UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report: ~~July~~ 23October 28, 2002

PRIME EQUIPMENT, INC.

(Exact name of registrant as specified in its charter)

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

NEVADA 000-29937 88-0412653

~~Suite~~(State ~~200-8275~~or ~~South~~other ~~Eastern~~jurisdiction ~~Avenue~~(Commission) (IRS Employer

~~Las~~of ~~Vegas,~~incorporation) ~~Nevada~~File ~~89123~~Number) Identification No.)

Unit 300 - 625 West Kent Ave. N.

Vancouver B.C., Canada V6P-6T7

(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone number, including area code: (~~702~~604) ~~990~~323-~~8387~~0090

~~Item~~ 1. ~~Changes~~i. inRegistrant's primary accountant, David Coffey, was ~~Control~~dismissed ofby ~~Registrant~~the Company on October 24th, 2002.

Onii. ~~July~~No ~~10,~~reports ~~2002,~~on ~~a Share Exchange Agreement (~~the ~~"Agreement")~~financial ~~was~~statements ~~entered~~prepared ~~into~~by ~~between Prime Equipment, Inc~~Mr. ~~("Prime") and Netmagic Investments Limited~~ ~~("Netmagic").~~Coffey ~~Under~~over the ~~terms~~two ofmost ~~the~~recent ~~Agreement,~~fiscal ~~Netmagic agrees~~years tocontained ~~transfer~~any toadverse ~~Prime~~opinion ~~100% of IP Teleservices, Inc. ("IPT")~~or ~~issued~~disclaimer ~~and outstanding shares, and the ownership~~ of ~~it's software Platform~~opinion, ~~of which~~or ~~Netmagic~~was ~~owns~~qualified ~~100%.~~or Inmodified ~~consideration~~as ~~for the IPT shares and software platform, Prime issued five hundred thousand (500,000) shares of its preferred shares~~ to ~~Netmagic's referral agent POLINVEST Ltd.~~uncertainty, ~~and five million~~audit (5scope,~~000,000)~~ ~~shares~~or ofaccounting ~~its common stock to the following Netmagic shareholders:~~principals.

	Shareholder Name	No. of Common Prime Shares
1.	Media Fund Limited	900,000
2.	Virgo Enterprises Co	720,000
3.	Ms Kam-Lan Mak	680,000
4.	Best Holding Limited	900,000
5.	Best Reliance Limited	600,000
6.	Ms. Liao Lin Chun-Huei	300,000
7.	Mr. Kin-Ming So	100,000
8.	Ms. Lai-Bing Fung	800,000
	Shareholder Name	No. of Preferred Prime Shares
1.	POLINVEST Ltd.	500,000

iii. The decision to change accountants was approved by the Board on October 17, 2002.

~~Upon~~iv. ~~closing~~During of the ~~Agreement~~ onregistrant's ortwo ~~before~~most ~~July~~recent 31fiscal years, ~~2002 (Closing Date)~~ and for ~~issuance of~~ the ~~above listed~~interim ~~shares,~~period ~~the~~ended ~~Netmagic~~June ~~shareholders~~30, ~~will~~2002, ~~hold~~there ~~55%~~were ofno ~~the~~disagreements ~~issued~~with ~~and~~Mr. ~~outstanding~~Coffey ~~shares~~on any matter of ~~common~~accounting ~~stock~~principals ofor ~~Prime~~practices, ~~and~~financial ~~Polyinvest~~statement disclosure, ~~LTD.~~or ~~will~~auditing ~~own~~scope ~~100% of~~or ~~the~~procedure, ~~issued~~which ~~and~~disagreements ~~outstanding~~would ~~shares~~have caused ofit ~~preferred~~to ~~stock.~~make ~~Following~~reference isto athe ~~list~~subject matter of ~~certain~~ ~~beneficial~~the ~~shareholders~~disagreements ofin connection ~~Prime~~with its report.

