INDEPENDENT AUDITORS' SUPPLEMENTARY REPORT
                 ON INTERNAL CONTROL REQUIRED BY SEC RULE 17a-5

To the Board of Directors and Stockholder
      Prime Capital Services, Inc.

In planning and performing our audit of the financial statements and
supplemental schedules of Prime Capital Services, Inc. (the "Company") for the
year ended June 30, 2003 we considered its internal control, including control
activities for safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial statements
and not to provide assurance on internal control.

Also, as required by rule 17a-5(g)(l) of the Securities and Exchange Commission
(the "SEC"), we have made a study of the practices and procedures followed by
the Company including tests of such practices and procedures that we considered
relevant to the objectives stated in rule 17a-5(g) in making the periodic
computations of aggregate indebtedness and net capital under rule 17a-3(a)(11)
and for determining compliance with the exemptive provisions of rule 15c3-3.
Because the Company does not carry securities accounts for customers or perform
custodial functions relating to customer securities, we did not review the
practices and procedures followed by the Company in any of the following:

1.    Making the quarterly securities examinations, counts, verifications and
      comparisons
2.    Recordation of differences required by rule 17a-13
3.    Complying with the requirements for prompt payment for securities under
      Section 8 of Federal Reserve Regulation T of the Board of Governors of the
      Federal Reserve System

The management of the Company is responsible for establishing and maintaining
internal control and the practices and procedures referred to in the preceding
paragraph. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
controls and of the practices and procedures referred to in the preceding
paragraph and to assess whether those practices and procedures can be expected
to achieve the SEC's above-mentioned objectives. Two of the objectives of
internal control and the practices and procedures are to provide management with
reasonable but not absolute assurance that assets for which the Company has
responsibility are safeguarded against loss from unauthorized use or disposition
and that transactions are executed in accordance with management's authorization
and recorded properly to permit the preparation of financial statements in
accordance with accounting principles generally accepted in the United States of
America ("US GAAP'). Rule 17a-5(g) lists additional objectives of the practices
and procedures listed in the preceding paragraph.

Because of inherent limitations in internal control or the practices and
procedures referred to above, error or fraud may occur and not be detected.
Also, projection of any evaluation of them to future periods is subject to the
risk that they may become inadequate because of changes in conditions or that
the effectiveness of their design and operation may deteriorate.

Our consideration of internal control would not necessarily disclose all matters
in internal control that might be material weaknesses under standards
established by the American Institute of Certified Public Accountants. A
material weakness is a condition in which the design or operation of the
specific internal control components does not reduce to a relatively low level
the risk that error or fraud in amounts that would be material in relation to
the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving internal control, including
control activities for safeguarding securities, that we consider to be material
weaknesses as defined above.



We understand that practices and procedures that accomplish the objectives
referred to in the second paragraph of this report are considered by the SEC to
be adequate for its purposes in accordance with the Securities Exchange Act of
1934 and related regulations, and that practices and procedures that do not
accomplish such objectives in all material respects indicate a material
inadequacy for such purposes. Based on this understanding and our study, we
believe that the Company's practices and procedures were inadequate at June 30,
2003, to meet the SEC's objectives. We noted the following matters involving the
practices and procedures required under Rule 17a-5(g). These conditions were
considered in determining the nature, timing and extent of the procedures to be
performed in our audit of the financial statements of the Company for the year
ended June 30, 2003. The Company's practices and procedures in connection with
financial reporting and FOCUS preparation were inadequate due to insufficient
levels of review and supervision with regards to the accuracy of books and
records and proper application of US GAAP. Management has taken certain steps to
address these matters including hiring an additional financial and operations
principal and increased involvement in the review process by the current chief
executive officer and chief operating officer.

This report is intended solely for the use of the Board of Directors,
Stockholder and Management of the Company, and the SEC, the National Association
of Securities Dealers, Inc., and other regulatory agencies that rely on rule
17a-5(g) under the Securities Exchange Act of 1934 in their regulation of
registered brokers and dealers, and is not intended to be and should not be used
by anyone other than these specified parties.

New York, New York
September 29, 2003