SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB/A


                            (Filed on July 1, 2004)



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

         FOR  THE  FISCAL   YEAR  ENDED   DECEMBER   31,  2003

                           Commission File No. 333-75932

                              PRIME COMPANIES, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

         Delaware                                                 52-2031531
         --------                                                 ----------
(State  or  other  jurisdiction  of                           (I.R.S.  Employer
incorporation  or  organization)                            Identification  No.)


  409  Center  Street,  Yuba  City,  CA.                            95991
----------------------------------------------                   -----------
(Address  of  principal  executive  offices)                     (Zip  Code)


Issuer's  telephone  number:   (530)  755-3580
                               ---------------


Securities  Registered  Pursuant  to  Section  12(b)  of  the  Act:

  None

Securities  Registered  Pursuant  to  Section  12(g)  of  the  Act:


                                                       NAME  OF  EACH  EXCHANGE
TITLE  OF  EACH  CLASS                                   ON  WHICH  REGISTERED
----------------------                                   ---------------------
Common  Stock,  $.0001                                           NASD
                                                          OTC  Bulletin  Board

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. Yes X No

Check if disclosure  of delinquent  filers in response to Item 405 of 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 Yes No X

State  issuer's revenues  for  the  most  recent  fiscal  year.........$352,375

As of  March 31, 2004  there  were  37,287,489 shares of the Company's Common
Stock  outstanding.  The  aggregate  market  value of voting stock held by  non-
affiliates of the registrant on March 31 was $648,147.

Documents  incorporated  by  reference:

None
<PAGE>
                                     PART I

ITEM  1.   DESCRIPTION  OF  BUSINESS

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------

Certain  statements  made herein or  elsewhere  by, or on behalf of, the Company
that are not  historical  facts are  intended to be  forward-looking  statements
within the  meaning of the safe  harbor  provisions  of the  Private  Securities
Litigation  Reform  Act  of  1995.   Forward-looking  statements  are  based  on
assumptions about future events and are therefore inherently uncertain.

The Company cautions readers that the following important factors, among others,
could affect the Company's consolidated results:

1     Whether  acquired  businesses  perform at levels used by management in the
      valuation process and whether,  and the rate at which,  management is able
      to increase the profitability of acquired businesses.

2.    The ability of the  Company to manage its growth in terms of  implementing
      internal  controls and  information  gathering  systems,  and retaining or
      attracting key personnel, among other things.

3.    The  amount  and  rate  of  growth in the Company's corporate general and
      administrative  expenses.

4.    Changes  in interest rates, which can increase or decrease the amount the
      Company  pays  on  borrowings.

5.    Changes  in  government  regulation,  including tax rates and structures.

6.    Changes  in  accounting  policies  and  practices  adopted voluntarily or
      required  to  be  adopted  by  accounting  principles generally accepted
      in the United States of America.

The Company cautions readers that it assumes no obligation to update or publicly
release any  revisions to  forward-looking  statements  made herein or any other
forward-looking statements made by, or on behalf of, the Company.


                        BUSINESS HISTORY, AND DEVELOPMENT

                                   BACKGROUND
                                   ----------

Prior to February 1999,  Prime's business was operated as a sole  proprietorship
owned by Norbert J. Lima, the Company's CEO. The business'  operations  began in
the early 1980's as a business telephone interconnect company.  Worldnet Tel.com
Inc.  was formed in  Delaware  in January  1999 when four  founders  and another
individual  funded  Worldnet.  In February 1999 management  formed WNTC Holdings
Inc. in Delaware as a wholly  owned  subsidiary  of Worldnet.  In February  1999
management also formed  NACC-Tel Corp. in Delaware as a wholly owned  subsidiary
of WNTC. At that time the sole proprietorship  business operated by Mr. Lima was
contributed  to  NACC-Tel.  Worldnet  was  merged  into  Prime  through a merger
effective August 11, 1999. This gave the company immediate access to the capital
markets, and the ability to facilitate the  initial  and second stage funding of
the build out of the local multipoint distribution service infrastructure. Prior
to the merger, Prime  had  6,507,742  shares of common  stock  outstanding  held
by  various individuals. WorldNet was issued 14,500,000 shares of  Prime  common
stock, and as  a  result  of  the stock  exchange,  the former  shareholders  of
WorldNet  then  held  69%  of  the  outstanding  common  stock of Prime.  On the
effective  date  of the  merger,  the  officers and directors of WorldNet became
the officers and directors of Prime.

LMDS Communications Inc. (LMDS), a Delaware corporation,  was formed in February
1999 as a wholly owned subsidiary of WNTC. LMDS is a telecommunications  company
with interests in the fixed broadband wireless sector.  LMDS Communications Inc.
obtained  local  multipoint  distribution  service  licenses at the 1999 Federal
Communications  Commission auction and is now deploying broadband fixed wireless
services.  In 2000  LMDS  Communications  obtained  competitive  local  exchange
carrier status in the States of Pennsylvania and New York. The competitive local
exchange  carrier  status  enables  LMDS  Communications  Inc. to connect to the
public switched  telephone network and negotiate  wholesale rates with incumbent
local exchange  carriers.  LMDS  participated in an auction conducted by the FCC
between  April 27, 1999 and May 12, 1999 for 161 local  multipoint  distribution
service  licenses.  Prime  secured  8 basic  trading  areas at the  auction  for
$591,800  (a 45%  discount  from the gross price of  $1,076,010).  The price per
population averages out to approximately $0.56. This compares to a high of $5.53
per  population  and an average  net bid of $1.35 per  population  for the 121 A
Block  licenses  auctioned in 1999. LMDS is in default of a loan with the  Rural
Utilities Service and anticipates that upon receipt of anticipated funding, that
it will cure  its  present  default  status  with the RUS  and will  not violate
any debt covenants in the future.


Prepaid Tel.com Inc. (Prepaid),  a Delaware corporation,  was formed in February
1999 as a wholly  owned  subsidiary  of WNTC.  Prepaid  is a  Competitive  Local
Exchange Carrier ("CLEC") certified by the California Public Utility Commission.

In September 1999, Prime acquired Olive Tree Image  Engineers,  a small internet
service  provider  located in  Sacramento,  California.  In October 1999,  Prime
completed the acquisition of Marathon Telecommunications, a commercial telephone
interconnect  business  based in  Sacramento,  California.

Both Marathon and Olivetree operate under fictitious business names of NACC-Tel;
for legal and accounting purposes they have been fully integrated into NACC-Tel.

In April 2000 the Company  acquired the internet domain name  NTCOMM.com,  which
had been  operating  as a buyer and  seller of used  telephone  equipment.  This
business is now part of NACC-Tel.

Prior to December 30, 1998 Prime operated as a long-haul  temperature-controlled
truckload  carrier through its wholly-owned  subsidiary,  Mid-Cal Express,  Inc.
Prime also provided logistics  operations  through its wholly-owned  subsidiary,
Mid-Cal Express  Logistics,  Inc.  Effective December 30, 1998, Prime terminated
the operations of these  subsidiaries  through the sale of substantially  all of
the operating assets of Mid-Cal Express,  Inc. to Gulf Northern Transport,  Inc.
in exchange for 400,000  shares of US Trucking, Inc., the parent company of Gulf
Northern. The transaction closed on April 14,  1999,  and on April 30,  1999 the
Company  entered  into an  agreement  with the Credit  Managers  Association  of
Southern  California   for  the  orderly   liquidation   and   payment   of  the
Outstanding liabilities  of Mid-Cal  Express Inc. These  liabilities  were to be
paid by the collection of Mid-Cal Express, Inc.'s accounts receivable and by the
liquidation of up to 400,000  shares of US Trucking  (previously  traded on  the
OTC Bulletin Board symbol USTK), which were placed in escrow for the benefit  of
the creditors of Mid-Cal Express, until the stock is sold on the open market. US
Trucking has filed  bankruptcy  and its stock price has declined so the value of
these shares on March 29, 2001 was less than $10,000.  On March 29, 2001 Mid-Cal
Express, Inc. filed for  protection  and  liquidation  under  Chapter 7  of  the
United  States Bankruptcy Act.

In  November 2001  Prime  entered  into  an  agreement  with  the  Virginia Tech
Foundation to commercially develop the Foundation's LMDS license in the Roanoke,
Virginia area. In July 2002 Prime and VTF organized Bright-Bridge Communications
Networks, Inc., a Delaware corporation,  to  operate the business  envisioned by
the  November  2001 agreement.  In August  2002  the  Company's  fixed  wireless
broadband system began transmitting radio signals from a mountaintop overlooking
the Roanoke Valley.  In December 2002 service was launched on a beta test basis,
and  in January 2003 the system became commercially  operational.  During  early
2003 competition among service providers in the Roanoke  community  dramatically
increased,  and the Company found itself in the midst of a "price war" competing
with the local cable TV company and a local Competitive Local Exchange  Company,
for customers at decreasing monthly  prices for our service. In August 2003  the
Company  determined  that the Roanoke venture would not be a commercial success,
and the business was closed in September 2003.

In January 2002 the Rural Utilities Service, an agency of the U.S. Department of
Agriculture, approved LMDS' request for a long term low  interest rate  loan  in
the amount of $5,012,000. Funds may be drawn  against this loan through April 1,
2005. As of December 31, 2003 LMDS had drawn down $2,148,675 and the balance  on
the loan was $2,063,131.


<PAGE>











                               Organization Chart

                                [OBJECT OMITTED]

Prime Companies, Inc.
---------------------
WNTC Holdings Inc
     LMDS Communications Inc.
     Prepaid Tel.com Inc.
     NACC-Tel Corp.
Bright-Bridge Communications Networks, Inc.


                                  THE BUSINESS
                                  ------------

Prime's   mission  is  to   provide  a  single   source  for  a  wide  range  of
telecommunications  services to both the consumer and commercial markets.  Prime
derives  the   majority  of  its  revenues  from  sales  generated  by its three
specialized  subsidiary  corporations.  Prime operates as a holding  company and
conducts all of its operations through its wholly owned subsidiaries.

Prime's principals comprise an experienced management team with over 50 years of
experience in the telecommunications  industry. It is this unusually broad scope
of skills and  experience  which will enable  Prime to  establish a balanced and
efficient  organization,  and to forge strong supplier  relationships with major
industry manufacturers,  such as Alcatel, Ericsson, Pacific Telephone,  Samsung,
and Texas Instruments,  as well as established distributors who intend to market
Prime's services.  Thus, Prime is well positioned to offer its clients the depth
of knowledge and experience  necessary to reach their personal and/or  corporate
needs and to execute each transaction efficiently and successfully.


LMDS  COMMUNICATIONS,   INC.  This  subsidiary  has  the  FCC  local  multipoint
distribution  service  licenses.  The  licenses  encompass  an area  of  western
Pennsylvania  and  southwestern  New York  State,  and include a  population  of
approximately  1,050,000  persons and 39,000  businesses.  This  subsidiary  was
incorporated  in Delaware in 1999 and is licensed and regulated by the states of
Pennsylvania and New York as a competitive local exchange  carrier.  The Federal
Communications  Commission,  an agency of the  United  States  government,  also
regulates this  subsidiary.  LMDS  Communications,  Inc. is funded by its parent
company,  Prime Companies,  Inc. This subsidiary's financial results in 2000 and
2001  were  not  material  to the overall operations of Prime.  Revenues for the
years  ending  December  31,  2003  and  2002  amounted  to  $49,659 and $41,331
respectively.  We have constructed six  fixed broadband wireless systems in four
of our  eight  licensed areas.  As  the  expected  growth  in  revenues for this
segment of our  business  has not developed as we had anticipated, subsequent to
year end we decided to close our Pennsylvania operation.

In the future Prime  will again evaluate the  commercial  viability of providing
broadband  fixed   wireless services  to  various   markets  in  which   it  has
purchased   exclusive  spectrum   licenses  from  the   Federal   Communications
Commission.  However, the competitive marketplace has evolved since we purchased
those licenses, and at this  time there  is  no  LMDS  infrastructure  equipment
available from any manufacturer at a price  point  that  will provide a  service
provider  the possibility of being commercially successful.  As volume purchases
take  place  and  alternate  equipment  vendors  come  to  the market, we expect
infrastructure  costs to reduce and in the long  term  expect a viable market to
develop.  Local  multipoint  distribution  service  is  the  broadband  wireless
technology  used  to  deliver  voice,  data, internet, and video services.  Each
license permits us to use  multiple radio frequency channels  ranging  from 27.5
GHz  to 31.225 GHz.  We  intend  to use these radio channels to  build, install,
and implement  the  telecommunication systems  and  offer  some  or  all of  the
following one and two-way broadband services:


   -      High-speed  internet  access
   -      Video  teleconferencing
   -      Wireless  local  loop  telephony
   -      Alternative  cable  television  service
   -      High-speed  data  transmission

The flexibility  offered by a local multi-point  distribution  system will allow
Prime to offer a turnkey  package  of  services,  including  internet  and video
teleconferencing, which is what US customers desire: one-stop shopping for their
telecommunications needs.

A local  multi-point  distribution  system is capable of offering  subscribers a
variety  of one  and  two-way  broadband  services,  such as  video  programming
distribution;  video  teleconferencing;   wireless  local  loop  telephony;  and
high-speed data transmission, i.e. internet access. Because of its multi-purpose
applications,  local  multi-point  distribution  systems  have the  potential to
become major competitors to local exchange and cable television services.

Local  multi-point  distribution  service  systems may consist of multiple  cell
systems with return-path  capability  within the assigned  spectrum.  Generally,
each cell will contain a centrally located transmitter (hub), multiple receivers
or transceivers  and  point-to-point  links connecting the cell with the central
processing  center  and/or other cells.  Licenses are issued for a ten-year term
from  the  initial  license  grant  date.  At the  end of the  ten-year  period,
licensees  are  required  to  submit  an  acceptable   showing  to  the  Federal
Communications  Commission  demonstrating  that they are  providing  substantial
service to their service area.  Licensees  failing to demonstrate  that they are
providing substantial service will be subject to forfeiture of their licenses.

Our customers  pay a fixed monthly  charge for the unlimited use of our service.
We can customize the service for each customer.  We have a rate schedule and the
monthly  charge is based  upon the data  transmission  speed which each customer
signs up for.  We do not  currently  charge any fees  based upon the  customers'
specific usage of the service.  As we are the licensed carrier providing service
to the end users, our cost of revenues is primarily depreciation on our  capital
infrastructure  equipment,  and utility connection costs that we pay for  access
to the public switched telephone network, and our bandwidth providers who enable
us to connect to the internet.

Advantages to the use of LMDS services is that the licensed markets have limited
access  to  high  speed  connectivity  (broadband  services).  LMDS  provides  a
quick-to-market  availability.  This allows the underserved  communities to have
equal  access  to the  internet.  Today  the  disadvantage  would  be  that  the
infrastructure  required to deploy to an individual  business  customer is still
somewhat  expensive.

LMDS Communications,  Inc. has received  certificates from both Pennsylvania and
New York State to operate  as a  facilities  based  competitive  local  exchange
carrier.

Field  trials of local  multipoint  distribution  service  technology  have been
successfully  conducted and the service has been deployed in New Castle, PA. The
second system became  operational on December 20, 2000 and the first customer in
Oil  City,  PA  went  online  on  December 21, 2000.   During  2001  we launched
commercial service in our  third   market, Meadville, Pennsylvania.  Towards the
end  of 2002 we launched service in our fourth market, Sharon, Pennsylvania, and
also  launched  service  in Franklin, Pennsylvania, which is included in our Oil
City licensed area.   The cost  to  build and install a fixed wireless broadband
system is  dependent  upon  the specific  configuration  ordered for a  specific
location;  the  range  for the cost of a single  system  is  from  approximately
$50,000 to  approximately  $300,000.  We  are  continuously  speaking  with  and
reviewing infrastructure suppliers.  A critical element for this service and our
selection of  an equipment provider  is  the  ability  to  acquire the  customer
premise equipment at a  capital cost that the investment makes a viable business
case.


NACC-TEL CORP.  NACC-Tel markets,  installs,  and maintains  business  telephone
communications  systems  Additionally,  NACC-Tel  provides  paging and voicemail
services.  NACC-Tel also maintains  these systems under service  agreements with
its commercial and municipal  customers.  This  subsidiary was  incorporated  in
Delaware in 1999 and is the successor to a  proprietorship  previously  owned by
Norbert Lima, CEO of Prime.  The business is based in Yuba City,  California and
also  operates  from a  branch  office  in New  Castle,  Pennsylvania.  The core
services  of this  subsidiary  are also offered  to the  customers  of the  LMDS
Communications,  Inc.  subsidiary.  Prime's personnel who sell and service local
multipoint  distribution  services will also offer the NACC-Tel core services to
our customers.  The NACC-Tel operation generates sufficient cash flow to sustain
its core business. NACC-Tel also offers wireless digital subscriber line service
in Northern   California  using  unlicensed  spectrum.  It plans  to expand this
offering to other communities in California, which are unable  to  obtain  high-
speed  access to the internet  through the  incumbent  local  exchange  carrier.
Funding for the build out of these systems and the marketing of  these  services
may  come  from the  parent  corporation,  Prime Companies,  Inc., and also from
partnering relationships with some  of our equipment suppliers.   NACC-Tel  does
not require a license to offer these services,  as  it uses unlicensed spectrum.
The Federal Communications  Commission issues rules and regulations for  the use
and operation of equipment on these frequencies. The wireless digital subscriber
line application has been deployed by  NACC-Tel  Corp  and  the local multipoint
distribution service application has been deployed by LMDS Communications,  Inc.