Title of class	Name and address of beneficial owner	Amount and nature of beneficial ownership	Percent of class
Common	Media Fund Limited	900,000	9.9%
Common	Virgo Enterprises Co.	720,000	7.9%
Common	Ms. Kam-Lan Mak	680,000	7.5%
Common	Best Holding Limited	900,000	9.9%
Common	Best Reliance Limited	600,000	6.6%
Common	Ms. Lai-Bing Fung	800,000	8.8%
Preferred	Polinvest, LTD	500,000	100%

Mr. Coffey did not advise the registrant that internal controls necessary to develop reliable financial statements did not exist; no information had come to Mr. Coffey's attention which would make him unwilling to rely on management's representations, or unwilling to be associated with the financial statements prepared by management. Mr. Coffey did not advise registrant that the scope of the audit should be expanded significantly, or that information had come to his attention that would materially impact the fairness or reliability of a previously issued audit report or the underlying financial statements or the financial statements issued or to be issued covering the fiscal periods subsequent to the date of the most recent audited financial statements, dated December 31, 2001, (including information that might preclude the issuance of an unqualified audit report.

~~Item~~ 2. ~~Acquisition~~i. ~~or Disposition~~The registrant retained the services of ~~Assets~~Evancic Perrault Robertson on October 24, 2002, as their principal accountant. Prior to that time, Evancic Perrault Robinson provided audited financial statements for IP Teleservices, Inc.

~~Under~~ii. The registrant did not contact the ~~Agreement described~~new inaccountant ~~Item~~prior 1to its ~~above,~~engaging ~~Prime~~the ~~has~~new ~~acquired~~accountant ~~100%~~regarding the application of accounting principals to a specified transaction, or the ~~issued~~type ~~and~~of ~~outstanding~~audit opinion that might ~~shares~~be ofrendered ~~IPT~~on ~~and~~the ~~its~~registrant's ~~software~~financial ~~platform~~statements, except that the registrant did contact the new accountant to provide assistance in ~~exchange~~compiling ~~for~~financial information ~~5,00,000~~to ~~shares~~assist ofthe registrant in complying with a previously filed Form ~~Prime's~~8-K. ~~common~~The ~~stock~~new ~~and~~accountant ~~500,000~~prepared ~~share~~financial ofinformation ~~Prime's~~to ~~preferred~~IP ~~stock~~Teleservices, Inc., ~~Determination~~which ofmerged with the ~~purchase~~registrant, ~~price~~and ~~was~~so ~~based~~the ~~upon~~registrant ~~current~~consulted ~~market~~with ~~for~~ the ~~shares~~new accountant concerning the merger and combined financial statements of ~~each~~the ~~company~~two companies.

~~Item 7~~iii. ~~Financial~~The registrant did not contact the new accountant prior to ~~Statements~~its ~~and~~engaging ~~Exhibits~~the new accountant regarding any matter that was either the subject of a disagreement or a reportable event.

3. The registrant has provided a copy of this report, on or IPprior ~~TELESERVICES~~to ~~INC~~the date of filing this report with the Commission, to Mr. Coffey and requested that he furnish the registrant with a letter addressed to the ~~Financial~~Commission ~~Statements~~stating his approval of or disagreement with the disclosures made ~~December~~herein. 31Mr. Coffey's letter will be attached as an exhibit upon receipt, ~~2001~~and (Usaid letter discloses the statements referred to in Section 1.Sv. ~~Dollars)~~ above.

