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

                                   Form 10-K/A
                                (Amendment No. 1)

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

For the Fiscal year ended May 31, 1997

                                       OR

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


                         Commission file number:0-18700

                              PRIME CELLULAR, INC.
             (exact name of Registrant as specified in its charter)

            Delaware                                            13-3570672
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                              Identification No.)

 100 First Stamford Pl., Stamford, CT                              06902
(Address of Principal Executive Office)                         (Zip Code)

Registrant's telephone number, including area code (203)327-3620

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

                                      None.

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

                          Common Stock, $.01 par value

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 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 shares of voting stock of the Registrant held
by non-affiliates at October 31, 1997 was approximately $5,669,997.43 based on
the average of the closing bid and ask prices as reported by the OTC Bulletin
Board of $1.0781. As of October 31, 1997, 5,259,250 shares of the Registrant's
Common Stock were outstanding.
    

                    Documents incorporated by reference: NONE



<PAGE>




                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
PART II

Item 7      Management's Discussion and Analysis of Financial
               Condition and Results of Operations..........................   3

PART III

Item 10     Directors and Executive Officers of the Registrant..............   5

Item 11     Executive Compensation..........................................   6

Item 12     Security Ownership of Certain Beneficial Owners and Management..   9

Item 13     Certain Relationships and Related Transactions..................  11



                                       -2-


<PAGE>



                                     PART II


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


RESULTS OF OPERATIONS

     On June 11, 1996, Prime Cellular, Inc. (the "Company") acquired Bern
Associates, Inc. ("Bern") by merging Bern with an inactive subsidiary of the
Company formed to complete such merger (the "Merger"), and simultaneously with
the consummation of the Merger, the subsidiary changed its name to Bern
Communications, Inc. ("Bern Communications"). Under the Merger Agreement, all of
the outstanding shares of Common Stock of Bern were exchanged for 1,586,187
shares of the Company. This transaction was accounted for as a reverse
acquisition whereby Bern was the acquirer for accounting purposes. The
historical financial statements prior to June 1, 1996 are therefore those of
Bern.

     In connection with the Merger, the Company entered into a Settlement
Agreement on August 28, 1997 with certain former stockholders of Bern as a
result of claims made by the Company for possible breaches of certain
representations and warranties of the Bern stockholders with respect to the
Merger and otherwise.

     As a result of the Settlement, Bern Communications ceased soliciting
further opportunities or engaging in any further consulting services in
connection with its integrated Internet access systems. Moreover, all sales of
computer hardware and/or software of Bern Communications were discontinued
effective as of the Settlement. Bern Communications will continue to provide
help desk functions as well as network management services pursuant to its
existing contractual arrangements.

     The Company has retained an outside Consultant (since 1991) who is also a
stockholder, under an agreement, to assist it in finding a new business
opportunity for the Company.

1997 vs. 1996

     Revenue decreased $538,226 for the year ended May 31, 1997 as compared to
the year ended May 31, 1996. This decrease was due to a large equipment sale
which occurred during the year ended May 31, 1996. Furthermore, the Company did
not generate any equipment sales for the fourth quarter ended May 31, 1997.

     Gross profit increased $809,828 for the year ended May 31, 1997 as compared
to the year ended May 31, 1996. This increase resulted from the low gross profit
realized on the large equipment sale made during the year ended May 31, 1996 as
compared to the multiple equipment sales, at relatively higher margins,
generated during the year ended May 31, 1997. For the year ended May 31, 1996,
the Company's help desk and network management services were still in a start-up
phase, distinguished by numerous costs and no associated revenue stream.

                                       -3-


<PAGE>



     Selling, general and administrative expenses increased $1,266,736 for the
year ended May 31, 1997 as compared to the year ended May 31, 1996. This
increase resulted from Prime's selling, general and administrative costs of
$380,198, which were not present for the year ended May 31, 1996 as well as
expenses of $886,538 incurred to increase equipment sales and revenue for the
year ended May 31, 1997. Interest income increased as a result of acquiring
significant cash and investments from Prime following the Merger in June 1996.

1996 vs 1995

     Bern was incorporated in February 22, 1995 and had little operating
activity for the period ended May 31, 1995. Operations of Bern commenced during
the year ended May 31, 1996 when significant contracts and revenue were
received. Selling, general and administrative expenses increased $477,462 for
the year ended May 31, 1996 as compared to the inception period ended May 31,
1995. This increase was due to the increased costs incurred in order to secure
Bern's first major contracts as well as the costs associated with servicing
these customers and developing an internal organization.

LIQUIDITY AND CAPITAL RESOURCES

     At May 31, 1997 the Company had approximately $261,899 in cash and
investments and working capital of approximately $5,500,000.

