10QSB

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

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

For the quarterly period ended March 31, 2002

[   ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______ to __________

Commission file number _________________________

PROGRESSIVE ASSET MANAGEMENT, INC.
(Exact name of small business issuer as specified in its charter)

CALIFORNIA
(State or other jurisdiction of
incorporation or organization) 90-804853
(IRS Employer Identification No.)

1010 Oak Grove Road, Concord, CA 94518

(Address of principal executive offices)

800-786-2998

(Issuer’s telephone number)

Former name, former address and former fiscal year, if changed since last report)

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [   ] No [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 1,220,983 shares of Common Stock as of April 30, 2002.

Transitional Small Business Disclosure Format (Check one): Yes [X] No [   ]

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TABLE OF CONTENTS

PART I-FINANCIAL INFORMATION
	Item 1. Financial Statements.
		Condensed Consolidated Statement of Operations
		Condensed Consolidated Statement of Cash Flows
		Condensed Consolidated Statement of Financial Condition
	Item 2. Management’s Discussion and Analysis or Plan of Operation.
PART II-OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES
Exhibit 19

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

Progressive Asset Management, Inc.

Condensed Consolidated Statement of Operations

		Three months ended		Three months ended
		March 31, 2002		March 31, 2001
Total revenues		$	110,472	$	128,938
Costs and expenses
	Employee compensation and benefits		58,426		43,555
	Other costs and expenses		51,058		44,402
	Total costs and expenses		109,484		87,957
Income before income taxes			988		40,981
Taxes on income			0		0
Net income (loss)		$	988	$	40,981
Net income (loss) per share
	Basic	$	0.00	$	0.03
	Fully diluted	$	0.00	$	0.02
Shares used to compute per share amounts
	Basic		1,346,572		1,537,667
	Fully diluted		2,584,072		2,711,986

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Progressive Asset Management, Inc.

Condensed Consolidated Statement of Cash Flows

		Three months ended			Three months ended
		March 31, 2002			March 31, 2001
Cash flows from operating activities
	Net income (loss)	$	988		$	40,981
	Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities		12,380			(26,378	)
	Net cash provided (used) by financing activities		13,368			14,603
Net cash provided (used) by investing activities			(87,341	)		0
Net cash provided (used) by financing activities			(112,365	)		(37,424	)
Net change in cash and cash equivalents			(186,338	)		(22,821	)
Cash and cash equivalents,
	Beginning of period		486,927			528,683
	End of period	$	300,589		$	505,862

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Progressive Asset Management, Inc.

Condensed Consolidated Statement of Financial Condition

			March 31, 2002			March 31, 2001
Assets
	Current assets
		Cash and cash equivalents	$	300,589		$	505,862
		Commissions and other receivables		26,211			69,904
		Other current assets		35,596			46,558
		Total current assets		362,396			622,324
	Property and equipment, net			9,536			12,869
	Other assets			131,975			40,273
	Total assets		$	503,907		$	675,466
Liabilities and Stockholders’ Equity
	Current liabilities
		Accounts payable and accrued liabilities	$	16,022		$	14,531
		Total current liabilities		16,022			14,531
	Other liabilities			33,849			78,084
	Preferred stock, Series A			50,644			8,184
	Stockholders’ equity
		Preferred stock, Series B		25,000			25,000
		Common stock, no par value		1,278,935			1,443,126
		Retained earnings (accumulated deficit)		(900,543	)		(893,449	)
		Total stockholders’ equity		403,392			574,667
	Total liabilities and stockholders’ equity		$	503,907		$	675,466

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Item 2. Management’s Discussion and Analysis or Plan of Operation.

Results of Second Quarter. The results of PAM’s Second Quarter is described in the “REPORT TO SHAREHOLDERS” dated April 30, 2002. A copy is included as Exhibit 19 to this Form 10-QSB and is incorporated by reference as part of this Item 2.

