F-10

<PAGE>



4 -  Repurchase Agreement

     On  November  20,  1998,  the  Company  bought  a U.S.  Treasury  Note  for
     $4,942,187 plus accrued  interest of $11,050 and  simultaneously  resold it
     for $5,000,000  pursuant to a Repurchase  Agreement  ("Repo") with Goldman,
     Sachs & Co. The Repo  requires  the Company to  repurchase  the security on
     February 26, 1999 for $5,000,000 plus accrued interest at 4.7%. Pursuant to
     Statement  of  Financial  Accounting  Standards  No.  125,  Accounting  for
     Transfers  and  Servicing  of  Financial  Assets  and   Extinguishments  of
     Liabilities,  the Company has accounted for the Repo as collateralized debt
     and,  therefore,  has  reported  the  security  as an  investment  security
     receivable  and  the  related  $5,000,000  obligation  as a  collateralized
     investment loan.

5 -  Investment Securities

     At December 31, 1998, the Company held investments in securities which were
     classified as  held-to-maturity.  These securities included both a security
     due within  one year and a security  receivable  pursuant  to a  repurchase
     agreement  with a  maturity  date  beyond  one year.  The  security  with a
     maturity date within one year is classified as Investment securities and is
     included within Current Assets at amortized cost plus accrued interest. The
     security  with  a  maturity  date  beyond  one  year  is  classified  as  a
     non-current  Investment security receivable and is stated at amortized cost
     plus accrued interest.

     The   held-to-maturity   securities  at  December  31,  1998  included  the
     following:

                                                       Amortized
                                                         Cost       Fair Value
                                                     -------------------------

Investment Securities - current
   U.S. Treasury Note - face value of $5,000,000 -
     interest at 5.875% - due February 28, 1999      $ 4,997,180   $ 5,009,375
                                                                   -----------

   Accrued interest                                       99,377

Investment Securities Receivable - non-current
   U.S. Treasury Note - face value of $5,000,000 -
     interest at 4.0000% - due October 31, 2000        4,945,522   $ 4,946,875
                                                                   ===========

   Accrued interest                                       33,425

Net Book Value - held-to-maturity securities         $10,075,504
                                                     ===========




                                                                       Continued

                                      F-11

<PAGE>



6 -  Property, Plant and Equipment

     Property, plant and equipment consist of the following:


                                              December 31,
                                        ----------------------    Estimated
                                           1998       1997       Useful Lives
                                       --------------------------------------

     Land                              $   90,000   $   90,000        --
     Building and Improvements            325,480      270,392   39-40 years
     Machinery and Equipment              934,544      594,600   5-17 years
     Leasehold Improvements                90,338       90,338   Lease life
     Furniture and Fixtures                82,154       72,309   5-10 years
                                       ----------   ----------
                                        1,522,516    1,117,639
     Less:  Accumulated depreciation
               and amortization           518,792      321,868
                                       ----------   ----------

                                       $1,003,724   $  795,771
                                       ==========   ==========

     Depreciation  and  amortization  expense charged to operations is $184,149,
     $112,253 and $68,302 for the years ended December 31, 1998,  1997 and 1996,
     respectively.

7 -  Note Payable - Bank

     In October, 1998, the Company entered into a 180-day note payable agreement
     with a bank for a maximum of $200,000. In December, 1998, the bank advanced
     $160,000 to the Company under this agreement.  Interest is stated at 6 1/4%
     and is payable monthly.  During  February,  1999,  $60,000 was repaid.  The
     principal and any accrued  interest were due April 1, 1999 and the note was
     renewed  for an  additional  90  days.  This  note is  collateralized  by a
     $200,000  certificate of deposit as well as a personal  guarantee by one of
     the officers of the Company.

8 -  Line of Credit

     At December 31, 1997, the Company had an outstanding  balance of $31,295 on
     a $75,000 line of credit  issued by a bank.  The line of credit had expired
     in September, 1997 and was paid in full in January, 1998.


