SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-KSB


                            (Filed on March 19, 2003)




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

         FOR  THE  FISCAL   YEAR  ENDED   DECEMBER   31,  2002

                           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  issuer's revenues  for  the  most  recent  fiscal  year.........$ 455,202

As of  February 28, 2003  there  were  32,274,384 shares of the Company's Common
Stock  outstanding.  The  aggregate  market  value of voting stock held by  non-
affiliates of the registrant on February 28, 2003 was $482,727.

Documents  incorporated  by  reference:

None
<PAGE>
                                     PART I

ITEM  1.   DESCRIPTION  OF  BUSINESS

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

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

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

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

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

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

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

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

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

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


                        BUSINESS HISTORY, AND DEVELOPMENT

                                   BACKGROUND
                                   ----------

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

LMDS Communications Inc. (LMDS), a Delaware corporation,  was formed in February
1999 as a wholly owned subsidiary of WNTC. LMDS is a telecommunications  company
with interests in the fixed broadband wireless sector.  LMDS Communications Inc.
obtained  local  multipoint  distribution  service  licenses at the 1999 Federal
Communications  Commission auction and is now deploying broadband fixed wireless
services.  In 2000  LMDS  Communications  obtained  competitive  local  exchange
carrier status in the States of Pennsylvania and New York. The competitive local
exchange  carrier  status  enables  LMDS  Communications  Inc. to connect to the
public switched  telephone network and negotiate  wholesale rates with incumbent
local exchange  carriers.  LMDS  participated in an auction conducted by the FCC
between  April 27, 1999 and May 12, 1999 for 161 local  multipoint  distribution
service  licenses.  Prime  secured  8 basic  trading  areas at the  auction  for
$591,800  (a 45%  discount  from the gross price of  $1,076,010).  The price per
population averages out to approximately $0.56. This compares to a high of $5.53
per  population  and an average  net bid of $1.35 per  population  for the 121 A
Block  licenses  auctioned in 1999.

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.

Zenith  Technologies,  Inc.  (Zenith),  a  Delaware  Corporation,  was formed in
December 1998 as a wholly owned subsidiary of Prime  Companies, Inc.  Operations
began   in   June 2001,   providing   one   plus   long   distance  services  to
residential  and  commercial customers.  In July, 2001 the Board of Directors of
Prime  declared  a stock dividend to the shareholders by spinning off 10% of the
ownership of Zenith to the Prime shareholders. In December 2002 the Company sold
its interest in Zenith to a small venture capital fund.

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

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

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

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

In  November 2001  Prime  entered  into  an  agreement  with  the  Virginia Tech
Foundation to commercially develop the Foundation's LMDS license in the Roanoke,
Virginia area. In July 2002 Prime and VTF organized Bright-Bridge Communications
Networks, Inc., a Delaware corporation,  to  operate the business  envisioned by
the  November  2001 agreement.  In August  2002  the  Company's  fixed  wireless
broadband system began transmitting radio signals from a mountaintop overlooking
the Roanoke Valley.  In December 2002 service was launched on a beta test basis,
and in January 2003 the system became commercially operational.

In January 2002 the Rural Utilities Service, an agency of the U.S. Department of
Agriculture, approved LMDS' request for a long term low  interest rate  loan  in
the amount of $5,012,000. Funds may be drawn  against this loan through April 1,
2005. As of December 31, 2002 LMDS had drawn down $1,700,990 and the balance  on
the loan was $1,666,337.


<PAGE>











                               Organization Chart

                                [OBJECT OMITTED]

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


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

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

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


LMDS  COMMUNICATIONS,   INC.  This  subsidiary  has  the  FCC  local  multipoint
distribution  service  licenses.  The  licenses  encompass  an area  of  western
Pennsylvania  and  southwestern  New York  State,  and include a  population  of
approximately  1,050,000  persons and 39,000  businesses.  This  subsidiary  was
incorporated  in Delaware in 1999 and is licensed and regulated by the states of
Pennsylvania and New York as a competitive local exchange  carrier.  The Federal
Communications  Commission,  an agency of the  United  States  government,  also
regulates this  subsidiary.  LMDS  Communications,  Inc. is funded by its parent
company,  Prime Companies,  Inc. This subsidiary's financial results in 2000 and
2001  were  not  material  to the overall operations of Prime.  Revenues for the
years  ending  December  31,  2002  and  2001  amounted  to  $41,331 and $46,422
respectively.  We have constructed five fixed broadband wireless systems in four
of our  eight  licensed areas  and anticipate building out additional systems in
2003 and 2004, utilizing long term financing  from the Rural  Utilities Service,
which  is  part  of  the  U.S.  Department  of  Agriculture.  LMDS  is  expected
to  generate  more  revenues  in  2003.  We expect this segment of our  business
to  grow  dramatically,  as   our    fixed   broadband   wireless   systems  are
constructed   and   our  service  offerings  are  launched  within  all  of  our
licensed territories.

Prime  intends to  capitalize on the  broadband  fixed  wireless  communications
revolution by providing local multipoint distribution system services to various
markets in which it has purchased  exclusive  spectrum licenses from the Federal
Communications   Commission.   Local  multipoint  distribution  service  is  the
broadband wireless technology used to deliver voice, data,  internet,  and video
services.  Each license  permits us to use  multiple  radio  frequency  channels
ranging  from 27.5 GHz to 31.225 GHz.  We intend to use these radio  channels to
build,  install, and implement the  telecommunication  systems and offer some or
all of the following one and two-way broadband services:


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

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

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

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

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

Advantages to the use of LMDS services is that the licensed markets have limited
access  to  high  speed  connectivity  (broadband  services).  LMDS  provides  a
quick-to-market  availability.  This allows the underserved  communities to have
equal  access  to the  internet.  Today  the  disadvantage  would  be  that  the
infrastructure  required to deploy to an individual  business  customer is still
somewhat  expensive.  As volume  purchases  take place and  alternate  equipment
vendors come to the market we expect  infrastructure  costs to reduce and in the
long term eliminate the disadvantages


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

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


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

The  operations  of  NACC-Tel  during  2001 and 2002 were the core of  Prime's
business.   We  anticipate  the  wireless  service  offering  by  NACC-Tel  will
experience  substantial  growth  over the coming  years.  The core  business  of
telephone interconnect, voicemail, and paging services is expected to experience
only  moderate growth,  as  Prime's  local  multipoint  distribution  system and
wireless  digital  subscriber  line  service  offerings  come  online   in  more
communities.

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

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

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


BRIGHT-BRIDGE COMMUNICATIONS NETWORKS, INC.  Bright-Bridge  is  a  joint venture
corporation with the Virginia Tech Foundation, Inc. All of the service offerings
described above for  LMDS and  NACC-Tel are offered  in  the  Roanoke,  Virginia
community by our Bright-Bridge subsidiary.


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

The customer base for prepaid telecommunications  services is large and diverse,
including:  credit-impaired  customers,  who  generally  cannot meet the initial
deposit requirements for telecommunications services;  individuals who prefer to
pay in cash;  and  individuals  who want to  re-establish  credit.  The  company
markets its service through selected retailers, who act as agents to sign up our
customers and collect their periodic payments. The operations of this subsidiary
in  2000  were  not  material  to  the overall operation of Prime.  In both 2002
and 2001 it accounted  for  approximately  12%  of total corporate revenues.


EMPLOYEES

On December 31, 2002 Prime had 15 full time employees.  Prime had  12  full-time
employees on December 31, 2001.

ITEM  2.  DESCRIPTION  OF  PROPERTIES

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

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

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

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

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

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

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

Oil City, Pennsylvania            Rooftop rights                     $  1,980

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

Union Township, Pennsylvania      Tower space                        $  2,700

Sharon, Pennsylvania              Rooftop rights                     $  1,200

Lake Wildwood, California         Tower space                        $  2,700

Roanoke, Virginia                 Office                757 sq. ft.  $  9,585

Roanoke, Virginia                 Tower space                        $  7,200

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

The Concord office lease was terminated in March 2002.

ITEM  3.  LEGAL  PROCEEDINGS


There are no current pending lawsuits involving Prime.

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

Pfeffer & Williams,  PC, 155 Montgomery  Street,  Suite 609, San  Francisco,  CA
94104 has passed upon the legality of the  securities  offered in a Registration
Statement filed with the Securities and Exchange Commission in November 2000, as
amended by filings in January and February 2001.


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

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

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

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

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

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

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


<PAGE>


                                     PART II

ITEM  5.  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER MATTERS

                                     MARKET
                                     ------

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


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


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

As of December 31, 2002 the number of  shareholders  of record of common  stock,
excluding the number of objecting beneficial owners whose securities are held in
street  name,  was  approximately   1270.  The   number  of  shareholders  whose
securities  were held in their  name was  approximately  270 on that  date.  The
number of non-objecting  beneficial  owners whose securities were held in street
name on that date was approximately 1000.


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

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

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



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

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

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


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

During  the  year  ended  December  31,  2002,  sales  revenue  from  continuing
operations  decreased to $284,617 from $455,202 for the corresponding  period of
the prior year. The decrease in revenue is attributed to the general slowdown in
our economy,  and  the  resulting postponement  of  the  replacement  of  legacy
telecommunications equipment by both our for-profit and non-profit customers.

