SECURIITES AND
EXCHANGE COMMISSION



Washington, D.C. 20549



Form 10-KSB



Annual Report Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934



Date of Report: December
31, 2002



PRIME EQUIPMENT, INC.

(Exact name of
registrant as specified in its charter)





|Nevada                                                               | 000-29937                      | 88-0412653                             
|-------------------------------------------------------------------- | ------------------------------ | ---------------------------------------
|(State of other
      jurisdiction of incorporation or organization) | (Commission File
      Number) | (IRS Employer
      Identification No.)



4287B Dawson Street,
Burnaby BC, Canada V5B 4C3

(Address of principal
executive offices)



Registrant's telephone
number: (604) 298-9989



(Mark One)

> [X] Annual report
>     pursuant to Section 13 or 15(d) of the securities exchange act of 1934 for
>     the fiscal year ended December 31, 2002.

[ ] Transition report
under Section 13 or 15(d) of the securities exchange act of 1934



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





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



Common stock



Check whether the issuer
(1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 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. [X] Yes [ ] No



Check if there is no
disclosure of delinquent filers in response to Item 405 or Regulation S-B is not
contained in this form, and no disclosure will 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-KSB or any amendment to
this Form 10-KSB [X]



State issuer's
revenues for its most recent fiscal year: $976,406



State the aggregate
market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was sold, or the
average bid and asked price of such common equity, as of a specified date within
the past 60 days. NA



State the number of
shares outstanding of each of the issuer's classes of common equity, as of the
latest practicable date. 9,046,000 common, 500,000 preferred





PART I



Item 1. Description of
Business



General

Prime Equipment, Inc.
(the "Company") is a Nevada company formed under the laws of the State
of Nevada on December 18, 1998, originally to engage in the construction
equipment and telecommunication equipment rental & sales business. Since its
inception, the company has been establishing itself in the industry. The Company
has sold equity shares to raise capital, planned and arranged for management,
and has commenced corporate strategic planning regarding potential viable
operations. The Company currently operates out of 4287B Dawson St, Burnaby BC.
Canada V5B-4C3. The Company is currently generating revenues and expects that
its revenues will continue and, possibly increase.



On July 10, 2002, Prime
Equipment merged with IP Teleservices, Inc., a British Columbia Canadian
corporation ("IPT") with Prime Equipment the surviving entity. IP
Teleservices Inc. (IPT) has subsequently changed its name to Prime Teleservices
Inc. ("PTSI")



Business of Issuer



The Company is engaged
in the import and distribution of telecommunications services. It worked with
DATICO S.P.A. (www.datico.it) of Italy for the exclusive right to import and
distribute their manufactured telecommunications equipment to Internet Service
Providers and end users in the North America. Unfortunately, the inability of
DATICO to provide support and testing has required the Company to terminate its
relationship, as of November 19th, 2002.



Prime Teleservices
Inc., (PTSI) a newly incorporated telecom company in Canada, has developed an
application platform that is software based and is capable to reach a global
presence at low cost and short timeframe, enabling Voice 0ver Internet Protocol
(VoIP) over the public internet for Long Distance telephone service and calling
card businesses for the retail; wholesale and other business models applicable
to anywhere in the world.



The objective of PTSI
is to develop a global voice services backbone network on IPT where VoIP
Gateways and Call Management Data centers (CMDCs) will be installed at strategic
locations around the world. With the platform in place, PTSI will be in a
position to focus at a "two prong" marketing approach to develop the
business. One area of the marketing activity will be on retail business where
target customer groups/ethnic base will be offered prepaid calling cards or
prepaid residential services at preferential rate to a particular destination
directly through agents or PTSI outlets. Concurrently, PTSI will also wholesale
its products by offering OEM telephone cards for phone-centers; convenience
stores and travel agencies/tour operators to maximize its network resources at
the initial stage of the business operation. The idea of offering business
opportunities to interested partners will be the main driving force in enabling
an expanded IP network reach, in the shortest possible timeframe. This
initiative is the first in turning basic telecom services into commodity
retailing through a business opportunity network on a global scale.



The Company expects
the PTSI Global VoIP platform to be established in stages. Currently, the
Company's CMDCs are operating in Vancouver and Toronto, Canada, Hong Kong, and
China. There will be an additional four (4) CMDCs equipped with software based
IP switch and application servers for PTSI's global VoIP platform. The planned
expansion will bring Milan, Italy, Los Angeles and San Francisco, California,
and New York, New York online. These three regional and one European CMDCs will
be co-located and connected to the Internet upstream carrier/ Internet gateway
operators for reliability and security purposes. The Company is focused on
becoming a provider of complete telecom services.



Each regional CMDC
will be managing remote point of presents (POPs) in cities within the region
where business is to be conducted or partner operation maintains a presence. The
POPs will provide the basic connectivity to the local Public Switched Telephone
Network (PSTN) for customer access as well as traffic termination. The
terminating POPs are essential for controlling costs, where majority of the
Company's traffic is terminated. All terminating POPs will be connected to
carriers providing the least cost, or the respective local PSTN, depending on
costs and regulatory issues.



All elements on the
PTSI's platform are connected through the Internet domain, and Internet
protocol software switching controls traffic. The corresponding routing will be
accomplished through software controlled LCR and gateway-to-gateway VoIP
logical connections.



With the securing of a
leased premises by PTSI for the next three years, the Company has a suitable
office space in Burnaby B.C. to operate and administrate its business.



Other than development
of its website, and the Software based Application Platform, the



Item 2. Description of
Property.



The Company's principal
executive and administrative offices are located in Burnaby BC, in which it
shares leased premises. The Company intends to stay at this premise until it
out-grows the current office space. The Company shares office space under a
lease agreement. A copy of the lease is attached as an Exhibit. The Company
considers its executive and administrative offices to be adequate and suitable
for its current needs. The Company does not own or lease any other real estate



Item 3. Legal
Proceedings



The Company is not a
party to any material pending legal proceedings and, to the best of its
knowledge, no such action by or against the Company has been threatened. The
Company's sole officer and director is not an adverse party to the Company nor
does he have a material interest adverse to the Company.



