SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                  FORM 10-KSB/A
                                (Amendment No. 1)
                             (Filed on May 22, 2000)


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

         FOR  THE  FISCAL   YEAR  ENDED   DECEMBER   31,  1999

                           Commission File No. 0-22919

                              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  issuers  revenues  for  the  most  recent  fiscal  year. . .. . .$441,663

As of May 16, 2000 there were  31,030,429  shares of the Company's  Common Stock
outstanding.  The aggregate market value of voting stock held by  non-affiliates
of the registrant on May 16, 2000 was $20,500,701.

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  generally accepted  accounting  principles.

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, the Company operated as a sole  proprietorship  operated
by Norbert J. Lima, the Company's CEO. The Company began  operations in February
1998 when it acquired certain assets of Pagers Plus Cellular(an entity for which
the  Company's  current CEO served as an officer) in exchange for  assumption of
specified  liabilities.  In January 1999, management formed Woldnet Tel.com Inc.
(Worldnet),  a Delaware  corporation,  In February 1999,  management formed WNTC
Holdings,  Inc. (WNTC), a Delaware corporation and a wholly-owned  subsidiary of
Worldnet,  and NACC-Tel Corp.  (NACC-Tel),  a Delaware corporation and a wholly-
owned  subsidiary  of WNTC.  At that time the  operations  of the  Company  were
contributed to NACC-Tel.

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.
Prepaid  had  no  substantial  operations  during  1999.

                                        1
<PAGE>

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 had no substantial
operations during 1999.


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.  Prior to the  merger,  Prime had  6,507,742  shares of common  stock
outstanding held by various individuals. Pursuant to the agreement, Worldnet was
issued  14,500,000  shares  of Prime  common  stock.  As a result  of the  stock
exchange, the former shareholders of Worldnet hold 69% of the outstanding shares
of common stock of Prime.  Pursuant to the  Agreement,  on the effective date of
the merger,  the  officers  and  directors  of Worldnet  became the officers and
directors of Prime.


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.
for 400,000 shares of US Trucking, Inc., the parent company of Gulf Northern. On
April 30, 1999 the  Company  entered  into an  agreement  with  Credit  Managers
Association  of  California  for the  orderly  liquidation  and  payment  of the
outstanding liabilities of the subsidiaries. These liabilities are 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  (traded on the OTC Bulletin
Board  symbol  USTK),  which have been  placed in escrow for the  benefit of the
creditors of Mid-Cal Express, until the stock is sold on the open market.

Zenith  Technologies  Inc.  (Zenith),  a  Delaware  Corporation,  was  formed in
December 1998 as a wholly-owned subsidiary of Prime Companies, Inc.  To date, it
has  had  no  operations.


In September  1999,  the Company  acquired Olive Tree Image  Engineers,  a small
Internet Service Provider located in Sacramento, California. In October 1999 the
Company completed the acquisition of Marathon  Telecommunications,  a commercial
telephone interconnect business based in Sacramento,  California. The Company is
currently reviewing several  telecommunications  acquisition  opportunities that
have come to its attention.


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

The  Corporation's  mission  is to  provide a single  source for a wide range of
telecommunications services to both the consumer and commercial markets.

The Corporation'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  the  Corporation  to
establish a balanced and efficient  organization,  and to forge strong  supplier
relationships  with major  industry  manufacturers,  such as  Ericsson,  Pacific
Telephone,  Samsung, and Texas Instruments,  as well as established distributors
who intend to market the Corporation's  services.  Thus, the Corporation 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.

The Corporation will derive the majority of its revenues from sales generated by
its 3 specialized subsidiary corporations.

Prepaid  Tel.com  Inc. currently operates as a "reseller" of "prepaid" services,
---------------------
including  prepaid  wireline  (residential  local  telephone and long  distance)
services, in the State of California.

                                        2
<PAGE>

The customer 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.


LMDS  Communications,  Inc.  The  Corporation   intends  to  capitalize  on  the
---------------------------
broadband  fixed  wireless  communications  revolution by providing  LMDS (Local
Multipoint  Distribution  Systems)  services to various  markets in which it has
purchased   exclusive   spectrum   licenses  from  the  Federal   Communications
Commission.  LMDS is the broadband  wireless  technology  used to deliver voice,
data, Internet, and video services in the 28 to 31 GHz spectrum. The Corporation
intends 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  (i.e.  ATM)

The  flexibility  offered by LMDS will allow the  Corporation 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.

NACC-Tel Corp. The Company sells, installs, and services business communications
--------------
systems and provides paging and voicemail  services.  The Company also maintains
these  systems  under  service  agreements  with its  commercial  and  municipal
customers.


                                   COMPETITION
                                   -----------

Small-  and  medium-sized   businesses   currently  face  a  limited  choice  of
alternatives for high-speed  Internet access.  Over the last few years,  digital
subscriber   line   technologies,   cable   modems,   T-1-based   solutions  and
fixed-wireless   connections  have  emerged  as  alternative   technologies  for
high-speed,  always-on  service  in  our  country's  major  metropolitan  areas.
However,  these  technologies  have not yet reached the country's  secondary and
tertiary markets;  this fact reinforces the viability of the company's  strategy
to initially target businesses in the markets where we have LMDS licenses.

We  believe  that our  solution  will  receive  wide  acceptance  by our  target
customers because our network will provide:

-     consistent  speed  and  quality  of  signal;
-     rapid,  relatively uncomplicated provisioning of new customers that is not
      dependent  on  another  provider  of  local  connectivity;
-     symmetrical  broadband  capacity  that  will  allow us to  offer  enhanced
      business communication services such as full motion video conferencing;
-     scaleable,  competitive  pricing  schemes which are based on the number of
      desktops  connected  to  the  network;  and
-     substantially  higher  speeds  and  an  easy  path to increased bandwidth.


                                        3
<PAGE>

                             MARKETING AND CUSTOMERS
                             -----------------------

The growth of the Internet is leading to a global  society where every  business
must obtain  access to the  Internet,  or World Wide Web,  and utilize  "online"
functionality  in order to fulfill  its  information  needs.  The  Company  will
capitalize on this need by providing these services in its markets.

LMDS now provides vital  communications  services to regions that heretofore did
not justify wireline  services,  typically because the inherent costs outweighed
the potential  revenues.  With the old method,  it was difficult to actually lay
the wire and install these systems.  With LMDS, the wireless  technology enables
easy  implementation  at any business,  requiring  installation at the business'
building only.