The  operations  of  NACC-Tel  during  2002 and 2003  were  the core of  Prime's
business.   We  anticipate  the  wireless  service  offering  by  NACC-Tel  will
experience substantial growth  over the coming years.  In early 2003 we launched
our  broadband wireless service in Penn Valley, California, where Lake Wildwood,
a  4,700  home upscale gated community is located. This is a community where the
cable TV  "plant" is  old and  incapable of providing broadband  services.  This
community has become the model for the type of community we will  seek  out  and
expand into, to provide our services to underserved and unserved markets. By the
end of 2003  we  had  selected  our  second  gated  community, and have recently
launched our service in the community  of  Lake of the  Pines, which is about 20
miles southeast from Lake Wildwood. The core business of telephone interconnect,
voicemail, and  paging services  is  expected to experience  moderate growth, as
Prime's  fixed  wireless   broadband   service  offerings  come online  in  more
communities.

The  advantage to a customer  using  NACC-Tel is that we are a  distributor  for
Samsung's business  communication  systems.  One of the requirements  defined by
Samsung  is  that  each  of  their  distributors  must  have  factory  certified
technicians.  This  requirement  provides the customer with a higher  quality of
service  because  only  certified  technicians  will  work on their  product.  A
disadvantage from the customer point of view is that once they have selected the
Samsung product, they would have a limited choice of servicing companies.

NACC-Tel's costs of revenues are the  traditional  material  costs for the phone
systems it sells, and the labor to install and maintain the systems.

In October 1999, Prime completed the acquisition of Marathon Telecommunications,
a commercial telephone  interconnect  business based in Sacramento,  California.
Marathon operates under the fictitious business name of NACC-Tel;  for legal and
accounting purposes it has been fully integrated into NACC-Tel.


BRIGHT-BRIDGE COMMUNICATIONS NETWORKS, INC.  Bright-Bridge  is  a   wholly owned
Delaware corporation.  At this  time  it is not operational, since we closed our
Roanoke, Virginia office in September 2003, as discussed above. We are currently
evaluating  several  merger/acquisition  opportunities for Bright-Bridge in  the
telecommunications industry.

PREPAID TEL.COM INC.  Prepaid  Tel.com Inc.  provides  residential  consumers an
alternative  source for local telephone and long distance  services in the State
of  California,  These  consumers  pay for the  service  prior  to  usage.  When
customers buy our residential  telephone service, they pay us a setup charge and
a monthly charge. These charges are in accord with the tariff we have filed with
the  California  Public  Utility  Commission.  When  customers buy long distance
telephone  service,  or phone  cards,  they pay us in advance of their using the
service.  When the amount they have  prepaid is used up, they are unable to make
any more long  distance  calls  until they prepay for more long  distance  phone
service.  Our customers in general have either not established  credit,  or have
poor credit precluding them from traditional  phone service access.  Most of our
customers pay for our service by cash or money orders.  We do,  however,  accept
checks from our established customers. The disadvantage to the customer who uses
our service is that Prepaid Tel.com  purchases its services from the traditional
telephone  companies,  and this  creates  a higher  cost to the  consumer.  This
subsidiary  was  incorporated  in  Delaware  in  1999  and  is  licensed  by the
California Public Utility Commission as a competitive local exchange carrier.

The  customer  target base for prepaid telecommunications  services is large and
diverse, including: credit-impaired  customers,  who  generally  cannot meet the
initial  deposit  requirements for telecommunications services;  individuals who
prefer to pay in cash;  and individuals  who want to  re-establish  credit.  The
company  markets  its  service  through selected retailers, who act as agents to
sign up our  customers  and  collect  their periodic payments. The operations of
this subsidiary in  2000  were  not material  to the overall operation of Prime.
In 2003  and 2002 it accounted for approximately  4% and 12% of total  corporate
revenues.  We  are  reevaluating  the  business  model  for  this  sector of our
business.  With the advent of relatively inexpensive mobile phones and unlimited
monthly  service  plans that the prepaid customer is being offered by the mobile
phone  carriers,  the  market  for  prepaid  dialtone  in  the  home  is rapidly
shrinking.

EMPLOYEES

On December 31, 2003 Prime had 12 full time employees.  Prime had  15  full-time
employees on December 31, 2002.

ITEM  2.  DESCRIPTION  OF  PROPERTIES

Prime leases and rents the following facilities as general office,  engineering,
and  retail  space per the terms of the leases or on a  month-to-month  basis as
applicable:

Location                          Type                 Size          Annual Rent
--------------------------------------------------------------------------------
Yuba City, Ca*              Office, Engineering,      2,240 sq. ft.  $ 20,160
                                 ISP, NOC,
                             Equipment Refurbishing,
                                  Retail

Yuba City, California             Storage               200 sq. ft.  $    900

Yuba City, California             Storage               150 sq. ft.  $    660

New Castle, Pennsylvania          Office                950 sq. ft.  $ 12,000

New Castle, Pennsylvania   80 sq. ft & rooftop rights    80 sq. ft.  $  9,000

Oil City, Pennsylvania    100 sq. ft & tower space      100 sq. ft.  $  8,400

Oil City, Pennsylvania            Rooftop rights                     $  1,980

Meadville, Pennsylvania   225 sq. ft. & rooftop rights  225 sq. ft.  $  3,600

Union Township, Pennsylvania      Tower space                        $  2,700

Axtell Tower                      Tower space                        $    -0-

Wild Canary Tower                 Tower space                        $  2,100

Applegate Tower                   Tower space                        $  2,700

Lake Wildwood, California         Tower space                        $  1,800



*An officer and director of Prime is the landlord of this property.

The Concord office lease was terminated in March 2002.

ITEM  3.  LEGAL  PROCEEDINGS


There are no current pending lawsuits involving Prime.

Prime is exposed to  routine  litigation  incidental  to its  operations  in the
telecommunications  industry.


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

In May 2001 the management, the audit committee, and the Board of Directors  all
agreed to engage Stonefield Josephson, Inc.  to  perform  the  services  as  the
Company's auditor for the fiscal years ending December 31, 2001 and 2000.

In  December  2002  the Shareholders  ratified  the  appointment  of  Stonefield
Josephson, Inc.  as auditor  for  the  Company  for the years 2000 and 2001, and
approved  the appointment  of  them as  auditor for 2002.  The shareholders also
approved  a change in the By-Laws to amend the  requirements  for  a  quorum  at
future  shareholder meetings.  A quorum will be present if the holders of thirty
three percent  (33%)  of the shares  entitled  to  vote  are  represented at the
meeting.

The   shareholders  also  elected  as  Directors  the  following  five
individuals and the number of votes cast for each of them was as follows:

               Norbert Lima                  19,457,497
               Stephen Goodman               19,457,497
               William Turley                19,457,497
               Martin Sokolowski             19,457,497
               Dennis Hinz                   19,457,497

The  shareholders  also  approved  the  offering  of  a  private   placement  of
convertible bonds  or convertible  preferred  shares  in  an  amount  up  to  $1
million,  with  a  provision  that up to half of the proceeds from this offering
may be used to acquire PRMC  common  shares  in  the  marketplace, to be used as
Treasury  shares  to  enable  the  Company to have a marketable vehicle to offer
prospective  sellers  of  attractive  acquisition  opportunities that may become
available to the Company.

The  shareholders  also  approved  the  issuance to all current  employees stock
options for the year 2002 a total of 791,100 stock options exercisable into PRMC
common shares  at 20 cents  per share for the period through December  31, 2005;
the options will vest 50% on January 1, 2004, and 50% on January 1, 2005.

We have not held a shareholders' meeting since December 2002.


<PAGE>


                                     PART II

ITEM  5.  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER MATTERS

                                     MARKET
                                     ------

The Company's Common stock has traded on the NASDAQ OTC Bulletin Board under the
symbol PRMC since May 17, 1998. The following table presents high and low prices
for the Company's common stock published by the National Quotation Service, Inc.
The quotations represent prices in the  over-the-counter-market  between dealers
in securities and do not include retail markup,  markdown or commissions  and do
not necessarily represent actual transactions.


         QUARTER  ENDING         HIGH       LOW
         ----------------------------------------
         June  30,  1998         3.00      3.00
         September  30, 1998     3.25      0.31
         December  31,  1998     3.50      1.00
         March  31,  1999        2.50      0.125
         June  30,  1999         0.56      0.125
         September  30,  1999    0.50      0.22
         December  31,  1999     0.50      0.25
         March  31,  2000        4.31      0.30
         June  30,  2000         2.625     1.00
         September 30, 2000      1.25      0.3125
         December 31, 2000       0.625     0.16
         March  31,  2001        0.50      0.156
         June  30,  2001         0.344     0.05
         September 30, 2001      0.11      0.02
         December 31, 2001       0.06      0.021
         March  31,  2002        0.16      0.035
         June  30,  2002         0.145     0.05
         September 30, 2002      0.08      0.02
         December 31, 2002       0.07      0.015
         March  31,  2003        0.025     0.01
         June  30,  2003         0.05      0.015
         September 30, 2003      0.05      0.03
         December 31, 2003       0.045     0.015



                                  SHAREHOLDERS
                                  ------------

As of December 31, 2003 the number of  shareholders  of record of common  stock,
excluding the number of objecting beneficial owners whose securities are held in
street  name,  was  approximately   1270.  The   number  of  shareholders  whose
securities  were held in their  name was  approximately  270 on that  date.  The
number of non-objecting  beneficial  owners whose securities were held in street
name on that date was approximately 1000.


                                 DIVIDEND POLICY
                                 ---------------

The Company has not paid  dividends on its common  stock.  The Company  plans to
retain future  earnings,  if any, for use in its business and,  accordingly  the
Company  does  not  anticipate  paying  dividends  on  its  common  stock in the
foreseeable future.  Any earnings are expected to be reserved for the  operation
and  expansion of the Company's business.  Payment of  dividends  is within  the
discretion  of the  Company's  Board of Directors  and will depend,  among other
factors,  upon   the   Company's  earnings,  financial  condition,  and  capital
requirements.

In the first quarter of 2002 the Company completed  a  Private  Placement  under
an  exemption provided by  Securities and Exchange Commission  Regulation D. The
offering was for  the  Company's Series "A" 7% Convertible Preferred Stock. Each
share  of  the Series "A"  Preferred  is  convertible  into  100 shares  of  the
Company's  common stock.  The  Series "A" Preferred Stock  is  callable  by  the
Company at  par  at  any time that the common stock trades at or above $1.00 per
share for a five  day  period  prior to the announcement of the call. The Series
"A"  Preferred Shares  have priority  over  the Common Shares in the event of an
involuntary liquidation of the Company.



ITEM  6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS  OF  OPERATION

Critical Accounting Policies
----------------------------

As  set  forth  in  greater  detail  in the Footnote  (2)  to  Prime's financial
statements "Summary of Significant Accounting Policies", the company  recognizes
revenue  upon installation  of  telephone  systems  upon completion,  recognizes
revenues  from  paging  services on  a monthly basis, and recognizes set up fees
received  by  customers  to  commence  prepaid  telephone  services and wireless
broadband services over the expected service period, generally one year.


Results  of  Operations
-----------------------

During  the  year  ended  December  31,  2003,  sales  revenue  from  continuing
operations increased to $352,375 from $284,617 for the corresponding  period  of
the prior year.  The increase in revenue is attributed to the development of our
wireless  broadband  system  in Lake Wildwood, California  and  to  the  general
recovery  in our  economy that  began  during  2003, resulting in the receipt of
orders  from  both  our  for-profit  and non-profit  customers,  who  had   been
postponing  the  replacement  of  legacy telecommunications equipment due to the
general slowdown our economy experienced during the recent past.

The gross  margin as a percent of revenues  decreased  to 43% for the year ended
December 31, 2003 from 59% in the  corresponding  period of the prior year.  The
decline  in the gross  margin is mainly due to excessive bandwidth costs for our
Pennsylvania and Virginia operations,  where  revenues  did  not scale up to the
level necessary to generate the margins we had anticipated.

Prime's selling, general and administrative expenses for the year ended December
31, 2003 increased to $1,844,914 from $1,004,785  for the  corresponding  period
of the prior year.  The increase is  attributed mainly to non-cash  charges  for
the writedown of some of our LMDS and wireless broadband equipment in the amount
of $479,046  for  excessive  radio  transmitting and receiving equipment on hand
relative to our current need for that  equipment,  based  upon the number of new
wireless  customers  we  provisioned  last  year; the write-off  of  $79,836  of
goodwill  relative  to  our  acquisition  of  Marathon due to decreased sales of
telephony   equipment   in  Sacramento,  California  last  year.  The  estimated
amortization expense for each of the next five years is approximately $6,469.

Interest expense for the year ended December 31, 2003 increased to $108,982 from
$32,641  for  the  corresponding  period  of the prior  year.  The  increase  is
attributed to the interest on the Rural Utilities Service loan advances received
in 2002 and 2003.

The  provision  for  taxes for  the year ended  December 31, 2003  decreased  to
$4,800 from $3,400 for the corresponding period of the prior year.

We recorded  an expense in  the  approximate  amount  of  $46,542  for remaining
lease  obligations  relative to  the  closure of our  Pennsylvania  operation in
April  2004, as  described  in the Subsequent  Events  section of this document.
Additionally,  we had SG&A expenses of $148,723relative to our Roanoke, Virginia
operation, which we discontinued last year in  July.

A net gain on  investment was recorded in  2002 in the amount of $78,372  due to
the sale  of  the  shares  in  our  former  subsidiary,  Zenith Technology, Inc.
An additional net amount of  $25,620  was  received  from  two  prior buyers who
contracted to buy our Zenith shares,  but  defaulted  and  forfeited  their non-
refundable deposits;  this  amount is included  in  Other Income.  In March 2001
Mid-Cal Express, Inc.  filed  a bankruptcy  petition and that  investment became
worthless  to  Prime.   However,  the   bankruptcy  of   Mid-Cal  Express,  Inc.
effectively  reduced  the amount  of  our loss on investment in Mid-Cal Express,
Inc. by  $699,340,   which  was  reported  as  an  extraordinary  gain  on  debt
forgiveness  during  2001,  and  reclassified  in  2002  in accordance with FASB
Statement  145,  as  it   did   not   meet  the  criteria  of   Opinion  30  for
classification  as  an extraordinary item.

During the year ended December 31, 2003,  NACC-Tel sales revenue from continuing
operations  increased to $284,634 from $210,511 for the corresponding  period of
the  prior year. The increase in revenue is attributed to the development of our
wireless  broadband  system  in  Lake  Wildwood,  California  and to the general
recovery in our economy that  began during 2003, resulting  in  the  receipt  of
orders  from  both  our  for-profit  and  non-profit  customers,  who  had  been
postponing  the  replacement  of  legacy telecommunications equipment due to the
general  slowdown  our economy  experienced during the recent past. This had the
effect  of  causing  a  delay  in  their commitments for capital expenditures to
upgrade their telephone systems in 2002.  Continuing into the future,  increased
marketing  efforts  and a greater  geographical  presence  may  tend to increase
our revenues.  The  larger  geographical  presence  is  directly  related to our
deployment of fixed broadband wireless services in the  markets we serve.

The NACC-Tel gross margin as a percent of revenues increased to 57% for the year
ended December 31, 2003 from 53% in the corresponding  period of the prior year.
We were able to  experience  an  increase  in the gross margin in  spite  of  an
inventory  writedown   in  the  amount  of  $36,057  to  reserve  for  excessive
refurbished inventory  on hand relative to the level of our sales last year. Our
margin last year before  the  writedown  was 70%. We attribute the increase to a
greater volume purchase discount  from  our primary supplier, and to our ability
to balance  our  wireless  market  to  maximize the benefit of oversubscriptions
without any negative impact upon the customers in Lake Wildwood, California.

NACC-Tel's  selling,  general  and  administrative  expenses  for the year ended
December 31, 2003  increased  to  $380,682 from  $274,813  for the corresponding
period  of  the  prior  year.  The  increase  is  attributed  to the writeoff of
goodwill related to the Marathon acquisition in the amount of  $79,836,  and  to
the addition of administrative staff and sales personnel  as  a  result  of  our
increased marketing efforts, and the  commercial  launching  of  fixed  wireless
broadband services to Penn Valley, California and the surrounding communities in
late 2002. As  of  December   31, 2003,  the  Company performed  the  first tier
impairment test  as required under SFAS No. 142 and determined that the goodwill
was  impaired.  In performing the second tier test assigning fair values to  the
business unit using techniques including discounted  net cash  flow,  management
determined that there was  an  impairment to  the carrying value of the goodwill
in the amount of $79,836.