The gross  margin as a percent of revenues  increased  to 59% for the year ended
December 31, 2002 from 14% in the  corresponding  period of the prior year.  The
improvement in  the gross  margin is mainly due to our successfully negotiating,
in November 2001, a substantial reduction in our bandwidth overhead costs, which
are required to serve our wireless  customers.  These  cost savings occurred  in
stages by our new vendor, and were fully implemented by March 2002.

Prime's selling, general and administrative expenses for the year ended December
31, 2002 decreased to $1,004,785  from $1,527,224 for the  corresponding  period
of the prior year.  The decrease is  attributed mainly to non-cash  charges  for
employee  and  outside director stock option  programs of $124,464, $120,484  to
reduced legal expenses, $34,110 to reduced accounting expenses, and $125,541  to
the reduction of our selling and  administrative  payroll in 2002 from the level
of 2001.

Interest  expense for the year ended December 31, 2002 increased to $32,641 from
$8,211  for  the  corresponding  period  of the prior  year.  The   increase  is
attributed to the interest on the Rural Utilities Service loan advances received
in 2002.

The  provision  for  taxes for  the year ended  December 31, 2002  increased  to
$3,400 from $2,800 for the corresponding period of the prior year.

The non-cash  expense  of  Deferred  Offering  Costs  in  the amount of $882,911
related to the Swartz agreement was  fully  expensed  during  2001.   No similar
expense was recorded in 2002.

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

During the year ended December 31, 2002,  NACC-Tel sales revenue from continuing
operations  decreased to $210,511 from $355,873 for the corresponding  period of
the  prior year.  The  decrease  in  revenue is  attributed  to the  prospective
customers'  continuing  concerns  regarding  the general  slowdown  in  economic
conditions experienced  by  virtually all  sectors  of  our  economy.  This  has
had the  effect of causing a delay in their commitments for capital expenditures
to  upgrade  their  telephone systems.  Continuing  into  the future,  increased
marketing efforts and a greater  geographical  presence  may  tend to offset the
negative  effect  caused by the current concern about the  general  economy. The
larger  geographical  presence  is  directly  related to our deployment of fixed
broadband wireless services in the  markets we serve.

The NACC-Tel gross margin as a percent of revenues decreased to 53% for the year
ended December 31, 2002 from 64% in the corresponding  period of the prior year.
The  reduction  in the gross margin is because our direct labor and overhead did
not decrease in line with the decreased level of sales.

NACC-Tel's  selling,  general  and  administrative  expenses  for the year ended
December 31, 2002  remained level at $274,813  compared  with  $272,892  for the
Corresponding period of the prior year.

During the year  ended  December 31, 2002,  sales  revenue for  Prepaid  Tel.com
decreased  to  $32,775  from  $52,672  for the corresponding period of the prior
year.  The  decrease in revenue is  attributed to  additional competition coming
into  the  California marketplace  for  prepaid  residential dialtone customers,
coupled  with  a curtailment in the Company's marketing effort in this sector of
its business,  as management  has been focusing on the  fixed wireless broadband
sector of its business.

Prepaid's gross margin as a percent of revenues increased to  73% for  the  year
ended December 31, 2002 from 57% in the corresponding period of the prior  year.
The improvement  in  the  gross  margin  is  due to the  fact  that  during  the
second  quarter of this year we terminated customers in a region, where  we  had
a  relatively  high tariff cost for the services provided by the incumbent local
exchange company.  We had been unable to charge our customers in that region the
fees commensurate with our normal gross margin, so we decided to cease providing
services in that region.

Prepaid's  selling,  general  and  administrative  expenses  for the year  ended
December 31,  2002 decreased  to  $21,082  from  $83,260  for  the corresponding
period  of the  prior year.  The decrease  is  attributed  to our  reduction  of
administrative staff and sales personnel.

During the year ended December 31, 2002, sales revenue from LMDS Communications'
continuing  operations decreased to $41,331 from $46,422  for the  corresponding
period of the prior year. The  decrease  in revenue is  attributed to  the  fact
that the results for  2001  include  revenues in the amount of  $14,092 from the
sale  of  equipment and setup fees to new customers,  which did not occur during
2002.

LMDS' gross margin as a percent of revenues increased to 81% for the  year ended
December 31, 2002 from a negative  margin in  the  corresponding period  of  the
prior  year. The improvement  in  the  gross  margin  is  due to the  fact  that
during 2001 we incurred substantial startup expenses related to the  development
and construction of our initial LMDS systems, and the fact that in  late 2001 we
successfully negotiated substantial discounts in the cost of  our  bandwidth and
transport  costs.  These  savings were   implemented  in 2002.  Additionally, we
received various and substantial credits  during  2002  for overcharges from our
vendors related to expenses incurred in 2001.

LMDS' selling,  general and administrative  expenses for the year ended December
30, 2002 increased to $368,149 from $297,824 for the corresponding period of the
prior  year. The  increase  is  attributed  primarily  to additional  site  rent
obligations  that  we  had not incurred during 2001, and depreciation on capital
equipment acquired in 2001 and 2002.


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

At  December  31,  2002,  Prime  had  cash  of  $442,433  and working capital of
$8,008.

Cash  used  in  operations  was $1,105,641 for the year ended  December 31, 2002
compared to  $205,234  in 2001.  The cash used in operations  during   2002  was
primarily  attributed  to the net loss and the reduction of accounts payable and
other  current   liabilities,   offset  by  noncash  charges  of  $151,845   for
depreciation  and  amortization,  and a noncash charge of $78,300  for  services
paid through the issuance of common and preferred stock.

Cash used in  investing  activities,  consisting  of  purchases  of property and
equipment in the amount of $291,934  offset by the proceeds from disposal of the
Zenith  Technology subsidiary,  was $213,562  for the period ended December  31,
2002.  Cash  used  in  investing activities, consisting of purchases of property
and equipment, was $104,030 for the period ended December 31, 2001.

Cash provided by financing activities was $1,759,934 for the year ended December
31, 2002.  These funds are primarily attributable to the funding of our RUS loan
agreement.  Cash  provided  by  financing  activities  was  $46,873 for the year
ended December 31, 2001.

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

In April 2001 each of the five Directors  exercised  100,000 options to  acquire
Common stock, raising $21,873. In May the Company sold  500,000 of its shares in
a private placement offering, raising $25,000.

On  January  31,  2001 a letter of credit for the  benefit of an LMDS  equipment
supplier  expired,  and  $170,772   of  cash  restricted  for  use as collateral
securing the letter of credit was released to us in February 2001.

In February 2001 we entered into an agreement with a leasing company for a lease
in  the  amount  of $33,612 for equipment used in the  development  of the fixed
broadband wireless business.  In  2002  this  lease  was renegotiated and is now
included in our accounts payable and long term payables.

In  March  2001 we entered into an agreement with another leasing  company for a
Lease in the amount of $33,167  for  equipment  used in the  development  of the
fixed broadband wireless business.  In  2002  this lease was renegotiated and is
now included in our accounts payable and long term payables.

On March 15, 2001 we entered into an amended and restated  agreement with Swartz
wherein  we  granted  Swartz  an  additional  152,100  commitment  warrants  and
eliminated  the  requirement  to issue  Swartz any  additional  warrants  in the
future; the agreement  previously  provided for us to issue Swartz 1 warrant for
every 10 common  shares we sell them in the future.  This Agreement has expired,
and we will not sell any shares to Swartz under that Agreement.

On March 29, 2001 our wholly owned  subsidiary, Mid-Cal  Express,  Inc., filed a
Chapter VII  bankruptcy  petition to liquidate the company.  This is the company
that previously was in the trucking  business,  and whose operating  assets were
sold at the end of 1998.  This event  will created a  non-recurring  gain in the
approximate amount of $700,000 for Prime's consolidated statements of operations
for the  year  ended  December  31,  2001.  Approximately  $700,000  of  Mid-Cal
liabilities  was  eliminated  from  our  consolidated  balance  sheet,  and  our
working  capital  and  stockholders'  equity   was  increased  by  approximately
$700,000.

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

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

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



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

Prime has a Limited  Operating  History.  If Prime does not successfully  build,
install,  and implement its  telecommunication  systems, it will incur continued
losses,  and may not be able to  remain  in  business.  Prime  has  generated  a
cumulative  net loss of  $8,040,831  for the period from its  inception  through
December  31,  2002.  The ultimate  success of Prime will,  among other  things,
depend on its ability to build,  install  and  implement  the  telecommunication
systems  necessary  to  provide  high  speed  telecommunications  services.  The
likelihood  of the success of Prime must be considered in light of the problems,
expenses,  difficulties,  complications  and delays  frequently  encountered  in
connection  with the development of a new business  enterprise,  the competitive
environment in which Prime operates,  and the frequently  encountered  delays in
the delivery of infrastructure equipment by telecom equipment manufacturers.  In
2002, Prime experienced the late delivery of transport and  bandwidth components
ordered from more than one provider of these components for several of our newly
constructed  fixed wireless broadband systems. These components must be in place
before we are  able  to  provide services to our customers.  During 2002 we also
experienced  significant  delays  in receiving  customer support from one of our
infrastructure  providers;  this caused us to be in short  supply of spare parts
required to adequately maintain our systems. By the end of  2002 we were able to
get  the parties for these  problems to rectify  their procedures  for providing
customer support to us.  However,  there are  no  assurances that  these  supply
problems will not occur again in the future.