IP TELESERVICES INC.
FINANCIAL STATEMENTS
December 31, 2001
(U.S. Dollars)
INDEPENDENT ACCOUNTANTS' REPORT
BALANCE SHEET STATEMENT 1
STATEMENT OF EARNINGS STATEMENT 2
STATEMENT OF STOCKHOLDER'S EQUITY STATEMENT 3
STATEMENT OF CASH FLOWS STATEMENT 4
NOTES TO THE FINANCIAL STATEMENTS
EVANCIC PERRAULT ROBERTSON
CERTIFIED GENERAL ACCOUNTANTS
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholder
IP Teleservices Inc.
We have audited the balance sheet of IP Teleservices Inc. as of December 31, 2001 and the statements of earnings, stockholder's equity and cash flows for the period from March 16, 2001 to December 31, 2001. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the IP Teleservices Inc. as of December 31, 2001 and the results of its operations and its cash flows for the period from March 16, 2001 to December 31, 2001 in conformity with accounting principles generally accepted in the United States.
CERTIFIED GENERAL ACCOUNTANTS
Coquitlam, B.C.
May 24, 2002
2nd Floor Heron Centre, 566 Lougheed Highway, Coquitlam, B.C. V3K 3S3
Telephone (604) 936-4377 Fax (604) 936-8376
Website: eprcoq.com Email: eprcoq@eprcoq.com
Office Across Canada
Affiliates Around the World
IP TELESERVICES INC.
BALANCE SHEET
December 31, 2001
(U.S. Dollars)
ASSETS
Current:
Cash $ 54,100
Accounts receivable 140,148
Government agencies receivable 4,345
Prepaid expenses 119,999
Current portion of lease receivable - note 2 16,265
334,857
Lease receivable - note 2 13,449
Due from stockholder - note 3 1,508
Property, plant and equipment - note 4 102,891
$ 452,705
LIABILITIES AND STOCKHOLDER'S EQUITY
Current:
Accounts payable and accrued liabilities $ 237,794
Customer deposits 44,148
281,942
Loans payable - letter 5 166,901
Due to director - note 6 3,792
452,635
Stockholder's equity
Capital stock - note 7 1
Other comprehensive income (2)
Retained earnings 71
70
$ 452,705
On behalf of the Board
________________________________Director
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC.
STATEMENT OF EARNINGS
For the period from March 16, 2001 to December 31, 2001
(U.S. Dollars)
Revenue $ 186,975
Cost of goods sold 128,492
Gross profit 58,483
Expenses
Net earnings for the period
$
71
    post period end stock split
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC.
STATEMENT OF STOCKHOLDER'S EQUITY
For the period from March 16, 2001 to December 31, 2001
(U.S. Dollars)
OCI
Retained Earnings
Total
Number
Amount
Issuance of stock for cash
March 16, 2001
Net earnings for the period
-
-
-
71
71
Effect of foreign exchange
-
-
(2)
-
(2)
Balance, December 31, 2001
1
$
1
$
(2)
$
71
$
70
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC.
STATEMENT OF CASH FLOWS
For the period from March 16, 2001 to December 31, 2001
(U.S. Dollars)
Cash provided by (used for)
Cash from operating activities:
Earnings from operating activities $ 71
Items not requiring an outlay of funds
Amortization 11,331
Changes in non-cash working capital 11,402
Increase in accounts receivable (144,168)
Increase in prepaid expenses (120,000)
Increase in accounts payable and accrued liabilities 244,616
Increase in government agencies receivable (4,379)
Increase in customer deposits 45,000
32,471
Cash from financing activities:
Loan advances 171,511
Loan to stockholder (1,550)
Loan from director 3,897
Issuance of capital stock 1
173,859
Cash from investing activities:
Purchases of property, plant and equipment (114,942)
Increase in lease receivable (30,024)
(144,966)
Effect of exchange rate changes on cash (7,264)
Increase in cash 54,100
Cash, beginning of period -
Cash, end of period $ 54,100
Supplemental Disclosures
Interest paid $ -
Income taxes paid $ -
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC.
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2001
(U.S. Dollars)
IP Teleservices Inc. (IPT) is a telecommunication company in Canada poised to be the leader in "softswitch" Voice over Internet Protocal (VoIP) implementation on a global scale. It will generate significant traffic volume from the retail, wholesale and franchising opportunities around the world. At the same time, it will improve the overall margin continuously as its network grows with its latest integrated software technology.
The Company was incorporated on March 16, 2001 under the Canada Business Corporations Act by a team of experienced telecom marketers and software developers. Their objective is to build and develop a Global Voice Services Backbone Network that connects to VoIP Gateways and Call Management Data Centres spanning the globe. It has already successfully built a software based VoIP application platform that enables VoIP over the Internet and/or Internet for Long Distance Telephone services and Calling Card businesses. This platform can be deployed inexpensively, quickly and most importantly, globally.