During the year  ended  December 31, 2003,  sales  revenue for  Prepaid  Tel.com
decreased  to  $13,987  from  $32,775  for the corresponding period of the prior
year.  The  decrease in revenue is  attributed to  additional competition coming
into  the  California marketplace  for  prepaid  residential dialtone customers,
coupled  with  a curtailment in the Company's marketing effort in this sector of
its business,  as management  has been focusing on the  fixed wireless broadband
sector of its business.

Prepaid's gross margin as a percent of revenues increased to 97%  for  the  year
ended December 31, 2003 from 73% in the corresponding period of the prior  year.
The improvement  in  the  gross  margin  is  due  to  the  fact  that  last year
we received net credits on our monthly  invoices from one of our incumbent local
exchange carrier  providers,  due  to  refunds due us relating to overcharges in
prior periods.

Prepaid's  selling,  general  and  administrative  expenses  for the year  ended
December 31,  2003  decreased  to  $19,882 from $21,082  for  the  corresponding
period  of the  prior year.  The decrease  is  attributed  to our  reduction  of
administrative staff and sales personnel.

During the year ended December 31, 2003, sales revenue from LMDS Communications'
continuing  operations increased to $49,659  from $41,331 for the  corresponding
period of the prior year. The  increase  in revenue is  attributed to  the  fact
that during 2003  we signed  up  a  modest  number  of  new  wireless  broadband
customers in Pennsylvania.

LMDS' gross margin as a percent of  revenues was negative  for  the  year  ended
December 31, 2003 compared to 81% in the corresponding period of the prior year.
The reduction in the gross  margin  is  due to the  fact  that during the latter
part of last year we  lost a  number of  our wireless customers due to churn and
non-payment, causing our monthly bandwidth costs to exceed our revenues.

LMDS' selling,  general and administrative  expenses for the year ended December
31, 2003 increased to $828,647  from  $368,149  for the  corresponding period of
the prior  year. The  increase is attributed primarily  to the writedown of some
of our  LMDS  and  wireless  broadband  equipment in the amount of $479,046  for
excessive  radio  transmitting and receiving  equipment  on hand relative to our
current need for that equipment, based upon the number of new wireless customers
we  provisioned  last  year. Other reasons for the increase are additional  site
rent obligations  that  we had not incurred during 2002; depreciation on capital
equipment  acquired in 2001, through 2003;.and increased administrative expenses
and engineering expenses related to our fixed wireless broadband business.

Management does not anticipate  a future financial  impact from the discontinued
Virginia, other than what has been disclosed in this document.

Management used the following assumptions in its goodwill impairment analysis: a
3% discount factor was applied to the projected operating income anticipated
from Marathon over the next 7 years.

The  Company  anticipates that upon receipt of anticipated funding, that it will
cure  its  present  default  status  with the RUS  and will not violate any debt
covenants in the future.

The Company used the following assumptions in establishing an inventory reserve:
refurbished items were reduced in value by 50%.

The Company  used  the  following  assumptions  in writing down the value of its
broadband  wireless  equipment:  certain  equipment placed into service prior to
late 2002 was written down by 50% of its  original cost, creating a writedown of
$275,010, and other equipment was written down by $275,399, so that its net book
value is now approximately 11% of its original cost.


Liquidity  and  Capital  Resources
----------------------------------

At December 31, 2003, Prime had  cash  of  $-0-  and negative working capital of
$2,787,641.

Cash  used  in  operations  was $584,749 for the year ended  December  31,  2003
compared to $1,105,641 in 2002.  The cash used in operations  during   2003  was
primarily  attributed to the net loss offset by the increase in accounts payable
and other current liabilities, and noncash charges of $332,975 for depreciation,
and amortization,  and a noncash charge of  $479,026  for the writedown of radio
transmitting and receiving equipment.

Cash used in  investing  activities,  consisting  of  purchases  of property and
equipment,  was  $473,946  for  the period ended December 31, 2003. Cash used in
investing activities, consisting of  purchases  of property and equipment in the
amount of $291,934 offset by the proceeds from disposal of the Zenith Technology
subsidiary,  was $213,562  for the period ended December  31, 2002.

Funds provided by financing activities were $616,261 for the year ended December
31, 2003.  The  funds  provided  in  2003 were from one tranche of $443,882 from
our  broadband  telecommunications  loan, $193,690 funds from  the conversion of
short term notes and other liabilities to long term debt, and  $54,795  proceeds
from the sale of common stock, less  repayments on the RUS  loan  and other long
term  debt  in the amount of $74,200.  Cash  provided  by  financing  activities
was  $1,759,934 for the year ended December 31, 2002, and was primarily from our
RUS loan agreement.

In  January  2002  one  of  the Directors  purchased 100,000 shares in a private
placement at $.05 per share, raising $5,000.

On  January  26, 2002 we  received  written approval from  the  Rural  Utilities
Service,  part of the U.S. Department of Agriculture,  that  our request for low
interest rate 10 year debt  financing  was approved in the amount of $5,012,000.
The  funds  from the  loan are  being and  will  be used to construct  55  fixed
broadband wireless systems in 24 communities in Pennsylvania and New York State.
On  April  12, 2002 the  Secretary  of Agriculture  signed  the  loan documents,
and they were delivered to us on that day for execution.

On January 30, 2002 we sold 6,500 shares of our Series "A" Convertible Preferred
stock for $65,000,  to our communications attorneys,  in payment  of  that  same
amount which had been owed  to them.  These  shares  are  convertible  into  our
common stock at a conversion price of ten cents per share.  The closing price of
our common shares that  day was $0.035. The Series  "A"  Preferred  Shares  have
priority  over  the Common Shares in the event of an  involuntary liquidation of
the Company.

In January  2003  we sold  1,750  shares of our Series "A" Convertible Preferred
stock for $1,750 to a consultant  who provided us with professional services, in
payment of that same amount for  services rendered. These shares are convertible
into our common stock at a conversion  price  of  twenty  cents  per  share. The
closing price of our common shares at  that  time  was  $0.025.  The Series  "A"
Preferred  Shares  have  priority  over  the Common Shares  in  the  event of an
involuntary liquidation of the Company.

On September 30, 2003 we sold 782,848 shares in a private placement  to  related
parties in conjunction with the receipt of cash and the conversion  of  accounts
payable and short term notes payable to new long term notes  totaling  $208,759.
The closing price of our shares that day was $0.03.

On the  morning  of  November 18, 2003  we  sold  2,080,257  shares in a private
placement  to  related  parties at $0.015 per share  in  payment of  $31,204  of
accounts payable.  The closing price of our shares the day before was $0.015.

Management believes the actions taken to secure long term debt financing and its
current  efforts  to  raise  additional  cash  through the private  placement of
preferred shares will be sufficient  to sustain operations for at least the next
twelve months.



Risk Factors Associated with Owning our Securities
--------------------------------------------------

Prime has a Limited  Operating  History.  If Prime does not successfully  build,
install,  and implement its  telecommunication  systems, it will incur continued
losses,  and may not be able to  remain  in  business.  Prime  has  generated  a
cumulative  net loss of  $9,865,955  for the period from its  inception  through
December  31,  2003.  The ultimate  success of Prime will,  among other  things,
depend on its ability to build,  install  and  implement  the  telecommunication
systems  necessary  to  provide  high  speed  telecommunications  services.  The
likelihood  of the success of Prime must be considered in light of the problems,
expenses,  difficulties,  complications  and delays  frequently  encountered  in
connection  with the development of a new business  enterprise,  the competitive
environment in which Prime operates,  and the frequently  encountered  delays in
the delivery of infrastructure equipment by telecom equipment manufacturers.  In
2002, Prime experienced the late delivery of transport and  bandwidth components
ordered from more than one provider of these components for several of our newly
constructed  fixed wireless broadband systems. These components must be in place
before we are  able  to  provide services to our customers.  During 2002 we also
experienced  significant  delays  in receiving  customer support from one of our
infrastructure  providers;  this caused us to be in short  supply of spare parts
required to adequately maintain our systems. By the end of  2002 we were able to
get  the parties for these  problems to rectify  their procedures  for providing
customer support to us.  However,  there are  no  assurances that  these  supply
problems will not occur again in the future.

Prime's  revenues  will  be  derived  primarily  from  customer  fees  that  are
contingent upon certain transactions (i.e. financings, system build-outs, sales,
acquisitions, etc.) being successfully consummated by Prime.

The  Telecommunications  Industry is Highly  Competitive.  Prime  competes  with
several  entities,  some  of  which have more financial resources and experience
than  Prime,  which  enable  them  to  better  withstand  the  impact  of  risks
associated   with  a  highly   competitive   industry.

Prime has Limited Working  Capital.  Prime may seek additional  financing in the
future from outside sources, either through additional equity offerings in Prime
or by borrowing.  There is no assurance that such financing will be available to
Prime in the future,  and if available,  that it will be at terms  acceptable to
Prime.  Such  financing  may be sought to  complete  the  build-out  of  Prime's
telecommunications  systems,  expand upon the newly built and operating systems,
or for the  marketing  of the  telecommunications  services  provided by Prime's
systems.  Moreover,  Prime  may have to  forfeit  some  interest  in its  future
revenues or dilute the equity  interest of its  shareholders  in order to obtain
any such additional financing.  If such additional financing is required but not
available,  Prime may lose its market share of customers in the  territories  in
which it has built  its  systems.  The  ability  of Prime to  obtain  additional
financing  may be dependent on factors over which Prime has no control,  such as
the general condition of the financial markets,  and the financial  condition of
the  larger  telecommunications  companies  at the time that Prime may seek such
additional   financing.

Prime is Dependent on Key Personnel. The loss of any of Prime's key personnel or
the failure to attract and retain  necessary new employees could have an adverse
effect on Prime's business operations.  Prime's success is highly dependent upon
the  skills  of a  limited  number  of key  management  personnel.  To reach its
business  objectives,  Prime will need to hire and retain qualified personnel in
the areas of  installation  and  maintenance of  telecommunications  systems and
marketing.  Prime  may not be able to hire or  retain  such  personnel.  Another
factor we have to contend with is that the rural communities  in which  Prime is
building its telecommunications  systems are  generally,  in the  opinion of the
technically educated  and  experienced  pool  of  potential  employees,  not  as
desirable  communities  in which  to reside  as the primary markets and the high
tech areas of the United States.

Prime is  dependent  on its  vendors to  deliver  infrastructure  equipment  and
services   at  agreed  upon   delivery   dates.   Telecommunications   equipment
manufacturers   sometimes  announce  the  availability  of  commercially  tested
equipment, even though the equipment may not have been actually field-tested. It
is reasonably  foreseeable that a vendor may deliver  equipment to Prime that is
not sufficiently  reliable for Prime to permit its customers to use the services
anticipated  to be  provided  by the  equipment.  If a vendor  does not  deliver
commercially  proven equipment to Prime after accepting Prime's purchase orders,
Prime  cannot  construct  its  telecommunications   systems  and  meet  its  new
customers'  expected  activation  dates.  This in  turn  would  create  negative
feelings toward Prime within the local  community.  Prime is also subject to the
risk that a larger  and/or  better-financed  purchaser  may exert  pressure on a
vendor to give its  equipment  orders a higher  priority for delivery  than that
afforded to Prime.  If this should happen,  Prime's  rollout  schedule for fixed
wireless broadband services will be delayed.

Prime has a History of Losses and a Limited Operating History. If Prime does not
successfully  build its  telecommunication  systems  and market its  services to
customers,  it will  incur  continued  losses,  and may not be able to remain in
business. Prime has generated a cumulative net loss of $9,865,955 for the period
from its inception  through December 31, 2003. In order to establish  profitable
operations, Prime must successfully market its systems and keep its expenditures
in line with moderate revenues.  Prime is subject to a number of risks including
its ability to  successfully  market,  distribute and sell its product,  intense
competition,  and  its  reliance  on a set of  FCC  licenses  authorizing  local
multipoint distribution services within licensed service areas.

The market price of Prime's common stock has been highly  volatile and is likely
to continue to be so. The stock  market has  experienced  significant  price and
volume  fluctuations  unrelated  to  the  operating  performance  of  particular
companies.  Prime's float (shares  available for trading by the public) has been
very thin,  and the lack of  substantial  trading  volume  tends to increase the
volatility of Prime's stock price.  Factors such as Prime's  ability to increase
revenues,  variations in Prime's  financial  results,  and its ability to obtain
needed financing,  announcements of technological innovations or new products by
Prime or its competition,  comments by securities  analysts,  adverse regulatory
actions or decisions, any loss of key management,  results of Prime's operations
or those of its competition,  and changing  governmental  regulations may have a
significant impact on the market price of Prime's common stock.

Limited Public Market for Prime Shares.  Investors should be aware that there is
a limited  market for our common  shares.  Accordingly,  it may be  difficult to
resell the shares.

In the event that Prime  elects to issue  additional  shares of common  stock or
other  securities  in connection  with any future  financings,  investors  could
experience dilution of their ownership interest in Prime.  Prime's expansion and
growth strategy may involve acquisitions of companies whereby some or all of the
consideration  may  be  Common  Stock  or  other  equity  securities  of  Prime.
Accordingly,  in the event Prime engages in an aggressive  acquisition  strategy
involving  a  significant   number  of  companies,   investors  will  experience
significant dilution of their ownership interest in Prime.


Dividend Policy
---------------
Prime does not intend to declare cash dividends on its Common Stock. The payment
of future dividends on the common stock and the rate of such  dividends, if any,
will be determined by our Board of Directors in light of our earnings, financial
condition, capital requirements and other factors.  Investors risk not receiving
any current nor  future  return  on  their  investment.  We  have  not  paid any
dividends on our common stock  during the past two years.  We expect to continue
to  retain  all  earnings  generated by our operations for  the development  and
growth of our business,  and do  not  anticipate  paying any cash  dividends  to
our common shareholders  in the foreseeable future.


Penny Stock Rules
-----------------
Our Stock is  Subject  to the Penny  Stock  Rules.  Investors  in our stock risk
having  less  liquidity  than they may have in a stock not  subject to the Penny
Stock Rules.   Pursuant to the  Securities  and Exchange Act of 1934, the Common
Stock of Prime is classified as a penny stock, which means that it is subject to
restrictions  with  respect to its  marketability.  SEC rule  15G-9  establishes
certain sales practice requirements for such stock and, in particular,  prior to
a transaction:

         The  broker  or dealer  must have  approved  a  prospective  customer's
account for  transactions in penny stocks in accordance with the procedure under
the SEC rules and the broker or dealer must have  received  from the  customer a
written agreement to the transaction  setting forth the identity and quantity of
the designated security to be purchased.  In order to approve a person's account
for  transactions  in penny  stocks,  the broker or dealer  must obtain from the
person  information  concerning  the person's  financial  situation,  investment
experience,  and  investment  objectives.  The broker or dealer must  reasonably
determine that transactions in designated securities are suitable for the person
and that the person or the person's  independent  advisor in these  transactions
has  sufficient  knowledge  and  experience  in financial  matters such that the
person or the person's independent advisor in these  transactions reasonably may
be expected to be capable of evaluating the risks of  transactions in designated
securities.

         The broker or dealer  must  deliver  to the person a written  statement
setting  forth the basis on which the  broker or dealer  made the  determination
required by the rules  stating in a  highlighted  format that it is unlawful for
the broker or dealer to effect a transaction in a designated security unless the
broker or dealer has received, prior to the transaction,  a written agreement to
a transaction  from the person and stating in a highlighted  format  immediately
preceding  the  customer's  signature  line  that:  (a) the  broker or dealer is
required by this section to provide the person with a written statement; and (b)
the person  should not sign and return the  written  statement  to the broker or
dealer if it does not  accurately  reflect  the  person's  financial  situation,
investment experience,  or investment  objectives;  and obtain from the person a
manually signed and dated copy of the written statement required by the rules.

         As a practical  matter,  the only customers  eligible to purchase penny
stocks are persons  for whom the broker or dealer  carries an account and who in
such account have effected a securities  transaction  or made a deposit of funds
or securities  more than one year  previously;  or have made three  purchases of
penny stocks that occurred on separate days and involved different issuers.


Industry Risk Factors
---------------------
Dependence  On  Network   Infrastructure;   Establishment   and  Maintenance  of
Relationships; Capacity; Risk of System Failure; Requisite Agreements may not be
able to be Obtained on Satisfactory  Terms and Conditions.  Prime's success will
depend  upon its  ability to  implement  and  subsequently  continue to expand a
network  infrastructure  and  support  services  in order to  supply  sufficient
geographic reach, capacity,  reliability and security at an acceptable cost. The
development  and  expansion  of Prime's  network will require that it enter into
agreements,  on acceptable terms and conditions,  with the various  providers of
infrastructure  capacity and equipment and support services.  These are referred
to as peering relationships.