LMDS offers the ability to provide various,  vital  telecommunications  services
via one, efficient, cost-effective medium. Through the Company's licenses in its
various territories, it will deliver a better "package" for these businesses and
thus  provide them with  greater  value,  as opposed to the need to sign up with
several  different  suppliers.  The company's  Nacc-Tel  subsidiary will readily
support and provide business telephone  interconnect  services,  voicemail,  and
paging services to our LMDS  customers.  In some markets we may also provide ISP
services such as Internet web site hosting for our LMDS customers.



                                    EMPLOYEES
                                    ---------

The  Company had nine full-time employees and one part-time employee at December
31,  1999


ITEM  2.  DESCRIPTION  OF  PROPERTIES

The Company rents the following facilities as general office,  engineering,  and
retail space on a month-to-month basis:

<TABLE>
<CAPTION>

Location                          Type                         Size           Annual
-------------------------------------------------------------------------------------
<S>                             <C>                          <C>            <C>
Yuba City, California*           Office, Engineering, Retail  1,100 sq. ft.  $11,058
Concord, California              Office                         700 sq. ft.  $ 8,400
Sacramento, California           Office                       1,200 sq. ft.  $ 6,205
Sacramento, California           Storage                        200 sq. ft.  $   900
Sacramento, California           Office                         250 sq. ft.  $ 3,600

*An officer and director of the Company is the landlord of this property.
</TABLE>



ITEM  3.  LEGAL  PROCEEDINGS

The Company is the  defendant  in a lawsuit  with a former  officer and director
claiming payment of $32,000 due for advances made on behalf of the Company.  The
Company has filed a  cross-complaint  seeking to recover 4,500,000 shares of its
common stock held by the plaintiff,  and to be reimbursed for legal fees arising
from this action. Management believes the outcome of this matter will not have a
material  adverse  effect on the  Company's  financial  position  or  results of
operations.

The Company is exposed to routine  litigation  incidental to it's  operations in
the  telecommunications  industry.  The Company is also peripherally  exposed to
routine  litigation  incidental  to  its  former  trucking  business,  primarily
involving  claims for  personal  injuries and  property  damage  incurred in the
transportation  of freight.  The Company has turned  these  matters  over to its
insurance carrier and management believes these matters will not have a material
adverse effect on the Company's financial position or results of operations.
                                        4
<PAGE>

In January 2000 the Company purchased Directors and Officers Liability Insurance
with coverage that the Company's Board of Directors deems  sufficient to attract
and retain talented and experienced personnel.


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

None.


                                     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.   Quarterly  market  price
information for the Company's shares of common stock is as follows:


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


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

As of April 30,  2000 the  number  of  shareholders  of record of common  stock,
excluding the number of beneficial  owners whose  securities  are held in street
name was approximately 575.

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

The Company had 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 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.

                                        5
<PAGE>


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

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

Restatement  of Financial  Statements - The Company  filed its annual  report on
Form 10KSB with the United States Securities and Exchange  Commission on May 22,
2000.  Included in that report were the  Company's  December 31, 1999  financial
statements.  Subsequent  to the  issuance  of those  financial  statements,  the
Company  re-evaluated  the  accounting for the  acquisition of Marathon  Telecom
which  occurred in October  1999.  The  reevaluation  resulted in the removal of
$190,318 of goodwill net of accumulated  amortization of $10,017,  a decrease in
property, plant, and equipment of $1,050 and increases of cost of goods sold and
general  and  administrative  expenses of $12,783  and  $178,585,  respectively.
Accordingly,  these  financial  statements  have been  restated  to reflect  the
changes listed above. The increase in expenses  increased net loss per basic and
diluted share by $0.01 cent per share to $0.06.


During  the  year  ended  December  31,  1999,  sales  revenue  from  continuing
operations  increased to $441,663 from $209,823 for the corresponding  period of
the prior year. The increase in revenue is attributed to increased  marketing by
the Company and greater demand as customers  continued to upgrade  systems to be
Y2K compliant.

The gross margin as a percent of revenues increased to 63% for the year December
31, 1999 from 42% in the corresponding period of the prior year. The improvement
in the gross margin is due to additional discounts for volume purchases provided
to the Company by its telephone vendors.

The Company's selling,  general and  administrative  expenses for the year ended
December 31, 1999  increased  to $599,474  from  $143,002 for the  corresponding
period of the prior year.  The increase is  attributed  to  increased  marketing
efforts and additional  corporate overhead costs associated with the merger with
Prime.


As a result of the  reverse  merger in  August  1999,  the  Company  recorded  a
one-time charge of $428,194 for the cost of the merger, representing Prime's net
liabilities in excess of assets immediately prior to the merger.

Interest expense for the year ended December 31, 1999 increased to $199,089 from
$14,796  for the  corresponding  period  of the  prior  year.  The  increase  is
attributed to the increased debt assumed in the merger with Prime.

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


At December  31, 1999,  the Company had cash of $237,403  and a working  capital
deficit of $61,836.  The primary cause of the deficit position resulted from the
assumption of net liabilities in the merger with Prime.

Cash used in  operations  was  $124,970  for the year ended  December  31,  1999
compared  to  $24,986  in  1998.  The  cash  used in  operations  was  primarily
attributed  to the net loss  offset by noncash  charges  for  depreciation,  the
one-time,  noncash  charge  related to the  merger,  and an  increase in accrued
interest.

Cash provided by investing activities, consisting primarily of proceeds from the
sale of property held for sale,  was  $1,060,211 for the year ended December 31,
1999. Cash used in investing activities, consisting of purchases of property and
equipment, was $7,635 for the period ended December 31, 1998.

Cash used in financing  activities  was $701,317 for the year ended December 31,
1999 and consisted of $740,565 paid on notes payable (with the proceeds from the
sale of property held for sale) offset by $39,248 of proceeds from notes payable
(used for operating expenses). Cash provided by financing activities was $36,100
for 1998 and consisted of capital contributions.

The  Company's  ability to develop  its Local  Multipoint  Distribution  Service
business is dependent  upon its ability to obtain  additional  financing for the
infrastructure   equipment   and   working   capital  to   develop   the  market
opportunities.  Subsequent  to December  31, 1999,  the Company  sold  6,569,444
shares of its common stock in private placement offerings,  raising $2.4 million
net of commissions of approximately  $547,000).  Additionally,  in February 2000
creditors  holding  $1,307,187  (balance  due as of February  28, 2000) of notes
payable accepted the Company's offer to convert their debt into 2,904,860 common
shares of the Company.