                                                                       Continued

                                      F-12

<PAGE>



9 -  Long-Term Debt

     Long-term debt consists of the following:

                                                         December 31,
                                                  --------------------------
                                                      1998           1997
                                                  --------------------------
     Mortgage  Payable - payable in
     240  monthly  installments  of
     $2,610  to   February,   2017,
     including a variable  interest
     rate    which   is    adjusted
     annually  (1998 rate was 9%) -
     secured   by   the   Company's
     building in Phillipsburg,  New
     Jersey                                       $   277,488    $   284,972

     Notes Payable - bank - payable
     in 60 monthly  installments of
     $2,132   to    April,    2002,
     including  interest  at  10% -
     guaranteed by two stockholders
     and secured by a stockholder's
     personal residence                                71,863         89,303

     Other                                                346          3,874
                                                  -----------    -----------
                                                      349,697        378,149
     Less: Current maturities                          25,533         27,038
                                                  -----------    -----------
                                                  $   324,164    $   351,111
                                                  ===========    ===========


     Principal  maturities  of  long-term  debt over the next five  years are as
     follows:

                  December 31, 1999          $    25,533
                               2000               28,492
                               2001               31,029
                               2002               16,037
                               2003                9,016
                  Thereafter                     239,590
                                             -----------
                                             $   349,697
                                             ===========


10 - Stockholder Loans

      Six stockholders advanced $500,000, in  aggregate, to CMT during 1997. The
      promissory notes bear 5% simple interest,  payable at maturity, and had an
      original due date of July 14, 2002. As  the promissory  notes bear a below
      market rate of interest,  additional  interest was imputed on the notes to
      approximate the Company's current  available financing rate of 10%.


                                                                       Continued

                                      F-13

<PAGE>



     As a result  of the  merger,  the above  loans'  maturity  dates  have been
     accelerated  to May 1, 2000.  The imputed  interest has been  adjusted as a
     result of the maturity date  acceleration  thereby reducing the discount by
     $58,909. This was charged to additional paid-in capital as an adjustment to
     the original $120,199 credited to additional  paid-in capital in 1997 which
     related to the  purchase of stock.  At December  31,  1998,  the balance of
     stockholder loans, net of unamortized discount of $37,515 is $501,860.  The
     interest,  including imputed amounts,  totaled $17,826,  from July 15, 1997
     through December 31, 1997 and $45,142 for 1998.

11 - Related Party Transactions and Leases

     During 1996,  the Company  sold certain  automobiles  to  stockholders  and
     incurred an aggregate loss of approximately $41,000 on the sales.

     In May, 1997, the Company  entered into an employment  agreement with CMT's
     President/CEO.  The  agreement  is for an initial  term of three  years and
     contains a provision for an automatic  one-year  extension,  unless written
     notice is received by either party.

     The  Company  has a  consulting  agreement  with  its  President/CEO  which
     provides  for  monthly  consulting  fees and  expenses  and  allows  him to
     participate in employee benefit plans and receive fringe benefits generally
     provided to senior management.

     The Company has, from time to time,  received  various other loans from its
     stockholders to fund operations.

     The  Company  subleases  its former  administrative  office  and  executive
     research laboratory from a stockholder of the Company. The underlying lease
     expires in November,  1999.  However,  the Company has entered into an oral
     agreement  with the landlord to  terminate  the lease  effective  April 30,
     1999.  Rent  payments  are made  directly to the  landlord on behalf of the
     officer of the Company. Rental expense of $15,840,  $17,444 and $14,000 was
     incurred  under  sublease for the years ended  December 31, 1998,  1997 and
     1996, respectively.  The future minimum lease payments to be made for these
     premises are $13,200 for the year ending December 31, 1999.

     The Company subleases  executive office space from the Company's  president
     on a  month-to-month  basis.  Rental expense was $10,500 for the year ended
     December 31, 1998.

12 - Income Taxes

     The components of the provision for income taxes for the years ended are as
     follows:

                                                  December 31,
                                    ---------------------------------------
                                      1998           1997             1996
                                    ---------------------------------------

     Current                        $10,513         $    --         $ 2,638
     Deferred                            --              --              --
                                    -------         -------         -------

                                    $10,513         $    --         $ 2,638
                                    =======         =======         =======




                                                                       Continued

                                      F-14

<PAGE>


     Deferred taxes reflect the tax effects of temporary differences between the
     amount of assets and  liabilities  for financial  reporting and the amounts
     recognized  for  income  tax  purposes  as well as the tax  effects  of net
     operating loss and tax credit carryforwards.  The significant components of
     deferred tax assets are as follows:


                                                         December 31,
                                               -------------------------------
                                                  1998      1997        1996
                                               -------------------------------

Net Operating Loss Carryforward                $444,000   $ 64,000   $      --
Depreciation and Other Temporary Differences     21,000     11,000          --
                                               --------   --------   ---------
                                                465,000     75,000          --
Less:  Valuation allowance                      465,000     75,000          --
                                               --------   --------   ---------

                                               $     --   $     --   $      --
                                               ========   ========   =========


     The  provision for income taxes differs from the amount using the statutory
     federal income tax rate (34%) as follows:


                                                        December 31,
                                            -----------------------------------
                                               1998         1997         1996
                                            -----------------------------------

At Statutory Rates                          $(238,000)   $ (64,000)   $ (20,000)
Loss for which no benefit was recorded        238,000       75,000           --
Loss of Net Operating Loss Carryforward
  Benefit Related to S Corporation                 --           --       16,900
No Federal Income Tax on S Corporation             --      (17,000)          --
Other - primarily state taxes                  10,513        6,000        5,738
                                            ---------    ---------    ---------

                                            $  10,513    $      --    $   2,638
                                            =========    =========    =========


     The Company has  available to offset  future  income taxes a net  operating
     loss of approximately $907,000 expiring in 2013 that is subject to separate
     return loss year restrictions.


                                                                       Continued

                                      F-15

<PAGE>



13 - Percentage-of-Completion

     The following is a summary of assets and  liabilities  related to long-term
     contracts which are recognized on the percentage-of-completion basis:


                                                          December 31,
                                                     ----------------------
                                                        1998        1997
                                                     ----------------------
     Contract Receivables
         Billed: Contracts in progress               $ 114,814    $  66,187
         Unbilled                                       23,799       65,188
                                                     ---------    ---------
                                                       138,613      131,375
         Less:  Allowance for doubtful collections          --           --
                                                     ---------    ---------

                                                     $ 138,613    $ 131,375
                                                     =========    =========



     Unearned Revenue
         Costs incurred on uncompleted contracts     $ 131,150    $ 197,207
         Estimated earnings                             48,642      223,847
                                                     ---------    ---------
                                                       179,792      421,054
         Less:  Billings to date                       198,380      408,514
                                                     ---------    ---------

                                                     $ (18,588)   $  12,540
                                                     =========    =========



     Included in the accompanying balance sheets
         under the following captions:
            Unbilled services                        $  23,799    $  65,188
            Unearned revenue                           (42,387)     (52,648)
                                                     ---------    ---------

                                                     $ (18,588)   $  12,540
                                                     =========    =========

     The Company uses estimates of remaining  costs to complete each contract to
     determine the revenue and profitability on each contract. The estimates are
     reevaluated  periodically and, as such,  reevaluations  may, in the future,
     lead to changes in the rate of profitability on each contract.

     There were no  contracts  where the  expected  costs  exceeded the contract
     price. All contract receivables are due within one year.


                                                                       Continued

                                      F-16

<PAGE>



14 - Stock Option Plan

     The 1990 Stock Option Plan (the "Plan") provides for the granting of either
     stock  options  intended to qualify as incentive  stock  options  under the
     Internal Revenue Code or non-statutory stock options for up to an aggregate
     of 1,000,000 shares of common stock. Options may be granted for terms of up
     to ten years and are  exercisable  as determined by the Company's  Board of
     Directors  (the  "Board").  The option price under the plan must be no less
     than fair market value of the shares on the date of grant,  except that the
     term of an incentive  stock option  granted under the Plan to a stockholder
     owning more than 10% of the  outstanding  common  stock may not exceed five
     years and its  exercise  price may not be less than 110% of the fair market
     value of the common stock on the date of the grant.

     The pro forma  information  required by SFAS 123  regarding  net income and
     earnings per share has been  presented as if the Company had  accounted for
     its stock option plans under the fair value method.  The fair value of each
     option grant is estimated on the date of the grant using the  Black-Scholes
     pricing model with the following weighted average assumptions:

                                                       1998            1997
                                                     ------------------------
          Assumptions
            Expected life of options                 5 years          5 years
            Risk free interest rate                       5%             5.5%
            Volatility of stock                         172%                -
            Expected dividend yield                        -                -

     Options granted in 1997, when the Company was privately-held were valued in
     accordance  with SFAS 123 which does not consider  expected  volatility for
     nonpublic entities.