The expansion and adaptation of Prime's network infrastructure will also require
substantial  financial  operational and managerial  resources.  Prime may not be
able to expand or adapt the network infrastructure it intends to develop to meet
the industry's evolving standards or its customers' growing demands and changing
requirements  on a timely basis, at a commercially  reasonable  cost, or at all.
Prime may not be able to deploy  successfully  any expanded and adapted  network
infrastructure. Failure to maintain peering relationships or establish new ones,
if necessary, would cause Prime to incur additional operating expenditures which
would have a material adverse effect on Prime's  business,  financial  condition
and results of operations.

Prime is dependent on telecommunications  carriers and other suppliers.  Prime's
suppliers  and  telecommunications  carriers  also  sell or lease  services  and
products to Prime's  competitors,  and some of these  carriers  are,  and in the
future  others  may  become,   competitors  of  Prime.   Prime's  suppliers  and
telecommunications  carriers may enter into exclusive  arrangements with Prime's
competitors  or otherwise  stop selling or leasing their services or products to
Prime,  which could have a material  adverse effect on Prime.  In January  2001,
Prime entered into a supply agreement   with  Adaptive   Broadband   Corporation
for fixed wireless broadband infrastructure equipment for the year 2001. In 2002
we  modified  that  agreement  with  Axxcelera  Broadband   Wireless  Inc.,  the
successor company  to  Adaptive Broadband.  In 2002  we also entered into supply
agreements with  Wi-Lan Inc. and WaveRider Communications Inc.

The  Telecommunications  Industry  experiences rapid  technological  change. Any
failure on the part of Prime to use new technologies effectively, to develop its
technical expertise and new services or to enhance existing services on a timely
basis, either internally or through arrangements with third parties,  could have
a  material  adverse  effect  on Prime.  The  market  for  Prime's  services  is
characterized  by rapidly  changing  technology,  evolving  industry  standards,
changes in customer  needs and frequent  new service and product  introductions.
Prime's  future  success  will  depend,  in part,  on its ability to use leading
technologies  effectively,  to continue to develop its technical  expertise,  to
enhance its existing  services and to develop new  services  that meet  changing
customer  needs  on  a  timely  and  cost-effective   basis  and  obtain  market
acceptance.

Market and Financial Forecasts.  Prime has prepared certain forecasts for use by
management.  The  conclusions  contained in the forecasts may not be attained in
the  actual  operation  of  Prime.  Actual  results  of  operations  may  differ
significantly  based on certain  assumptions  concerning  facts and events  over
which Prime may have no control,  including  the ability  through  marketing and
management  to obtain the  projected  revenue  levels.  Therefore  the operating
results forecast may not be achieved, and the assumptions on which the forecasts
are based may not be realized.

The risks  highlighted  herein  should not be assumed to be the only things that
could affect future performance of Prime.


Impact of Recently Issued Standards
-----------------------------------

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This Statement rescinds FASB Statement No. 4,"Reporting Gains
and Losses from Extinguishment of Debt", and an amendment of that Statement,
FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements" and FASB Statement No. 44, "Accounting for Intangible Assets of
Motor Carriers". This Statement amends FASB Statement No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required accounting for sale-
leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. The adoption did not materially impact the Company's financial
position or results of operations.

In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The
provisions of this Statement were effective for exit or disposal activities
initiated after December 31, 2002, and did not materially impact the company as
there were no such activities in 2003.

In October 2002, the FASB issued Statement No. 147, "Acquisitions of Certain
Financial Institutions-an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9", which removes acquisitions of financial institutions from
the scope of both Statement 72 and Interpretation 9 and requires that those
transactions be accounted for in accordance with  Statements No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets.  In addition,
this Statement amends SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, to include in its scope long-term customer-relationship
intangible assets of financial institutions such as depositor- and borrower-
relationship intangible assets and credit cardholder intangible assets.  The
requirements relating to acquisitions of financial institutions is effective for
acquisitions for which the date of acquisition is on or after October 1, 2002.
The provisions related to accounting for the impairment or disposal of certain
long-term customer-relationship intangible assets are effective on October 1,
2002.  The adoption of this Statement did not have a material impact to the
Company's financial position or results of operations as the Company has not
engaged in either of these activities.

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", which amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results.  The transition guidance and annual disclosure provisions of Statement
148 were effective for fiscal years ending after December 15, 2002.  The interim
disclosure provisions were effective for financial reports containing financial
statements for interim periods beginning after December 15, 2002.  The adoption
of this statement did not have a material impact on the Company's financial
position or results of operations as the Company has not elected to change to
the fair value based method of accounting for stock-based employee compensation.

During April 2003, the FASB issued SFAS 149 - "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", effective for contracts entered
into or modified after June 30, 2003, except as stated below and for hedging
relationships designated after June 30, 2003. In addition, except as stated
below, all provisions of this Statement should be applied prospectively. The
provisions of this Statement that relate to Statement 133 Implementation Issues
that have been effective for fiscal quarters that began prior to June 15, 2003,
should continue to be applied in accordance with their respective effective
dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases
or sales of when-issued securities or other securities that do not yet exist,
should be applied to both existing contracts and new contracts entered into
after June 30, 2003. The Company does not participate in such transactions, so
adoption of this pronouncement had no material effect.

During May 2003, the FASB issued SFAS 150 - "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity", effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective for public entities at the beginning of the first interim period
beginning after June 15, 2003. This Statement establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a freestanding financial instrument that is within its scope as a
liability (or an asset in some circumstances). Many of those instruments were
previously classified as equity.  The adoption of this pronouncement did not
materially affect the financial statements as the company does not issue this
type of financial instrument.

In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. (FIN) 45, "Guarantor's Accounting and Disclosure requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others."  Among
other things, the Interpretation requires guarantors to recognize, at fair
value, their obligations to stand ready to perform under certain guarantees. FIN
45 is effective for guarantees issued or modified on or after January 1, 2003.
The Company does not believe the adoption of this pronouncement has had a
material impact to the Company's financial position or results of operations.


In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" (an interpretation of Accounting Research Bulletin
(ARB) No. 51, Consolidated Financial Statements). Interpretation 46 addresses
consolidation by business enterprises of entities to which the usual condition
of consolidation described in ARB-51 does not apply. The Interpretation changes
the criteria by which one company includes another entity in its consolidated
financial statements.  The general requirement to consolidate under ARB-51 is
based on the presumption that an enterprise's financial statements should
include all of the entities in which it has a controlling financial interest
(i.e., majority voting interest). Interpretation 46 requires a variable interest
entity to be consolidated by a company that does not have a majority voting
interest, but nevertheless, is subject to a majority of the risk of loss from
the variable interest entity's activities or entitled to receive a majority of
the entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity.

In December 2003 the FASB concluded to revise certain elements of FIN 46,
primarily to clarify the required accounting for interests in variable interest
entities.  FIN-46R replaces FIN-46, that was issued in January 2003. FIN-46R
exempts certain entities from its requirements and provides for special
effective dates for entities that have fully or partially applied FIN-46 as of
December 24, 2003. In certain situations, entities have the option of applying
or continuing to apply FIN-46 for a short period of time before applying
FIN-46R. In general, for all entities that were previously considered special
purpose entities, FIN 46 should be applied in periods ending after December 15,
2003. Otherwise, FIN 46 is to be applied for registrants who file under
Regulation SX in periods ending after March 15, 2004, and for registrants who
file under Regulation SB, in periods ending after December 15, 2004. The Company
does not expect the adoption to have a material impact on the Company's
financial position or results of operations.

In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" which replaces
the previously issued Statement. The revised Statement increases the existing
disclosures for defined benefit pension plans and other defined benefit
postretirement plans. However, it does not change the measurement or recognition
of those plans as required under SFAS No. 87, "Employers' Accounting for
Pensions," SFAS No. 88, "Employers' Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits," and SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
Specifically, the revised Statement requires companies to provide additional
disclosures about pension plan assets, benefit obligations, cash flows, and
benefit costs of defined benefit pension plans and other defined benefit
postretirement plans. Also, companies are required to provide a breakdown of
plan assets by category, such as debt, equity and real estate, and to provide
certain expected rates of return and target allocation percentages for these
asset categories. The Company has implemented this pronouncement and has
concluded that the adoption has no material impact to the financial statements.


Seasonality and Inflation
-------------------------

Management does not believe the Company's operations are significantly  affected
by seasonality or inflation.



ITEM  7.  FINANCIAL  STATEMENTS

The  Company's  consolidated  financial  statements  are  attached  as pages F-1
through F-23.


ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
          FINANCIAL  DISCLOSURE

None

                                    PART III

ITEM  9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
          COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT

Certain information about directors and executive officers of the Company is set
forth below:

                             OFFICERS AND DIRECTORS
                             ----------------------

The following table sets forth the names, ages and positions with the Company as
of December 31, 2002 of all of the officers and directors (the "Named  Executive
Officers")  of the  Company.  Also  set  forth  below is  information  as to the
principal occupation and background for each person in the table.

 a)  Directors  and  Executive  Officers  of  the  Company



NAME             AGE  DIRECTOR SINCE              POSITION
---------------  ---  --------------  ---------------------------------
Norbert Lima      58       1999       Chief Executive Officer, Director

Stephen Goodman   60       1999       Chief Financial Officer,
                                      Corporate Secretary, Director

Adrian Lima       33                  Vice President - Engineering

William Turley    66       2000       Director, Member of Audit Committee

Dennis Hinz       50       2000       Director, Chairman of Audit Committee, CPA
                                                Financial Expert,
                                                independent of management

Martin Sokolowski 57       2002       Director



The following is a brief description of the business background of the executive
officers and directors of the Company.



Norbert  Lima has  been  President, CEO  and  Director  for  the  Company  since
August 1999.  Mr. Lima has over thirty years of  telecommunications  experience,
and will be  responsible  for  implementing  the Company's  operational  systems
across multiple markets.  Mr. Lima founded and operated  NACC-Tel,  a California
interconnect  company,  from  1984-1994,  where  he  served  as  Sales  Manager,
Technical  Services  Engineer,  and Installation  Manager.  NACC-Tel merged with
Pagers Plus  Cellular in 1994,  whereby  Mr.  Lima served as Vice  President  of
Engineering,  responsible for RF engineering and construction of 220 MHz systems
throughout  the  US.  Under  Mr.  Lima's  direction,  Pagers  Plus  successfully
constructed 150 five-channel 220 MHz systems throughout various states. In early
1998, Mr. Lima re-purchased  NACC-Tel,  along with certain assets of Pagers Plus
Cellular,  which was subsequently  acquired by Prime in 1999, and will remain in
operation as its wholly owned subsidiary.

Mr. Lima worked in various  positions for Pacific  Telephone for nineteen years,
most recently as Engineering  Manager from 1981-1983.  From 1979-1981,  Mr. Lima
was  District  Manager  of  Construction,  where  he was  responsible  for  five
construction  divisions  with  275  subordinates  and  an  operating  budget  of
approximately  US$16,000,000  per annum. Mr. Lima's career has taken him through
multiple  levels of the large telecom  company,  as he also spent eight years as
Outside Plant Engineer,  where he had responsibilities of planning and designing
pole lines,  conduit  structures,  and  underground/building  cables. Mr. Lima's
success  enabled  his  promotion  to  Engineering  Manager,  where  he  became a
supervisor  for several  Outside  Plant  Engineers,  and then Staff Manager from
1978-1979,  where he was  responsible for conducting  Outside Plant  Engineering
Reviews throughout the states of California and Nevada. Mr. Lima received his BS
in Industrial  Technology-Electronics  and his BA in Public  Administration from
Fresno State University in 1970.


Stephen Goodman has been Chief Financial  Officer,  Treasurer,  and Director for
the Company since August 1999. Mr. Goodman has worked in the  telecommunications
industry for over eight years,  serving as President  for both Secure  Cellular,
Inc. and Pagers Plus Cellular, of San Francisco, from 1992-1999. Mr. Goodman had
been responsible for the strategic direction of both of the  companies,  and led
Pagers Plus to be named the 25th fastest-growing  company  in the  San Francisco
Bay area in 1996. Mr. Goodman developed, structured, and negotiated the majority
of the business for  Pagers Plus,  which  provides  prepaid  cellular  telephone
services,  prepaid wireless services, and telephone systems to both consumer and
corporate customers throughout California.


Mr. Goodman is skilled in banking and finance,  having  accumulated  over thirty
years of experience working for various organizations. Mr. Goodman was President
of Contra Costa  Financial  Services,  Inc. from  1989-1992,  where he owned and
managed this commercial and  residential  mortgage  brokerage/banking  firm. Mr.
Goodman was  involved  with the FCC while at Contra  Costa  Financial  Services,
Inc.,  applying to  participate in the lottery for a new spectrum of Specialized
Mobile Radio licenses. From 1985-1989,  Mr. Goodman worked for various savings &
loan  companies,  and from  1977-1985  he served  as  President  of Bay  Capital
Corporation & House of Money.  Mr. Goodman worked in financial  public relations
on Wall Street from 1969-1970 and as a stockbroker  for Loeb,  Rhoades & Company
from  1965-1966.  Mr. Goodman served as Lieutenant  Junior Grade in the US Coast
Guard from  1966-1969.  Mr.  Goodman  received his JD from  William  Howard Taft
University  in 1995,  passing  the  California  Baby Bar in  1992.  Mr.  Goodman
received his BS in Economics from the University of Pennsylvania-Wharton  School
in  1965,  and  received  his MBA  with  distinction  in  Finance  from New York
University in 1969.  He is an  adjunct  professor of  Finance and Communications
for the Graduate School of  Business Administration of the University of Phoenix
Online.



Adrian Lima has been Vice President of  Engineering  for the Company since 1999.
Adrian Lima is the son of Norbert  Lima,  the  Company's CEO and Chairman of the
Board of  Directors.  Mr. Lima has  accumulated,  while working for the NACC-Tel
proprietorship during the ten years prior to his employment by Prime,  technical
skills and experience through the installation of hundreds of telecommunications
systems manufactured by several different  companies.  Mr. Lima is adept at each
aspect  of  interconnect  installation,  including  wire  running,  termination,
hardware programming, troubleshooting, and training. Upon NACC-Tel's merger with
Pagers  Plus  Cellular  in  1994,  Mr.  Lima  obtained  experience  in  wireless
technologies, enabling him to spearhead the installation of some 750 channels of
two-way  220  MHz  radio  systems.  Mr.  Lima's  technical  experience  will  be
instrumental in implementing the Company's expansion plans in the future.



William   Turley  is   President   of   Communications   Engineering   Inc.,   a
well-established provider of telecommunications  products and services including
turnkey  voice and data  solutions;  he  founded  the  company  in 1977.  He has
extensive  experience  in  construction,  operations,  and  engineering  in  the
telephone  industry dating from 1952 both in the private and public sectors.  He
holds a Class A & C-7  California  Contractor's  License and is a member in good
standing of the Building Industrial  Consulting Society  International  (BICSI).
Prior to  establishing  his business in 1977,  he was a science  educator at Cal
State  University,  San Diego City  College,  and at  Kirchenpaur  Gymnasium  in
Hamburg,  Germany.  He obtained his M.A. degree in Physical  Science in 1971 and
his B.S.  degree in Physics in 1969,  from  California  State  University in San
Diego. He is a member of Prime's Audit Committee.



Dennis  Hinz  is a  shareholder  in  Ten  Haken,  Hinz  and  Carlos  Accountancy
Corporation.  He is a Certified  Public  Accountant  and a  Certified  Valuation
Analyst. He has been employed in the accounting profession since graduation from
California  State  University,  Chico,  in 1976,  where he obtained  his B.S. in
Business Administration with a concentration in accounting.  In 1986 he became a
partner of Marta,  Matli, & Thomas CPA's and its successor  firms  including Ten
Haken,  Hinz &  Carlos  CPA's.  He is a  member  of the  American  Institute  of
Certified  Public  Accountants,  the  California  Society  of  Certified  Public
Accountants,  and the National  Association of Certified Valuation Analysts.  He
serves as  Treasurer  of the  Kiwanis  Club of Yuba City,  and he is Chairman of
Prime's Audit Committee.



Martin  Sokolowski  is  currently  a  consulting  engineer  under  contract with
Marathon Oil. Previously he was  employed by Enercon Services, Inc. as  a Senior
Engineer for the Dallas, Texas office.  Prior  to  his  current position, he was
with Alcatel USA as the Senior  Manager  of  Strategic Planning for the Wireless
Access Business Unit, focusing on technology and support for point-to-multipoint
fixed wireless systems, networks and products. He has demonstrated himself to be
an engineering and business leader  with  engineering,  management,  design, and
customer field services expertise. He has successfully  managed  numerous  fixed
wireless  engineering  and  field   installation   programs  and  projects.  His
engineering  experience  includes  systems  engineering,    design  engineering,
planning and scheduling, prototype and first office applications and new product
deployment and support.  Telecom  experience  includes  overall  network design,
local telco, wireline and RF wireless systems, LMDS and MMDS point-to-multipoint
wireless networks and telecommunications infrastructure.  He  joined Alcatel  in
June 1999 to develop fixed wireless point-to-multipoint  products  and  systems,
and launch these new products  into  the  exploding  market  for high speed data
and voice communications. He coordinated the  final technical development of the
Alcatel Evolium 9900 family of LMDS and MMDS point-to-multipoint fixed  wireless
products between efforts  in  Paris, France and Richardson, Texas.  One  of  his
many  achievements  at  Alcatel  has  been  the  development   of   standardized
installation  cost  estimating  models  and  tools  to  quickly  and  accurately
estimate total  field installation costs for base station and CPE installations.
Mr. Sokolowski worked  in  various  engineering  management positions during his
career,  including  Bosch  Telecom  from  December  1997 to June 1999  in  their
Broadband  Wireless Access,  Global Deployments Division  in Richardson,  Texas,
where he  was the Manager of Technical Services and a Senior RF Systems Engineer
with responsibility  for  the  Final LMDS point-to-multipoint system development
to meet specifications and FCC  type  acceptance.  Upon  graduation  from George
Washington University with his Master of  Engineering  Administration  degree in
1971 he joined KPMG Peat  Marwick  in their  Washington, D.C. office as a Senior
Management Consultant.