                                        6
<PAGE>

The  Company  settled  notes in the  principal  amount of  $396,220  and accrued
interest of $108,750  with cash  payments of $152,500  and $100,000 in March and
April 2000  respectively,  and the issuance of 561,111  shares of the  Company's
common stock.  Management believes the actions taken to convert outstanding debt
and raise  additional  capital will be sufficient to sustain  operations  for at
least the next twelve months.

Impact of Recently Issued Standards

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards No. 133 (FASB133),  "Accounting  for Derivative
Instruments  and Hedging  Activities."  This  statement  requires that an entity
recognize all derivatives as assets or liabilities in the statement of financial
position and measure those instruments at fair value. This statement was amended
by FASB 137,  issued in June 1999,  such that it is effective  for the Company's
financial statements for the year ending December 31, 2001. The Company does not
believe  the  adoption  of  FASB133  will  have a  material  impact  on  assets,
liabilities or equity.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101,  entitled "Revenue  Recognition in Financial  Statements." SAB
101A  was  issued  by the  SEC  on  March  24,  2000  and  delays  the  required
implementation  date of SAB 101  until  the  second  quarter  of  2000.  SAB 101
provides guidance on the recognition,  presentation and disclosure of revenue in
the financial statements of public companies.  The Company does not believe that
the adoption of SAB 101 will have a material effect on its financial position or
results of operations.

Seasonality and Inflation

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

Year 2000 Compliance

The Company has  experienced no disruption in its operations that management can
attribute to Year 2000 issues.  In addition,  the Company has seen no Year 2000-
related  problems  itself or received any reports of such problems from entities
with which it transacts business.





ITEM  7.  FINANCIAL  STATEMENTS


The  Company's  consolidated  financial  statements  are  attached  as pages F-1
through  F-15.  As  discussed in the last  paragraph of Note 3 to the  financial
statements, the Company has restated certain financial statement amounts related
to the acquisition of Marathon Telecom which occurred in October 1999.





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, 1999 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      54       1999       Chief Executive Officer, Director


Stephen Goodman   56       1999       Chief Financial Officer,
                                      Corporate Secretary, Director

Adrian Lima       29                  Vice President - Engineering

Eric Bergmann     46       2000       Director

Michael Gilbert   45       2000       Director

William Turley    62       2000       Director


                                        7
<PAGE>


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


Norbert  Lima has been  President  and 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 the  Company 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 the companies, and led the
company  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  the  company,  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  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 CCFS, 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.

Eric Bergman was elected a director at the annual shareholder's  meeting held in
January 2000. He has been involved in  qualitative  and  quantitative  marketing
research and project  administration  for over 20 years.  Since 1988 he has been
president of California  Agri-Marketing  Research Associates.  He graduated Kent
State  University  with his BA degree in 1975.  He is a member of the  Company's
audit committee.
                                        8
<PAGE>

Michael Gilbert is the Managing  Partner/Owner of Gilbert & Co., a San Francisco
based Certified Public Accounting firm. He was the CPA for Prime Companies, Inc.
prior to the time Prime  became a publicly  owned  company.  He has an extensive
client base ranging from revenues of $1 million to $35 million annually, and has
experience  in  litigation  support,  mediation and  arbitration  services,  and
business  valuation  analysis.  He  is  the  Chairman  of  the  Company's  Audit
Committee. He obtained his MBA degree with honors from Wilkes University in 1977
and his BA in  Economics  from Wilkes  University  in 1976.  He is licensed as a
Certified Public Accountant in California, Colorado, and Pennsylvania.

William Turley is President of  Communications  Engineering  Inc.  (CEI), a well
established  provider of  telecommunications  products  and  services  including
turnkey Voice and Data Solutions.  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.

Adrian Lima has been Vice  President of  Engineering  for the Company  since its
merger in 1999.  Adrian Lima is the son of Norbert  Lima,  the Company's CEO and
Chairman of the Board of Directors.  Mr. Lima has accumulated  over ten years of
technical skills and experience while working for NACC-Tel,  installing 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.


ITEM  10.  EXECUTIVE  COMPENSATION

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


<TABLE>
<CAPTION>


Name and Principal Position . . . . . .  Year  Salary
---------------------------------------  ----  -------
<S>                                      <C>   <C>

Norbert Lima, CEO . . . . . . . . . . .  1999  $28,850
                                         1998    6,752
Stephen Goodman, CFO. . . . . . . . . .  1999    5,500
Adrian Lima, Vice President-Engineering  1999   54,347
                                         1998   37,642
</TABLE>



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

In  accordance  with  the  Commission  Rules,  the  following  is a list  of all
Compensatory Plans or Arrangements of the Company:

Prime  Companies  401(k)


     Prime Companies,  Inc. Incentive Stock Option Plan On January 14, 2000, the
Company approved compensation for its CEO and CFO each at the rate of $8,333 per
month for the year 2000. In April 2000 the Company approved compensation for its
Vice-President  -  Engineering  at the rate of $6,000 per month.  Employment  of
officers may be terminated by the Company at any time.


                                        9

<PAGE>

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

There are outstanding  options on 2,555,209  shares to various  individuals.  At
December 31, 1999, the Company had outstanding 1,396,375, 1,038,834, and 120,000
options exercisable at prices equal to $1.00, $3.00 and $6.00 respectively.  All
of these options expire December 31, 2000. There are 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.

There were no stock options granted in 1999.

In March 2000 the Board of Directors  approved an employee  stock option program
for all employees on staff as of Jan 31, 2000,  whereby each employee is granted
the right to  purchase  the number of shares  equal to 1999 gross  earnings  (at
Prime or any of its subsidiaries) at $1.00 per share; options to expire December
31, 2002, and are immediately exercisable.

In March 2000 the Board of  Directors  also  approved an employee  stock  option
program for all  employees  employed by Prime in 2000,  whereby each employee is
granted the right to purchase the number of shares equal to 2000 gross  earnings
(at Prime or any of its  subsidiaries)  at $1.50 per  share;  options  to expire
December 31, 2003, and do not vest until December 31, 2000.


In March  2000 the Board of  Directors  also  approved  a stock  option  program
whereby each outside director was granted an option for the year 2000, to expire
December  31,  2002,  on 20,000  shares at $1.00 per share.  The options vest on
January 1, 2001 to each current outside director who is still a director on that
date.

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

The  Company's  directors  will be  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 attended by such director.

ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND
MANAGEMENT

The following  table sets forth certain  information  about the ownership of the
Company's  Common Stock as of April 30, 2000,  by (i) those persons known by the
Company 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 the Company 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 the Company 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 the Company.


                                       10
<PAGE>

<TABLE>
<CAPTION>
                               Name of Amount and
Title of Class       Beneficial Owner    Nature of Interest  Percentages           Address
------------------  -------------------  ------------------  ------------  -----------------------
<S>                 <C>                  <C>                 <C>           <C>
Common Stock -                                                             109 Harrison Lane,
Par Value $0.0001.  Ron Gallagher                 4,500,000           14%  Bethlehem, CT 06751

Common Stock -                                                             2975 Treat Blvd #C8,
Par Value $0.0001.  Stephen Goodman               4,518,900           14%  Concord, CA 94518

Common Stock -                                                             409 Center Street, Yuba
 Par Value $0.0001  Adrian Lima                   1,072,413            3%  City, CA 95991

Common Stock -                                                             409 Center Street, Yuba
 Par Value $0.0001  Norbert Lima                  3,600,000           11%  City, CA 95991

Common Stock -                                                             155 Montgomery Street,
Par Value $0.0001.  Irving Pfeffer          (a)   3,866,602           12%  San Francisco, CA 94105

Common Stock -                                                             120 W 45 Street, New
Par Value $0.0001.  David Shaw              (b)   2,711,227            8%  York, NY 10036

Common Stock -      All Directors and
Par Value $0.0001   Officers as a Group           9,416,313           30%
------------------  -------------------  ------------------  ------------  -----------------------


(a)     Includes  options  to purchase 563,708  common  shares, which are currently exercisable.
(b)     Includes  options  to purchase  33,333  common  shares, which are currently exercisable.
</TABLE>



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 $11,000 in 1999
and 1998 on its headquarters.  There is no long term lease  arrangement  between
the Company and Mr. Lima.


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

(a)   INDEX  TO  EXHIBITS

4.2*     Summary  of  401(K)  plan
4.3*     Sample  Stock  certificate
27       Financial  Data  Schedule

*  Previously  filed

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

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

Form  10-KSB  Availability:
A copy of the 1999 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:

Continental  Stock  Transfer  and  Trust  Company
2  Broadway,  19th  Floor
New  York,  New  York  10004

Independent  Auditors:

Hein  +  Associates  LLP
333  City  Blvd.  West,  Suite  2100
Orange,  CA  92868

Corporate  Offices:  Prime  Companies,  Inc.
Mailing  Address:  409  Center  Street,  Yuba  City,  CA  95991
Telephone:  (530)  755-3580
                                       11
<PAGE>

                                   SIGNATURES
                                   ----------

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto  duly  authorized.  Dated this 5th day of
October, 2000.

                                        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


                                       12
<PAGE>



<TABLE>
<CAPTION>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<S>                                                                                          <C>

                                                                                                 PAGE
Independent Auditors' Report......................................................................F-2

Consolidated Balance Sheet - December 31, 1999....................................................F-3

Consolidated Statements of Operations - For the Years Ended December 31, 1999 and 1998............F-4

Consolidated Statement of Stockholders' Equity (Deficit)  - For the Years Ended
     December 31, 1999 and 1998...................................................................F-5

Consolidated Statements of Cash Flows - For the years ended December 31, 1999, and 1998...........F-6

Notes to Consolidated Financial Statements........................................................F-7


</TABLE>


<PAGE>







                          INDEPENDENT AUDITORS' REPORT





To the Board of Directors and Stockholders
Prime Companies, Inc.,
Yuba City, California




We have audited the accompanying  consolidated balance sheet of Prime Companies,
Inc. (a Delaware  corporation) and subsidiaries as of December 31, 1999, and the
related consolidated  statements of operations,  stockholders' equity (deficit),
and  cash  flows  for  the  years  ended  December  31,  1999  and  1998.  These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.


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


In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of Prime Companies,
Inc. and  subsidiaries at December 31, 1999, and the results of their operations
and  their  cash  flows  for the  years  ended  December  31,  1999  and 1998 in
conformity with generally accepted accounting principles.

As discussed in the last  paragraph of Note 3 to the financial  statements,  the
Company  has  restated  certain  financial  statement  amounts  related  to  the
acquisition of Marathon Telecom which occurred in October 1999.



/s/HEIN + ASSOCIATES LLP


HEIN + ASSOCIATES LLP
Certified Public Accountants

Orange, California


April 20, 2000, except for the last paragraph of Note 3 and paragraphs 2 through
4 of Note 4 which are as of August 31, 2000.


                                       F-2
<PAGE>
<TABLE>
<CAPTION>


                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999




                                                           ASSETS
                                                           ------
<S>                                                                                                 <C>

CURRENT ASSETS:
     Cash and cash equivalents                                                                             $        237,403
     Accounts receivable                                                                                             28,405
     Inventory                                                                                                       13,850
     Deposits and other current assets                                                                               31,700
     Net assets held for sale                                                                                       661,702
                                                                                                           ----------------
         Total current assets                                                                                       973,060

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $31,308                                                  103,671
LICENSES, net of accumulated amortization of $30,774                                                                584,698
                                                                                                           ----------------

TOTAL ASSETS                                                                                               $      1,661,429
                                                                                                           ================

                                       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                       ----------------------------------------------
CURRENT LIABILITIES:
     Current portion of notes payable to related parties                                                   $        180,500
     Convertible notes payable                                                                                      496,220
     Accounts payable                                                                                               159,715
     Accrued interest                                                                                               167,110
     Other accrued expenses and liabilities                                                                          31,351
                                                                                                           ----------------
              Total current liabilities                                                                           1,034,896

NOTES PAYABLE TO RELATED PARTIES, less current portion                                                            1,240,216
                                                                                                           ----------------
              Total liabilities                                                                                   2,275,112
                                                                                                           ----------------

COMMITMENTS AND CONTINGENCIES (Notes 3 and 12)                                                                         -

STOCKHOLDERS' EQUITY (DEFICIT):
     Preferred  stock,  $.0001 par value,  10,000,000  shares  authorized,  none
     issued and outstanding - Common stock, $.0001 par value,  50,000,000 shares
     authorized, 21,582,125 issued and
         outstanding                                                                                                  2,158
     Additional paid-in capital                                                                                     282,244
     Unrealized gain on available-for-sale securities                                                               125,000
     Accumulated deficit                                                                                         (1,023,085)
                                                                                                           ----------------
              Total stockholders' equity (deficit)                                                                 (613,683)
                                                                                                           ----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                       $      1,661,429
                                                                                                           ================