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

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

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

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

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

Prime has a History of Losses and a Limited Operating History. If Prime does not
successfully  build its  telecommunication  systems  and market its  services to
customers,  it will  incur  continued  losses,  and may not be able to remain in
business. Prime has generated a cumulative net loss of $8,040,831 for the period
from its inception  through December 31, 2002. In order to establish  profitable
operations, Prime must successfully market its systems and keep its expenditures
in line with moderate revenues.  Prime is subject to a number of risks including
its ability to  successfully  market,  distribute and sell its product,  intense
competition,  and  its  reliance  on a set of  FCC  licenses  authorizing  local
multipoint distribution services within licensed service areas.

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

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

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


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


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

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

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

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


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

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

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

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

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

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


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

In January 2001, the FASB Emerging Issues Task Force issued EITF 00-27 effective
for  convertible  debt  instruments  issued  after   November  16,  2000.   This
pronouncement requires the use of the intrinsic value method for recognition  of
the detachable and imbedded  equity features  included  with  indebtedness,  and
requires  amortization of the amount associated with the convertibility  feature
over  the  life  of  the  debt  instrument rather than the period for which  the
instrument first  becomes  convertible.  Inasmuch as all debt  instruments  were
entered into prior to November 16, 2000 and all of the debt discount relating to
the  beneficial  conversion  feature  was  previously  recognized  as expense in
accordance with  EITF 98-5,  there  is  no impact on these financial statements.
This  EITF 00-27,  could impact future financial statements,  should the Company
enter into such agreements.

In July 2001, the FASB issued SFAS No. 141 "Business Combinations." SFAS No. 141
Supersedes  Accounting Principles Boards  ("APB") No. 16  and  requires that any
business combinations  initiated  after June 30, 2001  be  accounted  for  as  a
purchase, therefore, eliminating the pooling-of-interest method defined  in  APB
16.  The statement  is  effective  for  any business combination initiated after
June 30, 2001, and applies to all business combinations  accounted  for  by  the
purchase method for which the date of acquisition is July 1, 2001 or later.  The
adoption did not have a material impact on the  Company's financial  position or
results  of  operations   since  the  Company  has   not  participated  in  such
activities covered under this pronouncement.

In July 2001,  the  FASB  issued SFAS No. 142, "Goodwill and Other Intangibles."
SFAS No. 142 addresses the initial recognition, measurement and amortization  of
intangible assets acquired individually or with a group of other assets (but not
those acquired in  a  business  combination),  and  addresses  the  amortization
provisions for excess cost over fair value of net assets acquired or intangibles
acquired in a business combination.  The statement is effective for fiscal years
beginning  after  December 15,  2001,  and  is  effective July 1,  2001  for any
intangibles acquired in a business combination initiated  after  June 30,  2001.
The  Company  does  not  expect  the  adoption  to have a material impact on the
Company's financial position or results of operations.

In   October  2001,  the FASB   issued  SFAS  No. 143,  "Accounting   for  Asset
Retirement Obligations,"  which requires companies to record the fair value of a
liability for asset retirement  obligations  in  the  period  in  which they are
incurred.  The statement applies to a  company's  legal  obligations  associated
with the  retirement  of  a  tangible long-lived asset  that  results  from  the
acquisition, construction,  and development or through the normal operation of a
long-lived asset.  When a  liability  is  initially  recorded, the company would
capitalize the  cost,  thereby  increasing  the  carrying  amount of the related
asset.  The  capitalized  asset  retirement cost is depreciated over the life of
the respective asset while the liability is accreted to its present value.  Upon
settlement of the liability, the obligation is settled at its recorded amount or
the company incurs a gain or loss.  The statement is effective for fiscal  years
beginning after June 30, 2002.  The Company does not expect the adoption to have
a material impact to the Company's financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of  Long-Lived Assets."  Statement  144  addresses  the  accounting and
reporting  for  the  impairment  or disposal of long-lived assets. The statement
provides a single accounting model for long-lived assets to be disposed of.  New
criteria must be met to classify  the  asset  as  an  asset  held-for-sale. This
statement also focuses on reporting the effects of a disposal  of a segment of a
business.  This statement is effective for fiscal years beginning after December
15, 2001.  The Company does not expect the adoption to have a material impact to
the Company's financial position or results of operations.

In April 2002, the FASB issued Statement No. 145, "Rescission of FASB Statements
No.  4,  44,  and  64,  Amendment  of  FASB  Statement  No.  13,  and  Technical
Corrections." This Statement rescinds FASB Statement No. 4, "Reporting Gains and
Losses from Extinguishment of Debt", and an amendment  of that  Statement,  FASB
Statement  No.  64,  "Extinguishments  of  Debt  Made  to  Satisfy  Sinking-Fund
Requirements" and FASB Statement No. 44,  "Accounting for Intangible  Assets  of
Motor Carriers". This Statement amends FASB Statement No.  13,  "Accounting  for
Leases", to eliminate an inconsistency between the required accounting for sale-
Leaseback  transactions  and   the  required   accounting  for   certain   lease
modifications that have economic  effects  that  are  similar  to sale-leaseback
transactions. The provisions of  the  statement  related  to  the  rescission of
statement 4 was required to  be  applied in fiscal years beginning after May 15,
2002, with earlier  adoption  encouraged.  The  Company  elected  to adopt these
provisions as of December 31, 2002 and, accordingly, the gain on  extinguishment
of debt in 2001 that was classified as an extraordinary item  which did not meet
the criteria in Opinion 30  for classification  as  an extraordinary  item,  was
reclassified.

In June 2002,  the  FASB  issued  Statement  No.  146,   "Accounting  for  Costs
Associated with Exit or Disposal Activities." This Statement addresses financial
accounting  and  reporting for costs associated with exit or disposal activities
and  nullifies  Emerging  Issues  Task  Force  (EITF) Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring)."  The provisions
of this Statement  are effective  for  exit  or  disposal  activities  that  are
initiated  after  December  31, 2002,  with early  application  encouraged.  The
Company  does not expect the adoption to have a material impact to the Company's
financial position or results of operations.

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

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

In January 2003,  the  FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities." Interpretation 46 changes the criteria by which one
company  includes  another  entity  in  its  consolidated  financial statements.
Previously,  the  criteria  were  based  on  control  through  voting  interest.
Interpretation  46  requires a variable interest entity to be consolidated  by a
company if that company is subject to a majority  of the risk of loss  from  the
variable interest entity's activities or entitled  to  receive a majority of the
entity's  residual  returns  or  both.  A company that  consolidates a  variable
interest  entity  is  called  the   primary  beneficiary  of  that entity.   The
consolidation requirements of  Interpretation 46 apply  immediately  to variable
interest entities created after January 31, 2003. The consolidation requirements
apply to older entities in the first fiscal year  or  interim  period  beginning
after June 15, 2003.   Certain  of  the  disclosure  requirements  apply in  all
financial statements issued  after  January 31, 2003,  regardless  of  when  the
variable interest entity was  established.  The  Company  does  not  expect  the
adoption to have a material  impact  to  the  Company's  financial  position  or
results of operations.



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

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



ITEM  7.  FINANCIAL  STATEMENTS

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


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

None

                                    PART III

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

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

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

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

 a)  Directors  and  Executive  Officers  of  the  Company



NAME             AGE  DIRECTOR SINCE              POSITION
---------------  ---  --------------  ---------------------------------
Norbert Lima      57       1999       Chief Executive Officer, Director

Stephen Goodman   59       1999       Chief Financial Officer,
                                      Corporate Secretary, Director

Adrian Lima       32                  Vice President - Engineering

William Turley    65       2000       Director, Member of Audit Committee

Dennis Hinz       49       2000       Director, Chairman of Audit Committee

Martin Sokolowski 56       2002       Director



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



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

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


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


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



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



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



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



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

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



On March 29, 2001 our wholly owned  Mid-Cal  Express,  Inc.  subsidiary  filed a
Chapter VII  bankruptcy  petition to liquidate the company.  This is the company
that previously was in the trucking  business,  and whose operating  assets were
sold  at  the end of 1998.  This event  created  a  non-recurring  gain  in  the
approximate amount of $700,000 for Prime's consolidated statements of operations
for  the  year  ended  December 31,  2001.  Approximately  $700,000  of  Mid-Cal
liabilities  were  eliminated  from  our  consolidated  balance sheet,  and  our
working  capital and  stockholders'  equity  was  increased   by   approximately
$700,000. Mr. Norbert Lima was the CEO of Mid-Cal and Mr. Goodman was the CFO of
Mid-Cal.