IP Teleservices Inc. has been making acquisitions and establishing partnerships with strategic local telecom companies. Through these acquisitions, IPT has placed itself in a position to provide a global VoIP Network that will link their presence in North America to Asia as well as Europe. This in turn provides many opportunities for the company to develop more lucrative business opportunities in the retail, wholesale and franchising sectors.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
Cash and cash equivalents includes cash and those short-term market instruments which, on acquisition, have a term to maturity of one year or less.
Financial instruments
The estimated fair value of cash and equivalents, short-term investments, accounts receivable, loans receivables, and accounts payable and accrued liabilities approximate their carrying amounts in the financial statements. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency, or credit risks arising from these financial statements.
Revenue recognition
Telecommunication products and services:
Revenue is recorded, net of trade discounts and allowances, upon shipment of products or rendering of services and when all significant contractual obligations have been satisfied and collection is reasonably assured.
Earnings (Loss) per share
Basic EPS is determined using net income divided by the weighted average shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Since the Company has no common shares that are potentially issuable, such as stock options, convertible securities or warrants, basic and diluted EPS are the same.
Translation of foreign currencies
The functional currency of the Company is the Canadian dollar. The financial statements of the Company's operations whose functional currency is other than the Canadian dollar are translated from such functional currency to Canadian dollars using the current rate method. Under the current rate method, assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Revenues and expenses, including gains and losses on foreign exchange transactions, are translated at average rates for the period. Where the current rate method is used, the unrealized translation gains will be accumulated in other comprehensive income (OCI) under the shareholders' equity section.
Property, plant and equipment
Capital assets are recorded at cost. Amortization is provided annually on a straight-line basis over a period of three years to write-off the assets over their estimated useful lives.
Use of Estimates
The preparation of the Company's financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates; however, management does not believe these differences would have a material effect on operating results.
2 LEASE RECEIVABLE
Equipment leased out for a term of two years commencing December 11, 2001 with monthly lease receipts of $1,687 excluding sales taxes, at an interest rate of 13.825%.
Balance $ 33,454
Less: unearned interest (3,740)
29,714
Less: current portion (16,265)
$ 13,449
3. DUE FROM STOCKHOLDER
The Company has advances receivable from its parent company. Advances carry no specific provision for interest or repayment. The parent company stated that it will not request repayment within the next fiscal year.
4. PROPERTY, PLANT AND EQUIPMENT
Cost Accumulated Amortization Net Book Value
Computer equipment $ 10,175 $ 2,095 $ 8,080
Telephone equipment 103,731 8,920 94,811
$ 113,906 $ 11,015 $ 102,891
5. LOANS PAYABLE
Best Holding Limited $ 68,011
Media Fund Limited 68,011
Bove Telecom Services Inc. 30,879
$ 166,901
The Company has loans payable which are non-interest bearing and have no specific repayment terms. The lenders stated that they will not request payment within the next fiscal year.
6. DUE TO DIRECTOR
The Company has a loan payable to its director which is non-interest bearing and has no specific repayment terms. The director has stated that he will not request payment within the next fiscal year.
7. SHARE CAPITAL
Authorized: unlimited common shares without par value.
Issued and outstanding:
1 common share $
8. SUBSEQUENT EVENTS
On March 23, 2002, the Company split its common shares by a ratio of 5,000,000 to 1.
Effective July 10, 2002, 100% of the Company's issued and outstanding shares were sold in exchange for 5,000,000 of the acquiring company's common shares.
IP TELESERVICES INC.