       See accompanying notes to these consolidated financial statements.
</TABLE>


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


                                                PRIME COMPANIES, INC. AND SUBSIDIARIES

                                                 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                              FOR THE YEAR ENDED
                                                                                                 DECEMBER 31,
                                                                                  -----------------------------------------
                                                                                         1999                    1998
                                                                                  --------------------    -----------------
<S>                                                                              <C>                     <C>

SALES REVENUES                                                                    $        441,663        $         209,823
                                                                                  ----------------        -----------------

COSTS AND EXPENSES:
     Cost of sales                                                                         163,550                  121,166
     Selling, general, and administrative expenses                                         599,474                  143,002
     Expense recognized for net liabilities assumed in
         reverse merger                                                                    428,194                    -
                                                                                  ----------------        -----------------
         Total costs and expenses                                                        1,191,218                  264,168
                                                                                  ----------------        -----------------

OPERATING LOSS                                                                            (749,555)                 (54,345)
                                                                                  ----------------        -----------------

OTHER EXPENSE:
     Interest expense                                                                     (199,089)                 (14,796)
                                                                                  ----------------        -----------------

LOSS BEFORE TAXES                                                                         (948,644)                 (69,141)
     Provision for taxes                                                                     5,300                    -
                                                                                  ----------------        -----------------

NET LOSS                                                                          $       (953,944)       $         (69,141)
                                                                                  ================        -----------------


BASIC AND DILUTED NET LOSS PER SHARE                                              $          (0.06)        $          (0.02)
                                                                                  ================        =================

WEIGHTED AVERAGE SHARES OUTSTANDING                                                     16,680,764                4,500,000
                                                                                  ================        =================
</TABLE>

                                       F-4




<PAGE>
<TABLE>
<CAPTION>


                                                PRIME COMPANIES, INC. AND SUBSIDIARIES

                                        CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)
                                            FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


                                                                                          UNREALIZED GAIN
                                                                                                ON                         TOTAL
                                                      COMMON STOCK           ADDITIONAL    AVAILABLE-FOR-              STOCKHOLDERS'
                                             ---------------------------      PAID-IN          SALE        ACCUMULATED    EQUITY
                                                SHARES           AMOUNT       CAPITAL       SECURITIES       DEFICIT     (DEFICIT)
                                             --------------- ----------- ----------------  -------------   -----------  ------------
<S>                                         <C>              <C>          <C>              <C>             <C>          <C>

BALANCES, January 1, 1998                         -          $     -     $       -         $   -           $    -       $       -

     Capital contributions                        4,500,000          450        35,650         -                -            36,100
     Net loss                                     -                -             -             -              (69,141)      (69,141)
                                             --------------  ----------- --------------    -----------     ----------   ------------

BALANCE, December 31, 1998                        4,500,000          450        35,650         -              (69,141)      (33,041)

     Shares issued for services                  10,517,241        1,051       220,341         -               -            221,392
     Shares issued in merger transaction          6,507,742          651          (651)        -               -                -
     Stock issued in acquisitions                    57,142            6        26,904         -               -             26,910
     Comprehensive loss:
         Net Loss                                 -                -             -             -             (953,944)
         Unrealized gain on
              available-for-sale securities       -                -             -             125,000         -
         Total comprehensive loss                 -                -             -             -               -           (828,944)
                                             --------------  ----------- --------------    -----------     ----------   ------------

BALANCE, December 31, 1999                       21,582,125  $     2,158  $     282,244    $   125,000     $(1,023,085) $  (613,683)
                                             ==============  =========== ==============    ===========     ===========  ============


</TABLE>


                                       F-5
<PAGE>

<TABLE>
<CAPTION>

                                                PRIME COMPANIES, INC. AND SUBSIDIARIES

                                                 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                       FOR THE YEAR ENDED DECEMBER 31,
                                                                                  -------------------------------------------
                                                                                         1999                    1998
                                                                                  --------------------    -------------------
<S>                                                                              <C>                      <C>

CASH FLOW FROM OPERATING ACTIVITIES:
       Net loss                                                                   $        (953,944)      $         (69,141)
     Adjustments to reconcile net loss to net cash used in
         operating activities:
         Depreciation and amortization                                                       49,506                  11,526
         Stock issued for services                                                          221,392                      -
         Noncash expense recognized upon reverse merger                                     428,193                      -
            Changes in operating assets and liabilities:
                Accounts receivable                                                         (17,247)                (10,158)
                Inventory                                                                    (7,620)                 12,779
                Prepaid expenses and other current assets                                   (22,878)                   (350)
                Accounts payable                                                            (10,965)                 30,358
                Accrued liabilities                                                         188,593                     -
                                                                                  --------------------    -------------------
                Net cash used in operating activities                                      (124,970)                (24,986)
                                                                                  --------------------    -------------------

CASH FLOW FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                                    (14,744)                 (7,635)
     Sale of property held for sale                                                       1,074,955                     -
                                                                                  --------------------    -------------------
                Net cash provided by (used in) investing
                activities                                                                1,060,211                  (7,635)
                                                                                  --------------------    -------------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Capital contributions                                                                    -                      36,100

     Proceeds from notes payable                                                             39,248                     -
     Principal payments on notes payable and long-term debt                                (740,565)                    -
                                                                                  --------------------    -------------------
                Net cash provided by (used in) financing
                activities                                                                 (701,317)                 36,100
                                                                                  --------------------    -------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                       233,924                   3,479

CASH AND CASH EQUIVALENTS, beginning of year                                                  3,479                     -
                                                                                  --------------------    -------------------

CASH AND CASH EQUIVALENTS, end of year                                            $         237,403       $           3,479
                                                                                  ====================    ===================

SUPPLEMENTAL CASH FLOW INFORMATION:
     Cash payments for:
         Interest                                                                 $          31,979       $          14,796
                                                                                  ====================    ===================
         Income taxes                                                             $            -          $             -
                                                                                  ====================    ===================

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
     Assets acquired for assumption of debt                                       $            -          $          94,573
                                                                                  ====================    ===================
     Notes payable issued to acquire licenses                                     $         615,472       $             -
                                                                                  ====================    ===================
     Note payable issued to acquire property and equipment                        $          10,076       $             -
                                                                                  ====================    ===================
     Net assets acquired in exchange for stock                                    $          26,910       $             -
                                                                                  ====================    ===================
</TABLE>

                                       F-6
<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").  The Company  operates in one  segment and began  operations  on
     February 20, 1998 as NACC-Tel,  a sole  proprietorship  operated by Norbert
     Lima (the  Company's  CEO) when it acquired  certain  assets of Pagers Plus
     Cellular  (an  entity  for which  Norbert  Lima  served as an  officer)  in
     exchange for assumption of specified liabilities.  NACC-Tel provides paging
     services  and  installation  and  servicing  of  interconnect  and business
     communication systems.