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



No matter was submitted
during the fourth quarter of the fiscal year ended December 31, 2002, to a vote
of security holders, through the solicitation of proxies or otherwise.



PART II



Item 5. Market for
Common Equity and Related Stockholder Matters.



Market Information

The Company is
voluntarily filing a Registration Statement on Form 10-SB to obtain listing on
the OTC Bulletin Board, which requires all listed companies to be registered
with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934
and to be current in its required filings once so registered. That registration
statement is pending approval from the SEC.



The Company has no
public trading market for its common stock. Although the Company intends to seek
a quotation for its common shares on the Over-the-Counter Bulletin Board in the
future, there is no assurance the Company will do so, nor is there any assurance
that should the Company succeed in obtaining a listing for its securities on the
OTC Bulletin Board or on some other exchange that a trading market for the
Company's stock will develop. There are no outstanding options, warrants to
purchase, or securities convertible into common equity of the Company
outstanding. The Company has not agreed to register any shares of its common
stock for any shareholder. There are presently 9,046,000 shares of common stock
that were issued as follows: 100,000 shares of common stock for cash subject to
Rule 144 in December 1998; 100,000 issued pursuant to Regulation D, Rule 504 on
March 1999. On October 22, 1999, all of the existing shareholders surrendered
their stock and the Company issued 4,000,000 shares of common stock to those
shareholders, pursuant to a 20 for 1 forward split. No additional stock was sold
at that time. On November 14, 1999 1,000 shares of restricted common stock was
issued, and in December 17, 1999 20,000 shares on restricted common stock was
issued, both pursuant to Regulation D, Rule 504. The Company issued 25,000
shares of restricted common stock to Giovanni Iachelli on November 1, 2000, for
services rendered.On July 10, 2002, the Company authorized the issuance
of 5,000,000 shares of common stock and 500,000 shares of preferred stock to the
shareholders of Net Magic, Ltd, in exchange for all outstanding shares, software
and equipment of IP Teleservices Inc.



Stockholders

There are 63
shareholders of record for the Company's common stock.



Recent Sales of
Unregistered Securities



On July 10, 2002, the
Company authorized the issuance of 5,000,000 shares of common stock and 500,000
shares of preferred stock to the shareholders of Net Magic, Ltd, in exchange for
all outstanding shares, software and equipment of PrimeTeleservices Inc.,
formerly IP Teleservices Inc.



Item 6. Management's
Discussion and Analysis or Plan of Operation.



The Company plans to
engage in the sale of telecommunications services and licensing of its
telecommunication platform services. Additional funding through private
placement will be necessary to enable the Company to expand its current
business.



On July 10, 2002, the
Company acquired one hundred percent (100%) of the stock of Prime Teleservices
Inc. (PTSI). PTSI is a telecom company in Canada poised to be the leader in
"softswitch" VoIP implementation on a global scale. PTSI hopes to
generate significant traffic volume from the retail, wholesale and licensing
opportunities around the world. At the same time, PTSI hopes to improve its
overall margin as its network grows with its latest integrated software
technology.





A team of experienced
telecom marketers and software developers started PTSI. Their objective is to
build and develop a Global Voice Services Backbone Network that connects to VoIP
Gateways and Call Management Data Centers spanning the globe. It has already
successfully built a software based VoIP application platform that enables VoIP
over the Internet and/or Intranet for Long Distance Telephone service and
Calling Card businesses. This platform can be deployed inexpensively, quickly
and most importantly, globally.



PTSI has been
establishing relationships with strategic local telecom companies. Through these
relationships, PTSI has placed itself in a position to provide a global VoIP
Network that will link its presence in North America to Asia as well as Europe.
This in turn opens many doors for the company to develop more lucrative business
opportunities in the retail, wholesale and licensing sectors.



The Company intends to
raise adequate funds of up to $1,500,000 from accredited investors to provide
adequate working capital for the next 12 months. The proceeds will be used to
expand the software network platform, pay professionals and consultants, and
market the business opportunity model. The Company expects to add employees over
the next 12 months as additional business is added. The Company expects to begin
the process of raising adequate funding in the near future.



Revenue

The
Company did not receive revenues from operations during the two-year period
preceding the merger with IP Teleservices. The Company has achieved revenue from
operations after the date of the merger. The total amount of receivables
collected in cash from October 1, 2002 to December 31, 2002 is $65,552.02



Liquidity

The
Company has been generating revenues from sales of its products. Although it
operated at a loss for the third quarter of 2002, the Company produced net
income for the nine months ending September 30, 2002. Losses were recorded
during the third quarter of 2002 for a number of reasons. Those include the
following:



- During
    the first nine months of 2002, there was a delay in receipts of customer
    payments. This caused the Company to record bad debt realization for the
    first time in September, 2002.
- There
    was an increase during the third quarter in the use of consultants and
    professions, and their associated fees.
- The
    Company leased an office space, adequate in size to operate its business.



It will have to raise
additional capital in the next twelve months in order to continue its business
plan.



The current market for
raising capital through one or more private placements is difficult. The number
of public and private companies seeking such financing means the competition to
secure investors is great. It may be that the Company will not be able to secure
any equity financing through a private placement, and may have to seek financing
from other, less traditional, more costly venues. In any such event, the Company
would have to alter and revise its business plan to provide for significantly
less expansion and growth.