Financial Statements
(Unaudited)
March 31, 2002
(U.S. Dollars)
IP TELESERVICES INC.
FINANCIAL STATEMENTS
December 31, 2002
(Unaudited)
(U.S. Dollars)
INDEPENDENT ACCOUNTANTS' REPORT
BALANCE SHEET STATEMENT 1
STATEMENT OF EARNINGS STATEMENT 2
STATEMENT OF STOCKHOLDER'S EQUITY STATEMENT 3
STATEMENT OF CASH FLOWS STATEMENT 4
NOTES TO THE FINANCIAL STATEMENTS
EVANCIC PERRAULT ROBERTSON
CERTIFIED GENERAL ACCOUNTANTS
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholder
IP Teleservices Inc.
We have reviewed the accompanying balance sheet of IP Teleservices Inc. as at March 31, 2002 and the statements of earnings, stockholder's equity and cash flows for the period from January 1, 2002 to March 31, 2002. These financial statements are the responsibility of IP Teleservices Inc.'s management.
We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of financial statements consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, no such opinion is expressed.
Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles established by the American Institute of Certified Public Accountants.
CERTIFIED GENERAL ACCOUNTANTS
Coquitlam, B.C.
July 8, 2002
2nd Floor Heron Centre, 566 Lougheed Highway, Coquitlam, B.C. V3K 3S3
Telephone (604) 936-4377 Fax (604) 936-8376
Website: eprcoq.com Email: eprcoq@eprcoq.com
Office Across Canada
Affiliates Around the World
IP TELESERVICES INC.
BALANCE SHEET
March 31, 2002
(Unaudited - See Independent Accountants' Report)
(U.S. Dollars)
2002 2001
Lease receivable - note 2
18,125
-
Due from stockholder - note 3
Property, plant and equipment - note 4
108,485
7,405
LIABILITIES AND STOCKHOLDER'S EQUITY
264,649
15,430
Loans payable - note 5
166,755
-
Due to director - note 6
3,789
23,832
Stockholder's equity
________________________________Director
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC.
STATEMENT OF EARNINGS
For the period from January 1, 2002 to March 31, 2002
(Unaudited - See Independent Accountants' Report)
(U.S. Dollars)
January 1, 2002
to
March 31, 2002
March 16, 2001
to
March 31, 2001
Revenues
$
263,769
$
-
171,597
-
Gross profit
92,172
-
48,604
(11,993)
Gain on disposal of property, plant and equipment
509
-
Earnings (loss) before provision for income taxes
49,113
(11,993)
Current income taxes
23,834
-
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC.
STATEMENT OF STOCKHOLDER'S EQUITY
For the period from January 1, 2002 to March 31, 2002
(Unaudited - See Independent Accountants' Report)
(U.S. Dollars)
Retained
Number
Amount
OCI
Earnings
Total
(Deficit)
Net loss for the period
-
-
-
(11,993)
(11,993)
Effect of foreign exchange
-
-
-
135
135
Balance, March 31, 2001
1
1
135
(11,993)
(11,857)
Net earnings for the period
-
-
-
12,064
12,064
Effect of foreign exchange
-
-
-
(137)
(137)
Balance December 31, 2001
1
1
(2)
71
70
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC. STATEMENT
STATEMENT OF CASH FLOWS
For the period from January 1, 2002 to March 31, 2002
(Unaudited - See Independent Accountants' Report)
(U.S. Dollars)
January 1, 2002
to
March 31, 2002
March 16, 2001
to
March 31,2001
Cash provided by (used for)
$
$
$
$
The accompanying notes are an integral part of these financial statements.
EVANCIC PERRAULT ROBERTSON
IP TELESERVICES INC.
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2002
(Unaudited - See Independent Accountants' Report)
(U.S. Dollars)
IP Teleservices Inc. (IPT) is a telecommunication company in Canada poised to be the leader in "softswitch" Voice over Internet Protocol (VoIP) implementation on a global scale. It will generate significant traffic volume from the retail, wholesale and franchising opportunities around the world. At the same time, it will improve the overall margin continuously as its network grows with its latest integrated software technology.
The Company was incorporated on March 16, 2001 under the Canada Business Corporations Act by a team of experienced telecom marketers and software developers. Their objective is to build and develop a Global Voice Services Backbone Network that connects to VoIP Gateways and Call Management Data Centres spanning the globe. It has already successfully built a software based VoIP application platform that enables VoIP over the Internet and/or Internet for Long Distance Telephone services and Calling Card businesses. This platform can be deployed inexpensively, quickly and most importantly, globally.