Upon graduation with his  Bachelor of  Engineering Science degree from the State
University  of  New York  at Stony Brook,  he  entered the  U.S. Navy's  Officer
Candidate School,  and  after  graduation  was  assigned to the highly selective
Naval  Security  Group.  He  was  honorably  discharged as a Lieutenant. He is a
Registered  Professional  Engineer  (Registration 65159),  and  a  Member of the
civic advisory  boards for the City  of  Plano, Texas,  the Texas  and  National
Societies   of  Professional   Engineers,  the  American   Association  of  Cost
Engineers,  and  a  past  president  of  the  Dallas  Chapter  of the Operations
Research Society of America. He is an adjunct  professor  of  Statistics for the
Graduate School of the University of Phoenix Online.



ITEM  10.  EXECUTIVE  COMPENSATION

The following table sets forth the aggregate cash and options  compensation paid
to all  officers of Prime.  The  officers  received no other  compensation  from
Prime:

<TABLE>
<CAPTION>


----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
      Name            Principal      Year  Salary   Options   Exercise     Exercisable  Expiration
                      Position                                  Price
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
<S>                <C>               <C>    <C>     <C>      <C>            <C>         <C>
  Norbert Lima           CEO         2002  $100,000 100,000     $.20         12/31/02    12/31/05
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
                                     2003  $100,000
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
  Stephen Goodman        CFO         2002  $100,000 100,000     $.20         12/31/02    12/31/05
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
                                     2003  $100,000
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
  Adrian Lima      VP-Engineering    2002  $ 72,000  76,000     $.20         12/31/02    12/31/05
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
                                     2003  $ 72,000
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------

</TABLE>

                              EMPLOYMENT AGREEMENTS
                              ---------------------

In accordance  with the  Commission  Rules,  the following are the  Compensatory
Plans and Arrangements of the Company:

Prime  Companies  401(k)
Prime Companies,  Inc. Incentive Stock Option Plans

On September 7, 2000, the  Company approved employment agreements with  its  CEO
and CFO, each providing for compensation at the rate of $8,333 per month for the
three years ending December 31, 2002.  On  April 13, 2000  the Company  approved
compensation for its Vice-President - Engineering  at  the  rate  of  $6,000 per
month.

                                  STOCK OPTIONS
                                  -------------

On  December 31,  2003 there were  outstanding  options on 1,152,710  shares  to
various individuals. Each option  provides  the right to  purchase  one share of
common stock. 476,110 of these  options  expire December 31, 2004,  and  706,600
expire  December  31, 2005.  The  options  expiring  in  2004 are exercisable at
various  prices from $.10 to $.5625  and  the  average  exercise  price is $.30.
All  of  the  options  expiring  in 2005 are exercisable at  $.20 per share. Mr.
Goodman, Mr. Adrian Lima, and Mr. Norbert Lima have rights  under the Year 2002,
and the Year 2001 Employee Stock Option Programs.  Messrs.  Turley and Hinz each
have 20,000  options under the Year 2001  Outside Director Stock Option Program.
These   options are currently exercisable  and expire December 31, 2004.  Messrs
Turley,  Hinz, and  Sokolowski each have 20,000  options  under  the  Year  2002
Outside  Director Stock Option Program. These options are currently  exercisable
and expire  December 31, 2005.  As  of December 31, 2003, there  were  no  other
warrants,  rights, conversion, privileges,  or other  rights  pursuant  to which
Mr.  Goodman,  Mr. Adrian Lima or Mr. Norbert Lima or any other current  Officer
or Director has the right to acquire further shares in the Corporation.

In January 2001 the Board of Directors approved an employee stock option program
for all employees  employed by Prime in 2001,  whereby each employee employed on
the date of adoption of the program is granted  options equal to their year 2000
gross earnings (at Prime or any of its  subsidiaries) at $.328125 per share; the
options are to expire  December 31, 2004,  and vest 50% on December 31, 2001 and
50% on December 31, 2002.  Each employee  employed during 2001 after the date of
adoption of the program will receive options, equal to their prorated annualized
2001 income, with the same terms and rights, but an exercise price equal to 150%
of the closing price of the shares on their first day of employment.

In  June  2001,  the  Board  of  Directors   approved  a  stock  option  program
whereby each outside  director was granted  20,000 options for the year 2001, to
expire  December  31, 2004, at $.10 per share.  The options vest on December 31,
2001 to each current  outside  director who is still a director on that date.

In December 2002 the Shareholders approved an employee stock option  program for
all employees employed by Prime whereby each employee on the date of adoption of
the program is granted options approximately equal to their 2002 gross  earnings
at $.20 per  share.  The options  expire  December 31, 2005,  and  vest  50%  on
December 31, 2003 and 50% on December 31, 2004.

In December  2002  the  Board  of Directors  approved  a  stock  option  program
whereby each outside  director was granted  20,000 options for the year 2002, to
expire  December  31, 2005, at $.20 per share.  The options vest 50% on December
31, 2003 and 50% on December 31, 2004.



                              DIRECTOR COMPENSATION
                              ---------------------

The   Company's   directors   are  reimbursed  for  any  out-of-pocket  expenses
incurred  by them for  attendance  at  meetings  of the  Board of  Directors  or
committees thereof.  The Company compensates  directors $500 for each meeting of
the  Board  personally  attended  by such  director,  and $250 for each  meeting
attended  telephonically.  Members of the Audit Committee are compensated at the
rate of $500.00 per meeting.


ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT

The  following  table sets forth  certain  information  about the  ownership  of
Prime's  Common  Stock as of December 31, 2003,  by (i) those  persons  known by
Prime to be the beneficial  owners of more than 5 percent of the total number of
outstanding  shares of any  class  entitled  to vote;  (ii)  each  director  and
officer;  and (iii) all  directors  and officers of Prime as a group.  The table
includes Common Stock issuable upon the exercise of options that are exercisable
within 60 days.  Except as  indicated in the  footnotes to the table,  the named
persons  have sole  voting and  investment  power with  respect to all shares of
Prime common  stock shown as  beneficially  owned by them,  subject to community
property laws where applicable.  The ownership figures in the table are based on
the books and records of Prime.

               Name of         Amount and
Title of       Beneficial      Nature of
Class          Owner           Interest    Percentages      Address
---------------------------------------------------------------------------
Common Stock                                          409 Center Street
Par Value                                             Yuba City, CA 95991
$0.0001        Stephen Goodman(a)7,271,693    19%

Common Stock                                          409 Center Street
Par Value                                             Yuba City, CA 95991
$0.0001        Adrian Lima    (b)1,179,385     3%

Common Stock                                          409 Center Street
Par Value                                             Yuba City, CA 95991
$0.0001        Norbert Lima   (c)6,385,094    17%

Common Stock                                         155 Montgomery Street, #609
Par Value                                            San Francisco, CA 94104
$0.0001        Irving Pfeffer    2,883,683     8%

Common Stock                                          120 W 45 Street
Par Value                                             New York, NY 10036
$0.0001        David Shaw        2,677,894     7%

Common Stock                                         300 Colonial Center Parkway
Par Value      Swartz Private                        Roswell, GA 30076
$0.0001          Equity LLC   (d)1,673,100     4%

Common Stock  All Directors
Par Value         and
$0.0001        Officers as
                 a Group     (e)15,221,169    40%
--------------------------------------------------------------------------------



a)   Includes options to purchase 145,834 common shares, which are currently
     exercisable.
b)   Includes options to purchase 106,972 common shares, which are currently
     exercisable.
c)   Includes options to purchase 145,834 common shares, which are currently
     exercisable.
d)   Includes 1,673,100 warrants, all of which are currently exercisable.
e)   Includes options to purchase 468,637 shares, which are currently
     exercisable.


ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS


Norbert  Lima, a Director and the  Company's  CEO, owns the real estate in which
the Company's  headquarters is located. The Company paid rent of $20,160 in 2003
and  $20,160  in 2002 on its  headquarters.  A three year  lease  agreement  was
authorized  by the  Board of  Directors  in June 2000 and was  entered  into and
executed that month.

Dennis  Hinz is a Director  of the  Company.  The  accounting  firm that he is a
partner in, Ten, Haken, Hinz, and Carlos,  prepared the Company's 2001, 2000 and
1999 state and federal tax  returns.  The  agreed  upon fee to be charged by his
firm for this  service was  $3750,  $2750 and $2,500 respectively.  Mr. Hinz has
been appointed by the Board of Directors as the Chairman of the  Company's audit
committee.  The  Company  anticipates  that Mr.  Hinz'  firm  will  prepare  the
Company's 2002 and 2003 state and federal tax returns.


ITEM  13.  EXHIBITS,  REPORTS  ON  FORM  8-K  AND  SUPPLEMENTAL INFORMATION

(a)   INDEX  TO  EXHIBITS

4.1      Proxy for 2002 Annual Meeting of Shareholders

99.1     Certifications

(b) No  reports  on Form 8-K were  filed  during  the last  quarter  of the year
covered by this report.

ITEM  14. CONTROLS AND PROCEDURES.


The Company's management,  under  the  supervision and with the participation of
the Company's principal executive officer  and principal financial officer,  has
evaluated  the Company's disclosure controls  and  procedures  as  of  the  date
of   this   Annual  Report  on  Form 10-K.  Based   upon  that  evaluation,  the
Company's   principal  executive  officer and principal financial  officer  have
concluded that the Company's disclosure controls and procedures  are  effective.
There  were  no  significant changes  in the Company's internal controls  or  in
other factors  that  could  significantly  affect  these  controls subsequent to
the date of their evaluation,  including  any  corrective actions with regard to
significant deficiencies and material weaknesses.

The  Company  has not adopted a Code of Ethics, due to insufficient resources to
prepare, review, and adopt one.  The Company does intend to adopt a Code  during
2004.

ITEM  15.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees. The aggregate fees billed by our auditors, for professional services
rendered for the audit of the Company's annual financial statements for the year
ended  December  31,  2002,  and for the  reviews  of the  financial  statements
included in the Company's  Quarterly Reports on Form 10-QSB  during  fiscal 2002
and  Form 10-QSB in fiscal 2003  approximated  $60,547  (2002 items) and $23,280
(2003 items), respectively.

The Board of  Directors  has  considered  whether  the  provision  of  non-audit
services,  for which  there was  required  SAS 100 review  services on the Forms
10-QSB, is compatible with maintaining the principal accountant's independence.


                             SHAREHOLDER INFORMATION
                             -----------------------


Form  10-KSB  Availability:
A copy of the 2003 Form 10-KSB filed with the Securities and Exchange Commission
will be  forwarded  preferably  by  email,  upon  request,  to any  shareholder.
Requests should be directed to:

Norbert  Lima,  CEO
Prime  Companies,  Inc.
409  Center  Street
Yuba  City,  CA  95991
Or by email to: adminpri@primecompanies.com

Transfer  Agent  and  Registrar:

Mountain Share Transfer
1625 Abilene Drive
Broomfield, CO 80020
Telephone: (303) 460-1149
Fax: (303) 438-9243
Email: beth@mountainsharetransfer.com


Independent  Auditors:

Stonefield Josephson, Inc.
1620 26th Street
Suite 400 South
Santa Monica, CA 90404-4041
Telephone: 310-453-9400
Fax: 310-453-1187


Corporate  Offices:  Prime  Companies,  Inc.
Mailing  Address:  409  Center  Street,  Yuba  City,  CA  95991
Telephone:  (530)  755-3580
Fax: (530) 671-3215

























                                   SIGNATURES
                                   ----------


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto duly  authorized.  Dated this 14th day of
April, 2004.


                                        Prime  Companies,  Inc.

                                   By:  /s/  Norbert  J.  Lima
                                        -------------------------------
                                        Norbert  J.  Lima
                                        Chief  Executive  Officer
                                       (Principal  Executive  Officer)
                                        Director

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

By:      /s/  Stephen  Goodman
         -----------------------------------
         Stephen  Goodman
         Director,  Chief  Financial  Officer


By:      /s/  William  Turley
         -------------------------------
         William  Turley
         Director


By:      /s/  Dennis Hinz
         -------------------------------
         Dennis Hinz
         Director


By:      /s/  Martin Sokolowski
         -------------------------------
         Martin Sokolowski
         Director

<PAGE>





































<TABLE>
<CAPTION>



                                                                                                PAGE

<S>                                                                                            <C>
Independent Auditors' Report.....................................................................F-2

Consolidated Balance Sheet  - December 31, 2003..................................................F-3

Consolidated Statements of Operations - For the Years Ended December 31, 2003 and 2002...........F-4

Consolidated Statements of Stockholders' Equity (Deficit)- For the Years Ended
     December 31, 2003 and 2002 .................................................................F-5

Consolidated Statements of Cash Flows - For the years ended December 31, 2003 and 2002 ..........F-6

Notes to Consolidated Financial Statements.......................................................F-7
</TABLE>



                                               F-1
<PAGE>




































INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
PRIME COMPANIES INC. AND SUBSIDIARIES
YUBA CITY, CALIFORNIA


We have audited the accompanying consolidated balance sheet of Prime Companies,
Inc. and Subsidiaries as of December 31, 2003, and the related consolidated
statements of operations, stockholders' deficit and cash flows for each of the
two years in the period ended December 31, 2003. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Prime
Companies, Inc. and Subsidiaries as of December 31, 2003, and the consolidated
results of their operations and their cash flows for each of the two years in
the period ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1, the
Company has incurred net losses and negative cash flows from operations since
its inception, has a working capital deficit of $2,787,641 and stockholders'
deficit of $2,312,141. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.


/s/ Stonefield Josephson, Inc.

STONEFIELD JOSEPHSON, INC.
Certified Public Accountants

Santa Monica, California
April 1, 2004










                                      F-2

<PAGE>







<TABLE>

                    PRIME COMPANIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEET

                                                                  December 31,
                                                                      2003
                                                                  ------------
                                     ASSETS
                                     ------
<S>                                                                <C>
CURRENT ASSETS:
     Cash                                                          $      -
     Accounts receivable, net of allowance of $1400                     21,650
     Inventory                                                          59,049
     Deposits                                                           31,301
     Prepaid expenses and other current assets                           4,370
                                                                   -----------
        Total current assets                                           116,370

PROPERTY AND EQUIPMENT, net of Accumulated Depreciation of $571,513
                    and Accumulated Equipment Writedown of $479,046    392,456
LICENSES, net of Accumulated Amortization of $212,236                  259,399
GOODWILL,                                                               32,346
                                                                   -----------
TOTAL ASSETS                                                       $   800,571
                                                                   ===========

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
                      ----------------------------------------------

CURRENT LIABILITIES:
     Accounts payable and accrued expenses                         $   389,194
     Current maturities of note payable, Rural Utilities Service     2,063,217
     Accrued payroll liabilities                                       289,589
     Due to officers                                                    92,684
     Other current liabilities                                          55,923
     Current maturities of long term debt                                6,480
     Deferred revenues                                                   4,714
     Current maturities of capital lease obligations                     2,210
                                                                   -----------
              Total current liabilities                              2,904,011
                                                                   -----------
LONG TERM LIABILITIES:
     Notes payable, related parties, net of debt discount              189,887
     Capital lease obligations, net of current maturities               13,467
     Long term debt, net of current maturities                           5,347
                                                                   -----------
              Total long term liabilities                              208,701
                                                                   -----------

STOCKHOLDERS' DEFICIT:
     Preferred stock, $.0001 par value, 50,000,000 shares
         authorized, 8,250 issued and outstanding                            1
     Common stock, $.0001 par value, 100,000,000 shares
         authorized, 35,137,489 issued and outstanding                   3,514
     Additional paid-in capital                                      7,550,300
     Accumulated deficit                                            (9,865,956)
                                                                   -----------
              Total stockholders' deficit                           (2,312,141)
                                                                   -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $   800,571
                                                                   ===========

The accompanying notes form an integral part of these consolidated financial statements.