Assuming that the
Company is successful in raising its equity financing, the projected investment
needs for the Company and categories of expenditures for the next twelve months
are as follows:



|Network Expansion                                                                                                       | USD      
|----------------------------------------------------------------------------------------------------------------------- | ---------
|Set-up and
      acquisition costs of Network Equipment and VoIP Gateways for 8 China
      cities and 2 Italian cities | 600,000  
|                                                                                                                        |          
|                                                                                                                        |          
|Business Expansion                                                                                                      |          
|                                                                                                                        |          
|Complete New
      Corporate Office in Burnaby                                                                          | 100,000  
|                                                                                                                        |          
|Establish Regional
      Offices in Hong Kong and Italy                                                                 | 150,000  
|                                                                                                                        |          
|Additional
      consulting services from Software and Networks consultants/ professionals                              | 280,000  
|                                                                                                                        |          
|Marketing costs
      for Business Opportunity Model/ Road shows                                                        | 120,000  
|                                                                                                                        |          
|Administrative
      expenses                                                                                           | 250,000  
|                                                                                                                        |          
|Total                                                                                                                   | 1,500,000



The Company has issued
shares of its common stock from time to time in the past to satisfy certain
obligations, and expects in the future to acquire certain services and satisfy
indebtedness utilizing authorized shares of the capital stock of the Company. If
operations and cash flow can be improved through these efforts, management
believes that the Company's liquidity problems will be resolved, and that the
Company can continue to operate. However, no assurance can be given that
management's actions will result in profitable operations.



The plan of the Company
is to raise more financing through loans and the sale of the Company's common
and preferred stock to enable the Company to expand its current business. An
overall budget of $1,500,000 for acquisitions, employment, marketing and
procurement of equipment for the upcoming year should achieve the Company's
goals. The intent is to acquire strategically located IPS companies, hire
employees for expansion of the software network, execute additional contracts
with telecom service providers, as well as aggressively market and promote
business opportunities.



If the Company is unable
to secure financing through the sale of common stock, it may have to adjust its
business plan and reduce its future goals.



The Company previously
entered into lines of credit with its former President and a former consultant.
The lines of credit are unsecured, payable on demand, with interest at the rate
of 8% per annum, compounded annually.  In the event of default by the
Company the interest rate increases to 10%. Total credit extended under the two
$100,000 lines of credit as of September 30, 2002, was $46,505. Both lines of
credit have been cancelled, and the amounts owed were reflected by Promissory
Notes.



Potential Uncertainties

As the Company expects
eventually to obtain sales from overseas businesses and such expenditures are
generated in foreign currencies, fluctuations in the value of currencies
relative to the United States dollar could adversely affect the Company's
profitability. Royalty payments, if any, paid by the Company relating to foreign
licensing arrangements would be converted to U.S. dollars based on the exchange
rate at the time of payment. In addition, if the Company is unable to raise cash
through the sale of stock, it may not have sufficient resources to continue, and
may fail.



Item 7. Financial
Statements

















































|PRIME EQUIPMENT
      INC.(Successor to
      Prime Teleservices Inc., which was formerly IP Teleservices Inc.)Consolidated
      Financial Statements
      
      December 31,
      2002 and 2001
      (U.S. Dollars)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

























































Contents















INDEPENDENT AUDITORS'
REPORT







CONSOLIDATED BALANCE
SHEETS 1



CONSOLIDATED
STATEMENTS OF EARNINGS 2



CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT 3



CONSOLIDATED
STATEMENTS OF CASH FLOWS 4



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS











EVANCIC PERRAULT
ROBERTSON

CERTIFIED GENERAL
ACCOUNTANTS







> 

INDEPENDENT ACCOUNTANTS'
REPORT









To the Board of
Directors and Stockholders

Prime Equipment Inc.





We have audited the
consolidated balance sheet of Prime Equipment Inc. as of December 31, 2002 and
the consolidated statements of earnings, retained earnings and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits. The financial statements of Prime
Equipment Inc. as of December 31, 2001, were audited by other auditors whose
report dated February 4, 2002, expressed an unqualified opinion on those
statements.



We conducted our
audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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
2002 financial statements referred to above present fairly, in all material
respects, the financial position of the Prime Equipment Inc. as of December 31,
2002 and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.







EVANCIC PERRAULT
ROBERTSON

CERTIFIED GENERAL
ACCOUNTANTS





Coquitlam, B.C.

March 19, 2003

2nd Floor, 566
Lougheed Highway, Coquitlam, BC V3S 3S3

Telephone (604)
936-4377 Fax (604) 936-8376

Website: http//epr.ca
Email: epr@eprcoq.ca

Office Across Canada

Affiliates Around the
World



PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

CONSOLIDATED BALANCE
SHEETS

Year ended December 31,
2002 and 2001

(U.S.
Dollars)



|Assets                                                                                                                                                       |   |                                                             |   |                                             
|------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ----------------------------------------------------------- | - | --------------------------------------------
|Current                                                                                                                                                      |   |                                                             |   |                                             
|Cash                                                                                                                                                         | $ | 211,249                                                     | $ | 54,100                                      
|Accounts Receivables, net allowance for doubtful accounts                                                                                                    |   |                                                             |  
|(2002 - $75,000) (2001 - $ -)
      Current portion of lease receivable - (Note 3)                                                                           |   | 150,173
      -                                             |   | 141,656
      16,265                        
|Government agencies receivable
      Inventory
      Prepaid expenses                                                                                        |   | -
      88,602
      1,319                                  |   | 4,345
      -
      119,999                 
|                                                                                                                                                             |   |                                                             |   |                                             
|                                                                                                                                                             |   | 451,343                                                     |   | 336,365                                     
|Lease receivable
      Property, plant and equipment - (Note 4)
      Deferred income tax assets                                                             |   | -
      93,133
      8,684                                  |   | 13,450
      102,891
      -                
|                                                                                                                                                             | $ | 553,160                                                     | $ | 452,706                                     
|                                                                                                                                                             |   |                                                             |   |                                             
|Liabilities and
      Stockholders- Deficit                                                                                                                  |   |                                                             |   |                                             
|Current                                                                                                                                                      |   |                                                             |   |                                             
|Note Payable - (Note 5)                                                                                                                                      | $ | 25,000                                                      | $ | -                                           
|Note Payable to stockholders - (Note 6)
      Accrued interest
      Accounts payable and accruals
      Customer deposits
      Government agencies payable |   | 77,143
      13,569
      413,931
      57,000
      10,194 |   | -
      -
      237,795
      44,148
      -
|                                                                                                                                                             |   |                                                             |   |                                             
|                                                                                                                                                             |   | 596,837                                                     |   | 281,943                                     
|Due to director
      Loans payable
      - (Note 7)
      Due to
      stockholders - (Note 8)
      Preferred stock
      - (Note 9)                       |   | -
      31,176
      81,436
      500                       |   | 3,792
      30,879
      136,022
      -    
|                                                                                                                                                             |   | 709,949                                                     |   | 452,636                                     
|Stockholders'
      Equity (Deficit)                                                                                                                         |   |                                                             |   |                                             
|Common stock - (Note 9)                                                                                                                                      |   | 2                                                           |   | 1                                           
|Other comprehensive income
      Retained earnings (deficit)                                                                                                 |   | (123)
      (156,668)                                       |   | (2)
      71                                
|                                                                                                                                                             |   |                                                             |   |                                             
|                                                                                                                                                             |   | (156,789)                                                   |   | 70                                          
|                                                                                                                                                             | $ | 553,160                                                     | $ | 452,706                                     
|                                                                                                                                                             |   |                                                             |   |                                             
|                                                                                                                                                            