     The weighted average fair value of the options granted during 1998 and 1997
     was  $287,390 and $5,500,  respectively.  Had the fair value of the options
     been amortized to expense over the related  service  period,  the pro forma
     impact on earnings of the  stock-based  compensation  for the options under
     the provision would have been as follows:

                                                     1998              1997
                                                ------------------------------
          Net (Loss)
            As reported                         $   (698,674)    $   (209,621)
            Pro forma                               (914,045)        (210,721)

          Earnings Per Share
            As reported                                 (.16)            (.17)
            Pro forma                                   (.21)            (.17)


                                                                       Continued

                                      F-17

<PAGE>



     In  accordance  with SFAS 123,  the  weighted  average  fair value of stock
     options granted is required to be based on a theoretical  statistical model
     using the preceding assumptions.  In actuality, the Company's stock options
     do not trade on a secondary  exchange  and,  therefore,  the  employees and
     directors  cannot  derive any benefit from holding the stock  options under
     these plans without an increase in the market price of Company stock.  Such
     an increase in stock price would benefit all shareholders commensurately.

     Presented  below is a summary of stock  option plan  activity for the years
     shown:

<TABLE>
<CAPTION>
                                                                       Weighted                        Weighted
                                                                       Average                          Average
                                                                       Exercise        Options         Exercise
                                                       Options          Price         Exercisable        Price
                                                     -----------------------------------------------------------
<S>                                                      <C>           <C>                <C>            <C>
       Balance - December 31, 1996                            --       $    --                 --        $   --
         Granted                                         144,000           .28
                                                     -----------

       Balance - December 31, 1997                       144,000       $   .28             28,800        $  .28
         Granted                                         293,000           .95
         Transferred through merger                      257,000          1.49
         Exercised                                        (7,200)          .28
         Canceled                                        (28,800)          .28
                                                     -----------

       Balance - December 31, 1998                       658,000       $  1.05            468,200        $ 1.16
                                                     ===========
</TABLE>


     The following summarizes  information for options currently outstanding and
     exercisable at December 31, 1998:

<TABLE>
<CAPTION>
                                                    Options Outstanding                     Options Exercisable
                                         -----------------------------------------      --------------------------

                                                          Weighted        Weighted                       Weighted
                                                           Average        Average                        Average
                                                          Remaining       Exercise                       Exercise
                                           Number           Life           Price          Number          Price
                                         -------------------------------------------------------------------------
<S>                                         <C>            <C>            <C>              <C>           <C>
       Range of Prices
         $   .28                            108,000        3 years        $   .28           43,200       $  .28
             .75                            290,000        3 years            .95          190,000          .75
            1.63                            217,000        2 years           1.63          217,000         1.63
            2.00                             18,000        4 years           2.00           18,000         2.00
            2.25                             25,000        3 years           2.25               --           --
                                         ----------                                     ----------
                                            658,000                         $1.00          468,200       $ 1.16
                                         ==========                                     ==========
</TABLE>




                                                                       Continued

                                      F-18

<PAGE>



15 - Segment Information

     As described in Note 1, the Company has two  reportable  segments which are
     organized  along its  divisional  lines.  The  accounting  policies  of the
     segments  are the same as those  described  in the  summary of  significant
     accounting policies.  The Company evaluates  performance based on profit or
     loss before income taxes. The Company accounts for inter-segment  sales and
     transfers, if any, as if the transactions were to third parties, that is at
     current market prices.

     The Company's  reportable  segments are strategic business units that offer
     different  products and services.  They are managed separately because each
     business requires different technologies and marketing strategies.