     In January  1999,  Mr.  Lima,  along with three  other  principals,  formed
     Worldnet Tel.com,  Inc.  (Worldnet),  a Delaware  corporation,  to form the
     legal  structure  for the  Company's  further  development.  Norbert  Lima,
     subsequently  contributed  the  operations  of NACC-Tel to  Worldnet,  with
     interests in the Company assigned to the other three principals in exchange
     for services to be provided for the further  development  of the  Company's
     operations.  The services were to be rendered in 1999. Worldnet contributed
     the operations of NACC-Tel to NACC-Tel Corp., a Delaware corporation formed
     as a wholly-owned subsidiary of WNTC Holdings,  Inc., which was formed as a
     wholly-owned   holding  company  subsidiary  of  Worldnet.   For  financial
     statement purposes,  the operations of NACC-Tel are considered the business
     of Worldnet and the financial  statements reflect the historical  financial
     position and results of operations and cash flows of NACC-Tel.

     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.

     For financial  statement  purposes,  Worldnet was  considered the acquiring
     company,  and this  transaction has been treated as an acquisition of Prime
     by Worldnet.  For legal  purposes,  however,  Prime  remained the surviving
     entity.  Therefore, the combined entity retained Prime's capital structure.
     Prior to the merger, Prime had 6,507,742 shares of common stock outstanding
     held by various individuals. Pursuant to the agreement, Worldnet was issued
     14,500,000 shares of Prime common stock. As a result of the stock exchange,
     the former  shareholders of Worldnet hold 69% of the outstanding  shares of
     common stock of Prime. At the time of the merger,  Prime had liabilities in
     excess  of net  assets  of  $428,194.  This  amount  was  been  charged  to
     operations on the date of the merger as a cost of the reorganization.

     The accompanying financial statements of the Company reflect the operations
     of Worldnet and its  subsidiaries  and  consolidate the operations of Prime
     and its subsidiaries commencing on the date of the merger.

     The Company's other wholly-owned subsidiaries as described below:

     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.  Prepaid had no substantial  operations  during
     1999.

                                       F-7
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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 had no substantial operations during 1999.

     Mid-Cal Express,  Inc. and Mid-Cal Express Logistics,  Inc.  (collectively,
     Mid-Cal) are wholly-owned  subsidiaries of Prime. Mid-Cal ceased operations
     in  December  1998 (prior to the  acquisition  by  Worldnet)  and is in the
     process of liquidating its assets and settling outstanding liabilities.

     Zenith Technologies Inc. (Zenith),  a Delaware  Corporation,  was formed in
     December  1998 as a  wholly-owned  subsidiary of Prime  Companies,  Inc. To
     date, it has had no operations.


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

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

     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.

     Inventories  -  Inventories  of  installation  equipment  and materials are
     -----------
     stated at the lower of cost (first-in, first-out method) or market.

     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 5 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 properties 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.

     Intangibles -  Intangibles  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.

     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.

                                       F-8
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Revenue  Recognition - Revenue is generated from  installation  of business
     --------------------
     phone systems recognized as installations are completed.

     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.

     Net Assets Held for Sale - Net assets held for sale include 400,000 shares
     ------------------------
     of common stock of US Trucking,  Inc.,  and cash of Mid-Cal  Express,  Inc.
     (the Company's  inactive trucking  subsidiary) net of payables to unsecured
     creditors  of Mid-Cal  Express  Inc. The assets are pledged  as security to
     the  unsecured  creditors  and are  being  held  in  escrow  pending  final
     settlement of the claims.

     Earnings  Per Share - Basic  earnings  per share  excludes  dilution and is
     -------------------
     computed  by  dividing  income  available  to  common  stockholders  by the
     weighted  average  number  of common  shares  outstanding  for the  period.
     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. Common stock equivalents as
     of December 31, 1999 were  anti-dilutive and excluded from the earnings per
     share computation.

     Accounting   Estimates  -  The  preparation  of  financial   statements  in
     ----------------------
     conformity  with  generally   accepted   accounting   principles   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.

     The Company's  financial  statements are based upon a number of significant
     estimates  including  the allowance  for doubtful  accounts,  the estimated
     lives  of  property  and  equipment,  licenses,  and  intangibles,  and the
     realizability of deferred tax assets. Due to the uncertainties  inherent in
     the  estimation  process,  it is at least  reasonably  possible  that these
     estimates will be further revised in the near term and such revisions could
     be material.

     Investments - The U.S.  Trucking stock included in net assets held for sale
     -----------
     is considered  available  for sale.  These  securities  are carried at fair
     value with unrealized gains or losses,  net of tax,  reported as a separate
     component of stockholders' equity.

     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  in accounting  for its employee stock
     options.  In  accordance  with  FASB  Statement  No.  123  "Accounting  For
     Stock-Based  Compensation"  (FASB123), 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 FASB123.

     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 FASB Statement 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-9
<PAGE>


                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The customers of the Company's  1999  operations  are located  primarily in
     California.  At December 31, 1999 approximately $13,800 representing 48% of
     trade receivables was due from two customers.  No other customers accounted
     for more than 10% of the Company's trade  receivables at December 31, 1999.
     No single  customer  accounted  for 10% or more of the  Company's  revenues
     during 1999.

     Fair  Value of  Financial  Instruments  - The  estimated  fair  values  for
     --------------------------------------
     financial instruments under FASB Statement No. 107, "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 following methods and assumptions were used in estimating the indicated
     fair values of the Company's financial instruments:

               Cash and cash equivalents:  The carrying amount approximates fair
               value because of the short maturity of those instruments.

               Investments: Investments included in net assets held for sale are
               considered  available-for-sale  and are  carried at market  value
               based on quoted market prices.

               Long-term and other debt: The fair value of the Company's debt is
               estimated  based on current rates offered to the Company for debt
               with  similar  terms and  maturities  and  approximates  carrying
               value.

