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

Form 10-KSB

[x ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
       For the fiscal year ended June 30, 2002.

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
       For the transition period from      to

Progressive Asset Management, Inc.
(Name of small business issuer in its charter)

|                                                                          |  |                                               
|------------------------------------------------------------------------- |  | ----------------------------------------------
|California
(State or other jurisdiction of
incorporation or organization) |  | 90-804853
(I.R.S. Employer Identification No.)
|                                                                         
|1010 Oak Grove Road, Concord, CA
(Address of principal executive offices) |  | 94518
(Zip Code)                              

Issuers telephone number (800) 786-2998

Securities registered under Section 12(b) of the Exchange Act:
NONE

Securities registered under Section 12(g) of the Exchange Act:
1,11983 shares of Common Stock

Common Stock
(Title of class)

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. [x ] Yes    [   ] No

Check if there is no 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. [   ]

Issuers revenues for its most recent fiscal year $497,772.

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|                                               |                                                                                                    |  |  |  |  |  |  | 
|---------------------------------------------- | -------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                               | ITEM 6. DESCRIPTION OF BUSINESS                                                                   
|                                               | ITEM 7. DESCRIPTION OF PROPERTY                                                                   
|                                               | ITEM 8. DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES                                  
|                                               | ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS                                                    
|                                               | ITEM 10. SECURITY OWNERSHIP                                                                       
|                                               | ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS                                
|PART II                                       
|                                               | Item 1. Market Price of Dividends on the Registrants Common Equity and Other Shareholder Matters.
|                                               | Item 2. Legal Proceedings.                                                                        
|                                               | Item 3. Changes in and Disagreements with Accountants.                                            
|                                               | Item 4. Submission of Matters to a Vote of Security Holders.                                      
|                                               | Item 5. Compliance with Section 16(a) of the Exchange Act.                                        
|                                               | Item 6. Reports on Form 8-K.                                                                      
|PART III                                      
|SIGNATURES                                    
|Progressive Asset Management, Inc. Form 10-KSB



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The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of
September 1, 2002, is $360,450.33.

The number of shares outstanding of each of the issuers classes of common
equity, as of September 1, 2002, is 1,220,483.

DOCUMENTS INCORPORATED BY REFERENCE

None of the following documents are incorporated by reference: (1) any annual
report to security holders; (2) any proxy or information statement; and (3) any
prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933.

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

INFORMATION REQUIRED IN ANNUAL REPORTS OF
TRANSITIONAL SMALL BUSINESS ISSUERS

The Issuer has elected to furnish the information required by Items 6-11 of
Model B of Form 1-A, as well as the information required by Parts II and III of
Form 10-KSB.




ITEM 6. DESCRIPTION OF BUSINESS

(a)  Narrative Description of Business.

(1)  Business of Progressive Asset Management, Inc. (PAM).

(i)  PAM Provides Securities Brokerage and Advisory Services.

(A)  Introduction. PAM was incorporated in California July 14, 1987. It is
registered as a broker-dealer with the NASD and as an investment adviser with
the State of California. PAM is a member of SIPC and the MSRB. PAM
significantly restructured the manner in which it provides services to the
public in 1999. This restructuring is described in section (B) below.

(B)  PAM Provides Its Services Principally Through Financial West Group, Inc.,
(FWG). Prior to 1999, PAM had its corporate office in Oakland, California, an
office in New York, New York, and offered its services through several other
independent offices operated by persons who were registered representatives of
PAM. In March 1999, PAM entered into an agreement with FWG and Paradox
Holdings, Inc. (Paradox). FWG is a wholly-owned subsidiary of Paradox. FWG is
a broker-dealer, registered with the NASD, with 47 offices and approximately
400 registered representatives. FWG is an NASD, SIPC, and MSRB member. FWG is
also registered as a investment adviser with the Securities and Exchange
Commission, the State of California and several other states. Financial
transactions are processed through Correspondent Services
Corporation (CSC), a wholly owned, fully guaranteed subsidiary of
PaineWebber, Inc.

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Under the agreement among the parties, PAM transferred all of its customer
accounts and its registered representatives to FWG. Three persons remain
registered representatives with PAM as well as becoming registered
representatives of FWG. (For purposes of convenience, persons registered
through FWG are referred to as employees although many are classified as
independent contractors under federal or state law.)

For purposes of marketing and convenience, the registered representatives of
FWG who concentrate on socially-responsible investing and use the services of
PAM, are referred to as the PAM Network so that it is clear to the investor
that the services of PAM are utilized to achieve the goals of the client to
have a portfolio that meets the clients social responsibility goals. Because
of the requirements of the NASD and the California Department of Corporations,
all signage, correspondence and agreements state that all transactions are
conducted through FWG. Consequently, the PAM Network serves as the socially
responsible investment arm of FWG, with PAM providing participants in the PAM
Network with state of the art socially responsible investment services  social
screening, shareholder advocacy, and information on community investing.