Forward-Looking Statements. Any statements contained in this Quarterly Report that relate to future plans, events, or performance are forward-looking statements that involve risks and uncertainties. These include: but are not limited to, changes in general economic conditions, particularly the recent down-turn in the economy and the war on terrorism, intense competition for customers, pressures on brokerage, other fees charged, most notably the competition among firms offering brokerage services on-line, the mood of the investing public and the changes in political attitude toward socially responsible investments. The terrible attack on September 11, 2001, on targets in the United States, creates even greater uncertainty and insecurity. No one yet knows the full ramifications of these incidents. PAM cautions that the foregoing list of important factors is not exclusive. Developments in any of these areas could cause PAM’s results to differ materially from results that have been or may be projected by or on behalf of PAM. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this statement. PAM does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of PAM.

PART II-OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

(a)  Exhibits required by Item 601 of Regulation S-B.

Exhibit 2	(a)	Restated Articles of Incorporation(1)
	(b)	Bylaws(1)
Exhibit 6	(a)	Stock Option Plan(1)
	(b)	Standstill and Restrictions on Transfer Agreement Between and among Progressive Asset Management, Paradox Holdings Inc., and Financial West Group(1)
	(c)	Agreement between PAM and Sustainable Systems, Inc.(2)
	(d)	Amendment to Standstill and Restrictions on Transfer Agreement Between and among Progressive Asset Management, Paradox Holdings Inc., and Financial West Group(3)
Exhibit 12	(a)	Purchase Agreement Among Paradox Holdings, PAM and FWG(1)
Exhibit 19	Report to Shareholders, dated April 30, 2002

Footnotes: (1) Incorporated by reference to the Company’s Registration Statement on Form 10-SB, Amendment 2, filed August 9, 2000. (2) Incorporated by reference to the Company’s Form 10-KSB, filed on September 28, 2000. (3) Incorporated by reference to the Company’s Schedule TO (Exhibit (d)(3)) filed on November 14, 2001.

(b)  Reports on Form 8-K. No Forms 8-K were filed during the quarter for which this report is filed, listing the items reported, any financial statements filed and the dates of such reports.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PROGRESSIVE ASSET MANAGEMENT, INC.

Date: May 1, 2002	/s/ Eric Leenson
	Eric Leenson, President and Chief Executive Officer
Date: May 1, 2002	/s/ Catherine Cartier
	Catherine Cartier, Secretary

6 EX-19 3 f81195ex19.htm EXHIBIT 19

EXHIBIT 19

[Progressive Asset Management, Inc. letterhead]

REPORT TO SHAREHOLDERS

I. Finances for the Quarter Ending March 31, 2002

During the quarter ending March 31, 2002, Progressive Asset Management, Inc. (PAM), narrowly achieved positive financial results. PAM produced total revenues of $110,472, while incurring expenses of $109,484, thereby generating a net profit of $988 for the quarter. There were no meaningful earnings per share for the quarter.

Net profits fell $39,993 from the same quarter of the previous year. Such a decline resulted from an $18,466 falloff in revenues and a $21,527 increase in expenses. The decline in revenues was a continuing indication of the investing public’s present apathy with regard to the equities markets, as well as to the decline in asset values that has occurred over the past year. The increase in expenses is primarily a result of the increase in staff, the new promotional efforts and the one time cost of completing the tender offer described below. Each shareholder receives as part of this Quarterly Report, the unaudited financial statement for the quarter ending March 31, 2002, prepared by the accounting firm of Markle Stuckey Hardesty & Bott.

Under the strategic alliance with Financial West Group (FWG), FWG executes securities transactions and receives the commissions for those transactions generated by registered representatives who are members of the PAM Network. FWG then distributes the preponderance of the commissions to the registered representatives, retaining a portion, which is shared with PAM. The alliance is described in more detail in PAM’s annual 10-KSB filed with the Securities and Exchange Commission on September 27, 2001, and available online at its website or from PAM’s secretary.

II. Implementation of PAM’s Business Plan.

Throughout the quarter, PAM’s Business Development Department led by Alison Wise continued to make contacts with potential broker recruits. In addition she began a modest experiment with Internet advertising by securing space for PAM links on the Christian Science Monitor and Green Money Journal websites. Time will tell if these ads will generate interest for the services we provide.