     Impact  of  Recently  Issued  Standards  -  In  June  1998,  the  Financial
     ---------------------------------------
     Accounting   Standards  Board  issued  Statement  of  Financial  Accounting
     Standards No. 133 (FASB133),  "Accounting  for Derivative  Instruments  and
     Hedging  Activities." This statement  requires that an entity recognize all
     derivatives as assets or liabilities in the statement of financial position
     and measure those  instruments at fair value. This statement was amended by
     FASB 137,  issued in June 1999, such that it is effective for the Company's
     financial  statements  for the year ending  December 31, 2001.  The Company
     does not believe the  adoption  of FASB133  will have a material  impact on
     assets, liabilities or equity.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
     Accounting  Bulletin No 101,  entitled  "Revenue  Recognition  in Financial
     Statements." SAB101A was issued by the SEC on March 24, 2000 and delays the
     required  implementation  date of SAB101 until the second  quarter of 2000.
     SAB 101 provides  guidance on the recognition,  presentation and disclosure
     of revenue in the  financial  statements of public  companies.  The Company
     does not believe that the  adoption of SAB 101 will have a material  effect
     on its financial position or results of operations.

                                      F-10
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

     The accompanying financial statements have been prepared on a going concern
     basis, which contemplates the realization of assets and the satisfaction of
     liabilities in the normal course of business.  As shown in the accompanying
     consolidated financial statements,  the Company has recorded losses for the
     years ended December 31, 1999 and 1998, resulting in an accumulated deficit
     of $1,023,085 as of December 31, 1999. Cash used in operations  during 1999
     and 1998 was $124,970 and $24,986, respectively.

     Management  expects  to  achieve  profitable  operations  as its  CLEC  and
     Internet  subsidiaries  begin  operations  during  2000.  Until  profitable
     operations can be achieved, management had taken steps to obtain additional
     working  capital for the Company.  Subsequent  to December  31,  1999,  the
     Company converted  approximately  $1.6 million of debt and accrued interest
     to  common  stock  and  completed  a  private  placement  of an  additional
     6,569,444 shares of common stock for net proceeds of $2.4 million (see note
     13).  Management  believes,  based  on its  current  and  planned  level of
     operations it has  sufficient  resources to continue as a going concern for
     at least the next twelve months.  Accordingly,  the financial statements do
     not   include   any   adjustments   related  to  the   recoverability   and
     classification of recorded asset amounts,  or the amount and classification
     of liabilities,  or any other adjustment that might be necessary should the
     Company be unable to continue as a going concern.


     Restatement  of Financial  Statements - The Company filed its annual report
     on Form 10KSB with the United States Securities and Exchange  Commission on
     May 22, 2000.  Included in that report were the Company's December 31, 1999
     financial  statements.  Subsequent  to  the  issuance  of  those  financial
     statements,  the Company re-evaluated the accounting for the acquisition of
     Marathon Telecom which occurred in October 1999. The reevaluation  resulted
     in the removal of $190,318 of goodwill net of accumulated  amortization  of
     $10,017,  a  decrease  in  property,  plant,  and  equipment  of $1,050 and
     increases of cost of goods sold and general and administrative  expenses of
     $12,783 and $178,585, respectively. Accordingly, these financial statements
     have been  restated to reflect the changes  listed  above.  The increase in
     expenses  increased  net loss per basic and diluted share by $0.01 cent per
     share to $0.06.


4.   ACQUISITIONS:
     ------------

     In  September  1999,  the Company  acquired all of the assets of Olive Tree
     Image Engineers (a sole proprietorship) (Olive Tree) in exchange for 57,142
     shares of the Company's common stock. This stock issuance was valued at the
     average of the  closing  bid and ask prices for three days before and after
     the  acquisition  was  agreed  to  by  the  Company  and  Olive  Tree.  The
     transaction  was  accounted  for as a purchase and the  resulting  purchase
     price of $26,910 was assigned to property  and  equipment  acquired.  Olive
     Tree had no substantial operations prior to the acquisition by the Company.


     On March 19, 1999,  Norbert Lima, as an individual  and sole  proprietor of
     NACC-Tel,  acquired  the  assets of  Marathon  Telecom  (Marathon)  from an
     unrelated  party in  exchange  for the  assumption  of certain  liabilities
     totaling  approximately  $40,000  and  consideration  paid to the seller of
     $5,500. On April 1, 1999, Norbert Lima assigned to his son, Adrian Lima who
     was an  employee  of  NACC-Tel,  his 100%  ownership  of  Marathon  with no
     consideration to be paid to Norbert Lima.


                                      F-11
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     During the period between March 19, 1999 through  October 15, 1999,  Adrian
     operated  Marathon  independently  of Norbert Lima and  NACC-Tel.  Marathon
     generated revenues of approximately  $99,000 (unaudited) and had net income
     of approximately  $28,000 (unaudited).  Financial  information for Marathon
     prior to March 19, 1999 is not available.

     On October 15,  1999,  the  Company  acquired  the assets of Marathon  from
     Adrian  Lima,  a sole  proprietor,  in exchange  for 517,241  shares of the
     Company's  common stock.  This stock  issuance was valued at the average of
     the  closing  bid and ask  prices  for  three  days  before  and  after the
     acquisition was agreed to by the Company and Marathon.  The transaction was
     accounted  for  as  a  purchase  and  accordingly,  the  inclusion  of  the
     operations  of Marathon in the  consolidated  operations  commenced  on the
     acquisition date. The resulting  purchase price was $196,552 which consists
     of $188,602 stock based compensation for the 517,241 shares of common stock
     issued to Adrian Lima and $7,950 in fixed assets.