The accompanying notes
are an integral part of these financial statements.

PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

CONSOLIDATED STATEMENTS
OF EARNINGS

Year ended December 31,
2002 and 2001

(U.S. Dollars)

2002                                    
2001



|Revenue                                          | $   | 976,406    | $ | 186,975  
|------------------------------------------------ | --- | ---------- | - | ---------
|                                                 |     |            |   |          
|Cost
      of sales                              |     | 714,967    |   | 128,492  
|                                                 |     |            |   |          
|Gross profit                                     |     | 261,439    |   | 58,483   
|                                                 |     |            |   |          
|Operating
      Expenses                         |     |            |   |          
|Depreciation                                     |     | 48,854     |   | 11,331   
|Bank charges                                     |     | 470        |   | 88       
|Bad debt                                         |     | 135,177    |   | -        
|Commission                                       |     | 3,406      |   | -        
|Consulting                                       |     | 50,628     |   | 28,213   
|Promotions and entertainment                     |     | 378        |   | 585      
|Office                                           |     | 4,359      |   | 309      
|Professional fees                                |     | 28,799     |   | 9,602    
|Rent                                             |     | 2,343      |   | -        
|Travel                                           |     | 1,856      |   | 12,617   
|                                                 |     |            |   |          
|                                                 |     | 276,270    |   | 62,745   
|                                                 |     |            |   |          
|                                                 | $   | (14,831)   | $ | (4,262)  
|                                                 |     |            |   |          
|Other income
      and (expenses)                |     |            |   |          
|Interest expense                                 |     | (6,381)    |   | -        
|Gain on foreign exchange                         |     | 190        |   | 4,333    
|Gain on sale of property, plant and equipment    | 516 |            | -
|                                                 |     |            |   |          
|                                                 | $   | (5,675)    | $ | 71       
|                                                 |     |            |   |          
|Earnings (loss)
      before                     |     |            |   |          
|Provision for
        income tax                 |     | (20,506)   |   | 71       
|                                                 |     |            |   |          
|Deferred tax
      benefits                      |     | (8,724)    |   | -        
|                                                 |     |            |   |          
|                                                 |     |            |   |          
|Net earnings
      (loss) for the year           |     | (11,782)   |   | 71       
|                                                 |     |            |   |          
|Weighted
      average common shares outstanding |     | 6,319,973  | $ | 5,000,000
|                                                 |     |            |   |          
|Earnings (loss)
      per share                  | $   | (0.001864) | $ | 0.000014 
|                                                 |     |            |   |          

The accompanying notes
are an integral part of these financial statements.









PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

CONSOLIDATED STATEMENTS
OF STOCKHOLDERS' DEFICIT

Year ended December 31,
2002 and 2001

(U.S. Dollars)

|                                                                                                                        |                              |   |                                                   |   |                                   |   |                                        |          
|----------------------------------------------------------------------------------------------------------------------- | ---------------------------- | - | ------------------------------------------------- | - | --------------------------------- | - | -------------------------------------- | ---------
|                                                                                                                        | Number of Common
      Stock |   | Common Stock and
      Additional Paid-in Capital |   | Retained
      Earnings (Deficit) |   | Other
      Comprehensive
      Income | Total    
|Issuance of
      stock for cash
      March 16, 2001                                                                   | 5,000,000                    |   | 1                                                 |   | -                                 |   | -                                      | 1        
|Net Income for
      the year                                                                                           | -                            |   | -                                                 |   | 71                                |   | -                                      | 71       
|Effect of
      foreign exchange                                                                                        | -                            |   | -                                                 |   | -                                 |   | (2)                                    | (2)      
|                                                                                                                        |                              |   |                                                   |   |                                   |   |                                        |          
|Balance,
      December 31, 2001                                                                                        | 5,000,000                    |   | 1                                                 |   | 71                                |   | (2)                                    | 70       
|Reverse
      aquisition                                                                                                |                              |   |                                                   |   |                                   |   |                                        |          
|Pre-acquisition
      share of
      Prime Equipment
      Inc
      (Note 2)                                           | 4,046,000                    |   | -                                                 |   | -                                 |   | -                                      | -        
|Issuance of
      shares for
      Reverse
      acquisition of
      Prime
      Teleservices Inc.
      July 18, 2002 | 5,000,000                    |   | 1                                                 |   | -                                 |   | -                                      | 1        
|Net deficit
      aquired from
      subsidiary                                                                         | -                            |   | -                                                 |   | (144,957)                         |   | -                                      | (144,957)
|Less exchange
      of Prime
      Teleservices
      Inc.'s shares                                                     | (5,000,000)                  |   | -                                                 |   | -                                 |   | -                                      | -        
|                                                                                                                        |                              |   |                                                   |   |                                   |   |                                        |          
|Balance after
      reverse acquisition                                                                                 | 9,046,000                    |   | 2                                                 |   | (144,886)                         |   | (2)                                    | (144,886)
|Net loss for
      the year                                                                                             | -                            |   | -                                                 |   | (11,782)                          |   | -                                      | (11,782) 
|Effect of
      foreign exchange                                                                                        | -                            |   | -                                                 |   | -                                 |   | (121)                                  | (121)    
|Balance,
      December 31, 2002                                                                                        | 9,046,000                    | $ | 2                                                 | $ | (156,668)                         | $ | (123)                                  | (156,789)



The accompanying notes
are an integral part of these financial statements.





PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

CONSOLIDATED STATEMENTS
OF CASH FLOWS

Year ended December 31,
2002

(U.S.
Dollars)

|Cash flows from
      (for) operating activities:                                                         |   |          |   |          
|--------------------------------------------------------------------------------------------------------- | - | -------- | - | ---------
|Net Earnings
        (loss)                                                                               | $ | (11,782) |   | 71       
|                                                                                                          |   |          |   |          
|Adjustment to
        reconcile net earnings (loss) to net cash provided by operating
        activities: |   |          |  
|Issuance of
        stock for services rendered                                                           |   | 500      |   |          
|Depreciation                                                                                              |   | 48,854   |   | 11,331   
|Gain on sale of
        property, plant and equipment                                                     |   | (516)    |   | -        
|Deferred income
        tax                                                                               |   | (8,724)  |   | -        
|Increase in
        accounts receivable                                                                   |   | (8,714)  |   | (144,168)
|Increase in
        inventory                                                                             |   | (89,009) |   | -        
|Decrease
        (increase) in pre-paid expenses                                                          |   | 120,769  |   | (120,000)
|Increase in
        accrued interest                                                                      |   | 3,126    |   | -        
|Increase in
        accounts payable and accrued liabilities                                              |   | 120,494  |   | 244,616  
|Increase in
        customer deposits                                                                     |   | 12,000   |   | 45,000   
|Increase
        (decrease) in government agencies payables                                               |   | 14,648   |   | (4,379)  
|                                                                                                          |   | 201,646  |   | 32,471   
|                                                                                                          |   |          |   |          
|Cash Flows from
      (for) investing activities:                                                         |   |          |   |          
|                                                                                                          |   |          |   |          
|Purchase of
        property, plant and equipment                                                         | $ | (21,526) | $ | (114,942)
|Decrease
        (increase) in lease receivable                                                           |   | 30,138   |   | (30,024) 
|                                                                                                          |   | 8,612    |   | (144,966)
|                                                                                                          |   |          |   |          
|Cash flows from
      (for) financing activities:                                                         |   |          |   |          
|Advances from
        (repayment to) stockholders                                                         |   | (33,868) |   | 169,961  
|Advances from
        (repayment to) director                                                             |   | (3,897)  |   | 3,897    
|Issurance of
        common shares                                                                        |   | 1        |   | 1        
|                                                                                                          |   | (37,764) |   | 173,859  
|                                                                                                          |   |          |   |          
|Effect of
      exchange rate changes on cash                                                             |   | (15,345) |   | (7,264)  
|                                                                                                          |   |          |   |          
|Increase in
      cash                                                                                    |   | 157,149  |   | 54,100   
|                                                                                                          |   |          |   |          
|Cash, beginning
      of year                                                                             |   | 54,100   |   | -        
|                                                                                                          |   |          |   |          
|Cash, end of
      year                                                                                   | $ | 211,249  | $ | 54,100   
|                                                                                                          |   |          |   |          
|Supplemental
      Disclosure                                                                             |   |          |   |          
|Interest paid                                                                                             | $ | -        | $ | -        
|Income taxes
      paid                                                                                   | $ | -        | $ | -        

Non-cash activities:

500,000 preferred shares
were issued for services rendered in connection with the reverse acquisition

The accompanying notes
are an integral part of these financial statements.



PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(U.S. Dollars)





1. NATURE OF BUSINESS



> The Company was
>   incorporated on December 18, 1998, under the laws of the State of Nevada.
>   On July 18, 2002,
>   the Company acquired 100% of the shares of Prime Teleservices Inc., a Canadian
>   corporation which had changed its name from IP Teleservices Inc. on June 3,
>   2002.
>   
>   The Company's
>   subsidiary, Prime Teleservices Inc., is a telecommunication company in "softswitch"
>   Voice over Internet Protocol (VoIP) implementation on a global scale. It will
>   generate significant traffic volume from retail, wholesale and franchising
>   opportunities world wide.
>   
>   Prime Teleservices
>   Inc. was started by a team of experienced telecom marketers and software
>   developers. Its objective is to build and develop a Global Voice Services
>   Backbone Network that connects to VoIP Gateways and Call Management Data
>   Centres spanning the globe. It has successfully built a software based VoIP
>   application platform that enables VoIP Network that will link its presence in
>   North America to Asia and Europe. This in turn provides many opportunities for
>   the Company to develop business opportunities in the retail, wholesale and
>   franchising sectors.

2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES



> Basis of
>   consolidation
>   
>   
>   The financial
>   statements of entities, which are controlled by the Company, referred to as
>   subsidiaries, are consolidated. Entities which are not controlled but over
>   which the Company has the ability to exercise significant influence, referred
>   to as associated companies, are accounted for using the equity method.
>   Investments in entities that the Company does not control or over which it
>   does not exercise significant influence are accounted for using the cost
>   method.
>   
>   The acquisition by
>   the Company of the shares of Prime Teleservices Inc. on July 18, 2002 was
>   accounted for as a reverse acquisition whereby Prime Teleservices Inc. is
>   considered the acquiring company. The comparative figures presented are those
>   of Prime Teleservices Inc.