IP Teleservices Inc. has been making acquisitions and establishing partnerships with strategic local telecom companies. Through these acquisitions, IPT has placed itself in a position to provide a global VoIP Network that will link their presence in North America to Asia as well as Europe. This in turn provides many opportunities for the company to develop more lucrative business opportunities in the retail, wholesale and franchising sectors.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and cash equivalents
Cash and cash equivalents includes cash and those short-term market instruments which, on acquisition, have a term to maturity of one year or less.
Financial instruments
The estimated fair value of cash and equivalents, short-term investments, accounts receivable, loans receivables, and accounts payable and accrued liabilities approximate their carrying amounts in the financial statements. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency, or credit risks arising from these financial statements.
Revenue recognition
Telecommunication products and services:
Revenue is recorded, net of trade discounts and allowances, upon shipment of products or rendering of services and when all significant contractual obligations have been satisfied and collection is reasonably assured.
Earnings (Loss) per share
Basic EPS is determined using net income divided by the weighted average shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued. Since the Company has no common shares that are potentially issuable, such as stock options, convertible securities or warrants, basic and diluted EPS are the same
Translation of foreign currencies
The functional currency of the Company is the Canadian dollar. The financial statements of the Company's operations whose functional currency is other than the Canadian dollar are translated from such functional currency to Canadian dollars using the current rate method. Under the current rate method, assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Revenues and expenses, including gains and losses on foreign exchange transactions, are translated at average rates for the period. Where the current rate method is used, the unrealized translation gains will be accumulated in other comprehensive income (OCI) under the shareholders' equity section.
Property, plant and equipment
Capital assets are recorded at cost. Amortization is provided annually on a straight-line basis over a period of three years to write-off the assets over their estimated useful lives.
Use of Estimates
The preparation of the Company's financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates; however, management does not believe these differences would have a material effect on operating results.
2 LEASE RECEIVABLE
2002 2001
Equipment leased out for a term of two years commencing December 11, 2001 with monthly lease receipts of $1,687 excluding sales taxes, at an interest rate of 13.825%.
Aggregate of payments receivable $ 33,424 $ -
Less: unearned interest (3,736) -
29,688 -
Less: current portion (11,563) -
3. DUE FROM STOCKHOLDER
The Company has advances receivable from its parent company. Advances carry no specific provision for interest or repayment. The parent company stated that it will not request repayment within the next fiscal year.
4. PROPERTY, PLANT AND EQUIPMENT
2002
2001
Cost
Accumulated Amortization
Net Book Value
Net Book Value
5. LOANS PAYABLE
2002
2001
$
The Company has loans payable which are non-interest bearing and have no specific repayment terms. The lenders stated that they will not request payment within the next fiscal year.
6. DUE TO DIRECTOR
The Company has a loan payable to its director which is non-interest bearing and has no specific repayment terms. The director has stated that he will not request payment within the next fiscal year.
7. SHARE CAPITAL
Authorized: unlimited common shares without par value.
2002 2001 Issued and outstanding:
On March 23, 2002, the Company split its common shares by a ratio of 5,000,000 to 1.
8. SUBSEQUENT EVENT
Effective July 10, 2002, 100% of the Company's issued and outstanding shares were sold in exchange for 5,000,000 of the acquiring company's common shares.
PRIME EQUIPMENT, INC.
(SUCCESSOR TO IP TELESERVICES INC.)
PRO-FORMA CONDENSED FINANCIAL STATEMENTS
December 31, 2001
(U.S. DOLLARS)
PRIME EQUIPMENT, INC.
(SUCCESSOR TO IP TELESERVICES INC.)
PRO-FORMA CONDENSED FINANCIAL STATEMENTS
December 31, 2001
(U.S. Dollars )
The following pro-forma condensed balance sheet as of December 31, 2001 and the pro-forma condensed statement of earnings for the year ended December 31, 2001 give effect to the reverse acquisition of IP Teleservices Inc. by Prime Equipment, Inc. (Prime) on July 10, 2002.