5.   NET ASSETS HELD FOR SALE:
     -------------------------

     Mid-Cal Express, Inc. and Mid-Cal Express Logistics, Inc. ceased operations
     in December 1998 and its assets  have  been  pledged  as  security  for the
     settlement of claims by its unsecured  creditors.  The  assets  are held by
     the  Credit  Managers  Association  of  Southern  California  who is in the
     process of  liquidating  the assets and  making final  distribution  to the
     creditors.  The net assets held for sale  consisted  of  the  following  at
     December 31, 1999:


  Assets:
      Cash in escrow                                     $         83,079
      Investments                                               1,425,000
                                                         ----------------
           Total Assets                                         1,508,079
Unsecured Creditors                                              (846,377)
                                                         ----------------
   Net Assets of Discontinued Operations                 $        661,702
                                                         ================


6.   PROPERTY AND EQUIPMENT:
     -----------------------

         Property and equipment at December 31, 1999, consisted of:

                                                                       Estimated
                                                                    Useful Lives
                                                                    ------------
 Offices furniture and equipment                $         46,745        3 years
 Vehicles                                                 16,470        3 years
 Paging terminals                                         71,764        7 years
                                                ----------------
         Total Property and equipment                    134,979
 Less accumulated depreciation                           (31,308)
                                                ----------------
                                                $        103,671
                                                ================





                                      F-12
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





7.   NOTES PAYABLE TO RELATED PARTIES:
     ---------------------------------

     In  connection  with the merger  between  Prime and  Worldnet,  the Company
     assumed notes payable to related parties. At December 31, 1999, the Company
     had the following notes payable outstanding to related parties:

<TABLE>
<CAPTION>
            <S>                                                                         <C>

             Unsecured notes payable to shareholders; interest at 10% accruing through
             January 15, 2000, thereafter interest payments due monthly beginning
             January 15, 2000; principal due July 31, 2001                                $      1,240,216

             Unsecured notes payable to a shareholder, former officer and director;
             interest at 10%; principal and interest due at various dates throughout
             2000                                                                                  155,000

             Note payable to relative of the Chief Executive Officer; non-interest
             bearing; due April 15, 2000                                                            25,500
                                                                                          ----------------
                                                                                                 1,420,716
             Current Portion                                                                      (180,500)
                                                                                          ----------------
             Long Term Portion                                                            $      1,240,216
                                                                                          ================
</TABLE>

     Accrued  interest  on notes  payable  to  related  parties  was  $55,830 at
     December 31, 1999. Interest expense on these notes was $60,954 in 1999.

     In February 2000, notes in the principal amount of $1,240,216, plus accrued
     interest of $47,197 and interest accrued  subsequent to year end of $19,774
     were settled by the issuance of 2,904,860  shares of the  Company's  common
     stock.


8.   CONVERTIBLE NOTES PAYABLE:
     --------------------------

     During 1999,  the Company issued  unsecured  notes payable to an individual
     for cash and  licenses.  At December  31,  1999,  principal of $496,220 and
     accrued  interest of $111,280  were due on these  notes.  During the period
     ended June 30, 2000 the Company  settled notes in the  principal  amount of
     $396,220 and accrued  interest in the amount of $108,750 with cash payments
     of $252,500 and issuance of 561,111  shares of the Company's  common stock.
     The remaining  principal balance of $100,000 accrues interest at 10% and is
     due  October  1, 2000.  The note is  convertible  to 312,500  shares of the
     Company's common stock on October 1, 2000.


                                      F-13
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.   STOCK OPTIONS:
     --------------

     At the  time of the  merger,  Prime  had  outstanding  options  to  acquire
     2,555,209 shares of common stock. At December 31, 1999, options to purchase
     1,396,375  shares  were  exercisable  at the  price of  $1.00,  options  to
     purchase  1,038,834  shares  were  exercisable  at the price of $3.00,  and
     options to purchase  120,000 shares were  exercisable at the price of $6.00
     per share, and all were  exercisable  through December 31, 2000. No options
     were granted or exercised in 1999 or 1998.


10.  INCOME TAXES:
     -------------

     The  provision for taxes for 1999 consists of state  franchise  taxes.  The
     actual income tax expense differs from the "expected" tax expense  computed
     by applying the U.S.  federal  corporate  income tax rate of 34% because of
     the state  taxes and changes in the  valuation  allowance  of deferred  tax
     assets.

     The  components  of the net  deferred tax assets are as follows at December
     31, 1999:

             Noncurrent deferred tax assets:

             Net operating loss carryforward                    $     3,292,227
                  Valuation allowance                                (3,292,227)
                                                                ----------------
             Net noncurrent deferred tax assets                 $        -
                                                                ================

     As of December 31,  1999,  the Company has  available  net  operating  loss
     carryforwards  for income tax purposes of $8,551,000  which expire  through
     2019. The Company has state net operating loss  carryforwards of $4,140,000
     which  expire  through  2004.  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 limited by certain  consolidated  return
     filing regulations and limitations under Section 382. This limitation would
     prevent  the  use of  pre-acquisition  net  operating  losses  against  the
     activities of Worldnet or any of its subsidiaries.


11.  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.  The Company made no matching
     contributions to the Plan during the years ended December 31, 1999 or 1998.


12.  COMMITMENTS AND CONTINGENCIES:
     ------------------------------

     Leases
     ------

     The Company's  headquarters  is located on property  owned by the Company's
     CEO. The Company paid rent of $11,000 during 1999 and 1998 to the Company's
     CEO for use of this space.

     All of the  Company's  office space was rented on a  month-to-month  basis.
     During 2000, the Company intends to enter into lease  agreements for a term
     of one or more years with its various landlords.




                                      F-14
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




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

     The  Company  is the  defendant  in a  lawsuit  with a former  officer  and
     director  seeking payment of $32,000 due for advances made on behalf of the
     Company. The Company has filed a cross-complaint claiming the advances were
     capital  contributions  and is seeking to recover  4,500,000  shares of its
     common  stock held by the  plaintiff  and to be  reimbursed  for legal fees
     arising from this action.  The Company  believes the outcome of this matter
     will not have a material adverse effect on the Company's financial position
     or results of operations.


13.  SUBSEQUENT EVENTS:
     -----------------

     In March 2000 the  Company  completed a private  placement  offering of its
     common stock and sold 6,569,444 shares for $2.4 million (net of commissions
     of approximately $547,000).

     In March 2000,  the Board of  Directors  approved an employee  stock option
     program for all  employees  on staff as of January 31,  2000,  whereby each
     employee  is granted the right to  purchase  the number of shares  equal to
     1999  gross  earnings  (at Prime or any of its  subsidiaries)  at $1.00 per
     share;   options  to  expire   December  31,  2002,  and  are   immediately
     exercisable.

     In March 2000,  the Board of  Directors  also  approved  an employee  stock
     option  program for all employees  employed by Prime in 2000,  whereby each
     employee  is granted the right to  purchase  the number of shares  equal to
     2000  gross  earnings  (at Prime or any of its  subsidiaries)  at $1.50 per
     share;  options to expire December 31, 2003, and do not vest until December
     31, 2000.

     In March 2000,  the Board of Directors also approved a stock option program
     whereby each outside  director was granted an option for the year 2000,  to
     expire December 31, 2002, on 20,000 shares at $1.00 per share.  The options
     vest on January 1, 2001 to each  current  outside  director  who is still a
     director on that date.


                                      F-15