ITEM  10.  EXECUTIVE  COMPENSATION

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

<TABLE>
<CAPTION>


----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
      Name            Principal      Year  Salary   Options   Exercise     Exercisable  Expiration
                      Position                                  Price
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
<S>                <C>               <C>    <C>     <C>      <C>            <C>         <C>
  Norbert Lima           CEO         2001  $100,000  95,834     $.32813      12/31/01    12/31/04
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
                                     2002  $100,000 100,000     $.20         12/31/02    12/31/05
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
  Stephen Goodman        CFO         2001  $100,000  95,834     $.32813      12/31/01    12/31/04
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
                                     2002  $100,000 100,000     $.20         12/31/02    12/31/05
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
  Adrian Lima      VP-Engineering    2001  $ 72,000  68,971     $.32813      12/31/01    12/31/04
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------
                                     2002  $ 76,000  76,000     $.20         12/31/02    12/31/05
----------------- ------------------ ----- -------- ------- -------------- ------------ ----------

</TABLE>

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

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

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

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

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

On  December 31,  2002 there were  outstanding  options on 1,773,313  shares  to
various individuals. Each option  provides  the right to  purchase  one share of
common stock. 476,102 of these options expire December 31, 2003, 476,320 expire
December 31, 2004,  and  851,100  expire December 31, 2005. All  of the options
expiring in 2003 are exercisable  at  $.21875. The options expiring in 2004 are
exercisable at  various  prices from $.10 to $.5625  and  the  average exercise
price is $.30.  All of the options expiring in 2005 are exercisable at $.20 per
share. Mr. Goodman, Mr. Adrian Lima, and Mr. Norbert Lima have rights under the
Year 2002, Year 2001, and the Year 2000 Employee Stock Option Programs. Messrs.
Turley and Hinz each have 20,000  options under the Year 2001 Outside  Director
Stock  Option   Program.   These   options are currently exercisable and expire
December 31, 2004. Messrs Turley, Hinz, and Sokolowski each have 20,000 options
under the  Year 2002 Outside  Director Stock Option Program. These  options are
currently  exercisable  and  expire  December 31, 2005.   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.

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

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

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

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



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

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


ITEM  11.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT

The  following  table sets forth  certain  information  about the  ownership  of
Prime's  Common  Stock as of December 31, 2002,  by (i) those  persons  known by
Prime to be the beneficial  owners of more than 5 percent of the total number of
outstanding  shares of any  class  entitled  to vote;  (ii)  each  director  and
officer;  and (iii) all  directors  and officers of Prime as a group.  The table
includes Common Stock issuable upon the exercise of options that are exercisable
within 60 days.  Except as  indicated in the  footnotes to the table,  the named
persons  have sole  voting and  investment  power with  respect to all shares of
Prime common  stock shown as  beneficially  owned by them,  subject to community
property laws where applicable.  The ownership figures in the table are based on
the books and records of Prime.

               Name of         Amount and
Title of       Beneficial      Nature of
Class          Owner           Interest    Percentages      Address
---------------------------------------------------------------------------
Common Stock                                          409 Center Street
Par Value                                             Yuba City, CA 95991
$0.0001        Stephen Goodman(a)6,016,013    19%

Common Stock                                          409 Center Street
Par Value                                             Yuba City, CA 95991
$0.0001        Adrian Lima    (b)1,197,524     4%

Common Stock                                          409 Center Street
Par Value                                             Yuba City, CA 95991
$0.0001        Norbert Lima   (c)5,336,774    17%

Common Stock                                         155 Montgomery Street, #609
Par Value                                            San Francisco, CA 94104
$0.0001        Irving Pfeffer    2,883,683     9%

Common Stock                                          120 W 45 Street
Par Value                                             New York, NY 10036
$0.0001        David Shaw        2,030,744     6%

Common Stock                                         300 Colonial Center Parkway
Par Value      Swartz Private                        Roswell, GA 30076
$0.0001          Equity LLC   (d)1,673,100     5%

Common Stock  All Directors
Par Value         and
$0.0001        Officers as
                 a Group     (e)12,965,311    40%
--------------------------------------------------------------------------------



a)   Includes options to purchase 223,750 common shares, which are currently
     exercisable.
b)   Includes options to purchase 125,111 common shares, which are currently
     exercisable.
c)   Includes options to purchase 223,750 common shares, which are currently
     exercisable.
d)   Includes 1,673,100 warrants, all of which are currently exercisable.
e)   Includes options to purchase 677,611 shares, which are currently
     exercisable.


ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS


Norbert  Lima, a Director and the  Company's  CEO, owns the real estate in which
the Company's  headquarters is located. The Company paid rent of $20,160 in 2002
and  $20,160  in 2001 on its  headquarters.  A three year  lease  agreement  was
authorized  by the  Board of  Directors  in June 2000 and was  entered  into and
executed that month.

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


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

(a)   INDEX  TO  EXHIBITS

4.1      Proxy for 2002 Annual Meeting of Shareholders

99.1     Certifications

(b) No  reports  on Form 8-K were  filed  during  the last  quarter  of the year
covered by this report.
ITEM  14. CONTROLS AND PROCEDURES.


The Company's management,  under  the  supervision and with the participation of
the Company's principal executive officer  and principal financial officer,  has
evaluated the Company's disclosure controls  and procedures within 90 days prior
to  the  filing  date  of  this  Annual Report on  Form 10-K.  Based  upon  that
evaluation,  the Company's  principal  executive officer and principal financial
officer have concluded that the Company's disclosure controls and procedures are
effective. There were no significant changes  in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation,  including  any  corrective actions with regard to
significant deficiencies and material weaknesses.



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

Form  10-KSB  Availability:
A copy of the 2002 Form 10-KSB filed with the Securities and Exchange Commission
will be  forwarded  preferably  by  email,  upon  request,  to any  shareholder.
Requests should be directed to:

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

Transfer  Agent  and  Registrar:

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


Independent  Auditors:

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


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






















                                   SIGNATURES
                                   ----------


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  registrant  has duly  caused  this report to be signed on its
behalf by the  undersigned,  thereunto duly  authorized.  Dated this 19th day of
March, 2003.


                                        Prime  Companies,  Inc.

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

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

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


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


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


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

<PAGE>
<TABLE>
<CAPTION>

















CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Prime Companies, Inc. (the "Company")
on Form 10-KSB for the year ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Norbert J. Lima,
Chief Executive Officer of the Company, certify, pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, that:

(1) I have reviewed the Report.

(2) Based upon my knowledge, the Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which such statements were
made, not misleading.

(3) Based upon my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition and results of operations of the Company, as of, and for,
the periods presented in the Report.

(4) I and the other certifying officers of the Company are responsible for
establishing and maintaining disclosure controls and procedures for the Company
and have: (a) designed such disclosure controls and procedures to ensure that
material information is made known to us, particularly during the period in
which the Report is being prepared; (b) evaluated the effectiveness of the
Company's disclosure controls and procedures within 90 days of the date of the
Report; and (c) presented in the Report our conclusions about the effectiveness
of the disclosure controls and procedures based on the required evaluation.

(5) I and the other certifying officers have disclosed to the Company's auditors
and to the audit committee of the board of directors (or persons fulfilling the
equivalent function):

    (a)all significant deficiencies in the design or operation of internal
    controls (a pre-existing term relating to internal controls regarding
    financial reporting) which could adversely affect the Company's ability to
    record, process, summarize and report financial data and have identified for
    the Company's auditors any material weaknesses in internal controls; and
    (b) any fraud, whether or not material, that involves management or other
    employees who have a significant role in the Company's internal controls.

(6) I and the other certifying officers have indicated in the Report whether or
not there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.



/s/ Norbert J. Lima
------------------------
Norbert J. Lima
Chief Executive Officer
March 19, 2003

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934,
RULES 13a-14 AND 15d-14
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Prime Companies, Inc. (the "Company") on
Form 10-KSB for the year ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Stephen Goodman,
Chief Financial Officer of the Company, certify, pursuant to Rules 13a-14 and
15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002, that:

(1) I have reviewed the Report.

(2) Based upon my knowledge, the Report does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements made, in light of the circumstances under which such statements were
made, not misleading.

(3) Based upon my knowledge, the financial statements, and other financial
information included in the Report, fairly present in all material respects the
financial condition and results of operations of the Company, as of, and for,
the periods presented in the Report.

(4) I and the other certifying officers of the Company are responsible for
establishing and maintaining disclosure controls and procedures for the Company
and have: (a) designed such disclosure controls and procedures to ensure that
material information is made known to us, particularly during the period in
which the Report is being prepared; (b) evaluated the effectiveness of the
Company's disclosure controls and procedures within 90 days of the date of the
Report; and (c) presented in the Report our conclusions about the effectiveness
of the disclosure controls and procedures based on the required evaluation.

(5) I and the other certifying officers have disclosed to the Company's auditors
and to the audit committee of the board of directors (or persons fulfilling the
equivalent function):

    (a)all significant deficiencies in the design or operation of internal
    controls (a pre-existing term relating to internal controls regarding
    financial reporting) which could adversely affect the Company's ability to
    record, process, summarize and report financial data and have identified for
    the Company's auditors any material weaknesses in internal controls; and
    (b) any fraud, whether or not material, that involves management or other
    employees who have a significant role in the Company's internal controls.

(6) I and the other certifying officers have indicated in the Report whether or
not there were significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.