                                                  December 31,
                                  -----------------------------------------
                                     1998            1997           1996
                                  -----------------------------------------

     Contract Revenue and Sales
       MCS                        $   930,686    $ 1,125,855    $   602,836
       SM                           1,238,343      1,054,335        868,385
                                  -----------    -----------    -----------

                                  $ 2,169,029    $ 2,180,190    $ 1,471,221
                                  ===========    ===========    ===========

     (Loss) Before Taxes
       MCS                        $  (678,341)   $  (190,728)   $   (53,368)
       SM                             138,945        (28,790)        35,838
                                  -----------    -----------    -----------

                                  $  (539,396)   $  (219,518)   $   (17,530)
                                  ===========    ===========    ===========




                                                                       Continued

                                      F-19

<PAGE>


                                                   December 31,
                                       ------------------------------------
                                          1998         1997         1996
                                       ------------------------------------

     Depreciation and Amortization
       MCS                             $  137,795   $   82,502   $   41,265
       SM                                  41,383       29,751       27,037
                                       ----------   ----------   ----------

                                       $  179,178   $  112,253   $   68,302
                                       ==========   ==========   ==========

     Segment Assets
       MCS                             $  811,313   $1,520,920   $  433,047
       SM                                 639,248      507,537      273,917
                                       ----------   ----------   ----------

                                       $1,450,561   $2,028,457   $  706,964
                                       ==========   ==========   ==========

     Expenditures for Segment Assets
       MCS                             $  264,896   $  368,778   $   99,154
       SM                                  82,277      366,758        1,620
                                       ----------   ----------   ----------

                                       $  347,173   $  735,536   $  100,774
                                       ==========   ==========   ==========



     Essentially  all revenue earned for the years ended December 31, 1998, 1997
     and  1996  by the  Company  are  attributable  to the  United  States,  the
     Company's  country of domicile.  All  long-lived  assets of the Company are
     located in the United States.

     The following is a reconciliation of the contract revenues and sales, loss,
     interest  income and  expense,  depreciation  and  amortization  and assets
     segment items disclosed above to the amounts  reported on the  consolidated
     financial statements:

<TABLE>
<CAPTION>
                                                        December 31,
                                          ----------------------------------------
                                              1998          1997           1996
                                          ----------------------------------------
<S>                                       <C>            <C>           <C>
Contract Revenues and Sales
  Total contract revenues and sales for
    reportable segments                   $ 2,169,029    $ 2,180,190   $ 1,471,221
  Elimination of intersegment revenues
    and sales                                 (41,796)            --            --
                                          -----------    -----------   -----------

                                          $ 2,127,233    $ 2,180,190   $ 1,471,221
                                          ===========    ===========   ===========
</TABLE>



                                                                       Continued

                                      F-20

<PAGE>

<TABLE>
<CAPTION>
                                                                  December 31,
                                                  --------------------------------------------
                                                       1998           1997           1996
                                                  --------------------------------------------
<S>                                               <C>             <C>             <C>
     (Loss) Before Taxes
       Total (loss) for reportable segments       $   (539,396)   $   (219,518)   $    (17,530)
       Corporate income and expenses
         unallocated to segments                      (148,765)          9,897         (42,449)
                                                  ------------    ------------    ------------

                                                  $   (688,161)   $   (209,621)   $    (59,979)
                                                  ============    ============    ============

     Depreciation and Amortization
       Total depreciation and amortization for
         reportable segments                      $    179,178    $    112,253    $     68,302
       Corporate depreciation and amortization
         unallocated to segments                         4,971              --              --
                                                  ------------    ------------    ------------

                                                  $    184,149    $    112,253    $     68,302
                                                  ============    ============    ============

     Assets
       Total assets for reportable segments       $  1,450,561    $  2,028,457    $    706,964
       Corporate assets unallocated to segments     10,375,122              --              --
                                                  ------------    ------------    ------------

                                                  $ 11,825,683    $  2,028,457    $    706,964
                                                  ============    ============    ============
</TABLE>




                                      F-21

<PAGE>

16 - Significant Customers and Concentrations of Credit Risk

     For the years  ended  December  31,  1998,  1997 and 1996,  the Company had
     significant  sales and  receivable  balances  from major  customers  in the
     pharmaceutical and biotechnology industries and academia as follows:


<TABLE>
<CAPTION>
                                                         Approximate Year-to- Date
                              -------------------------------------------------------------------------------
                                 December 31, 1998          December 31, 1997            December 31, 1996
                              -------------------------------------------------------------------------------
                                          Percentage                   Percentage                  Percentage
                               Sales       of Total        Sales        of Total         Sales      of Total
                             --------------------------------------------------------------------------------
<S>                          <C>                 <C>     <C>                  <C>      <C>                 <C>
Significant  Customer
  A - segment MCS            $241,000            11%     $528,000             24%      $345,000            23%
  B - segment SM              280,000            13       229,000             11        189,000            13
                             --------      --------      --------       --------       --------      --------