                                      F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>






                                 PRIME COMPANIES, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                        FOR THE YEARS ENDED
                                                                           DECEMBER  31,
                                                              ---------------------------------------
                                                                       2003                   2002
                                                              ---------------       -----------------


<S>                                                           <C>                   <C>
SALES REVENUES                                                $       352,375       $        284,617

COST OF SALES                                                         202,229                116,283
                                                              ----------------      -----------------
GROSS PROFIT                                                          150,146                168,334

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES                       1,844,914              1,004,785
                                                              ----------------      -----------------
LOSS FROM CONTINUING OPERATIONS                                    (1,694,768)              (836,451)
                                                              ----------------      -----------------
OTHER INCOME (EXPENSE):
     Net gain from sale of interest in subsidiary                        --                   78,372
     Interest income                                                      442                    151
     Interest expense                                                (108,982)               (32,641)
     Other income, net                                                131,706                 21,320
                                                              ----------------      -----------------
         Net other income (expense)                                    23,166                 67,202
                                                              ----------------      -----------------
NET LOSS BEFORE TAXES                                              (1,671,602)              (769,249)
     Provision for taxes                                                4,800                  3,400
                                                              ----------------      -----------------
NET LOSS FROM CONTINUING OPERATIONS                                (1,676,402)              (772,649)
     Loss from discontinued operations, all operating losses         (148,723)                  --
                                                              ----------------      -----------------
NET LOSS                                                      $    (1,825,125)      $       (772,649)
                                                              ================      =================

BASIC & DILUTED PER SHARE INFORMATION:
                                                              ----------------      -----------------
    Net loss per common share from continuing operations      $         (0.05)      $          (0.02)
    Net loss per share from discontinued operations                     (0.01)                   -
                                                              ----------------      -----------------
    Net loss per share                                        $         (0.06)      $          (0.02)
                                                              ================      =================

WEIGHTED AVERAGE SHARES OUTSTANDING                                32,716,777             32,180,110
                                                              ================      =================

The accompanying notes form an integral part of these consolidated financial statements.


                                                  F-4

</TABLE>
<PAGE>
<TABLE>
<CAPTION>


























                                                       PRIME COMPANIES, INC. AND SUBSIDIARIES

                                                   CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                                                   FOR THE YEARS ENDED DECEMBER 31, 2003 and 2002



                                            COMMON STOCK        ADDITIONAL       OTHER       DEFERRED                      TOTAL
                                     -----------------------     PAID-IN       PREFERRED     OFFERING     ACCUMULATED  STOCKHOLDERS'
                                        SHARES       AMOUNT      CAPITAL         STOCK        COSTS        (DEFICIT)       DEFICIT
                                     -----------    --------   -----------    -----------    ---------     -----------  -----------


<S>                                    <C>          <C>        <C>            <C>            <C>          <C>            <C>
BALANCES, January 1, 2002             31,984,384    $  3,198   $ 7,410,772           --     $    --       $(7,268,182)  $   145,788

Issuance of common stock                 100,000    $     10   $     4,990           --          --              --     $     5,000
Common stock issued for services         190,000    $     19   $    13,281           --          --              --     $    13,300
Preferred stock issued for services         --           --    $    64,999    $         1        --              --     $    65,000
Net loss                                    --           --           --             --          --       $  (772,649)  $  (772,649)
                                     -----------    --------   -----------    -----------   ---------     -----------    ----------
BALANCES, December 31, 2002           32,274,384    $  3,227   $ 7,494,042    $         1        --       $(8,040,831)  $  (543,561)
                                     -----------    --------   -----------    -----------   ---------     -----------    ----------


Issuance of common stock               2,863,105    $    287   $    54,508           --          --              --     $    54,795
Preferred stock issued for services         --           --    $     1,750           --          --              --     $     1,750
Net loss                                    --           --            --            --          --       $(1,825,125)  $(1,825,125)
                                     -----------    --------   -----------    -----------   ---------     -----------   -----------
BALANCES, December 31, 2003           35,137,489    $  3,514   $ 7,550,300    $         1        --       $(9,865,956)  $(2,312,141)
                                     ===========    ========   ===========    ===========   =========     ============  ===========





The accompanying notes form an integral part of these consolidated financial statements.


                                                  F-5

</TABLE>
<PAGE>
<TABLE>
<CAPTION>







































                              PRIME COMPANIES, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                     FOR THE YEARS ENDED
                                                                          DECEMBER 31,
                                                           ---------------------------------------
                                                                      2003                2002
                                                           ------------------  -------------------
<S>                                                        <C>                 <C>
CASH FLOW FROM OPERATING ACTIVITIES:
    Net loss from continuing operations                    $      (1,676,402)  $        (772,649)
    Loss from discontinued operations                               (148,723)               --
        Net loss                                                  (1,825,125)           (772,649)
    Adjustments to reconcile net loss to net cash
       used in operating activities:
     Write off of equipment                                          479,046                --
     Depreciation of property and equipment                          205,975             151,845
     Amortization of licenses and goodwill                           127,000              47,163
     Preferred stock issued for services                               1,750              65,000
     Conversion of long term debt to accounts payable                (55,185)               --
     Net gain from sale of interest in subsidiary                       --               (78,372)
     Common stock issued for services                                   --                13,300
    Changes in operating assets and liabilities:
     Accrued payroll and other current liabilities                   245,471            (113,923)
     Accounts payable                                                 98,266            (431,002)
     Due to officers                                                  92,684                --
     Inventory                                                        37,543              (7,851)
     Prepaid expenses and deposits                                    16,054               7,263
     Accounts receivable                                              (6,163)             16,049
     Deferred revenues                                                (2,065)             (2,464)
                                                           ------------------  -----------------
         Net cash used in operating activities                      (584,749)         (1,105,641)
                                                           ------------------  -----------------
CASH FLOW FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                            (473,946)           (291,934)
     Proceeds from sale of subsidiary                                   --                81,000
     Proceeds from sale of shares in subsidiary to related parties      --                30,000
     Purchase of shares in subsidiary from related parties              --               (32,628)
                                                           -----------------   -----------------
         Net cash used in investing activities                      (473,946)           (213,562)
                                                           ------------------  -----------------
CASH FLOW FROM FINANCING ACTIVITIES:
     Proceeds from note payable                                      443,882           1,700,990
     Short term notes and other liabilities converted
                                    to long term debt                193,690                --
     Proceeds from long term debt                                       --               120,948
     Proceeds from sale of common stock                               54,795               5,000
     Change in short term portion of capital lease obligations        (1,906)               --
     Repayments on long-term debt                                    (23,396)            (32,351)
     Repayments on notes payable                                     (50,804)            (34,653)
                                                           ------------------  -----------------
         Net cash provided by financing activities                   616,261           1,759,934
                                                           -----------------   -----------------

NET INCREASE (DECREASE) IN CASH                                     (442,434)            440,731
CASH, beginning of year                                              442,434               1,702
                                                           -----------------   -----------------
CASH, end of year                                          $            -0-    $         442,433
                                                           =================   =================
SUPPLEMENTAL CASH FLOW INFORMATION:
     Cash payments for:
         Interest                                          $          27,729   $          31,133
                                                           =================   =================
         Income taxes                                      $            --     $            --
                                                           =================   =================

SUPPLEMENTAL DISCLOSURE OF NON-CASH
    TRANSACTIONS:

     Issuance of preferred stock for services              $           1,750   $          65,000
                                                           =================   =================
     Issuance of common stock in exchange for services     $            --     $          13,300
                                                           =================   =================

The accompanying notes form an integral part of these consolidated financial statements.
                                                  F-6
</TABLE>
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       ORGANIZATION AND NATURE OF OPERATIONS:
         --------------------------------------

         The  consolidated  financial  statements  include the accounts of Prime
         Companies, Inc. and its wholly owned subsidiaries  (collectively,  "the
         Company").

         In January 1999 four founders and another  individual  funded  Worldnet
         Tel.com,  Inc. (Worldnet),  a Delaware  corporation,  to form the legal
         structure for the Company's further development.  In February 1999, the
         four founders of NACC-Tel  contributed  their  respective  interests in
         NACC-Tel,  a privately  held  company,  to  Worldnet  in  exchange  for
         Worldnet common stock.

         Pursuant to a Stock Purchase Agreement (the "Agreement")  between Prime
         Companies,  Inc.  ("Prime"),  a Delaware  Corporation,  a  nonoperating
         public shell,  and  Worldnet,  Worldnet was merged into Prime through a
         merger  effective  August 11, 1999.

         The  accompanying  financial  statements  of the  Company  reflect  and
         consolidate  the operations of Prime and its subsidiaries.

                                      F-7
<PAGE>


                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          The Company's wholly-owned subsidiaries are described below:

          Prepaid Tel.com Inc. (Prepaid), a Delaware corporation,  was formed in
          February 1999 as a wholly-owned  subsidiary.  Prepaid is a Competitive
          Local Exchange  Carrier  ("CLEC")  certified by the California  Public
          Utility  Commission.  Prepaid  revenues  comprise the sale of  prepaid
          phone service,  prepaid telephone  cards, and related services such as
          voice mail and long distance.

          LMDS Communications Inc. (LMDS), a Delaware corporation, was formed in
          February   1999   as   a   wholly-owned   subsidiary.    LMDS   is   a
          telecommunications  company  with  interests  in the  fixed  broadband
          wireless sector.  LMDS  revenues  comprise  the  sale  of  high  speed
          internet access services.

          Mid-Cal   Express,   Inc.  was  a wholly-owned  subsidiary  of  Prime.
          Mid-Cal ceased  operations in December 1998 (prior to the  acquisition
          by  Worldnet).  It filed a Chapter Seven Bankruptcy Petition in March,
          2001 and has been liquidated.

          Zenith Technologies Inc. (Zenith), a Delaware Corporation,  was formed
          in December 1998 as a wholly-owned subsidiary of Prime Companies, Inc.
          In  June  2001  it  commenced  operations  to  provide  long  distance
          telephone service.  In  July  2001  Prime  declared  a dividend to the
          shareholders by distributing one share of Zenith for every ten  shares
          of Prime held by the stockholders.  In August 2001 Zenith  filed  Form
          10SB12G with the  Securities and Exchange  Commission  to  voluntarily
          become a fully reporting company. In October 2001 an NASD member  firm
          filed form 15C211 with the NASD so that  Zenith's common shares  could
          be  quoted  for trading on the OTC Bulletin Board.  During  2002 Prime
          sold its interest in Zenith Technology, Inc.

          The  Company  now   has  100%  ownership  interest   in  Bright-Bridge
          Communications Networks, Inc.,  a  Delaware  corporation  organized in
          2002 in conjunction with the Company's  agreement  with  the  Virginia
          Tech Foundation, Inc.  for  the  commercialization of the Foundation's
          LMDS license in the Roanoke, Virginia area. In July 2003 we recognized
          that the market for our services had  changed  dramatically during the
          year  after  we   launched  operations,   and  we  jointly  agreed  to
          discontinue the business.



2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
         -------------------------------------------

         Principles of  Consolidation - The  consolidated  financial  statements
         include  the   accounts  of  Prime  Companies,  Inc., and  its  wholly,
         majority owned subsidiaries    (collectively,    "the   Company").  All
         significant   intercompany   balances   and   transactions   have  been
         eliminated  in consolidation.

         Use  of  Estimates -  The   preparation   of  financial  statements  in
         conformity with accounting principles generally  accepted in the United
         States of America 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 revenue and expenses
         during the reporting periods.  As of  December 31, 2003  and  2002, the
         Company  used  estimates in determining the realization of its accounts
         receivable,  inventory write-downs,  goodwill  and  license impairment,
         depreciation  and  amortization,  sales  returns,  deferred  taxes  and
         contingencies. Actual results could differ from these estimates.

         Cash and Cash  Equivalents  - For  purposes of the  statements  of cash
         flows,  the  Company  considers  all  highly  liquid  debt  instruments
         purchased with an original  maturity of three months or less to be cash
         equivalents.

         Inventory - Inventory  of  installation  equipment  and  materials  are
         stated at the lower of cost (first-in,  first-out  method)  or  market.
         Reserves  have  been  provided  for  inventory  items  considered to be
         obsolete,  or  in  excess  of  amounts  which  can  be  used within the
         Company's normal operating cycle, typically one year.


                                      F-8

<PAGE>

                    PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Property  and  Equipment  -  Property  and  equipment  are  stated   at
         cost.  Depreciation  of   property   and    equipment   is   calculated
         using the straight-line method over the estimated useful lives (ranging
         from 3 to 7  years)  of the  respective  assets.  The  cost  of  normal
         maintenance  and repairs is charged to operating  expenses as incurred.
         Material   expenditures  which  increase  the  life  of  an  asset  are
         capitalized and depreciated over the estimated remaining useful life of
         the  asset.  The cost of  property  or  equipment  sold,  or  otherwise
         disposed of, and the related  accumulated  depreciation or amortization
         are removed from the accounts, and any gains or losses are reflected in
         current operations.

         Licenses  -  Licenses  include   the   amounts   paid   to  the  FCC to
         purchase licenses for Local Multipoint Distribution Services in certain
         markets. The licenses are being amortized on a straight-line basis over
         the  initial  term of the  license,  which is ten  years.  The  Company
         recognized  amortization  expense for the years ended December 31, 2003
         and 2002 of $47,164 and $47,164 respectively.

         Goodwill  -  Goodwill has been recorded in the amount of  $110,182  for
         the Marathon transaction  and  $2,000  for   the   NTCOMM  transaction.
         As  of  December   31, 2003,  the  Company  performed  the  first  tier
         impairment test  as required under SFAS No. 142 and determined that the
         goodwill was  impaired.  In performing the second tier  test  assigning
         fair values to  the business unit using techniques including discounted
         net cash flow,  management determined that there was  an  impairment to
         the carrying value of the goodwill in the amount of $79,836.

         Impairment  of  Long-Lived  and  Intangible  Assets - In the event that
         facts and circumstances indicate that the cost of long-lived assets may
         be impaired, an evaluation of recoverability would be performed.  If an
         evaluation is required,  the estimated future  undiscounted  cash flows
         associated  with the asset would be  compared  to the asset's  carrying
         amount to determine if a write-down to market value or discounted  cash
         flow value is required.

         Revenue  Recognition - Revenue is generated  from the  installation  of
         phone  systems,  paging  services,  DSL line service,  service calls to
         businesses and individuals,  prepaid local telephone  service,  prepaid
         long distance and LMDS service. Revenue generated from the installation
         of telephone systems and service calls is recognized upon completion.

         Revenue for paging services and prepaid phone services is recognized on
         a monthly basis.  Customers on the various  services the Company offers
         may  obtain  service  on a monthly,  quarterly,  semi-annual  or annual
         basis.  The  Company  records  unearned  revenue  as  a  liability  and
         recognizes the earned portion on a monthly basis.

         Set-up fees received by customers to commence  prepaid  phone  services
         are amortized over the expected service period, generally one year.

         Income  Taxes  - The  Company  accounts  for  income  taxes  under  the
         liability method which requires  recognition of deferred tax assets and
         liabilities  for the expected  future tax  consequences  of events that
         have been  included in the financial  statements or tax returns.  Under
         this method, deferred tax assets and liabilities are determined,  based
         on the  difference  between the financial  statements  and tax basis of
         assets and liabilities,  using enacted tax rates in effect for the year
         in which the differences are expected to reverse.




                                      F-9
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         Earnings Per Share - Basic earnings per share  is  computed by dividing
         income  available to common stockholders by the weighted average number
         of common shares  outstanding for the year.  Diluted earnings per share
         reflects the potential dilution that could occur if securities or other
         contracts to issue common stock were exercised or converted into common
         stock or resulted in the issuance of  common  stock that then shared in
         the  earnings  of the entity.  All  common stock equivalents consisting
         of 1,673,100  warrants  and  1,152,710  options  have been  excluded as
         their effect is anti-dilutive.

         Accounting  Estimates - The  preparation  of  financial  statements  in
         conformity  with accounting principles generally accepted in the United
         States of America requires management to make estimates and assumptions
         that affect the amounts   reported in the financial  statements and the
         accompanying   notes.  The  actual  results  could  differ  from  those
         estimates.

         Stock-Based Compensation - The Company has elected to follow Accounting
         Principles  Board  Opinion  No.  25,  "Accounting  for Stock  Issued to
         Employees" (APB25) and related interpretations, including the Financial
         Accounting  Standards Board  Interpretation 44, "Accounting for Certain
         Transactions  involving Stock Compensation" which was effective July 1,
         2000, in accounting for its employee stock options.  In accordance with
         SFAS  No.  123  "Accounting  For  Stock-Based  Compensation" (SFAS123),
         The  Company  will  disclose  the  impact of  adopting  the  fair value
         accounting  of  employee   stock  options.   Transactions   in   equity
         instruments  with   non-employees  for  goods  or  services  have  been
         accounted for using the fair value method  prescribed by  SFAS123.  Pro
         forma disclosures as if the fair value method prescribed  by  SFAS  No.
         123 were adopted has  not  been  presented,  as  the  results  are  not
         materially different.