As part of the ongoing relationship, PAM receives a portion of the gross
commission income generated by the FWG registered representatives who are
designated as members of the PAM Network, but no portion of the gross
commission generated by FWG registered representatives who are not members of
the PAM Network.

The gross commissions generated by FWG registered representatives who are
members of the PAM Network are shared between the registered representatives
who earn the commissions, FWG, and PAM. According to the agreement among the
parties, FWG receives 4.75% of the commission. PAM receives what remains after
the portions of the commission due to the registered representative and the
portion due to FWG have been subtracted. Therefore, the exact amount PAM will
receive on any one transaction depends on the amount of compensation the
individual registered representative is entitled to receive. The amount a
registered representative is entitled to receive is negotiated between FWG and
the registered representative and is not made public. However, for purposes of
illustration, a registered representative commonly receives approximately 86%
of the gross commissions, FWG receives 4.75%, and this results in PAM receiving
the balance of the gross commission.

This was the third full fiscal year of operation under the new structure
created by the strategic alliance with FWG. In this relationship, PAM provides
social research, stock screening, and other services to the brokers in the PAM
Network. To date this alliance has proved beneficial to both parties.

In the fiscal year ending June 30, 2002, PAM produced total revenues of
$497,772, with expenses of $448,488. This means that PAM had an after-tax net
profit of $47,684, generating basic earnings per share of $0.04 per share and
fully diluted earnings per share of $0.02. In
comparison, during the previous fiscal year, PAM earned gross revenues of
$603,605, with expenses of $407,316, and thus a net profit of $194,689, which
generated basic earnings per share of $0.13, and fully diluted earnings per
share of $ 0.07.

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Skeptics of Socially Responsible Investing (SRI) would like the public to
believe that do good companies cannot compete financially with those
enterprises that dont care about doing the right things. Since our founding in
1987, Progressive Asset Management (PAM), has striven to demonstrate that this
idea is simply false. The performance of SRI investments since 1987, has been
vindication of our trust and belief in SRI. You need look no further for
validation of SRI than the sorry state of the shareholders of Enron, Worldcom,
Global Crossing, or other recent victims of corporate greed.

The current wave of scandals has impacted everyone in the brokerage industry as
share prices have plummeted, and investor confidence has likewise fallen. Stock
market investment activity is likely to remain depressed for some time. Perhaps
the only silver lining to this cloud of pessimism overhanging the investing
public, is the interest, more robust than ever, in SRI as an investment
strategy. While SRI investors were, in certain instances, snookered in some of
these scandals, some of the screens commonly employed in SRI served to reduce
investors exposure.

PAM organized a milestone conference Bottomline 2001: The Future of Fiduciary
Responsibilitythat was held April 2001 in San Francisco. Nearly 200
institutional investors and their advisors, representing more than $700 billion
in assets, gathered to discuss the social and environmental impact of their
decisions. One of the most important themes of the conference was addressing
their increasing concern about corporate governance and how shareholders must
regain control of their property that had been usurped by corporate management.
Now, in 2002, this concern has exploded as an urgent national problem for the
coming decade. Whether or not the administration of capital can be democratized
to serve shareholders values and their long-term interest is an issue that
will have tremendous implications for our social and environmental well-being.

The fiscal year ending June 30, 2002, was very challenging, to say the least.
Economic recession, terrorist attacks, corporate scandals, instability in the
Middle East, and the threat of the United States going to war all contributed
to a decline of 17.9% in overall revenues. Despite the fact that expenses
increased, PAM again achieved a modest profit. In addition, PAM continued to
strengthen the staffs education and skills as well as adding more registered
representatives to the PAM Network.

This was the third full fiscal year of operation under the new structure
created by the strategic alliance with Financial West Group (FWG). In this
relationship, PAM provides social research, stock screening, and other services
to the brokers in the PAM Network, who are registered with FWG. In return, FWG
handles all the back office operations, is responsible for supervision and
oversight of all registered representatives in the Network, and pays PAM an
override on commissions and fees generated by the brokers of the PAM Network.
This alliance has proved beneficial to both parties.

In the fiscal year ending June 30, 2002, PAM produced total revenues of
$497,772 with expenses of $448,488. This means that PAM had an after-tax net
profit of $47,684 generating basic earnings per share of $0.04 and fully
diluted earnings per share of $0.02. In comparison, during the previous fiscal
year, PAM earned gross revenues of $603,605 with expenses of $407,316,
realizing a net profit of $194,689 with fully diluted earnings per share of
$0.07.

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In keeping with the implementation of our business plan, the largest single
increase in expenses came in employee compensation and benefits. As to be
expected, other related expense items in this area such as advertising and
travel/entertainment, also increased.

With regard to revenues, brokerage commissions and advisory fees were down
significantly, falling by $126,765, or approximately 22% from 2001. This drop
is attributable primarily to the decline in the total value of the assets under
management and to the drop in investor morale, as previously mentioned.
However, a portion of the change is attributable to the impact of the first
full year of the increased payout to registered representatives who are
members of the PAM Network, that was first authorized by the Board of Directors
in January 2001. Income declines from interest and dividends were more than
offset by a one-time payment of a fee of $30,000. The fee was for PAMs
providing communication and investor relation services over a period of six
years for a limited partnership formed to provide financing for low-income
housing.