/s/ Stephen Goodman
---------------------------
Stephen Goodman
Chief Financial Officer
March 19, 2003



















                                                                                                PAGE

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

Consolidated Balance Sheets - December 31, 2002 and 2001.........................................F-3

Consolidated Statements of Operations - For the Years Ended December 31, 2002 and 2001...........F-4

Consolidated Statements of Stockholders' Equity (Deficit)- For the Years Ended
     December 31, 2002 and 2001 .................................................................F-5

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

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



                                               F-1
<PAGE>
















































                          INDEPENDENT AUDITORS' REPORT




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



We  have  audited  the  accompanying  consolidated  balance   sheets   of  Prime
Companies, Inc. and  subsidiaries as of  December 31,  2002  and 2001,  and  the
related  consolidated statements of  operations, stockholders' equity (deficit),
and cash flows for the years then ended. These consolidated financial statements
are  the responsibility  of the Company's management.  Our  responsibility is to
express  an  opinion  on these  consolidated  financial  statements based on our
audits.

We  conducted  our  audits  in  accordance   with  auditing  standards generally
accepted in the United States of America.  Those  standards require that we plan
and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the
consolidated  financial  statements are free of material  misstatement. An audit
includes  examining,  on  a  test  basis,  evidence  supporting  the amounts and
disclosures in the  consolidated  financial statements.  An audit  also includes
assessing the  accounting  principles  used  and significant  estimates  made by
management, as well as evaluating the overall 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, 2002 and 2001, and the results of  their
operations  and their cash flows  for the years then ended  in  conformity  with
accounting principles  generally  accepted in the United States of America.




/s/ STONEFIELD JOSEPHSON, INC.

STONEFIELD JOSEPHSON, INC.
Certified Public Accountants

Santa Monica, California
February 28, 2003











                                      F-2

<PAGE>
<TABLE>

                    PRIME COMPANIES, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                                                  December 31,    December 31,
                                                                      2002            2001
                                                                  ------------    ------------
                                     ASSETS
                                     ------
<S>                                                                <C>             <C>
CURRENT ASSETS:
     Cash                                                          $   442,433     $     1,702
     Accounts receivable, net of allowance of $889 for 2002
        and $317 for 2001                                               15,486          31,535
     Inventory                                                          96,593          88,742
     Prepaid expenses and other current assets                          51,725          58,988
                                                                   -----------     -----------
        Total current assets                                           606,237         180,967

PROPERTY AND EQUIPMENT, net of Accumulated Depreciation
        of $365,538 for 2002 and $213,693 for 2001                     603,531         463,442
LICENSES, net of Accumulated Amortization
        of $165,072 for 2002 and $117,909 for 2001                     306,563         353,726
GOODWILL                                                               112,182         112,182
                                                                   -----------     -----------
TOTAL ASSETS                                                       $ 1,628,513     $ 1,110,317
                                                                   ===========     ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                      ----------------------------------------------

CURRENT LIABILITIES:
     Accounts payable                                              $   290,928         721,930
     Current maturities of note payable, Rural Utilities Service       136,904            --
     Accrued payroll and other current liabilities                      99,941         214,125
     Current maturities of long term debt                               61,765            --
     Current maturities of capital lease obligations                     1,913           1,652
     Deferred revenues                                                   6,778           9,242
                                                                   -----------     -----------
              Total current liabilities                                598,229         946,949
                                                                   -----------     -----------
LONG TERM LIABILITIES:
     Note payable, Rural Utilities Service,
         net of current maturities                                   1,529,433            --
     Long term debt, net of current maturities                          28,742            --
     Capital lease obligations, net of current maturities               15,670          17,580
                                                                   -----------     -----------
              Total long term liabilities                            1,573,845          17,580
                                                                   -----------     -----------

STOCKHOLDERS' EQUITY (DEFICIT):
     Preferred stock, $.0001 par value, 50,000,000 shares
         authorized, 6,500 issued and outstanding in 2002
         and none issued and outstanding in 2001                             1            --
     Common stock, $.0001 par value, 100,000,000 shares
         authorized, 32,274,384 issued and outstanding
         in 2002 and 31,984,384 issued and outstanding in 2001           3,227           3,198
     Additional paid-in capital                                      7,494,042       7,410,772
     Accumulated deficit                                            (8,040,831)     (7,268,182)
                                                                   -----------      ----------
              Total stockholders' equity (deficit)                    (543,561)        145,788
                                                                   -----------      ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)               $ 1,628,513      $1,110,317
                                                                   ===========      ==========

       See accompanying notes to these consolidated financial statements.

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

                                 PRIME COMPANIES, INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                        FOR THE YEARS ENDED
                                                                           DECEMBER  31,
                                                              ---------------------------------------
                                                                       2002                   2001
                                                              ---------------       -----------------


<S>                                                           <C>                   <C>
SALES REVENUES                                                $       284,617       $        455,202

COST OF SALES                                                         116,283                389,595
                                                              ----------------      -----------------
GROSS PROFIT                                                          168,334                 65,607

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES                       1,004,785              1,527,224
                                                              ----------------      -----------------
LOSS FROM OPERATIONS                                                 (836,451)            (1,461,617)
                                                              ----------------      -----------------
OTHER INCOME (EXPENSE):
     Gain on debt forgiveness                                            --                  699,340
     Net Gain from sale of interest in subsidiary                      78,372                   --
     Interest income                                                      151                  2,774
     Interest expense                                                 (32,641)                (8,211)
     Other income, net                                                 21,320                 24,720
     Write off of deferred offering costs                                --                 (882,911)
                                                              ----------------      -----------------
         Net other income (expense)                                    67,202               (164,288)
                                                              ----------------      -----------------
NET LOSS BEFORE TAXES                                                (769,249)            (1,625,905)
     Provision for taxes                                                3,400                  2,800
                                                              ----------------      -----------------
NET LOSS                                                             (772,649)            (1,628,705)
                                                              ================      =================

BASIC & DILUTED PER SHARE INFORMATION:
                                                              ----------------      -----------------
    Net loss                                                  $         (0.02)       $         (0.06)
                                                              ================      =================

WEIGHTED AVERAGE SHARES OUTSTANDING                                32,180,110              28,684,916
                                                              ================      =================

                   See accompanying notes to these consolidated financial statements.


                                                  F-4

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



























                                                       PRIME COMPANIES, INC. AND SUBSIDIARIES

                                               CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)
                                                   FOR THE YEARS ENDED DECEMBER 31, 2002 and 2001


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


<S>                                    <C>          <C>        <C>            <C>            <C>          <C>            <C>
BALANCES January 1, 2001              26,717,296    $  2,672   $ 7,133,001    $      --     $(856,005)    $(5,639,477)   $  640,191

 Issuance of common stock, net of
   offering costs                      3,476,387          50        24,948           --          --              --          24,998
 Exercise of options                     100,000          10        21,865           --          --              --          21,875
 Common stock issued for services      1,690,701         466       204,052           --          --              --         204,518
 Warrants issued in connection
   with equity line                         --           --         26,906           --       (26,906)           --            --
 Elimination of Deferred Offering Costs     --           --           --             --       882,911            --         882,911
 Net Loss                                   --           --           --             --          --        (1,628,705)   (1,628,705)
                                     -----------    --------   -----------    -----------   ---------     -----------    ----------
BALANCES, December 31, 2001           31,984,384    $  3,198   $ 7,410,772           --     $    --       $(7,268,182)   $  145,788
                                     -----------    --------   -----------    -----------   ---------     -----------    ----------

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

                   See accompanying notes to these consolidated financial statements.

                                                  F-5

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









































                              PRIME COMPANIES, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                     FOR THE YEARS ENDED
                                                                          DECEMBER 31,
                                                           ---------------------------------------
                                                                      2002                2001
                                                           ------------------  -------------------
<S>                                                        <C>                 <C>

CASH FLOW FROM OPERATING ACTIVITIES:
    Net loss                                               $        (772,649)  $      (1,628,705)
    Adjustments to reconcile net loss to net cash
       used in operating activities:
     Depreciation of property and equipment                          151,845             124,652
     Preferred stock issued for services                              65,000                --
     Net gain from sale of interest in subsidiary                    (78,372)               --
     Amortization of licenses                                         47,163              87,231
     Common stock issued for services                                 13,300             204,518
     Write off of Deferred Offering Costs                               --               882,911
     Gain on debt forgiveness                                           --              (699,340)
    Changes in operating assets and liabilities:
     Accounts payable                                               (431,002)            363,053
     Accrued payroll and other current liabilities                  (113,923)            149,969
     Accounts receivable                                              16,049              (3,714)
     Inventory                                                        (7,851)            (50,216)
     Prepaid expenses and deposits                                     7,263             (33,088)
     Deferred revenues                                                (2,464)             (2,505)
     Restricted cash                                                    --               400,000
                                                           ------------------  -----------------
         Net cash used in operating activities                    (1,105,641)           (205,234)
                                                           ------------------  -----------------

CASH FLOW FROM INVESTING ACTIVITIES:
     Proceeds from sale of subsidiary                                 81,000                --
     Proceeds from sale of shares in subsidiary to related parties    30,000                --
     Purchases of property and equipment                            (291,934)           (104,030)
     Purchase of shares in subsidiary from related parties           (32,628)               --
                                                           -----------------   -----------------
         Net cash used in investing activities                      (213,562)           (104,030)
                                                           ------------------  -----------------

CASH FLOW FROM FINANCING ACTIVITIES:
     Proceeds from note payable                                    1,700,990                --
     Proceeds from long term debt                                    120,948                --
     Proceeds from sale of common stock                                5,000              46,873
     Repayments on notes payable                                     (34,653)               --
     Repayments on long-term debt and capital lease obligations      (32,351)               --
                                                           ------------------  -----------------
         Net cash provided by financing activities                 1,759,934              46,873
                                                           -----------------   -----------------

NET INCREASE (DECREASE) IN CASH                                      440,731            (262,391)

CASH, beginning of year                                                1,702             264,093
                                                           -----------------   -----------------
CASH, end of year                                          $         442,433   $           1,702
                                                           =================   =================

SUPPLEMENTAL CASH FLOW INFORMATION:
     Cash payments for:
         Interest                                          $          31,133   $           5,605
                                                           =================   =================
         Income taxes                                      $            --     $            --
                                                           =================   =================






SUPPLEMENTAL DISCLOSURE OF NON-CASH
    TRANSACTIONS:

     Issuance of preferred stock for services              $          65,000   $            --
                                                           =================   =================
     Issuance of common stock in exchange for services     $          13,300   $         204,518
                                                           =================   =================
     Write off of Deferred Offering Costs                  $            --     $         882,911
                                                           =================   =================
     Warrants issued in connection with Swartz
         Equity Agreement                                  $            --     $          26,906
                                                           =================   =================


                See accompanying notes to these consolidated financial statements.