Reverse acquisition



> On July 18, 2002, the
> Company completed an agreement with the shareholders of Prime Teleservices Inc.
> whereby the Company issued 5,000,000 common shares in exchange for all the
> issued and outstanding shares of Prime Teleservices Inc. as well as the rights
> to the software platform, which was owned by the parent company of Prime
> Teleservices, Inc. The software platform has been recorded at a cost of $1. The
> Company also issued 500,000 preferred shares for services rendered in connection
> with this acquisition. No cash was transacted.
> 
> The acquisition has
> been accounted for as a reverse acquisition using the purchase method, and
> accordingly, for financial statement reporting purposes, the net assets of Prime
> Teleservices Inc. have been included in the consolidated balance at book values,
> and the net assets of Prime Equipment Inc. have been recorded at fair market
> value at the date of acquisition. The consolidated operations of the Company for
> the period from January 1, 2002 to the date of acquisition, July 18, 2002, are
> those of Prime Teleservices, Inc. and exclude the results of operations of Prime
> Equipment, Inc. The results of Prime Equipment, Inc. are included in the
> consolidated statements of operations from the date of acquisition.

PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(U.S. Dollars)



> 

Reverse acquisition
(continued)



The cost of the
acquisition is the assumption of the net liability position of Prime Equipment,
Inc. as at July 18, 2002 and consists of:

> 



|Accounts payable                               | 53,841 
|---------------------------------------------- | -------
|Note payable                                   | 71,505 
|Interest payable                               | 10,443 
|Loan from
      stockholders                   | 9,168  
|Total liabilities
      assumed on acquisition | 144,957



> Cash and cash
>   equivalents
>   
>   
>   Cash and cash
>   equivalents includes cash and those short-term market instruments which, on
>   acquisition, have a term to maturity of three months or less.
>   
>   Property, plant and
>   equipment
>   
>   
>   Property, plant and
>   equipment are recorded at cost. Amortization is provided annually on a
>   straight-line basis over a period of three years to write-off assets over
>   their estimated useful lives.
>   
>   Use of estimates
>   
>   
>   The preparation of
>   the Company's consolidated 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
>   disclosures of contingent assets and liabilities at the date of the financial
>   statements and the reported amounts of revenues and expenses during the
>   reporting period. Actual results could differ from those estimates.
>   
>   Inventory
>   
>   
>   Inventory is recorded
>   at the lower of cost and net realizable value. No reserve for obsolete and
>   slow-moving inventories is deemed necessary.
>   
>   Deferred income taxes
>   
>   
>   Deferred income taxes
>   have resulted from reporting certain items for income tax purposes on a basis
>   which differs from accounting policies. Effective corporate tax rates are 40%
>   and 15% for the Company's Canadian and United States operations respectively
>   for both 2002 and 2001. Deferred tax benefits of $8,724 pertains to the
>   Canadian operation.
>   
>   Revenue recognition
>   
>   
>   Telecommunication
>   products and services:
>   
>   Revenue is recorded
>   net of trade discounts and allowances upon shipment of products or rendering
>   of services and
>   when all significant contractual obligations have been satisfied and
>   collection is reasonably assured. The standard billing terms granted to
>   customers are due upon invoices issued to customers.



PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(U.S. Dollars)







> Earnings (loss) per
>   share (EPS)
>   
>   
>   Basic EPS is
>   determined using net income divided by the weighted average shares outstanding
>   during the period. Diluted EPS is computed by dividing net income by the
>   weighted average shares outstanding, assuming all dilutive potential common
>   shares were issued. Since the Company has no common shares that are
>   potentially issuable, such as stock options, convertible securities or
>   warrants, basic and diluted EPS are the same.
>   
>   As the acquisition
>   has been recorded as a reverse acquisition, EPS for 2002 was calculated using
>   the number of shares outstanding after the acquisition. The EPS for 2001 was
>   calculated using the number of shares issued in the reverse acquisition.
>   
>   Translation of
>   foreign currencies
>   
>   
>   The functional
>   currency of the Company is the United States dollar. The financial statements
>   of the Company's operations whose functional currency is other than the United
>   States dollar are translated from such functional currency to United States
>   dollars using the current rate method. Under the current rate method, assets
>   and liabilities are translated at the exchange rates in effect at the balance
>   sheet date. Revenues and expenses, including gains and losses on foreign
>   exchange transactions, are translated at average rates for the period. Where
>   the current rate method is used, the unrealized translation gains will be
>   accumulated in other comprehensive income under the shareholders' equity
>   section.
>   
>   Financial
>   instruments
>   
>   
>   The estimated fair
>   value of cash and equivalents, accounts receivable, loans receivables, and
>   accounts payable and accrued liabilities approximate their carrying amounts in
>   the financial statements. Unless otherwise noted, it is management's opinion
>   that the Company is not exposed to significant interest, currency, or credit
>   risks arising from these financial statements.

1. LEASE RECEIVABLE



|                           |                                        |   | 2002 |   | 2001  
|-------------------------- | -------------------------------------- | - | ---- | - | ------
|Equipment
      Leased Out |                                        |   |      |   |       
|                           | Aggregate of
      payments receivable | $ | -    | $ | 33,454
|                           | Less: unearned
      interest          |   | -    |   | (3,740
|                           |                                        |   |      |   |       
|                           |                                        |   | -    |   | 29,714
|                           | Less: current
      portion            |   | -    |   | 17,189
|                           |                                        |   |      |   |       
|                           |                                        | $ | -    | $ | 12,525



The lease has been
terminated during the last quarter of the fiscal year. The Company recovered the
assets for its own use.



PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(U.S. Dollars)





PROPERTIES, PLANT AND EQUIPMENT







|                          |   |         |   |                                |   | 2002           |   | 2001          
|------------------------- | - | ------- | - | ------------------------------ | - | -------------- | - | --------------
|                          |   | Cost    |   | Accumulated
      Amortization |   | Net Book Value |   | Net Book Value
|                          |   |         |   |                                |   |                |   |               
|Computer
      Equipment  | $ | 11,448  | $ | 5,772                          | $ | 5,676          | $ | 8,080         
|Telephone
      Equipment |   | 140,944 |   | 53,488                         |   | 87,456         |   | 94,811        
|Software                  |   | 1       |   | -                              |   | 1              |   | -             
|                          |   |         |   |                                |   |                |   |               
|                          | $ | 152,393 | $ | 59,260                         | $ | 93,133         | $ | 102,891       





NOTE PAYABLE



The promissory note
payable is unsecured, maturing April 30, 2003 with a simple interest rate at 10%
per annum.