With total stockholders equity of $403,956, cash and cash equivalents of
$337,226, little debt, and expenses well under control, PAM continues to enjoy
a healthy balance sheet. Nevertheless, in the context of present bear market
conditions, operating losses are possible. Budget restraints must remain in
place until revenues improve.

The size of the PAM Network is not static because it is not limited to the
registered representatives whose registrations were transferred from PAM to
FWG. Members of the PAM Network can include persons who were registered
representatives of FWG before PAM and FWG entered into the agreement as well as
new registered representatives. PAM assists FWG in recruiting registered
representatives who are interested in promoting socially-responsible investing.
Since the transfer of the registrations of the registered representatives from
PAM to FWG in 1999, the number of registered representatives in the PAM
Network, has nearly doubled from 23 to 50 as of June 30, 2002.

The following is a summary of the number of registered representatives of FWG
who are members of the PAM Network and the income to PAM generated by these
representatives over the last fiscal year.

|                |  |                                 |           |                                    |  |   |         | 
|--------------- |  | ------------------------------- | --------- | ---------------------------------- |  | - | ------- | 
|Number of       |  | Gross Revenues Generated by     |           | Portion of Gross Revenues Paid PAM
|Representatives |  | Representatives Received by FWG |           | by FWG                            
|                |  |                                 |           |                                   
|50              |  | $                               | 4,287,294 |                                    |  | $ | 443,026 | 

The increased number of registered representatives has helped generate new
clients and thus new sources of income both from the transaction-based fees
they generate as well as potential
advisory fee income. On the other hand, the increased number of registered
representatives has not required an increase in the overhead of PAM since FWG
absorbs the costs of the additional registered representatives.

As part of the agreement among the parties, Paradox has purchased a minority
equity stake in

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PAM equal to 40% of the voting power of all the outstanding
stock of PAM. Paradox cannot purchase any additional shares of PAM until
January 2, 2003. The NASD approved the March 1999 agreement among the parties
in late June 1999, and the purchase of PAM shares by Paradox was completed in
early July 1999. The March 1999 agreement among the parties is incorporated by
reference as Exhibit 12(a). An amendment to the standstill agreement between
and among Progressive Asset Management, Paradox Holdings, Inc., and Financial
West Group is incorporated by reference as Exhibit 6(d).

As a further incentive for entering into the relationship with FWG, PAM
receives an additional 2.5% of the gross commissions generated by FWG
registered representatives who are members of the PAM Network over and above
the basic amount. This additional payment will cease once FWG has paid PAM a
total of $875,000 from the gross commissions generated by FWG registered
representatives who are members of the PAM Network. Income of PAM from any
other source is not included in determining when the additional $875,000 is
fulfilled. As of June 30, 2002, PAM has received $325,268 of the $875,000 in
additional payments due it. For purposes of illustration, again, a registered
representative commonly receives approximately 86% of the gross commissions,
FWG receives 2.25% (5% minus 2.75%), and this results in PAM receiving 11.75%
of the gross commission.

|                          |  |                    |       |                            |  |  |      | 
|------------------------- |  | ------------------ | ----- | -------------------------- |  |  | ---- | 
|                          |  | Current Commission |       | Commission Structure after
|                          |  | Structure (%)      |       | PAM receives $875,000 (%) 
|Registered
Representative |  |                    | 86    |                            |  |  | 86   | 
|FWG                       |  |                    | 2.25  |                            |  |  | 4.75 | 
|PAM                       |  |                    | 11.75 |                            |  |  | 9.25 | 

FWG is a registered investment adviser and persons who it employs, where
required, are registered investment adviser representatives. FWG has special
programs that utilize its own proprietary system to select stock of companies
that meet its financial criteria for inclusion in the accounts it manages or
has discretionary authority. FWG submits these selections to PAM for screening
to identify those companies that meet the social and environmental criteria set
by PAM and FWG. PAM receives 5% of the gross amount of the asset-based fee that
FWG as a registered investment advisor periodically receives from clients of
FWG for this service. However, if the FWG employee responsible for the managed
account is a member of the PAM Network, then PAM does not receive this
management fee.

The resulting Socially Screened Portfolio is a product marketed directly by
FWG registered
representatives in presentations to current and prospective clients. The
registered representatives use promotional material prepared by and paid by
FWG. The incremental cost to PAM for providing the social screening to FWG is
negligible since PAM is continually screening companies as part of the services
it provides directly to members of the PAM Network.

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PAM does not receive a portion of all of FWGs income from its securities
brokerage and advisory business. Therefore, FWGs revenues in the past give no
guidance to the amount of revenues that will be generated under the agreement
between PAM and FWG.