                                                  F-6
</TABLE>
<PAGE>




















































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



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

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

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

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

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

                                      F-7
<PAGE>










































                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

          The  Company  also  has  an  80% ownership  interest  in Bright-Bridge
          Communications Networks, Inc.,  a  Delaware  corporation  organized in
          2002 in conjunction with the Company's  agreement  with  the  Virginia
          Tech Foundation, Inc.  for  the  commercialization of the Foundation's
          LMDS license in the Roanoke, Virginia area.

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

         Principles of  Consolidation - The  consolidated  financial  statements
         include  the   accounts  of  Prime  Companies,  Inc., and  its  wholly,
         majority owned subsidiaries    (collectively,    "the   Company").  All
         significant   intercompany   balances   and   transactions   have  been
         eliminated  in consolidation.  The  minority interest in its 80%  owned
         subsidiary has  not been disclosed as the subsidiary has an accumulated
         deficit at December 31, 2002.

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

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


                                      F-8

<PAGE>








                    PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

         Licenses  -  Licenses  include   the   amounts   paid   to  the  FCC to
         purchase licenses for Local Multipoint Distribution Services in certain
         markets. The licenses are being amortized on a straight-line basis over
         the  initial  term of the  license,  which is ten  years.  The  Company
         recognized  amortization  expense for the years ended December 31, 2002
         and 2001 of $47,163 and $47,164 respectively.

         Goodwill  -  Goodwill has been recorded in the amount of  $110,182  for
         the Marathon transaction  and  $2,000  for   the   NTCOMM  transaction.
         An analysis of the  value of  the  goodwill  was  performed in December
         2002,  and it  was  determined  that  there   has been no impairment to
         the carrying value of the goodwill.

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

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

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

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

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




                                      F-9
<PAGE>













                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

         Deferred  Offering Costs - The amount  represents the fair market value
         of warrants  issued to secure equity  financing  that was in process at
         December  31,  2001 and  2000.  This  amount,  totaling  $882,911   was
         written off entirely in  2001.

         Stock-Based Compensation - The Company has elected to follow Accounting
         Principles  Board  Opinion  No.  25,  "Accounting  for Stock  Issued to
         Employees" (APB25) and related interpretations, including the Financial
         Accounting  Standards Board  Interpretation 44, "Accounting for Certain
         Transactions  involving Stock Compensation" which was effective July 1,
         2000, in accounting for its employee stock options.  In accordance with
         SFAS  No.  123  "Accounting  For  Stock-Based  Compensation" (SFAS123),
         The  Company  will  disclose  the  impact of  adopting  the  fair value
         accounting  of  employee   stock  options.   Transactions   in   equity
         instruments  with   non-employees  for  goods  or  services  have  been
         accounted for using the fair value method prescribed by SFAS123.

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


                                       F-10

<PAGE>







                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


         The  customers  of  the  Company's  operations  are  located  primarily
         in  California  and  Pennsylvania.   At  December  31, 2002  and  2001,
         approximately  $9,346  and $25,659  representing  82% and 70%  of trade
         receivables  was  due  from  four  customers in  both years.  No  other
         customers   accounted  for  more   than  10%  of  the  Company's  trade
         receivables at December 31, 2002 and 2001.


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


         Recent Accounting Pronouncements:

          In  July  2001,  the FASB issued SFAS No. 141 "Business Combinations."
          SFAS No. 141 which supercedes Accounting Principles Boards ("APB") No.
          16  and  requires that any business combinations  initiated after June
          30,  2001 be accounted for as a  purchase,  therefore, eliminating the
          pooling-of-interest  method  defined  in   APB 16.   The statement was
          effective for  any business combination initiated after June 30, 2001,
          and  applies  to  all  business  combinations  accounted  for  by  the
          purchase  method  for which the date of acquisition is July 1, 2001 or
          later.  Adoption did not have any  impact  on  the Company's financial
          position  or   results   of  operations  since  the  Company  has  not
          participated in  such activities covered under this pronouncement.

          In July 2001,  the  FASB  issued  SFAS No. 142,  "Goodwill  and  Other
          Intangibles."  SFAS  No.  142  addresses   the   initial  recognition,
          measurement   and   amortization   of   intangible   assets   acquired
          individually or with a group of other  assets  (but not those acquired
          in  a   business  combination),   and   addresses   the   amortization
          provisions  for  excess cost over fair value of net assets acquired or
          intangibles  acquired  in  a  business  combination.  The statement is
          effective for fiscal years  beginning  after  December 15,  2001,  and
          is effective July 1,  2001  for any intangibles acquired in a business
          combination initiated after  June  30,  2001.  The Company implemented
          this statement with effect from January 1, 2002,  which,  among  other
          requirements,  discontinued  the  amortization  of  goodwill  ($40,068
          during 2001).  The  Company  performed the transitional first year and
          annual  impairment   test  at  December 31, 2002  per  SFAS  142,  and
          determined that there is no material impairment.









                                      F-11
<PAGE>



                    PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          In  October  2001,  the FASB  issued  SFAS  No. 143,  "Accounting  for
          Asset  Retirement  Obligations,"  which  requires  companies to record
          the fair value of a liability for asset retirement obligations in  the
          period  in  which  they  are  incurred.  The  statement  applies  to a
          company's  legal  obligations  associated with  the  retirement  of  a
          tangible  long-lived  asset  that  results   from   the   acquisition,
          construction,  and  development  or through  the normal operation of a
          long-lived asset.  When  a  liability  is   initially   recorded,  the
          company would capitalize the  cost, thereby  increasing  the  carrying
          amount of the related asset.  The  capitalized  asset  retirement cost
          is  depreciated  over  the life of  the  respective  asset  while  the
          liability is accreted to its present value.  Upon  settlement  of  the
          liability, the obligation is settled at  its recorded  amount  or  the
          company incurs a gain or loss.  The statement is effective for  fiscal
          years  beginning after June 30, 2002.  The Company does not expect the
          adoption to have a material impact on the Company's financial position
          or results of operations.

          In October 2001, the FASB issued  SFAS  No.  144,  "Accounting for the
          Impairment or Disposal of Long-Lived Assets."  Statement 144 addresses
          the  accounting  and  reporting  for  the  impairment  or disposal  of
          long-lived assets. The statement provides  a single  accounting  model
          for long-lived assets to be disposed of.  New criteria must be met  to
          classify  the  asset as  an  asset  held-for-sale. This statement also
          focuses on reporting the effects of  a  disposal  of  a  segment  of a
          business. This statement is effective for fiscal years beginning after
          December 15, 2001.  The Company does not expect the adoption to have a
          material impact on the Company's  financial  position  or  results  of
          operations.

          In  April 2002, the  FASB  issued SFAS  No. 145,  "Rescission of  FASB
          Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13,  and
          Technical Corrections." This Statement rescinds  FASB Statement No. 4,
          "Reporting Gains and Losses  from  Extinguishment  of  Debt",  and  an
          amendment of that Statement, FASB Statement  No. 64,  "Extinguishments
          of Debt Made to Satisfy Sinking-Fund Requirements"  and FASB Statement
          No. 44, "Accounting for Intangible  Assets  of Motor  Carriers".  This
          Statement amends FASB  Statement  No.  13, "Accounting for Leases", to
          eliminate an inconsistency  between  the required accounting for sale-
          leaseback transactions  and  the required accounting for certain lease
          modifications that have  economic  effects  that  are similar to sale-
          leaseback transactions. The provisions of  the  statement  related  to
          the  rescission of statement  4 was required to  be  applied in fiscal
          years   beginning   after  May  15,  2002,   with   earlier   adoption
          encouraged.  The  Company  elected  to adopt these  provisions  as  of
          December 31, 2002 and, accordingly, the gain on extinguishment of debt
          in 2001 that was  previously  classified  as  an  extraordinary  item,
          which under SFAS 145  did not  meet the criteria for classification as
          an extraordinary item, was reclassified.