     Net cash used by operating activity aggregated $261,899 and $279,089 for
the years ended May 31, 1997 and 1996, respectively. The decrease in cash used
by operating activities was attributable to a large decrease in accounts payable
and an additional net loss, offset by a large decrease in accounts receivable
and inventory.

     Net cash used in investing activity was $857,992 and $131,336, for the
years ended May 31, 1997 and 1996, respectively. This increase was due to cash
of $960,223 acquired from Prime in connection with the Merger.

   
     Cash flow from financing activities decreased to ($1,561) from $583,785 for
the year ended May 31, 1997 as compared to the year ended May 31, 1996. The
decrease resulted from payments in the amount of $76,561 made with respect to
officer's loans to the Company, offset by a net increase from proceeds from the
sale of stock and stock subscriptions of $65,000. The remaining derease was
attributable to the $500,000 net proceeds advanced from Prime to Bern for the
year ended May 31, 1996, which was eliminated in consolidation for the year
ended May 31, 1997.
    

INFLATION

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

SEASONALITY

     The operations of the Company are not considered to be seasonal.

                                       -4-




<PAGE>


                                    PART III


   
Item 10.    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
            PERSONS.

     The directors, executive officers, promoters and control persons of the
Company are as follows:

<TABLE>
<CAPTION>
Name                         Age      Position
----                         ---      --------
<S>                           <C>     <C>
Joseph K. Pagano              51      Director, President & Chairman of the Board)
                                      (principal executive officer)

Robert A. Reinhart            47      Vice-President, Chief Financial Officer, Treasurer and
                                      Secretary (principal financial and accounting officer)

Frederick R. Adler            71      Director

Samuel A. Rozzi               50      Director
</TABLE>



     Joseph K. Pagano has served as President of the Company since June 1994 and
as a consultant and director since 1991. He also served as Chief Financial
Officer from June 1994 until July 1997. 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 22,
1996 and as Vice-President, Secretary and Treasurer since May 2, 1997. Prior to
his employment by the Company, Mr. Reinhart served as the Chief Operating
Officer and Chief Financial Officer of DeBoles Nutritional Foods, Inc.. 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 8, 1996.
During the last five years, Mr. Adler's principal occupations have included
being the managing director of Adler & Company, a venture capital management
firm organized in 1968, and the general partner of its related investment funds.
Mr. Adler is also a general partner of Adler and Tolkowsky Management
Associates, L.P., which is the managing general partner of Athena Venture
Partners L.P., and a general partner of Euro-America-I L.P., both to which are
venture capital partnerships. Since January 1, 1991, Mr. Adler has been a
retiring senior partner of the law firm of Fulbright & Jaworski L.L.P., at which
firm he was a senior partner from January 1, 1989 until December 31, 1990. Mr.
Adler is also Chairman of the Executive Committee and a director of Data General
Corporation (a computer company)
    
                                       -5-




<PAGE>



   
and Life  Technologies,  Inc.  (a  supplier  of genetic  and other life  science
research and production  materials),  and a director of Micro Linear Corporation
(an integrated circuit manufacturer) and various private companies.  Since 1977,
Mr. Adler has been a trustee of Teachers' Insurance & Annuity Association.

     Samuel A. Rozzi has served as a director most recently since January 13,
1997. He previously served as a director of the Company from 1991 until June
1996. Mr. Rozzi is the President and Chief Executive Officer of Corporate
National Realty, Inc., a corporate real estate brokerage and services firm,
since April 1988. Mr. Rozzi is a founding partner of D'Angelo, Forrest, Rozzi &
Company (a commercial and industrial real estate brokerage firm) and has served
as its Treasurer and Secretary since 1973 and is a member of the Executive
Committee of its Board of Directors.

     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.

     During the fiscal year ended May 31, 1997, the Board of Directors held 4
meetings.



Item 11.    EXECUTIVE COMPENSATION

     The following table discloses the compensation awarded by the Company, for
the three fiscal years ended May 31, 1995, 1996 and 1997, to Mr. Joseph K.
Pagano, its Chief Executive Officer and Mr. Robert A. Reinhart, its Chief
Financial Officer (the "Named Executives"). During fiscal 1997, no other
executive officer of the Company received a total salary and bonus that exceeded
$100,000 during such fiscal year.