Association with FWG provides PAM with a much stronger technology platform,
enhanced back office capacity, and significantly expanded registered
representative recruitment opportunities. FWG handles licensing and
transactions for the registered representatives affiliated with the PAM
Network. Linking with PAM gives FWG access to the field of socially-responsible
investing. Through FWG, the PAM Network offers a complete range of investment
services for any portfolio, large or small including:



| |  | Access to all major markets and types of investments.                                                                                                                                           
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Socially responsible mutual funds and retirement plans.                                                                                                                                         
| 
| |  | Identification of socially responsible investment managers.                                                                                                                                     
| 
| |  | Social screening, shareholder advocacy, and community investments.                                                                                                                              
| 
| |  | Offices in Arizona, California, Iowa, Indiana, Kentucky, Maryland,
Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Oregon,
Pennsylvania, and Wisconsin, as of June 30, 2002.
| 
| |  | No-load socially responsible mutual funds through Charles Schwab & Co., Inc.,
on an advisory-fee basis.                                                                                         

(C)  PAMs Services to the Public Emphasize Socially-Responsible Investing.

(I)  Socially-Responsible Investing. PAM was created to provide securities
brokerage and advisory services to persons who seek to engage in
socially-responsible investing. This term means that a persons investments
reflect that persons social concerns. PAM starts from the premise that
corporations that combine positive financial and social performance make the
best long-term investments. Businesses that do not follow what PAM believes are
socially and environmentally responsible practices tend to have greater
liabilities and charges. Examples of such businesses are heavy industries and
utilities that pollute air and ground water and tobacco manufacturers, because
they are subject to charges against earnings from the burdens of regulatory
compliance, litigation, fines, strikes, and boycotts.

Socially-responsible investing can be achieved in three ways:



| |  | Social Screening.    
|- |  | ---------------------
| 
| |  | Shareholder Activism.
| 
| |  | Community Investing. 

PAM conducts its own proprietary research which it provides to PAM Network
registered representatives and to other registered investment advisers to use
in creating model portfolios
based on social and environmental concerns of most persons concerned with
socially-responsible investing. Social screens frequently requested include
structuring a portfolio that meets the goals of a client in these areas:



| |  | Environment.                     
|- |  | ---------------------------------
| 
| |  | Employee relations.              
| 
| |  | Quality of products and services.

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| |  | Nuclear weapons or nuclear power. 
|- |  | ----------------------------------
| 
| |  | Tobacco, alcohol, or gambling.    
| 
| |  | Relations with repressive regimes.

Customized screens are also developed according to registered representatives
and registered investment advisers specifications based on clients specific
needs.

(II)  Shareholder Advocacy and Community Investments. PAM provides support to
PAM Network registered representatives to assist their clients realizing their
social objectives through the strategies of shareholder advocacy and community
investing. Through shareholder advocacy, clients use their ownership of the
stock of a company to pursue change in the companys social or environmental
performance. PAM works with the Interfaith Center for Corporate Responsibility
and other advocates of corporate responsibility to:



| |  | Engage in dialogue with company officials.                         
|- |  | -------------------------------------------------------------------
| 
| |  | Introduce or co-sponsor social shareholder resolutions.            
| 
| |  | Build shareholder advocacy networks and wage shareholder campaigns.

PAM also works to provide community investing to enable the clients of PAM
Network registered representatives to invest in companies that have a high
community impact. PAM has served as the placement agent for investments that
promote:



| |  | Economic development in inner city and rural poverty areas in the United
States.
|- |  | --------------------------------------------------------------------------------
| 
| |  | Sustainable development in the developing world.                                
| 
| |  | Low income housing.                                                             
| 
| |  | Energy self-reliance and alternative energy production.                         

PAM has joined with the Calvert Social Investment Foundation to create PAM
Community Investments. PAM Community Investments are offered by Information
Guide through FWG. By using this national program, investors can direct capital
to community development loan funds that help low-income families and
neighborhoods work their way out of poverty.

PAM has a relationship to assist Trainer Wortham & Company, Inc. (Trainer
Wortham) to offer socially-screened management of short-term funds of cities
and other institutional investors. Trainer Wortham is registered with the SEC
as an investment adviser and has over $4.4 billion in management. It is the
investment management subsidiary of First Republic Bankcorp, a regional bank
with its headquarters in San Francisco, CA. Under the arrangement with Trainer
Wortham, PAM will be responsible for socially-screening investments and
marketing this service while Trainer Wortham manages the investments, making
the investment decisions. For its services, PAM receives a portion of the
advisory fees charged by Trainer
Wortham. The amount of the advisory fees that PAM receives is 10% of the total
management fee with respect to all funds invested by Trainer Wortham on behalf
of clients using PAMs screening services. Separately, for each investor
referred to Trainer Wortham by PAM, PAM will receive a percentage of the total
management fee Trainer Wortham receives from that client. During the first 12
months, the amount will be 25%; for the second 12 months, 20%; for the third 12
months,15%; for the fourth 12 months, 10%; and for the fifth 12 months and each
month thereafter, 5%. This relationship has not yet generated income for PAM.