NOTES PAYABLE TO STOCKHOLDERS



> The promissory notes
>   payable are unsecured, due on demand with interest at the rate of 8% per
>   annum, compounded annually. In the event of default by the Company, the
>   interest rate increases to 10%.

7. LOAN PAYABLE





|                                 |   | 2002   |   | 2001  
|-------------------------------- | - | ------ | - | ------
|                                 |   |        |   |       
|Bove Telecom
      Services Inc. | $ | 31,176 | $ | 30,879

> The Company has loans
>   payable, which are non-interest bearing and have no specific repayment terms.
>   The lenders stated that they will not request payment within the next fiscal
>   year.

8. DUE TO STOCKHOLDERS





|                           |   | 2002   |   | 2001   
|-------------------------- | - | ------ | - | -------
|                           |   |        |   |        
|Best Holding
      Limited | $ | 20,239 | $ | 68,011 
|Media Fund
      Limited   |   | 61,197 |   | 68,011 
|                           |   |        |   |        
|Total                      | $ | 81,436 | $ | 136,022



.

PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(U.S. Dollars)



9. CAPITAL STOCK





|                              |  |                                                                                                                                                                                                                                                                                                                      
|----------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Authorized:                   |  | 50,000,000
      voting common shares with par value of $0.001 each.                                                                                                                                                                                                                                                 
|                              |  | 24,000,000
      preferred shares with par value of $0.001 each. Each preferred share is
      convertible to 10 common shares. Conversion is applicable only upon
      achieving certain revenue, profit and share price targets to be set by the
      Board of Directors. These shares have no redemption rights.
|                              |  |                                                                                                                                                                                                                                                                                                                      
|Issued and
      outstanding: |  | 9,046,000
      common shares                                                                                                                                                                                                                                                                                        
|                              |  | 500,000
      preferred shares                                                                                                                                                                                                                                                                                       



10. STOCK SPLIT



> On March 23, 2002, the
>   predecessor company, Prime Teleservices Inc. split its common shares by a
>   ratio of 5,000,000 to 1. The consolidated statement of stockholders' deficit
>   was prepared assuming that the split occurred as of January 16, 2001.

11. PRO FORMA
  FINANCIAL STATEMENTS



> The following
>   summary, prepared on a pro forma basis, combines the consolidated results of
>   operations of the Company with Prime Teleservices, Inc. for the year ended
>   December 31, 2002 and 2001 as if the acquisitions of Prime Teleservices, Inc.
>   took place at the beginning of the years presented.



|Pro-forma
      Consolidated Balance Sheet |   |           |   |        
|------------------------------------------ | - | --------- | - | -------
|                                           |   | 2002      |   | 2001   
|Assets                                     |   |           |   |        
|Current Assets                             | $ | 460,027   | $ | 339,122
|Long-term assets                           |   | 93,133    |   | 241,395
|                                           |   |           |   |        
|                                           |   | 553,160   |   | 580,517
|Liabilities and
      stockholders' equity |   |           |   |        
|Current
      liabilities                  |   | 596,837   |   | 354,018
|Long-term
      liabilities                |   | 112,612   |   | 225,897
|                                           |   |           |   |        
|                                           |   | 709,448   |   | 579,915
|Stockholders'
      equity (deficit)       |   | (156,288) |   | 602    
|                                           |   |           |   |        
|                                           | $ | 553,160   | $ | 580,517











PRIME EQUIPMENT INC.

(Successor to Prime
Teleservices Inc., which was formerly IP Teleservices Inc.)

NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2002 and
2001

(U.S. Dollars)









|Pro-forma
      Consolidated Income Statement    |   |           |   |          
|------------------------------------------------ | - | --------- | - | ---------
|                                                 |   | 2002      |   | 2001     
|                                                 |   |           |   |          
|Revenues                                         | $ | 976,406   | $ | 186,975  
|Operating costs
      and expenses               |   | 1,012,988 |   | 260,250  
|                                                 |   |           |   |          
|Operating profit
      (loss)                    |   | (36,582)  |   | (73,275) 
|Other income
      (expenses)                    |   | 7,497     |   | 600      
|                                                 |   |           |   |          
|Earnings (loss)
      before taxes               |   | (29,085)  |   | (72,675) 
|Income taxes                                     |   | 8,724     |   | -        
|                                                 |   |           |   |          
|Net earnings
      (loss) for the year           | $ | (20,361)  | $ | (72,675) 
|                                                 |   |           |   |          
|Weighted average
      common shares outstanding |   | 9,046,000 |   | 9,046,000
|                                                 |   |           |   |          
|Earnings (loss)
      per share                  | $ | (0.002)   | $ | (0.008)  





13. COMPARATIVE FIGURES



> Certain balances of
>   the preceding period have been reclassified to conform with the current year's
>   financial statement presentation.

Item 8. Changes in and
  Disagreements with Accountants on Accounting and Financial Disclosures.



There have been no
  disagreements on accounting and financial disclosure matters. On October 24,
  2002, the Company dismissed David Coffey, CPA and retained the services of
  Evancic Perrault and Robertson as the Company's independent auditors. This
  was accomplished because of the Company's proximity to its new auditors.





PART III



Item 9. Directors,
  Executive Officers, Promoters and Control Persons; Compliance with Section
  16(a) of the Exchange Act



The following table
  sets forth the directors and executive officers of the Company, their ages,
  and all positions held with the Company.



|Name                         | Age | Position(s)               
|---------------------------- | --- | --------------------------
|Alexander J.
      Martyniak | 38  | Director                  
|Piero Dante
      Guglielmi  | 37  | President,
      Secretary



Mr. Piero Dante
Guglielmi received training in international marketing from Simon Fraser
University in Vancouver, British Columbia. Between 1989 and 1996, he was in
charge of research and development, as well as, corporate filing for North
American Fire Guardian Technology, Inc. From 1996 until January 2001 Mr.
Guglielmi was in charge of technical marketing and a director of North American
Fire Guardian Technology, Inc. In January 2001, North American Fire Guardian
Technology Inc. underwent corporate restructuring, and the company's name was
changed to Rival Technologies Inc. In August 2002, Mr. Guglielmi was elected
President by the shareholders of Rival Technologies and remains in the position
presently.