                           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              1997         $75,000             $ 0               ISOs(2)
                          of the Board (1)                    1996         $75,000             $ 0
                                                              1995         $75,000             $ 0

Robert A. Reinhart        Chief Financial Officer,            1997         $86,000(3)          $25,000           Stock Options(4)
                          Vice-President, Treasurer           
                          and Secretary
</TABLE>

----------
(1)  Mr. Pagano, who was elected President of the Company on June 15, 1994, does
     not receive a salary for serving as President of the Company. Mr. Pagano
     does, however, receive 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"

(2)  On May 14, 1996, the Company granted Mr. Pagano an incentive stock option
     to purchase 217,000 shares the Common Stock of the Company, at $1.625 per
     share, in


                                       -6-
    

<PAGE>


   
     substitution for an existing option held by Mr. Pagano.  Such option became
     immediately  exercisable  on the date of  grant.  

(3)  This dollar amount reflects the pro rata portion of Mr. Reinhart's annual
     salary rate of $100,000 during the 1997 fiscal year, commencing July 22,
     1996, when he was elected Chief Financial Officer.

(4)  The Company granted Mr. Reinhart an incentive stock option to purchase
     40,000 shares of the Common Stock of the Company at $2.50 per share, which
     option became immediately exercisable the date of grant. See "Item 13.
     Certain Relationships and Related Transactions."

The following table discloses information concerning options granted in fiscal
1997 to the Named Executives.

<TABLE>
<CAPTION>

                                                          OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)
                                                                                                            Potential Realizable  
                                                                                                           Value at Assumed  Annual
                                      Number of       Percent of                                             Rates of Stock Price  
                                     Securities         Total                                                 Appreciation for    
                                     Underlying        Options/                                                  Option Term      
                                    Options/SARs         SARs          Exercise or                         ------------------------ 
             Name                     Granted          Granted         Base Price      Expiration Date        5%             10%
             ----                     -------          -------         ----------      ---------------     --------       ---------
<S>                                    <C>             <C>            <C>                      <C>         <C>            <C>
Robert A. Reinhart                     40,000          100% (1)       $2.50/share      October 25, 2001    $27,628        $61,051
</TABLE>                                                             


(1)  The Company executed four (4) additional stock option agreements with
     former officers and/or directors (the "Key Employees") of Bern
     Communications (the "Subsidiary Options") during the fiscal year ended June
     31, 1997, which Subsidiary Options entitled the holders thereof to purchase
     an aggregate of 1,025,000 shares of the Company's Common Stock, subject to
     certain limitations and conditions. By that Settlement Agreement, dated
     August 28, 1997, among the Company, Bern Communications and the Key
     Employees, such employees terminated the Subsidiary Options. No Subsidiary
     Options had been exercised at the date of such termination. See "Item 13.
     Certain Relationships and Related Transactions."


The following table sets froth information concerning the number of options
owned by the Named Executives and the value of any in-the-money unexercised
options as of May 31, 1997. No options were exercised by the Named Executives
during fiscal 1997.


                                       -7-
    


<PAGE>



   
                AGGREGATED OPTION/SAR GRANTS IN LAST FISCAL YEAR
                      AND FISCAL YEAR END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                             Number of Securities                               Value of Unexercised
                           Underlying Unexercised                               In-the-Money Options
                           Options at May 31, 1997                              at May 31, 1997 (1)
                      ---------------------------------                 -----------------------------------
Name                  Exercisable        Unexercisable                  Exercisable          Unexercisable
----                  -----------        -------------                  -----------          -------------
<S>                   <C>                    <C>                         <C>                      <C>
Joseph K.             217,000 (2)            -0-                         $1,817,375               -0-
Pagano

Robert A.              40,000 (3)            -0-                             N/A                  -0-
Reinhart
</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 May 30, 1997, the closing bid price per share of the Common Stock
     as reported by the OTC Bulletin Board was $2.00.

(2)  Incentive 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 expire five (5) years after the date
     of grant.

(3)  Incentive stock options granted pursuant to Incentive Stock Option
     Agreement dated October 25, 1996, as authorized by the Board of Directors
     at June 12, 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.

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-statutory stock options
under the Company's 1990 Stock Option Plan. Nonstatutory stock options may be
granted 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 1997. Decisions as to compensation during fiscal 1997 were made by
the Company's Board of Directors. Mr. Pagano served as a member of the Board of
Directors during fiscal 1997. 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 1997.

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

                                       -8-
    

<PAGE>


   
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.

     No options under the Plan were granted to executive officers during the
fiscal year ended May 31, 1997.

     The Company from time to time has also granted non-plan options to certain
officers, employees and consultants. 40,000 of such options were outstanding at
May 31, 1997, having been granted to Mr. Reinhart during fiscal 1997.