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In the past fiscal year, PAM and PAM staff continued to play leadership roles
in a variety of special projects with significance for the field of socially
responsible investment and, during this fiscal year PAM initiated the following
new projects.

*Guided by Neil Stallings, PAMs Director of Social Research, PAM launched in
early calendar year 2002, 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) Investment Services Provided Through the PAM Network. Registered
representatives in the PAM Network, serving as the socially-responsible
division of FWG, offers a wide variety of services and investments for any size
portfolio, including:



| |  | Mutual funds full range of socially responsible mutual funds.        
|- |  | ----------------------------------------------------------------------
| 
| |  | Stocks access to all major markets and exchanges.                    
| 
| |  | Bonds municipal, government agency, corporate, and convertible bonds.
| 
| |  | Insurance.                                                            
| 
| |  | Financial and estate planning.                                        
| 
| |  | Retirement planning for individuals and businesses.                   

Through FWG, PAM Network Registered Representatives provide additional
financial consulting services to institutions and individuals with larger
investment portfolios. These services include assistance in and investment plan
design and implementation, such as:



| |  | Defining financial objectives and social goals.             
|- |  | ------------------------------------------------------------
| 
| |  | Asset allocation.                                           
| 
| |  | Assessment of portfolio performance.                        
| 
| |  | Investment manager evaluation, search, and selection advice.
| 
| |  | Ongoing social screening.                                   
| 
| |  | Regular performance monitoring.                             
| 
| |  | Shareholder advocacy.                                       
| 
| |  | Custodial services.                                         

These services are supported by PAM through the PAM Network. In addition to
providing these services through the PAM Network, PAM directly provides clients
ongoing social screening and shareholder advocacy services. PAM at present does
not receive compensation for shareholder
advocacy. Its compensation for ongoing social screening is negotiated between
PAM and the client.

(IV)  The Client Base Includes Large and Small Investors. Since any investor,
large or small, can have a portfolio structured to be socially-responsible,
persons who use the services of the PAM Network can have an account as small as
$1,000. The average size of an account is approximately $100,000, with at least
80% of the accounts under $500,000. Clients include individuals, unions,
religious organizations, and non-profit organizations. The largest client

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utilizing the services of FWG registered representatives in the PAM Network is
a religious organization, but which has been responsible for 12% of PAMs gross
revenue in fiscal years 2001 and 2002.

Through its relationship with FWG, PAM receives compensation on certain
transactions on a per-trade basis as a broker-dealer, and receives compensation
for advisory services, as an investment adviser. PAM also generates fees
separately from its relationship with FWG principally from social screening.

The income from brokerage transactions through FWG equal approximately 70% of
PAMs gross revenues, and the income from investment advisory fees through FWG
equal approximately 30% of PAMs gross revenues. PAM no longer acts as an
underwriter for any offerings.

(ii)  Status of New Products or Services.

*ProgressiveTrade Securities, Inc. In June 2000, PAM formed a strategic
alliance with Sustainable Systems, Inc., (SSI) to explore the creation of
ProgressiveTrade, as a new company to offer socially responsible investing to
on-line investors. The idea behind ProgressiveTrade is to design and build an
on-line social screening system that offers investors a way to create and apply
their own social and environmental screens to evaluate investments and then
execute trades in those investments through one or more affiliated on-line
brokerages. Under the agreement between PAM and SSI, the parties conducted
feasability studies and formed a new corporation in which PAM owns 70% of the
initial stock in ProgressiveTrade and SSI owns 30%. PAM has fulfilled its
maximum financial commitment of $100,000 to ProgressiveTrade. Based on initial
studies and planning, the parties in September 2000, agreed to incorporate
ProgressiveTrade (which has been done), raise initial capital and complete a
feasibility study. The agreement between the parties is identified as Exhibit
6(c) to this filing.

Since PAM has played a pioneering role in the definition of the field of
socially responsible investing, the company has a powerful location from which
to launch ProgressiveTrade, which will incorporate PAMs proprietary social
research and social screening systems.

ProgressiveTrade is the joint venture between PAM and SSI to create an on-line
socially-responsible investment brokerage firm, and is moving steadily closer
to launching. SSI is the Managing Member of the Communication Technology
Cluster, LLC, a successful incubator for
high tech communications start-ups located in the recently restored historic
Rotunda Building in downtown Oakland, California. ProgressiveTrade has offices
in the Communication Technology Cluster, taking advantage of the many services
offered by the incubator setting. SSI is also Managing Director of a project
initiated by the Bay Area Council that is establishing an innovative $250
million family of community investment funds. James Nixon, long-time Vice
President of Sustainable Development for PAM, left PAM in 2001 to focus on his
work at SSI, a company that PAM helped found in 1993.

ProgressiveTrade has been incorporated, finished its business plan, and begun
the process of

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building its on-line socially responsible investment system.