         Concentrations  of Credit Risk - Credit risk  represents the accounting
         loss that would be recognized at the reporting  date if  counterparties
         failed to perform as contracted. Concentrations of credit risk (whether
         on or off balance  sheet) that arise from financial  instruments  exist
         for  groups of  customers  or groups of  counterparties  when they have
         similar economic characteristics that would cause their ability to meet
         contractual obligations to be similarly effected by changes in economic
         or   other    conditions.   In   accordance   with   SFAS    No.   105,
         "Disclosure   of   Information   about   Financial   Instruments   with
         Off-Balance-Sheet Risk and Financial Instruments with Concentrations of
         Credit Risk," financial  instruments that subject the Company to credit
         risk are primarily accounts  receivable.  The credit risk amounts shown
         do not take into account the value of any collateral or security.


                                       F-10

<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The  customers  of  the  Company's  operations  are  located  primarily
         in  California. At December 31, 2003 approximately $10,687 representing
         49% of trade receivables was due from six customers. No other customers
         accounted  for  more   than  10%  of  the  Company's  trade receivables
         at December 31, 2003.


         Fair Value of Financial  Instruments - The  estimated  fair  values for
         financial instruments under SFAS Statement No. 107, none of  which  are
         held  for  trading,   "Disclosures  about  Fair   Value  of   Financial
         Instruments,"  are  determined  at  discrete    points in time based on
         relevant market  information.  These estimates   involve  uncertainties
         and cannot be determined with  precision.  The  estimated fair value of
         cash, cash  equivalents,  accounts  receivable     and accounts payable
         approximate their carrying  value  due  to  their  short-term   nature.
         The  estimated   fair   value  of  long-term  debt    approximates  its
         carrying  value  because it carries  interest  rates which approximates
         current market rates.


         Recent Accounting Pronouncements:



In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." This Statement rescinds FASB Statement No. 4,"Reporting Gains
and Losses from Extinguishment of Debt", and an amendment of that Statement,
FASB Statement No. 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
Requirements" and FASB Statement No. 44, "Accounting for Intangible Assets of
Motor Carriers". This Statement amends FASB Statement No. 13, "Accounting for
Leases", to eliminate an inconsistency between the required accounting for sale-
leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. The adoption did not materially impact the Company's financial
position or results of operations.

In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The
provisions of this Statement were effective for exit or disposal activities
initiated after December 31, 2002, and did not materially impact the company as
there were no such activities in 2003.

In October 2002, the FASB issued Statement No. 147, "Acquisitions of Certain
Financial Institutions-an amendment of FASB Statements No. 72 and 144 and FASB
Interpretation No. 9", which removes acquisitions of financial institutions from
the scope of both Statement 72 and Interpretation 9 and requires that those
transactions be accounted for in accordance with  Statements No. 141, Business
Combinations, and No. 142, Goodwill and Other Intangible Assets.  In addition,
this Statement amends SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, to include in its scope long-term customer-relationship
intangible assets of financial institutions such as depositor- and borrower-
relationship intangible assets and credit cardholder intangible assets.  The
requirements relating to acquisitions of financial institutions is effective for
acquisitions for which the date of acquisition is on or after October 1, 2002.
The provisions related to accounting for the impairment or disposal of certain
long-term customer-relationship intangible assets are effective on October 1,
2002.  The adoption of this Statement did not have a material impact to the
Company's financial position or results of operations as the Company has not
engaged in either of these activities.

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure", which amends FASB Statement No. 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results.  The transition guidance and annual disclosure provisions of Statement
148 were effective for fiscal years ending after December 15, 2002.  The interim
disclosure provisions were effective for financial reports containing financial
statements for interim periods beginning after December 15, 2002.  The adoption
of this statement did not have a material impact on the Company's financial
position or results of operations as the Company has not elected to change to
the fair value based method of accounting for stock-based employee compensation.

During April 2003, the FASB issued SFAS 149 - "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", effective for contracts entered
into or modified after June 30, 2003, except as stated below and for hedging
relationships designated after June 30, 2003. In addition, except as stated
below, all provisions of this Statement should be applied prospectively. The
provisions of this Statement that relate to Statement 133 Implementation Issues
that have been effective for fiscal quarters that began prior to June 15, 2003,
should continue to be applied in accordance with their respective effective
dates. In addition, paragraphs 7(a) and 23(a), which relate to forward purchases
or sales of when-issued securities or other securities that do not yet exist,
should be applied to both existing contracts and new contracts entered into
after June 30, 2003. The Company does not participate in such transactions, so
adoption of this pronouncement had no material effect.

During May 2003, the FASB issued SFAS 150 - "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity", effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective for public entities at the beginning of the first interim period
beginning after June 15, 2003. This Statement establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. It requires that an issuer
classify a freestanding financial instrument that is within its scope as a
liability (or an asset in some circumstances). Many of those instruments were
previously classified as equity.  The adoption of this pronouncement did not
materially affect the financial statements as the company does not issue this
type of financial instrument.

In November 2002, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. (FIN) 45, "Guarantor's Accounting and Disclosure requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others."  Among
other things, the Interpretation requires guarantors to recognize, at fair
value, their obligations to stand ready to perform under certain guarantees. FIN
45 is effective for guarantees issued or modified on or after January 1, 2003.
The Company does not believe the adoption of this pronouncement has had a
material impact to the Company's financial position or results of operations.


In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities" (an interpretation of Accounting Research Bulletin
(ARB) No. 51, Consolidated Financial Statements). Interpretation 46 addresses
consolidation by business enterprises of entities to which the usual condition
of consolidation described in ARB-51 does not apply. The Interpretation changes
the criteria by which one company includes another entity in its consolidated
financial statements.  The general requirement to consolidate under ARB-51 is
based on the presumption that an enterprise's financial statements should
include all of the entities in which it has a controlling financial interest
(i.e., majority voting interest). Interpretation 46 requires a variable interest
entity to be consolidated by a company that does not have a majority voting
interest, but nevertheless, is subject to a majority of the risk of loss from
the variable interest entity's activities or entitled to receive a majority of
the entity's residual returns or both. A company that consolidates a variable
interest entity is called the primary beneficiary of that entity.

In December 2003 the FASB concluded to revise certain elements of FIN 46,
primarily to clarify the required accounting for interests in variable interest
entities.  FIN-46R replaces FIN-46, that was issued in January 2003. FIN-46R
exempts certain entities from its requirements and provides for special
effective dates for entities that have fully or partially applied FIN-46 as of
December 24, 2003. In certain situations, entities have the option of applying
or continuing to apply FIN-46 for a short period of time before applying
FIN-46R. In general, for all entities that were previously considered special
purpose entities, FIN 46 should be applied in periods ending after December 15,
2003. Otherwise, FIN 46 is to be applied for registrants who file under
Regulation SX in periods ending after March 15, 2004, and for registrants who
file under Regulation SB, in periods ending after December 15, 2004. The Company
does not expect the adoption to have a material impact on the Company's
financial position or results of operations.

In December 2003, the FASB issued a revised SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" which replaces
the previously issued Statement. The revised Statement increases the existing
disclosures for defined benefit pension plans and other defined benefit
postretirement plans. However, it does not change the measurement or recognition
of those plans as required under SFAS No. 87, "Employers' Accounting for
Pensions," SFAS No. 88, "Employers' Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits," and SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
Specifically, the revised Statement requires companies to provide additional
disclosures about pension plan assets, benefit obligations, cash flows, and
benefit costs of defined benefit pension plans and other defined benefit
postretirement plans. Also, companies are required to provide a breakdown of
plan assets by category, such as debt, equity and real estate, and to provide
certain expected rates of return and target allocation percentages for these
asset categories. The Company has implemented this pronouncement and has
concluded that the adoption has no material impact to the financial statements.




                                       F-12

<PAGE>
                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.       BASIS OF PRESENTATION:
         ---------------------

         The  accompanying  consolidated financial statements have been prepared
         in conformity  with  accounting principles  generally  accepted  in the
         United States of America, which contemplate continuation of the Company
         as a going concern. The Company incurred net losses for the years ended
         December 31, 2003 and 2002 of $1,825,125 and $772,649 respectively, and
         at December 31, 2003 had a working capital deficit of $2,787,641. These
         conditions  raise  substantial  doubt  as  to  the Company's ability to
         continue as a going concern. These consolidated financial statements do
         not  include  any  adjustments   relating  to  the  recoverability  and
         classification of recorded asset amounts, or amounts and classification
         of liabilities that might be necessary  should the Company be unable to
         continue as a going concern.

         The Company plans to take the following steps that it believes will  be
         sufficient to  provide  the  Company  with  the  ability to continue in
         existence: The Company, in March 2004, acquired a $3,000,000 investment
         in the  Cross  Capital  Fund, which  will  enhance  our  balance  sheet
         by $3,000,000, and will provide us with cash flow estimated at $250,000
         per  month  beginning  October  2004  for   twelve   months   beginning
         approximately October 1, 2004. The Company has entered into a financial
         advisory  agreement  with  Grant   Bettingen  Investment  Banking,  and
         anticipates  funding  in  amounts   sufficient  to  execute  a business
         plan  providing  for  the  "roll up" of  independent wireless  internet
         service  providers  ("WISP").  With the  assistance of Grant Bettingen,
         we  intend  to  negotiate  the  acquisition   of approximately 12 WISPs
         during the next twelve  months.  The  Company  believes that  with  the
         $3  million  balance  sheet  enhancement  and  the  implementation  and
         funding of the WISP roll up plan, that the Company   will  be  able  to
         achieve profitable operations, but there can be no assurance  that  the
         Company will  generate  positive  cash flows from operations sufficient
         to sustain  operations.


4.       ACQUISITIONS AND DISPOSALS OF SHARES IN SUBSIDIARY:
         --------------------------------------------------

         During  2002,  the  Company  sold  15,494,592   shares  in  its  Zenith
         subsidiary to Directors for $30,000,  resulting  in  a  net  profit  of
         $3,000.  In  December 2002,  the  Company repurchased these shares from
         the  Directors  and  then  sold its 90% interest in Zenith for $81,000,
         realizing a gain on disposal of $78,372.




                                   F-13
<PAGE>



                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.       PROPERTY AND EQUIPMENT:
         -----------------------
<TABLE>
         Property and equipment at December 31, 2003 and 2002 consisted of the following:

<CAPTION>

                                                  2003          2002         ESTIMATED
                                                                             USEFUL LIVES
                                               ---------    ---------        ------------

           <S>                                <C>          <C>              <C>
           Office furniture and equipment      $  96,919    $  81,982        5 years
           Vehicles                               85,316       85,316        4 years
           Paging terminals                       71,824       71,764        7 years
           Site Improvements                      34,037       24,636        5 years
           DSL Equipment                           9,760        9,244        3 years
           LMDS Equipment                        550,409      460,892        7 years
           Fixed Broadband Wireless Equipment    594,750      235,235        3 - 7 years
                                               ---------    ---------
                 Total Property and equipment  1,443,015      969,069
           Less accumulated depreciation (a)    (571,513)    (365,538)
           Less writedown (b)                   (479,046)
                                               ---------    ---------
                                               $ 392,456    $ 603,531
                                               =========    =========

         (a) Depreciation expense for the years ended December 31,  2003 and  2002,
             was $205,975 and $151,845 respectively.
         (b) As of December 31, 2003, in connection with the company's discontinuance
             of its broadband operations in Pennsylvania and New York, management
             evaluated the net realizable values of its related property and equipment,
             and concluded that certain amounts were excessive for its remaining operations.
             Accordingly the company wrote off as excessive in the fourth quarter of 2003,
             $479,046 of equipment for which it did not have a current forecasted usage.

</TABLE>



6.       GOODWILL
         --------

The Company wrote  off  $79,836  of goodwill  relative  to  its  acquisition  of
Marathon due  to  decreased  sales  of  telephony    equipment   in  Sacramento,
California  last  year.  See  note (1)  for methodology of determining the
impairment loss.






7.       NOTE PAYABLE, RURAL UTILITIES SERVICE:
         -------------------------------------

The Note Payable, Rural Utilities  Service  relates  to advances received on the
$5,012,000 broadband loan agreement  with the  US  Department  of  Agriculture's
Rural Utilities Service. Advances on the loan, which may only be made once every
30 days, expire on April 1, 2005,  and  the  maturity date  for repayment of all
outstanding principal and interest  is  April 1, 2012.  The  interest  rate  for
each advance is fixed at  the time  of  disbursement and is equal to the average
market yield on outstanding  marketable  Treasury  securities due April 1, 2012,
and averaged  4.21%  at  December 31,  2003.  Monthly payments  are  required to
repay the  principal  and interest no later than the maturity date. The interest
expense on this loan for 2003 totaled $90,646.

The proceeds of this loan may only be used to finance the costs of furnishing or
improving  broadband  services  in  rural  areas  in Pennsylvania and New York.

The  loan is  secured  by all of the assets of LMDS Communications, Inc., and is
evidenced by  a  Mortgage Security Agreement  and  Financing Statement and UCC-1
filing in favor of the United States of America.  At December 31, 2003, the LMDS
assets, which comprised Broadband equipment,  LMDS licenses,  cash and  accounts
receivable, totaled $1,391,112  net of accumulated depreciation and amortization
and writeoff reserve of  $1,019,834  on  the  equipment and licenses. LMDS is in
default on payment of the monthly repayments  since  May  2003  of approximately
$182,724  of  principal and interest. In addition, based on an audit of the LMDS
expenditures  by  the RUS, the Company has been  notified that certain equipment
purchased  from Nacc-tel at fair value of approximately  $800,000  will  not  be
allowed as approved expenses under the terms of the loan agreement.  The Company
intends to  pay  the  overdue  amounts  and  resume  monthly payments as soon as
possible.

All  of  the  $2,063,131  principal  due  to  RUS has been classified as current
because the Company is in default for  non payment  of  principal  and  interest
since May 2003.

8.     Long Term Debt:
       --------------

The long-term debt is comprised of the following:

     Amount payable  under  a  financing agreement, secured  by
     assets  of  $11,827,  interest  free  and  repayable  from
     monthly revenues received from customers, as each unit  is
     put into service                                                  $ 11,827
                                                                         ------
                  Total                                                $ 11,827
     Less current maturities                                              6,480
                                                                         ------
                                                                       $  5,347
                                                                         ======
The principal due on the long-term debt is as follows:

        Year ending December 31,
           2004                                     $  6,480
           2005                                        5,347
                                                      ------
                  Total                             $ 11,827
                                                      ======

The principal amount of notes payable to related parties is $208,759 all due and
payable  January  1, 2005  with  the  interest  rate  of 10%  per annum, payable
monthly.  The  financial  statements  show the amount owed less  a debt discount
related to the fair value of common  stock that was issued with the indebtedness
of  $18,872,  which  is  being  amortized  monthly  through  December 2004.  The
interest expense on these notes during 2003 was $5,219.




                                      F-14
<PAGE>


                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




9.       Capital Lease Obligations:
         --------------------------

         The Company leases certain property and equipment under  capital  lease
         and has capitalized property and equipment of $27,825 with  accumulated
         depreciation of $27,825 as of December 31, 2003

         Minimum  future lease payments under a capital lease as of December 31,
         2003 and for the next three years and in the aggregate are as follows:

         Year ending December 31,
                    2004                               4,361
                    2005                              13,623
                                                    --------
         Net minimum lease payments                   17,984
         Less amount representing interest            (2,307)
                                                    --------
         Present value of minimum lease payments      15,677
         Less current maturities                      (2,210)
                                                    --------
                                                    $ 13,467
                                                    ========


                                    F-15
<PAGE>


                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


10.      STOCKHOLDERS EQUITY:
         --------------------

         In  January  2002  the  Company  issued  100,000  shares  in  a private
         placement at $0.05 to a Director of the Company.

         In January 2002 the  Company conveyed 6,500  shares  of  its  Series  A
         convertible preferred shares  to the  principals  of its communications
         law firm in satisfaction of $65,000 owed to the law  firm for  services
         rendered in 1999, 2000, and 2001. These shares are convertible into the
         Company's common shares at a conversion price of $0.10 per  share.  The
         Series "A"  Preferred Shares  have priority  over  the Common Shares in
         the event of an involuntary liquidation of  the Company.  These  shares
         are callable at par at any time when the  price of the Company's Common
         Stock  trades  at  or  above  $1.00  per  share for a five  day  period
         immediately prior to the announcement of the call.

         In June 2002 the Company issued 190,000 shares for consulting  services
         at $0.07 per share, amounting to $13,300.

         In September 2003 the Company  issued 1,750  shares  of  its  Series  A
         convertible preferred  shares to a consultant for professional services
         rendered.  The  shares are convertible into the Company's common shares
         at a conversion price of $0.20 per  share.  The  Series  "A"  Preferred
         Shares  have  priority  over  the  Common  Shares in  the  event  of an
         involuntary liquidation of the Company.  These  shares  are callable at
         par at  any time when the  price of the Company's Common  Stock  trades
         at  or  above  $1.00  per  share  for a  five  day  period  immediately
         prior to the announcement of the call.