The pro-forma information is based on the historical financial statements of Prime and IP Teleservices Inc. giving effect to the acquisition under the purchase method of accounting as if such transaction had been consummated as of the beginning of the year presented, and under the assumptions and adjustments in the accompanying notes to the pro-forma condensed financial statements.
The information contained in the following pro-forma condensed financial statements does not purport to be indicative of the results of operations of the Company which may have been attained had the acquisition been effect on the dates assumed.
The pro-forma information with respect to the acquisitions reflects: (i) the issuance of five million (5,000,000) shares in exchange for all the outstanding shares of IP Teleservices Inc. and a software platform; (ii) the issuance of five hundred thousand preferred shares for services.
The pro-forma condensed financial information contained herein should be read in conjunction with the historical financial statements and related notes of Prime Equipment, Inc. included in its filings with the Securities and Exchange Commission and with the historical financial statements of IP Teleservices Inc. included herein.
PRIME EQUIPMENT, INC.
(SUCCESSOR TO IP TELESERVICES INC.)
NOTES TO PRO-FORMA CONDENSED FINANCIAL STATEMENTS
December 31, 2001
(U.S. Dollars)
Translation of foreign currencies
The IP Teleservices Inc. historical balance sheets as of December 31, 2001 have been translated from Canadian dollars to U.S. dollars at the exchange rates in effect at the balance sheet date. The historical income statements for the year ended December 31, 2001 have been translated at the average rate for the year. The translation difference has been included in Other Comprehensive Income under Stockholders' equity section of the balance sheet.
PRIME EQUIPMENT, INC.
(SUCCESSOR TO IP TELESERVICES INC.)
PRO-FORMA CONDENSED BALANCE SHEET
December 31, 2001
(U.S. Dollars)
Prime IP Adjustments Pro-forma
Equipment, Teleservices
Inc. Inc.
ASSETS
Current
Cash $ 4,115 $ 54,100 $ - $ 58,215
Accounts receivable - 140,148 - 140,148
Government agencies receivable - 4,345 - 4,345
Prepaid expenses 150 119,999 - 120,149
Current portion of lease receivable - 16,265 - 16,265
4,265 334,857 - 339,122
Lease receivable - 13,449 - 13,449
Due from shareholder - 1,508 - 1,508
Property, plant and equipment - 102,891 - 102,891
Software - - 1 1
Goodwill - - 123,546 123,546
TOTAL ASSETS $ 4,265 $ 452,705 $ 123,547 $ 580,517
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Accounts payable $ 43,278 $ 237,794 $ - $ 281,072
Note payable 25,000 - - 25,000
Interest payable 3,798 - - 3,798
Customer deposits - 44,148 - 44,148
72,076 281,942 - 354,018
Notes payable to stockholders 46,505 - - 46,505
Interest payable to stockholders 3,411 - - 3,411
Loans from stockholders 5,288 - - 5,288
Loans payable - 166,901 - 166,901
Due to director - 3,792 - 3,792
127,280 452,635 - 579,915
Stockholders' equity
Preferred shares, 510,000 shares - - 510 510
Common stock, 4,046,000 shares 4,046 1 (4,014) 33
Other comprehensive income - (2) - (2)
Additional paid-in capital 46,304 - (46,304) -
Deficit (173,365) 71 173,365 71
(123,015) 70 123,547 602
$ 4,265 $ 452,705 $ 123,547 $ 580,517
The accompanying notes are an integral part of these financial statements
EVANCIC PERRAULT ROBERTSON
PRIME EQUIPMENT, INC.
(SUCCESSOR TO IP TELESERVICES INC.)
PRO-FORMA CONDENSED STATEMENT OF EARNINGS
Year-ended December 31, 2001
(U.S. Dollars)
Prime IP Adjustments Pro-forma
Equipment, Teleservices
Inc. Inc.
Revenue $ - $ 186,975 $ - $ 186,975
Cost of goods sold - 128,492 - 128,492
Gross profit - 58,483 - 58,483
Operating expenses
Amortization - 11,331 - 11,331
Foreign exchange - (4,333) - (4,333)
Consulting - 11,754 - 11,754
Rent 4,836 - - 4,836
Office expenses 6,460 309 - 6,769
Fees 655 - - 655
Professional fees 32,469 9,602 500 42,071
Travel 17,872 12,617 - 30,489
Meals and entertainment 3,032 585 - 3,617
Interest expense 8,022 88 - 8,110
Subcontractors - 16,459 - 16,459
73,346 58,412 500 131,758
Operating profit (73,346) 71 (500) (73,275)
Interest earned 600 - - 600
Net income (loss) for the year (72,746) 71 (500) (72,675)
Deficit, beginning of year (100,619) - - (100,619)
Adjustment due to consolidation 173,365 173,365
Deficit, end of year $ (173,365) $ 71 $ (500) $ 71
Weighted average common 9,025,589
shares outstanding
Earnings per share $ 0.000
The accompanying notes are an integral part of these financial statement
EVANCIC PERRAULT ROBERTSON
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