The development of Progressive Trade Securities, Inc. (PTS), continues. The
online financial platform initiated by PAM and Sustainable Systems, Inc. (SSI),
made substantial progress in fiscal 2002. It raised seed financing of $250,000
of which $100,000 came from PAM, as was disclosed in a quarterly report. In
addition, PTS completed an alpha version of its Social Screening Module, a
proprietary technology that enables individual investors to create their own
social screens and be notified electronically of whether particular companies
pass those screens. The Module is integrated with an online trading platform
that also allows investors to purchase securities.

PTS added several key persons to its advisory board, including Henry Carter and
Matt Ariker, respectively the former Chief Compliance Officer and former Senior
Vice President of Marketing for E*Trade. Management is now engaged in raising
additional capital necessary to roll out the system and thereby be in a
position to commence trading.

The launch date depends on many internal and market factors, but the current
goal is to be ready for clients to begin trading during the first quarter of
2003. However, it should be noted that raising capital is particularly
difficult in the present financial environment, especially for internet-related
startups. Should PTS be unsuccessful in its efforts to secure the necessary
capital, PAM could lose its entire investment.

*Transition Period. The last several years were spent making the successful
transition to our new business model with FWG. Now the essence of PAMs
business strategy may be described as follows:



|1) |  | Actively recruit more NASD licensed financial professionals to the
Network.             
|-- |  | ----------------------------------------------------------------------------------------
|  
|2) |  | Help increase the production of existing brokers with marketing and
product initiatives.
|  
|3) |  | Explore new business opportunities that do not require much outlay of
PAMs capital.    

To achieve these objectives, PAM has taken several important steps in the area
of broker recruitment. To that end, Alison Wise joined PAM as Director of
Business Development in August 2001, and PAM has dedicated more resources to
promote activities oriented to fulfill points 1 and 2 of the strategy described
above. In the short run, as anticipated in the 2001 Annual Report, these shifts
cut significantly into the level of profitability attained in the past fiscal
year.
However, increasing the number and productivity of brokers is crucial for the
long-term health of the Company. In addition, the current, substantial rise in
investor sentiment favoring socially responsible investing (SRI) makes the
upcoming period an unique time frame for attracting experienced professionals.

PAM management is exploring the feasibility of moving the headquarters back to
Oakland. Rents have fallen dramatically in Oakland since our departure two
years ago, reflecting the overall drop in commercial rental rates in the San
Francisco Bay Area. Management believes that having its principal office in
centrally-located Oakland will help attract registered representatives in the
San Francisco Bay Area to the Network. We believe that the move will result in
a modest

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reduction in the rental rate per square foot.

A boost to recruitment and marketing efforts will come from the recent
publication of PAM Chair Peter Camejos book The SRI Advantage: How Socially
Responsible Investing Has Outperformed Financially, a collection of essay and
articles. With a preface by Ralph Nader and an introduction written by famed
shareholder-activist Robert A.G. Monks, the author/editor weaves together the
chapters of evidence that SRI outperforms other investment approaches, in terms
of increasing return and reducing risk. The book includes writings of many
leaders of the SRI industry, and will stimulate interesting debates among
financial professionals while educating the general investing public.

On the social advocacy side, PAM will continue to leverage resources for
shareholder advocacy and community investing efforts. Interest in SRI issues by
institutional shareholders is likely to grow. PAM is well positioned to develop
educational services for that constituency, and for the investing public in
general, should it be determined that such activity will generate a meaningful
contribution to profitability.

Any statements contained in this filing that relate to future plans, events, or
performance are forward-looking statements that involve risks and
uncertainties, including, but not limited to, changes in general economic
conditions, intense competition for customers and pressure on brokerage and
other fees charged, the mood of the investing public, changes in political
attitude towards socially-responsible investments. The terrible attack on
September 11, 2001, on targets in the United States create 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 the date of this statement. PAM
does not undertake to update any forward-looking statement that may be made
from time-to-time by or on behalf of PAM.

(iii)  Estimated Amount Spent on Research. Less than $20,000 has been spent on
company-sponsored research to develop new products or services during the last
two years and no money has been spent on customer-sponsored research to develop
new products or services.

(iv)  Number of Employees. PAM has three full-time employees and four part-time
employees for a total of seven employees, including three of whom are
registered representatives with FWG. Peter Camejo, Eric Leenson, Cathy Cartier,
remain as registered principals of PAM. Staff in the offices of the 19
affiliates of the PAM Network are employees of the independent contractor
offices that make up the PAM Network.

(v)  Environmental Expenditures. PAM discharges no material into the environment
and requires no environmental control facilities. Therefore there have been no
expenditures and no effects or expected effects from compliance with federal,
state, and local provisions regulating discharge of materials into the
environment or from environmental control facilities.

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(2)  Future Financial Performance.