          In June 2002, the  FASB issued  SFAS No. 146,  "Accounting  for  Costs
          Associated with Exit or Disposal Activities." This Statement addresses
          financial accounting and  reporting  for costs associated with exit or
          disposal  activities  and  nullifies Emerging Issues Task Force (EITF)
          Issue  No.  94-3,  "Liability   Recognition   for   Certain   Employee
          Termination Benefits and  Other Costs  to  Exit an Activity (including
          Certain Costs Incurred in  a  Restructuring)."  The provisions of this
          Statement are effective for  exit  or  disposal  activities  that  are
          initiated after December 31, 2002, with early  application encouraged.
          The Company does not expect the adoption to  have a material impact on
          the Company's financial position or results of operations.

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

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

          In January 2003, the FASB issued Interpretation No. 46, "Consolidation
          of Variable Interest Entities." Interpretation 46 changes the criteria
          by which one  company   includes  another  entity  in its consolidated
          financial statements.  Previously,  the criteria were based on control
          through  voting  interest.  Interpretation  46  requires   a  variable
          interest  entity  to  be  consolidated by a company if that company is
          subject to  a  majority of the risk of loss from the variable interest
          entity's activities  or entitled to receive a majority of the entity's
          residual  returns  or  both.  A company  that  consolidates a variable
          interest entity is called the primary beneficiary of that entity.  The
          consolidation  requirements of  Interpretation 46 apply immediately to
          variable  interest  entities   created  after  January  31, 2003.  The
          consolidation requirements apply to older entities in the first fiscal
          year or interim  period beginning after June 15, 2003.  Certain of the
          disclosure requirements apply in all financial statements issued after
          January 31, 2003, regardless of when the variable interest entity  was
          established.  The  Company  does  not  expect  the  adoption to have a
          material impact  on  the  Company's  financial  position or results of
          operations.

                                       F-12

<PAGE>












                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

         These financial statements have  been prepared on a going concern basis
         as the  Company has  a remaining facility of approximately $3.3 million
         on the RUS loan agreement to finance the infrastructure development for
         the LMDS operations,  and has  arranged a loan of $9 million to finance
         its other operations  (Refer to the subsequent events footnote).  These
         financing arrangements should be sufficient for the  Company to sustain
         operations for at least the next twelve months.

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

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











































                                   F-13
<PAGE>



                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.       PROPERTY AND EQUIPMENT:
         -----------------------
<TABLE>
         Property and equipment at December 31, 2002 and 2001 consisted of the following:

<CAPTION>

                                                  2002          2001         ESTIMATED
                                                                             USEFUL LIVES
                                               ---------    ---------        ------------

           <S>                                <C>          <C>              <C>
           Office furniture and equipment      $  81,982    $  69,652        5 years
           Vehicles                               85,316       65,215        4 years
           Paging terminals                       71,764       71,764        7 years
           Site Improvements                      24,636       20,791        5 years
           DSL Equipment                           9,244       20,428        3 years
           LMDS Equipment                        460,892      349,596        7 years
           Fixed Broadband Wireless Equipment    235,235       79,689        3 - 7 years
                                               ---------    ---------
                 Total Property and equipment    969,069      677,135
           Less accumulated depreciation        (365,538)    (213,693)
                                               ---------    ---------
                                               $ 603,531    $ 463,442
                                               =========    =========
</TABLE>

         Depreciation expense for the years ended December 31,  2002  and  2001,
         was $151,845 and $124,652 respectively.


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

The Note Payable, Rural Utilities  Service  relates  to advances received on the
$5,012,000 broadband loan agreement  with the  US  Department  of  Agriculture's
Rural Utilities Service. Advances on the loan, which may only be made once every
30 days, expire on April 1, 2005,  and  the  maturity date  for repayment of all
outstanding principal and interest  is  April 1, 2012.  The  interest  rate  for
each advance is fixed at  the time  of  disbursement and is equal to the average
market yield on outstanding  marketable  Treasury  securities due April 1, 2012,
and averaged  4.84%  at  December 31,  2002.  Monthly payments  are  required to
repay the  principal  and interest no later than the maturity date. The interest
expense on this loan for 2002 totaled $23,568.

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

The  loan is  secured  by all of the assets of LMDS Communications, Inc., and is
evidenced by  a  Mortgage Security Agreement  and  Financing Statement and UCC-1
filing in favor of the United States of America.  At December 31, 2002, the LMDS
assets, which comprised Broadband equipment,  LMDS licenses,  cash and  accounts
receivable, totaled $2,181,211, net of accumulated depreciation and amortization
of $340,007 on the equipment and licenses.

The principal due over the next five years is as follows:

            Year ending December 31,
                2003                                            $ 136,904
                2004                                              143,677
                2005                                              150,784
                2006                                              166,073
                Thereafter                                      1,076,728
                                                               ----------
                           Total                               $1,666,337
                                                               ==========

7.     Long Term Debt:
       --------------

The long-term debt is comprised of the following:

     Amount payable  under  a  financing agreement, secured  by
     assets  of  $12,793,  interest  free  and  repayable  from
     monthly revenues received from customers, as each unit  is
     put into service                                                  $ 12,793

     Amount payable  under agreements for equipment  purchased.
     The amounts due are unsecured  and  interest free and  are
     repayable in equal monthly installments ending in May 2004          77,714
                                                                         ------
                  Total                                                $ 90,507
     Less current maturities                                             61,765
                                                                         ------
                                                                       $ 28,742
                                                                         ======
The principal due on the long-term debt is as follows:

        Year ending December 31,
           2003                                     $ 61,765
           2004                                       28,742
                                                      ------
                  Total                             $ 90,507
                                                      ======






                                      F-14
<PAGE>












































                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




8.       Capital Lease Obligations:
         --------------------------

         The Company leases certain property and equipment under  capital  lease
         and has capitalized property and equipment of $27,825 with  accumulated
         depreciation of $18,551 as of December 31, 2002.

         Minimum  future lease payments under a capital lease as of December 31,
         2002 and for the next three years and in the aggregate are as follows:

         Year ending December 31,
                    2003                               4,361
                    2004                               4,361
                    2005                              13,626
                                                    --------
         Net minimum lease payments                   22,348
         Less amount representing interest            (4,765)
                                                    --------
         Present value of minimum lease payments      17,583
         Less current maturities                      (1,913)
                                                    --------
                                                    $ 15,670
                                                    ========


                                    F-15
<PAGE>





































                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.       STOCKHOLDERS EQUITY:
         --------------------

         In  April 2001 each of the Directors exercised options to each  acquire
         20,000 shares of common stock at $0.21875 per share.

         In May 2001 the Company issued 900,000 shares for  consulting  services
         at $0.10 per share.  These  services  have  been and are being provided
         over a period of twelve months. During 2001 $56,250  was  expensed  and
         there  was  a balance of Prepaid Expenses of $33,750 as of December 31,
         2001.

         In May 2001 the Company issued 500,000 shares for $25,000 in a  private
         placement at $0.05 per share.

         In June 2001 the Company issued 476,387 shares in a  private  placement
         for services rendered by two Officers valued at $23,819, or  $0.05  per
         share.

         In September  2001  the  Company  issued  2,500,000 shares in a private
         placement for services rendered by two Officers valued at  $50,000,  or
         $0.02 per share.

         In November 2001 the  Company  issued  499,034  shares  for  consulting
         services at $0.0465 per share.

         In December 2001 the  Company  issued  291,667  shares  for  consulting
         services at $0.06 per share.  None  of  these  services  were  provided
         prior to December 31, 2001  and  therefore  $17,500  is  reflected as a
         prepaid expense as of December 31, 2001.

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

         In January 2002 the  Company conveyed 6,500  shares  of  its  Series  A
         Convertible preferred shares  to the  principals  of its communications
         law firm in satisfaction of $65,000 owed to the law  firm for  services
         rendered in 1999, 2000, and 2001. These shares are convertible into the
         Company's common shares at a conversion price of $0.10 per share.

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





                                        F-16
<PAGE>


















                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10 .      STOCK OPTIONS PLANS:
         --------------------

         In January 2001 the  Company   adopted  the 2001  Employee Stock Option
         Plan  (the  2001  Plan).  Under the 2001  Plan,  employees  on staff on
         January 17,   2001  are  entitled to receive  options to  purchase  the
         number of shares  equal to their  respective  2000 gross  earnings  (at
         Prime  or any of its  subsidiaries)  at  an  exercise  price  equal  to
         $0.32813  per share.  New employees receive options on  their  date  of
         employment  equal  to  the  estimated  amount of their anticipated 2001
         earnings, and the exercise  price  on  their  options  is  150%  of the
         closing  price  of  the  shares  on their first day of employment.  The
         options  vest  50%  on  December 31, 2001 and 50% on December 31, 2002.
         The options expire on December 31, 2004.

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

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



                                      F-17
<PAGE>






























                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The  following  table sets forth the activity  for all option  activity
         during the years ended  December  31,  2002 and 2001.