Mr. Alexander J.
Martyniak received a diploma in International Business from Langara College,
in Vancouver, B.C. From 1992 to 1994, Mr. Martyniak owned and operated Primalex
Development, in New Westminster, B.C. Primalex was an interior finishing and
painting contract company. From 1994 to 1996, he was the owner and operator of
Pronto Moda Clothing, Vancouver, B.C., a clothing importer and distributor.
During 1997, Mr. Martyniak was on a Co-op Work Team for Industry Canada, in
Vancouver, B.C. On that team, he marketed Internet training and trained business
owners and managers on the business applications of the Internet. Since May of
1998, Mr. Martyniak has been the commercial attache and Business Development
Manager for the Italian Chamber of Commerce of British Columbia. In that
position, he assists Italian and Canadian companies in bilateral trade and
investment, organizes trade missions and business meetings, organizes
promotional events, conducts market research and writes marketing reports; does
business and marketing consulting, cultivates relationships with the Chamber's
members, and is responsible for public relations with the business community and
governments.



Currently there are no
agreements or understanding for any officer or director to resign at the request
of another person and that none of the officers or directors are acting on
behalf of or will act at the direction of any other person.



Item 10. Executive
Compensation.



There has been no
executive compensation in any form. It is anticipated that the officers and
directors will receive compensation as sales of equipment and services are
achieved, including salaries and stock compensation. The Company has allotted
$250,000 in its Plan of Operation for "Administrative Expenses." None
of the planned administrative expenses include compensation for any of the
officers or directors of the Company.



Item 11. Security
Ownership of Certain Beneficial Owners and Management.



The following is a table
detailing the current shareholders of our stock who own 5% or more of the common
stock, and shares owned by our Directors and Officers:



|Title of Class | Name and Address
      of Beneficial Owner                                                                                                    | Business Nature of
      Corporations and Affiliation to Officers or Directors of Company                                 | Amount and nature
      of beneficial ownership | Percent of Class
|-------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------
|Common         | Media Fund limited
      Mr. Lau Kwai Shing
      7A, 17/F, Blk A,
      Hyde Tower, Kung Lok Rd., Kwun Tong, Hong Kong                       | Privately held
      company acting as a holding company for various investments
      
      No affiliation              | 900,000                                         | 9.9%            
|Common         | Virgo Enterprises
      Co.
      Mr. Wong Yu Shun
      Flat A, Supreme
      Ind'l Bldg, 15-17 Shan Mei St., Fo Tan, N, Hong Kong           | Privately held
      company acting as a holding company for various investments
      
      No affiliation              | 720,000                                         | 7.9%            
|Common         | Ms. Kam-Lan Mak
      24/Flat 2, Ka Wo
      House, Po Nga Court, Taipo, NT, Hong Kong                                                        | Private investor
      
      No affiliation                                                                              | 680,000                                         | 7.5%            
|Common         | Best Holding
      Limited
      Ms. Tong Ka Wing
      #14, G/F, Third
      Lane, Siu Lek Yuen Village, Shatin, Hong Kong                   | Privately held
      company acting as a holding company for various stock investments
      
      
      No affiliation | 900,000                                         | 9.9%            
|Common         | Best Reliance
      Limited
      Ms. Jerry Cheung
      Unit 7, 4/f, Block
      C, 491 Castle Peak Road, Kowloon, Hong Kong                 | Privately held
      company acting as a holding company for various investments
      
      
      No affiliation       | 600,000                                         | 6.6%            
|Common         | Ms. Lai-Bing Fung
      Rm 1012, Blk B,
      Cornhill Garden, Quarry Bay, Hong Kong                                                          | Private investor
      
      No affiliation                                                                              | 800,000                                         | 8.8%            
|Preferred      | Polinvest, LTD
      Elizabeth
      Biachi-Roos
      Morgan &
      Morgan Trust Corporation Ltd. Pasea Estate, Road Town, Tortola (B.V.I.) | Privately held
      company acting as a holding company for various stock investments
      
      
      No affiliation | 500,000                                         | 100%            



Item 12. Certain
Relationships and Related Transactions.



No persons who may, in
the future, be considered a promoter will receive or expect to receive assets,
services or other consideration from us. No assets will be or are expected to be
acquired from any promoter on behalf of our company. We have not entered into
any agreements that require disclosure to our shareholders.



Item 13. Exhibits and
Reports on Form 8-K



Exhibits



|Exhibit No. | Document                        | Location        
|----------- | ------------------------------- | ----------------
|3.1         | Articles of
      Incorporation | Previously Filed
|3.2         | Bylaws                          | Previously filed
|23          | Consent of Auditor              | Included        



Reports on Form 8-K



On July 25, 2002, a
share exchange agreement between Net Magic and the Company was filed on form
8-K. On October 29, 2002, a notification of change in accountants was filed on
form 8-K..



Signatures



In accordance with
Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.



PRIME EQUIPMENT, INC.





/s/ Perry Guglielmi

Perry Guglielmi,
President

Dated: April 15, 2003





In accordance with the
Exchange Act, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.







/s/ Alexander J.
Martyniak

Alexander J. Martyniak,
Director

Dated: April 15, 2003



CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Perry Guglielmi, certify that:

1. I have reviewed this annual report on Form 10-KSB of Prime
Equipment, Inc. for the year ended December 31, 2002;

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

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

4. The registrant's other certifying offering officers and I
are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have: a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being prepared; b)
evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and c) presented in this annual report
our conclusions about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function): a) all significant deficiencies in the design or
operation of internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in internal
controls; and b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

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

Date: April 15, 2003



/s/ Perru Gugliemi

Perry Guglielmi

President