Guided by Neil Stallings, PAM’s Director of Social Research, PAM launched a new service for Network clients. PAM will notify financial consultants if a company in a client’s portfolio is the subject of a socially-oriented shareholder resolution. Where appropriate, clients will be informed of the resolution by their advisor and encouraged to make an informed decision.

III. ProgressiveTrade Securities, Inc.

ProgressiveTrade Securities, Inc., is the online trading firm being developed by PAM and Sustainable Systems, Inc. Substantial progress has been made during the quarter in preparing ProgressiveTrade to commence operation. Most importantly, ProgressiveTrade closed its seed round of financing, raising $250,000 of which $100,000 came from PAM.

ProgressiveTrade entered into an agreement with Q4i, in order to utilize its online trading engine, and into an agreement with Blue Marble (a wholly owned subsidiary of Q4i), to serve as the executing broker for trades that will be placed through ProgressiveTrade. ProgressiveTrade also retained the services of Q4i to build the ProgressiveTrade social research database and social screening system. ProgressiveTrade believes its demonstration model of the system will be ready for alpha testing within three months. Significant progress was also made in establishing agreements with social research providers and affinity marketing partners. ProgressiveTrade management is now engaged in raising the $1 million Series A Round funding necessary to commence offering these services to the public.

IV. Shareholder Matters.

At the Annual Shareholders Meeting held on March 22, 2002, the following Directors were re-elected to serve one-year term on the Board — Peter Camejo, Cathy Cartier, Nina Lau-Branson, Eric Leenson, Ed Price, Gene Valentine, and Michael Wyman. In addition the accounting firm of Markle Stuckey Hardesty & Bott was reappointed to serve as auditors of PAM.

As was previously mentioned in an earlier report, PAM commenced a tender offer for common shares that ended January 18, 2002. 184, 671 shares were tendered and accepted at $0.60 per share. An additional 2,500 shares were purchased on the open market during the balance of the quarter.

PAM’s Board believes that the repurchase of PAM common shares is a good way to increase shareholder value by reducing the number of outstanding shares. The company has maintained a buy back program since selling a 40% interest to FWG and will continue to buy shares to minimize the diluting effect of that sale.

V. Looking to the Future.

July 1, 2002, will mark the third anniversary of our strategic alliance with FWG. Over that time frame many of our objectives have been met. PAM has returned to consistent profitability, the number of registered representatives in the Network has more than doubled, and the provision of socially responsible investment (SRI) products and services has expanded. The company has foregone seeking major new opportunities in order to build its core business more solidly than ever.

While work remains to be done to strengthen our core business, we believe that PAM is now well positioned to undertake new ventures that offer promising results. PAM’s investment of $100,000 in Progressive Trade Securities is an indication of that willingness. In today’s environment of pullbacks in the securities industry, there is no doubt that such an investment is a risky proposition that is not to be made lightly. There is no certainty that the necessary capital for Series A Round funding will be raised for Progressive Trade or that the company will achieve the desired objectives necessary to succeed. However, we believe a socially screened on line securities platform offers significant potential financially as well as in terms of expanding interest in SRI. Progressive Trade, if successful, will be fully complementary to our existing business model by bringing in new revenues and introducing PAM to prospective new clients seeking professional money management services.

Be assured that we will watch ProgressiveTrade’s development carefully in the coming months. Thank you for your continuing support of our efforts.

/s/ Eric Leenson	/s/ Peter Camejo
President & CEO	Chairman of the Board
May 1, 2002

Forward-Looking Statements. Any statements contained in this Report that relate to future plans, events, or performance are forward-looking statements that involve risks and uncertainties. These include, but are not limited to, changes in general economic conditions, particularly the recent down-turn in the economy, the war against terrorism, intense competition for customers, pressures on brokerage, other fees charged, most notably the competition among firms offering brokerage services on-line, the mood of the investing public and the changes in political attitude toward socially responsible investments. The terrible attack on September 11, 2001, on targets in the United States, creates even greater uncertainty and insecurity. No one yet knows the ramifications of these incidents. PAM cautions that the foregoing list of important factors is not exclusive. Developments in any of these areas could cause PAM’s results to differ materially from results that have been or may be projected by or on behalf of PAM. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this statement. PAM does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of PAM.

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