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

         Balance, December 31, 2000          681,813       $             .34

         Granted                             651,159                     .33
         Expired                                -                        -
         Exercised                          (100,000)                    .22
         Canceled/Forfeited                 (174,849)                    .39
                                     ----------------      --------------------
         Balance, December 31, 2001        1,058,123       $             .33

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

         At December 31, 2001   the Company had  options  to  purchase   105,711
         shares of common stock exercisable at $1.00, options for 427,190 shares
         at $0.32813, options for 476,102 shares at $0.21875, options for  9,120
         shares at $0.1125, and options for 40,000 shares at $0.10 per share.

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

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


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

                                         ----------------    ----------------
            2003                                  476,102    $         .22
            2004                                  446,110              .30
            2005                                  851,100              .20
                                         ----------------    ----------------
         Balance, December 31, 2002             1,773,312    $         .23
                                         ================    ================


         As  noted  in Note 2,  the  Company  has not  adopted  the  fair  value
         accounting  prescribed by SFAS123 for employees.  Had compensation cost
         for stock options issued to directors been determined based on the fair
         value at grant date for  options  awarded in 2002  consistent  with the
         provisions  for SFAS123,  the Company's net loss and net loss per share
         would have been adjusted to the proforma amounts indicated below:



                                     F-18
<PAGE>





                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                             YEAR ENDED
                                                         DECEMBER 31, 2002
                                                         -----------------


         Net Loss                                        $       (772,664)
                                                         =================

         Basic and diluted net loss per common share     $         (.02)
                                                         =================

         The fair value of each option was  estimated on the date of grant using
         the Black-Scholes option-pricing model using the following assumptions:
         a  risk-free  interest  rate  of  4.08%, expected  life of three years,
         dividend yield of 0%, and expected  volatility  of  65%.  The weighted-
         average  fair  value  of  the  options  granted  during the  year ended
         December 31, 2002 was $0.20.



11.      INCOME TAXES:
         -------------

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

                                            For the Years Ended
                                               December 31,
                                         2002                   2001
                                 ---------------------  ----------------

        Current
                  Federal        $        -             $        -
                  State                  3,400                  2,800
                                 ----------------       ----------------
                                 $       3,400          $       2,800
                                 ================       ================

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






                                          F-19

<PAGE>







<TABLE>
<CAPTION>



                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                            For the years ended
                                                               December 31,
                                                         2002                  2001
                                                 ----------------       ----------------
       <S>                                       <C>                    <C>
       Amount of expected tax benefit            $       (262,600)      $       (552,900)
       Non-deductible expenses                             10,500                311,300
       State taxes, net                                     2,200                  1,800
       Change in valuation allowance                      268,400                242,000
       Other                                              (15,100)                   600
                                                 ----------------       ----------------
                                                 $          3,400       $          2,800
                                                 ================       ================
</TABLE>

          The components of the net deferred tax asset and liability  recognized
          are as follows:
<TABLE>
                                                                DECEMBER 31,        DECEMBER 31,
                                                                    2002                2001
                                                              ----------------    ----------------
<S>                                                           <C>                 <C>
       Current deferred tax assets
          Accrued expenses                                    $        31,600     $         39,000
          APB 25 compensation expense                                  55,500               55,500
          Other accrued liabilities                                     1,200                1,300
                                                              ---------------     ----------------
          Total current deferred tax assets                            88,300               95,800
          Valuation allowance                                         (88,300)             (95,800)
                                                              ---------------     ----------------
       Net current deferred tax assets                        $          -        $           -
                                                              ===============     ================

       Long-term deferred tax assets:
          Intangible asset                                             20,000               25,700
          Depreciation                                                 55,600               46,800
          Net operating loss carry-forwards                         3,829,900            3,445,500
                                                              ---------------     ----------------
          Total long-term deferred tax assets                       3,905,500            3,518,000
       Valuation allowance                                         (3,905,500)          (3,518,000)
                                                              ---------------     ----------------
       Net long-term deferred tax assets                      $          -        $           -
                                                              ===============     ================
</TABLE>


         The Company will continue to assess the  realizability  of the deferred
         tax assets in future  periods.  The  valuation  allowance  increased by
         $380,000  and  $233,600 during the years ended  December  31, 2002  and
         2001 respectively.

         As of  December  31,  2002,  the  Company  has  available  federal  net
         operating  loss carry  forwards for income tax purposes of  $9,100,000,
         which expire on various dates through 2022.  The Company has state  net
         operating loss carry  forwards of $8,300,000, the use of which has been
         suspended for  two  years, and which  expire on various  dates  through
         2012.  Due to the change  in  control of Prime, the benefit of  the net
         operating  losses generated  by  Prime  prior  to  the  acquisition  by
         Worldnet  will   be   significantly  limited  by  certain  consolidated
         return  filing regulations and limitations under  Section 382.



                                      F-20
<PAGE>

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



12.      EMPLOYEE DEFINED CONTRIBUTION PLAN:
         -----------------------------------

         Effective  January 1, 1998,  the Company  adopted a 401K Profit Sharing
         Plan (the "Plan") covering all employees. To be eligible to participate
         in the Plan,  employees must be age 21 and must complete at least 83.33
         hours of service per month for at least 6 months.  Contributions to the
         Plan are invested at the direction of the participant. No contributions
         were  made  to  the  plan  during the years ended December 31, 2001 and
         December 31, 2002.

13.      COMMITMENTS AND CONTINGENCIES:
         ------------------------------

         Leases: - The Company leases  operating  facilities and equipment under
         operating  leases which expire at various  dates  through  December 31,
         2007.  Facility  leases  provide  for  payment  of real  estate  taxes,
         insurance,  and maintenance  expenses by the Company. In addition,  the
         Yuba City facility lease is held by Mr. Bert Lima, President and CEO of
         the Company. The rent paid to Mr. Lima was $20,160 for both years ended
         December 31, 2002 and 2001.

         The future minimum commitments under these leases are as follows:

                 Year ending December 31,
                          2003                                   53,285
                          2004                                   40,773
                          2005                                   29,829
                          2006                                    7,200
                          2007                                    5,400
                                                       ----------------
                                                       $        136,487
                                                       ================

         Rent  expense   totaled   $53,125  and   $62,340  for   2002  and  2001
         respectively.


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

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



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

         None.

                                      F-21

<PAGE>






                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14.      SEGMENT REPORTING:
         ------------------

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

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

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

<S>                         <C>             <C>           <C>           <C>           <C>
 Revenues                   $       -       $     32,775  $    210,511  $     41,331  $        -
                            ============    ============  ============  ============  =============
 Gross Margin                       -                73%           53%           81%           -
                            ============    ============  ============  ============  =============
 Selling, G&A Expense       $    283,127    $     21,082  $    274,813  $    368,149  $      57,615
                            ============    ============  ============  ============  =============
 Interest Income            $       -       $       -     $         87  $         64  $        -
                            ============    ============  ============  ============  =============
 Interest Expense           $      5,252    $       -     $      3,792  $     23,598  $        -
                            ============    ============  ============  ============  =============
 Other Income               $     21,320    $       -     $       -     $       -     $        -
                            ============    ============  ============  ============  =============

</TABLE>
</CAPTION>

<TABLE>
<CAPTION>

                                              December 31, 2001
                                              -----------------

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

<S>                         <C>             <C>           <C>           <C>           <C>
 Revenues                   $        235    $     52,672  $    355,873  $     46,422  $     -
                            ============    ============  ============  ============  =============
 Gross Margin                        14%             57%           64%        -             -
                            ============    ============  ============  ============  =============
 Selling, G&A Expense       $    873,248    $     83,260  $    272,892  $    297,824  $     -
                            ============    ============  ============  ============  =============
 Interest Income            $      1,829    $        171  $        647  $        127  $     -
                            ============    ============  ============  ============  =============
 Interest Expense           $      7,040    $     -       $      1,171  $     -       $     -
                            ============    ============  ============  ============  =============
 Other Income               $    706,278    $     -       $     17,782  $     -       $     -
                            ============    ============  ============  ============  =============
 W/O Deferred Offering Cost $    882,911    $     -       $       -     $     -       $     -
                            ============    ============  ============  ============  =============

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

                     PRIME COMPANIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.     SUBSEQUENT EVENTS:
         -----------------

In January 2003 the  Company  commercially  launched  fixed  wireless  broadband
service in the Roanoke, Virginia community.

On  January 31, 2003  the  Company entered into a loan agreement with a European
investor for a $9 million five  year  loan at 5.5% interest per annum.  On March
7, 2003  the  Company received a comfort letter from the lender referring to the
Patriot Act as a  cause  of  funding delays, but indicated that the loan will be
funded by  no later than  March 30, 2003.



                                     F-23


















































<PAGE>

Exhibit  4.1


PROXY


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

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

IN WITNESS WHEREOF, I have executed this proxy.


Date:      /   /

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



































<Page>




Exhibit 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Prime Companies, Inc. (the "Company") on
Form 10-KSB for the year ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Norbert J. Lima,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.  1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.



/s/ Norbert J. Lima
---------------------
Norbert J. Lima
Chief Executive Officer
March 19, 2003

Exhibit 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Prime Companies, Inc. (the "Company") on
Form 10-KSB for the year ended December 31, 2002 as filed with the Securities
and Exchange Commission on the date hereof (the "Report"), I, Stephen Goodman,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.  1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and result of operations of the Company.




/s/ Stephen Goodman
----------------------
Stephen Goodman
Chief Financial Officer
March 19, 2003