                             $521,000            24%     $757,000             35%      $534,000            36%
                             ========      ========      ========       ========       ========      ========
</TABLE>


                                     Approximate Value at Year End
                          ---------------------------------------------------
                              December 31, 1998          December 31, 1997
                          ---------------------------------------------------
                           Accounts                  Accounts
                          Receivable   Percentage   Receivable     Percentage
                            (Net) *     of Total      (Net) *       of Total
                          ---------------------------------------------------
Significant  Customer
  A                       $ 46,000            14%     $ 48,000            16%
  B                             --            --        37,000            13
  C                             --            --        36,000            12
  D                         40,000            12            --            --
  E                         33,000            10            --            --
  F                         66,000            20            --            --
                          --------      --------      --------      --------

                          $185,000            56%     $121,000            41%
                          ========      ========      ========      ========



     *Accounts receivable (net) includes billed accounts receivable and unbilled
     services less unearned revenue.

     The Company's  financial  instruments that are exposed to concentrations of
     credit risk consist  primarily of cash and trade accounts  receivable.  The
     Company  placed its cash with high credit quality  institutions.  At times,
     balances  may be in  excess  of  the  FDIC  insurance  limit.  The  Company
     routinely  assesses  the  financial  strength  of its  customers  and, as a
     consequence,  believes  that its  trade  accounts  receivable  credit  risk
     exposure is limited.

17 - Fourth Quarter Adjustment

     For the three months  ended  December  31,  1998,  the Company  recorded an
     adjustment totaling $125,350 to reclassify the results of operations of the
     legal  acquirer for the period  January 1, 1998  through May 29, 1998,  the
     date of the merger, to additional paid in capital.  A reconciliation of the
     effect of this adjustment follows:

<TABLE>
<CAPTION>
                                                       For the Three Months Ended
                                        --------------------------------------------------------
                                        December 31,   September 30,    June 30,       March 31,
                                            1998           1998           1998           1998
                                        ========================================================
<S>                                      <C>            <C>            <C>            <C>
Net (Loss) - as previously reported      $(240,633)     $(322,314)     $(173,952)     $ (87,125)
Adjustment described above                      --             --         45,590         79,760
                                         ---------      ---------      ---------      ---------

Net (Loss) - as restated                 $(240,633)     $(322,314)     $(128,362)     $  (7,365)
                                         =========      =========      =========      =========

Net (Loss) Per Share - as previously
  reported                               $    (.04)     $    (.05)     $    (.05)     $    (.05)
Adjustment described above                      --             --           (.02)          (.05)
                                         ---------      ---------      ---------      ---------

Net (Loss) Per Share - as restated       $    (.04)     $    (.05)     $    (.03)     $    (.00)
                                         =========      =========      =========      =========
</TABLE>

                                      F-22

<PAGE>

                                   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.

                             PRIME CELLULAR, INC.


   
April 29, 1999              By: /s/ Robert A. Reinhart
                                -----------------------------------------------
                                Robert A. Reinhart, Chief Financial Officer and
                                principal accounting officer
    

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

<TABLE>
<CAPTION>
Signature                         Title                                              Date
---------                         -----                                              ----
<S>                               <C>                                                <C>
   
/s/ Joseph K. Pagano
-----------------------           Director, President                                April 29, 1999
Joseph K. Pagano                  (principal executive officer)


/s/ Robert A. Reinhart
-----------------------           Chief Financial Officer, Treasurer,                April 29, 1999
Robert A. Reinhart                Secretary and Vice President (principal
                                  financial and principal accounting officer)


-----------------------           Director                                           April __, 1999
Frederick R. Adler


/s/ Samuel Rozzi
-----------------------           Director                                           April 29, 1999
Samuel Rozzi


/s/ Richard Malavarca
-----------------------           Director                                           April 29, 1999
Richard Malavarca


/s/ Thomas Livelli
-----------------------           Director                                           April 29, 1999
Thomas Livelli


-----------------------           Director                                           April __, 1999
Paul A. Marks
</TABLE>