Item 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT

     The following table sets forth information, as of October 1, 1997 (except
as otherwise noted in the footnotes) regarding the beneficial ownership (as
defined by the Securities and Exchange Commission (the "Commission")) of the
Company's Common Stock of: (i) each person or group (as defined by the
Commission) 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                                            400,000                        7.61%
1520 S. Ocean Blvd.
Palm Beach, FL  33480

Joseph K. Pagano                                            1,422,700(1)                    27.05%
P.O. Box 7785
Aspen, CO  81612
</TABLE>


                                      -9-
    



<PAGE>


   
<TABLE>
<S>                                                        <C>                               <C>
Samuel A. Rozzi                                               397,625(2)                     7.56%
Corporate National Realty
7600 Jericho Turnpike
Woodbury, NY  11797

D.H. Blair Investment Banking Corp.                         1,124,859(3)                     21.39%
44 Wall Street
New York, NY  10005

J. Morton Davis                                             1,124,859(3)(4)                  21.39%
44 Wall Street
New York, NY  10005

Robert A. Reinhart                                             40,000(5)                      0.76%
104 Roy Street
North Massapequa, NY 11758


All directors and officers as a group (4 persons)           2,260,325(6)                     42.98%
</TABLE>

----------
(1)  Includes: (a) 217,000 shares which may be acquired by Mr. Pagano upon the
     exercise of an option; (b) 300,000 shares owned by Mr. Rozzi which Mr.
     Pagano has the right to vote pursuant to proxy; and (c) 50,000 shares owned
     by one individual which Mr. Pagano has the right to vote pursuant to a
     proxy. 

(2)  Mr. Rozzi has granted to Mr. Pagano a proxy to vote 300,000 of these
     shares.

(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 shares which may be acquired by Mr. Reinhart upon the exercise
     of an option.



                                      -10-
    


<PAGE>



   
(6)  Includes an aggregate of 257,000 shares which may be acquired within 60
     days upon the exercise of options and 50,000 shares owned by one individual
     which Mr. Pagano has the right to vote pursuant to a proxy.


Item 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     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 has been renewed annually the last five years through July
2, 1998. Mr. Pagano has been retained to assist the Company and Bern
Communications in finding a business to acquire and to advise the Company and
Bern Communications in the investment of their funds pending 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.

     On June 12, 1996, the board of directors of the Company authorized
incentive stock options in favor of Mr. Reinhart in connection with his
engagement as Chief Financial Officer of the Company and, by agreement dated
October 25, 1996, granted Mr. Reinhart incentive stock options to purchase up to
40,000 shares of the Common Stock of the Company, at a purchase price of $2.50
per share, which options to purchase shares of Common Stock were immediately
exercisable.

     In June 1996, acting through its wholly-owned subsidiary, the Company
acquired Bern. Under such Merger, the former stockholders of Bern received in
exchange for each share held by them in such company 1,586,187 shares of the
Common Stock of the Company (as adjusted by the Amendment to the Merger, as
hereinafter discussed). Following the Merger, the Company investigated possible
breaches of the representations and warranties of the Bern stockholders in
connection with the Merger and otherwise. As a result of claims made by the
Company for such possible breaches, certain of the former stockholders of Bern
(the "Settling Stockholders") and the Company agreed to reduce the consideration
paid in the merger by way of amendment. The Amendment to Merger was subsequently
executed as of June 11, 1996.

     Subsequently, on August 28, 1997, the Settling Stockholders entered in a
Settlement Agreement with the Company and Bern Communications (the
"Settlement"). The

                                      -11-
    


<PAGE>


   
Settlement provided for the Company to purchase all of the shares of common
stock from each Settling Shareholder, which in the aggregate amounted to 676,937
shares at $.50 per share for a total amount of $338,469. In addition, the
Company and Bern Communications transferred their right, title and interest in
certain computer software programs and certain computer equipment to certain of
the Settling Shareholders who were former officers and employees of Bern (the
"Settling Employees"). In exchange, all Settling Shareholders signed a general
release and the Settling Employees 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.

     Also as a result of the claims asserted by the Company in connection with
the representations and warranties of the Bern stockholders with respect to the
Merger, the Company and Bern Communications also commenced an action in Supreme
Court of Nassau County, New York on or about December 20, 1996, against a former
employee/shareholder of Bern and others, seeking an unspecified amount of
damages and rescission to recover the shares of the Company's Common Stock
issued to such defendants pursuant to the Merger.

                Compliance with Section 16(a) of the Exchange Act

     Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the commission and the National Association of
Securities Dealers, Inc. Executive officers, directors and greater than ten
percent beneficial owners are required by Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file.

     Based upon on a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1997 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with.


                                      -12-
    


<PAGE>


   
                                    SIGNATURE


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.

                                       /s/ Joseph K. Pagano
October 31, 1997                       -----------------------------------
                                       Joseph K. Pagano
                                       President






                                      -13-