PRIME EQUIPMENT, INC.

/s/ Perry Guglielmi

Perry Guglielmi, President

~~President~~Dated: October 29, 2002

Dated: July 23, 2002

BALANCE SHEET	STATEMENT 1
STATEMENT OF EARNINGS	STATEMENT 2
STATEMENT OF STOCKHOLDER'S EQUITY	STATEMENT 3
STATEMENT OF CASH FLOWS	STATEMENT 4
NOTES TO THE FINANCIAL STATEMENTS

Current:
	Cash	$ 54,100
	Accounts receivable	140,148
	Government agencies receivable	4,345
	Prepaid expenses	119,999
	Current portion of lease receivable - note 2	16,265
		334,857
Lease receivable - note 2		13,449
Due from stockholder - note 3		1,508
Property, plant and equipment - note 4		102,891
		$ 452,705
LIABILITIES AND STOCKHOLDER'S EQUITY
Current:
	Accounts payable and accrued liabilities	$ 237,794
	Customer deposits	44,148
		281,942
Loans payable - letter 5		166,901
Due to director - note 6		3,792
		452,635
Stockholder's equity
	Capital stock - note 7	1
	Other comprehensive income	(2)
	Retained earnings	71
		70
		$ 452,705

Revenue	$	186,975
Cost of goods sold		128,492
Gross profit		58,483
Expenses

Cash provided by (used for)
Cash from operating activities:
	Earnings from operating activities		$	71
	Items not requiring an outlay of funds
		Amortization		11,331
	Changes in non-cash working capital			11,402
		Increase in accounts receivable		(144,168)
		Increase in prepaid expenses		(120,000)
		Increase in accounts payable and accrued liabilities		244,616
		Increase in government agencies receivable		(4,379)
		Increase in customer deposits		45,000
				32,471
Cash from financing activities:
	Loan advances			171,511
	Loan to stockholder			(1,550)
	Loan from director			3,897
	Issuance of capital stock			1
				173,859
Cash from investing activities:
	Purchases of property, plant and equipment			(114,942)
	Increase in lease receivable			(30,024)
				(144,966)
Effect of exchange rate changes on cash				(7,264)
Increase in cash				54,100
Cash, beginning of period				-
Cash, end of period			$	54,100
Supplemental Disclosures
	Interest paid		$	-
	Income taxes paid		$	-

Equipment leased out for a term of two years commencing December 11, 2001 with monthly lease receipts of $1,687 excluding sales taxes, at an interest rate of 13.825%.
	Balance	$	33,454
	Less: unearned interest		(3,740)
			29,714
	Less: current portion		(16,265)
			$ 13,449

		Cost		Accumulated Amortization		Net Book Value
Computer equipment	$	10,175	$	2,095	$	8,080
Telephone equipment		103,731		8,920		94,811
	$	113,906	$	11,015	$	102,891

Best Holding Limited	$	68,011
Media Fund Limited		68,011
Bove Telecom Services Inc.		30,879
$	166,901

Authorized: unlimited common shares without par value.
Issued and outstanding:
1 common share	$

			2002		2001
Equipment leased out for a term of two years commencing December 11, 2001 with monthly lease receipts of $1,687 excluding sales taxes, at an interest rate of 13.825%.
	Aggregate of payments receivable	$	33,424	$	-
	Less: unearned interest		(3,736)		-
			29,688		-
	Less: current portion		(11,563)		-

	Prime	IP	Adjustments	Pro-forma
	Equipment,	Teleservices
	Inc.	Inc.
ASSETS
Current
Cash	$ 4,115	$ 54,100	$ -	$ 58,215
Accounts receivable	-	140,148	-	140,148
Government agencies receivable	-	4,345	-	4,345
Prepaid expenses	150	119,999	-	120,149
Current portion of lease receivable	-	16,265	-	16,265
	4,265	334,857	-	339,122
Lease receivable	-	13,449	-	13,449
Due from shareholder	-	1,508	-	1,508
Property, plant and equipment	-	102,891	-	102,891
Software	-	-	1	1
Goodwill	-	-	123,546	123,546
TOTAL ASSETS	$ 4,265	$ 452,705	$ 123,547	$ 580,517
LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Accounts payable	$ 43,278	$ 237,794	$ -	$ 281,072
Note payable	25,000	-	-	25,000
Interest payable	3,798	-	-	3,798
Customer deposits	-	44,148	-	44,148
	72,076	281,942	-	354,018
Notes payable to stockholders	46,505	-	-	46,505
Interest payable to stockholders	3,411	-	-	3,411
Loans from stockholders	5,288	-	-	5,288
Loans payable	-	166,901	-	166,901
Due to director	-	3,792	-	3,792
	127,280	452,635	-	579,915
Stockholders' equity
Preferred shares, 510,000 shares	-	-	510	510
Common stock, 4,046,000 shares	4,046	1	(4,014)	33
Other comprehensive income	-	(2)	-	(2)
Additional paid-in capital	46,304	-	(46,304)	-
Deficit	(173,365)	71	173,365	71
	(123,015)	70	123,547	602
	$ 4,265	$ 452,705	$ 123,547	$ 580,517

Filing Compare · PRIME EQUIPMENT INC