(i)  Distinctive or special characteristics of the financial services industry,
which may have a material impact upon Progressive Asset Managements financial
performance, include:



| |  | Changes in technology. The advent of internet trading, direct consumer access
to ever-increasing quantities of research information and lower commission
rates are having a significant impact on the securities industry. Such changes
have pushed down the profit-margins on transaction-based fees, especially those
charged on the internet. Furthermore, the increased usage of the internet for
trading requires all securities brokerage firms to consider offering such a
service. The availability of free or low-cost advice through print, television
and the internet have increased the pressure on profit-margins for offering
advice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Shifts in financial services compensation from transaction-based commissions,
to asset-based fee structures. This may result in short-term decline in revenue
from certain accounts through fiscal year 2003 as the basis of compensation is
gradually converted. All registered representatives may not be able to make the
transition to earning sufficient income under this basis of compensation and
thus may leave the industry.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| 
| |  | Rapid growth of socially responsible investment up 82% to $2.16 trillion with
screened portfolios up 183% to $1.49 trillion, according to the 1999 SRI Trends
Report of the Social Investment Forum, the professional association of socially
responsible investment professionals. One of the reasons for the rapid growth
of socially responsible investing is the positive financial performance of
socially responsible investment. Also, according to the Forum in a July 26,
2001 press release. Ten of the 15 screened funds (66%) with $100 million or
more in assets earned top marks for performance from either or both Morningstar
and Lipper Analytical Services for the one and three year periods ending June
30, 2001. The rapid growth of socially responsible investment is both positive,
in that the market for the services of PAM and the PAM Network is expanding,
and also negative in that competition within that market is also increasing.
The number of individual socially responsible investment practitioners is
growing and some of the major brokerage houses are adding socially responsible
investment divisions. Larger firms may have an advantage in recruiting
registered representatives, including the possibility of recruiting from FWG
and the PAM Network because they offer significant bonuses.
| 
| |  | The trading of PAMs common stock is reported on the NASD Over-the-Counter
Bulletin Board (OTCBB). Because trading on the Bulletin Board is extremely
light in comparison with trading on the NASDAQ or trading on an exchange,
trading of PAMs stock will remain illiquid,
thus limiting the ability to trade its stock. (As discussed in Part II, Item 1,
the OTCBB will cease functioning in 2003. Trades in PAMs stock will instead
will be reported on the Electronic Pink Sheets. The comments concerning
liquidity of the stock will remain accurate.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

(ii)  Impact of the Earth Trade settlement. Earth Trade, Inc. (Earth Trade) was
organized in 1992 to promote sustainable development by marketing both organic
and conventional food products from farm cooperatives in the developing world.
In prior years, the Company acted as a sales agent in connection with the
placement of certain Earth Trade debt and equity securities.

Principally due to continuing losses, the shareholders of Earth Trade voted in
May 1997 to voluntarily dissolve and liquidate its net assets. In April 1997,
the Company Board of Directors, with consideration of its mission and standards
of social responsibility, its 30% ownership of

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Earth Trade and its role as
placement agent for debt and equity securities issued by Earth Trade, offered a
settlement agreement to the Earth Trade note holders. Under the agreement, in
exchange for their residual Earth Trade debt and a general release of
liability, the note holders could receive either Company Series A preferred
stock with a stated value of $7.00 (fair market value on settlement date of
$0.70) or Company common stock with a stated value of $5.00 (fair market value
on settlement date of $0.50). Substantially all the Earth Trade note holders
accepted the settlement agreement in January 1998.

In February 1999, the shareholders approved an additional settlement with
certain remaining Earth Trade note holders. Under the agreement, in exchange
for their residual Earth Trade debt, a general release of liability and a
subordination agreement acceptable to the NASD, the note holders will receive a
total of $380,000. A reconciliation of the additional settlement subordinated
liability and current and future payments follow. Future payments depend upon
the gross revenue of the Company limited by the ability of the Company to meet
the NASD net capital requirements (Note 16). The remaining note holders may
elect to exchange their debt for PAM common shares held by its chair.
Outstanding amounts, if any, owed to the chair of PAM due to any exchange of
debt for common shares are further subordinated to debt owed the remaining note
holders.

The settlement of the claims with the Earth Trade noteholders has removed a
cloud on the future operations of PAM, and terminated what could have resulted
in a series of arbitrations and court cases that PAMs legal counsel estimated
would have cost PAM in excess of $100,000 in attorneys fees. Furthermore,
under the terms of the settlement, PAM is able to extend the payments over
approximately 10 years without the payment of any interest.

On the other hand, the Earth Trade settlement did require the initial payments
of $119,000 over 2-1/2 years, and will require annual payments equal to 1% of
PAMs gross revenues. These funds would have been available to meet the
obligations of PAM or expand PAMs operations. However, because of the amount
of legal fees facing PAM in relation to Earth Trade, the settlement overall has
improved the liquidity of PAM.

(b)  Segment Data. Progressive Asset Management, Inc. does not segment data in
its financial
statement.