         In  September 2003  the Company  issued  782,848  shares  in connection
         with a private placement of the Company's unsecured notes in the amount
         of $208,759 due January 1, 2005  to  two  Directors and Counsel for the
         Company. The shares were recorded at their fair value of $23,591.

         In  November  2003  the  Company issued  2,080,257 shares at $0.015 per
         share in satisfaction of $31,204 owed to two Directors of the Company.

         There are 1,673,100 warrants outstanding in connection with  an  equity
         line of credit that was established in September 2000.  These  warrants
         expire September 8, 2005 and are exercisable into 1,673,100  shares  of
         our common stock at $0.015 per share.

                                        F-16
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.      STOCK OPTIONS PLANS:
         --------------------

         In December 2002, the Company  adopted the 2002  Employee  Stock Option
         Plan  (the  2002  Plan).  Under the 2002  Plan,  employees  on staff on
         December  10,  2002 are  entitled to receive  options to  purchase  the
         number of shares approximately  equal to their  respective  2002  gross
         earnings  (at Prime or any of its  subsidiaries)  at  an exercise price
         equal to $0.20 per share. The number of options granted was 791,100 and
         they vest 50% on December 31, 2003 and 50% on  December 31, 2004.  They
         expire December 31, 2005.

         In December  2002, the Board of Directors  granted  options to purchase
         20,000 shares of common stock with an exercise  price of $.20 per share
         to each of three outside Directors.  The  options  vest 50% on December
         31, 2003 and December 31, 2004. They expire December 31, 2005.

         There were no options granted nor exercised in the year ending December
         31, 2003.


                                      F-17
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The  following  table sets forth the activity  for all option  activity
         during the years ended  December  31,  2003 and 2002.

                                     NUMBER OF SHARES        AVERAGE EXERCISE
                                                              PRICE PER SHARE
                                     ----------------      --------------------

         Balance, December 31, 2001        1,058,123       $             .33

         Granted                             851,100                     .20
         Expired                            (105,711)                   2.03
         Exercised                              -                        -
         Canceled/Forfeited                  (30,200)                    .33
                                     ----------------      --------------------
         Balance, December 31, 2002        1,773,312       $             .23

         Expired                             476,102                     .22
         Canceled/Forfeited                  144,500                     .20
                                     ----------------      --------------------
         Balance, December 31, 2003        1,152,710       $             .24
                                     ================      ====================

         At December 31, 2002  the  Company had  options  to  purchase   396,990
         shares at $0.32813, options for 476,102 shares at $0.21875, options for
         9,120  shares at $0.1125, options for 40,000 shares at $0.10 per share,
         and options for 851,100 shares at $0.20 per share.

         At December 31, 2003 the Company had options to purchase 562,207 shares
         of common stock exercisable at $0.32813, options for 706,600 shares  at
         $0.20, options for  9,120  shares  at  $0.1125, and  options for 40,000
         shares at $0.10 per share.

         If not previously  exercised,  canceled or forfeited,  the  outstanding
         options will expire as follows:


                                          NUMBER OF SHARES   AVERAGE EXERCISE
            PERIOD ENDED DECEMBER 31,                         PRICE PER SHARE

                                         ----------------    ----------------
            2004                                  446,110              .30
            2005                                  706,600              .20
                                         ----------------    ----------------
         Balance, December 31, 2003             1,152,710    $         .24
                                         ================    ================


         As  noted  in Note 2,  the  Company  has not  adopted  the  fair  value
         accounting  prescribed by SFAS123 for employees.



                                     F-18
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



      The fair value of each option was estimated on the date of grant using the
      Black-Scholes option-pricing model using the following assumptions: a risk
      -free  interest  rate  of  4.08%, expected  life of three years,  dividend
      yield of 0%, and expected  volatility  of  65%.  The weighted-average fair
      value  of  the  options  granted  during the  year ended December 31, 2002
      was $0.20. Pro-forma disclosure as if the fair value method were used  has
      not been presented as the amounts are not materially different.

      The  Black-Scholes  option  valuation  model  was  developed  for  use  in
      estimating  the  fair  value  of  traded  options  which  have no  vesting
      restrictions  and are fully  transferable.  In addition,  option valuation
      models require the input of highly  subjective  assumptions  including the
      expected  stock price  volatility.  Because the Company's  employee  stock
      options have characteristics  significantly different from those of traded
      options,  and because  changes in the  subjective  input  assumptions  can
      materially affect the fair value estimate,  in management's  opinion,  the
      existing  models do not  necessarily  provide a reliable single measure of
      the fair value of employee stock options.


12.      INCOME TAXES:
         -------------

         Income  tax  expense  for the  indicated  periods is  comprised  of the
         following:

                                            For the Years Ended
                                               December 31,
                                         2003                   2002
                                 ---------------------  ----------------

        Current
                  Federal        $        -             $        -
                  State                  4,800                  3,400
                                 ----------------       ----------------
                                 $       4,800          $       3,400
                                 ================       ================

         The actual  income tax expense  differs  from the  expected tax expense
         (benefit) as computed by applying the U.S. Federal corporate income tax
         rate of 34% for each period as follows:






                                          F-19
<PAGE>
<TABLE>
<CAPTION>
                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                            For the years ended
                                                               December 31,
                                                         2003                  2002
                                                 ----------------       ----------------
       <S>                                       <C>                    <C>
       Amount of expected tax benefit            $       (620,500)      $       (262,600)
       Non-deductible expenses                             11,800                 10,500
       State taxes, net                                     2,200                  2,200
       Change in valuation allowance                      533,600                268,400
       Other                                               77,700                (15,100)
                                                 ----------------       ----------------
                                                 $          4,800       $          3,400
                                                 ================       ================
</TABLE>

          The components of the net deferred tax asset and liability  recognized
          are as follows:
<TABLE>
                                                                DECEMBER 31,        DECEMBER 31,
                                                                    2003               2002
                                                              ----------------    ----------------
<S>                                                           <C>                 <C>
       Current deferred tax assets
          Accrued expenses                                    $        12,200     $         31,600
          APB 25 compensation expense                                  55,500               55,500
          Other accrued liabilities                                     1,200                1,200
                                                              ---------------     ----------------
          Total current deferred tax assets                            68,900               88,300
          Valuation allowance                                         (68,900)             (88,300)
                                                              ---------------     ----------------
       Net current deferred tax assets                        $          -        $           -
                                                              ===============     ================

       Long-term deferred tax assets:
          Intangible asset                                             20,000               20,000
          Depreciation                                                172,100               55,600
          Net operating loss carry-forwards                         4,250,600            3,829,900
                                                              ---------------     ----------------
          Total long-term deferred tax assets                       4,442,700            3,905,500
       Valuation allowance                                         (4,442,700)          (3,905,500)
                                                              ---------------     ----------------
       Net long-term deferred tax assets                      $          -        $           -
                                                              ===============     ================
</TABLE>


         The Company will continue to assess the  realizability  of the deferred
         tax assets in future  periods.  The  valuation  allowance  increased by
         $606,100  and  $380,000 during the years ended  December  31, 2003  and
         2002 respectively.

         As of  December  31,  2003,  the  Company  has  available  federal  net
         operating  loss carry forwards for income tax purposes of  $10,180,000,
         which expire on various dates through 2023.  The Company has state  net
         operating loss carry  forwards of $8,900,000, the use of which has been
         suspended for  two  years, and which  expire on various  dates  through
         2013.  Due to the change  in  control of Prime, the benefit of  the net
         operating  losses generated  by  Prime  prior  to  the  acquisition  by
         Worldnet  will   be   significantly  limited  by  certain  consolidated
         return  filing regulations and limitations under  Section 382, and may,
         therefore expire before its utilization.



                                      F-20
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



13.      EMPLOYEE DEFINED CONTRIBUTION PLAN:
         -----------------------------------

         Effective  January 1, 1998,  the Company  adopted a 401K Profit Sharing
         Plan (the "Plan") covering all employees. To be eligible to participate
         in the Plan,  employees must be age 21 and must complete at least 83.33
         hours of service per month for at least 6 months.  Contributions to the
         Plan are invested at the direction of the participant. No contributions
         were  made  to  the  plan  during the years ended December 31, 2002 and
         December 31, 2003.

14.      COMMITMENTS AND CONTINGENCIES:
         ------------------------------

         Leases: - The Company leases  operating  facilities and equipment under
         operating  leases which expire at various  dates  through  December 31,
         2008.  Facility  leases  provide  for  payment  of real  estate  taxes,
         insurance,  and maintenance  expenses by the Company. In addition,  the
         Yuba City facility lease is held by Mr. Bert Lima, President and CEO of
         the Company.  The rent  earned by Mr. Lima was $20,160 for both  years
         ended December 31, 2003 and 2002.

         The future minimum commitments under these leases are as follows:

                 Year ending December 31,
                          2004                                   31,461
                          2005                                   25,281
                          2006                                    9,600
                          2007                                    6,600
                          2008                                    4,275
                                                       ----------------
                                                       $         77,217
                                                       ================

         Commitments for leases in Pennsylvania have been expensed in  2003.

         Rent  expense   totaled  $93,076 and $53,125  for   2003  and  2002
         respectively.


         Employment Contracts
         --------------------

         In September 2000, the Company executed employment agreements with both
         the President/CEO and CFO. The contracts are effective retroactively to
         January 1, 2000 for a period of three  years  with an annual  salary of
         $100,000 for each officer.  The contracts extend on an annual basis and
         may be cancelled by either party with 3 months written  notice.  A nine
         month salary severance  package is included in the contracts should the
         officers be terminated.



         Litigation and other claims
         ---------------------------

         None.

                                      F-21

<PAGE>
                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.      SEGMENT REPORTING:
         ------------------

         The Company  has  identified  its  segments  based upon its  geographic
         operations.  These  segments are  represented  by each of the Company's
         individual  legal  entities:  Prime  Companies,   Inc.(Prime),  Prepaid
         Tel.com  Inc.(Prepaid), Nacc-Tel  Corp.(Nacc-Tel), LMDS Communications,
         Inc.(LMDS), and  Bright-Bridge  Communications  Networks, Inc.  Segment
         operations are measured  consistent with accounting  policies  used  in
         these consolidated  financial  statements.  Segment  information  is as
         follows:

<TABLE>
<CAPTION>















                                              December 31, 2003
                                              -----------------

                                Prime          Prepaid      Nacc-Tel        LMDS      Bright-Bridge
                            ------------    ------------  ------------  ------------  -------------

<S>                         <C>             <C>           <C>           <C>           <C>
 Revenues                   $      -        $     13,987  $    284,634  $     49,659  $       4,095
                            ============    ============  ============  ============  =============
 Gross Margin                      -                 97%           57%         nm             nm
                            ============    ============  ============  ============  =============
 Selling, G&A Expense       $    423,238    $     19,882  $    380,882  $    825,647  $     148,723
                            ============    ============  ============  ============  =============
 Interest Income            $      -        $     -       $        214  $        217  $          11
                            ============    ============  ============  ============  =============
 Interest Expense           $     14,410    $     -       $      3,925  $     90,646  $     -
                            ============    ============  ============  ============  =============
 Other Income               $     12,000    $     -       $       -     $    119,706  $     -
                            ============    ============  ============  ============  =============
 Total Assets               $    215,028    $   (112,857) $    325,385  $  1,391,111  $     223,592
                            ============    ============  ============  ============  =============
 Goodwill                   $      2,000                  $     30,346
                            ============    ============  ============  ============  =============
 Depreciation and
   Amortization                                           $     98,481  $    200,781  $      12,690
                            ============    ============  ============  ============  =============

</TABLE>
</CAPTION>



<TABLE>
<CAPTION>
                                              December 31, 2002
                                              -----------------

                                Prime          Prepaid      Nacc-Tel        LMDS      Bright-Bridge
                            ------------    ------------  ------------  ------------  -------------

<S>                         <C>             <C>           <C>           <C>           <C>
 Revenues                   $       -       $     32,775  $    210,511  $     41,331  $        -
                            ============    ============  ============  ============  =============
 Gross Margin                       -                73%           53%           81%           -
                            ============    ============  ============  ============  =============
 Selling, G&A Expense       $    283,127    $     21,082  $    274,813  $    368,149  $     57,615
                            ============    ============  ============  ============  =============
 Interest Income            $       -       $       -     $         87  $         64  $        -
                            ============    ============  ============  ============  =============
 Interest Expense           $      5,252    $       -     $      3,792  $     23,598  $        -
                            ============    ============  ============  ============  =============
 Other Income               $     21,320    $       -     $       -     $       -     $        -
                            ============    ============  ============  ============  =============
 Total Assets               $    117,275    $   (111,645) $    468,716  $  2,181,211  $    (57,615)
                            ============    ============  ============  ============  =============
 Goodwill                   $      2,000                  $    110,182
                            ============    ============  ============  ============  =============
 Depreciation and
   Amortization             $     55,209                  $     29,471  $    111,793  $      2,534
                            ============    ============  ============  ============  =============

</TABLE>
</CAPTION>

                                         F-22
<PAGE>
<TABLE>
<CAPTION>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.     UNAUDITED FINANCIALS
        --------------------

<S>           <C>          <C>         <C>         <C>         <C>         <C>         <C>         <C>
               Q1 -2002     Q2-2002     Q3-2002     Q4-2002     Q1-2003     Q2-2003     Q3-2003       Q4-2003
              ---------    ---------   ---------   ---------   ---------   ---------   ---------   -----------
Net Sales     $  73,349    $  72,626   $  96,207   $  42,435   $  84,252   $  99,103   $  80,032   $    91,641
              =========    =========   =========   =========   =========   =========   =========   ===========
Gross Profit  $   1,088    $  64,787   $  70,931   $  31,529   $  32,149   $  70,730   $  61,099   $   (22,707)
              =========    =========   =========   =========   =========   =========   =========   ===========
Income(loss)before extraordinary
  Items       $(187,698)   $(193,146)  $(240,621)  $(151,833)  $(369,797)  $(171,151)  $(263,817)  $  (973,027)
              =========    =========   =========   =========   =========   =========   =========   ===========
EPS before extraordinary
  items       $   (0.01)   $   (0.01)  $   (0.01)  $   (0.01)  $   (0.01)  $   (0.01)  $   (0.01)  $     (0.03)
              =========    =========   =========   =========   =========   =========   =========   ===========
Net Income    $(187,698)   $(193,146)  $(240,621)  $(151,833)  $(369,797)  $(171,151)  $(263,817)  $(1,020,360)
              =========    =========   =========   =========   =========   =========   =========   ===========
EPS               (0.01)   $   (0.01)  $   (0.01)  $   (0.01)  $   (0.01)  $   (0.01)  $   (0.01)  $     (0.03)
              =========    =========   =========   =========   =========   =========   =========   ===========
</TABLE>
</CAPTION>


17.     DISCONTINUED OPERATIONS:
        ------------------------

The Company had a net loss from discontinued operations of  $148,723, consisting
of operating  losses of $148,723 related  to  its  Roanoke,  Virginia operation,
which  was  a  separate  broadband  segment, operating under  the Bright- Bridge
subsidiary, which was discontinued last year in July, 2003.

Management does not anticipate  a future financial  impact from the discontinued
Virginia operation, other than what has been disclosed in this document.



18.     SUBSEQUENT EVENTS:
        ------------------

In February 2004 the Company proceeded with the Financial Advisory Agreement for
Investment  Banking  Services  that  it  entered into in October 2003 with Grant
Bettingen  Investment  Banking ("GBI"). A plan is currently being  developed for
the Company  to  implement  a  "roll up" of wireless internet service providers,
with the assistance and funding resources of GBI.

In  March  2004  the  Company  acquired  Bitsstar  Networks,  a small technology
consulting firm with extensive experience in the cable TV industry  for  350,000
shares of its common stock.

On March 24, 2004 the Company  entered into an Agreement to acquire a $3 million
investment  in the Cross Capital Fund, an Exchange Mutual Fund. This transaction
will  immediately and dramatically improve the balance  sheet  and shareholders'
equity.

On  March 31, 2004,  the Company entered into a binding letter of intent to sell
its  Pennsylvania  customer  base  and  the  related  radio  equipment servicing
those Customers. Closing of this transaction is anticipated to occur on or about
May 1, 2004.





                                     F-23




















<PAGE>

Exhibit  4.1


PROXY


I, ___________________________, shareholder of Prime Companies, Inc., a Delaware
corporation ("Corporation"),  do  hereby  appoint  Norbert J. Lima  and  Stephen
Goodman to be  my proxy agents, with full power of substitution, and to vote all
of my shares in the  Corporation  with  respect  to  matters  submitted  to  the
shareholders at all meetings of the shareholders, or any  adjournments  thereof,
and in all consents to any actions taken  without  a  meeting.  This appointment
shall continue  from this date  until  December 12, 2002 and during said period,
Norbert Lima and  Stephen Goodman  shall have all the power that I would possess
with respect to the voting of my shares and granting my consent.

1, hereby revoke all proxies previously given by  me  with  respect  to  all  my
shares in the Corporation.

IN WITNESS WHEREOF, I have executed this proxy.


Date:      /   /

                                    --------------------------
                                    Shareholder