ITEM 7. DESCRIPTION OF PROPERTY



| |  | National Office. PAMs national office is at 1010 Oak Grove Road, Concord, CA
94518. The phone number is 800-786-2998, and the email address is
pam@progressive-asset.com. PAM entered into a lease with Mr. Camejo for the
space now occupied as the principal offices of PAM. The term of the lease ends
October 1, 2002, and will continue on a month-to-month basis thereafter. The
office space is approximately 960 square feet. The rent, payable monthly, is
$1,660.00, and includes utilities. PAMs management believes the terms of the
lease are below market rate at the time the lease was entered into and was
approved by a majority of the disinterested members of the Board of Directors.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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PAM management is exploring the feasibility of moving the headquarters back to
Oakland. PAMs management believes that the move will result in a modest
reduction in the rental rate per square foot. PAM believes a new lease may be
entered into prior to November 1, 2003, and the move may be made prior to
January 1, 2003.

Progressive Asset Management Housing, Inc., a California corporation, is a
wholly-owned subsidiary of PAM. It is a general partner along with Rental
Housing, Inc., the managing general partner, of Magnolia Apartment Associates
Limited Partnership, an Idaho limited partnership. The limited partnership owns
two apartment complexes in the Boise, Idaho area. The units in these two
apartment complexes are leased to low-income families. The limited partnership
will dissolve December 31, 2021, unless earlier terminated under limited
circumstances as provided in the limited partnership agreement. While
Progressive Asset Management Housing, Inc., was instrumental in the
organization of the limited partnership and acquisition of the apartment
complexes in 1991 and retains a .50% partnership interest, it has never been
involved in the operation of the limited partnership or the apartment
complexes. Other than its position as a general partner of Magnolia Apartment
Associates Limited Partnership, Progressive Asset Management Housing, Inc., is
not a general partner nor a manager of any other real estate investments. These
real estate investments generate less than $7000 per year income to PAM.




ITEM 8. DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES

The members of the board of directors of PAM are elected at the annual meeting
of shareholders and serve until the next annual meeting of shareholders or
until their successors are elected. The most recent annual meeting was held
March 22, 2002.

(a)  Names, Ages, and Experience of Directors and Executive Officers.

Peter Camejo, Chair of the Board of PAM. Peter Camejo has served as CEO and
Board member since PAMs inception in 1987. From the inception of PAM until
April 1, 2001, Mr. Camejo was also the Chief Executive Officer of PAM. Before
co-founding PAM, he was an investment broker at Merrill Lynch and Prudential
Bache. Mr. Camejo has, in addition to his Series 7
General Securities license, a Series 24 General Principal license, a Series 4
Options license, and a Series 3 Commodities license.

Active in the environmental movement, Mr. Camejo has served as a member of the
Board of Directors of EarthShare and the Chair of the Council for Responsible
Public Investment. He is also a member of the Board of the Contra Costa County
Employee Retirement Association. Mr. Camejo, originally from Venezuela, is a
naturalized U.S. citizen. He is 62 years old, married and has two children.

Catherine Cartier, Secretary, Chief Administrative Officer and Director. Ms.
Cartier joined PAM at its inception in 1987 and has served as a Board member
and Corporate Secretary since 1994.

Prior to joining PAM, Ms. Cartier worked for Lehman Brothers and Prudential
Bache. She earned a BA from St. Marys College and holds her Series 7 General
Securities license, Series 24

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General Principal license, Series 53 Municipal
Principal license. Ms. Cartier is 52 years old.

Eric Leenson, President, Chief Executive Officer, Chief Financial Officer and
Director. Eric Leenson has been a member of the Board since 1989. He has been
CFO since 1990, President since 1992, and became Chief Executive Officer on
April 1, 2001. In his positions, he is responsible for the day-to-day oversight
of the firms operations. He is also responsible for its financial accounting
and reporting. He holds a Series 7 General Securities license, a Series 24
General Principal license, and a Series 4 Options license.

Mr. Leenson left his position as a financial consultant at Merrill Lynch to
join PAM in October 1987. Prior to joining Merrill Lynch, he was co-founder and
long time Managing Director of La Pena Cultural center in Berkeley, CA. Mr.
Leenson is 53 years old. Mr. Leenson received a B.A. from the Woodrow Wilson
School of Princeton University in 1970, and an M.B.A. from the University of
California, Berkeley in 1986.

Michael S. Wyman, Director. Mr. Wyman is a Board member of PAM, serving in his
second term. Mr. Wyman is a graduate of Pomona College, class of 1972 and
Hastings College of Law, class of 1981. He is member in good standing of the
California State Bar.

Mr. Wyman has worked as a lettuce picker, dishwasher, writer, editor, corporate
director. More recently, he was CEO of Its Electric!, an electric car
dealership from 1998 through January 1999. Before his involvement with Its
Electric!, and since he left, Its Electric!, he has been a private investor in
the field of socially responsible investing. Earlier he held the positions of
editor, associate director, and director for the Center for Democracy in the
Americas in Washington, D.C. Prior to his tenure at the Center, Mr. Wyman was
an attorney in private practice. Mr. Wyman is 51 years old.

Nina Lau-Branson, Director. Nina Lau-Branson is serving her second term on the
Board. After receiving her MBA in Finance from the University of Wisconsin, Ms.
Lau-Branson was employed by Price Waterhouse Coopers. As the first Corporate
Controller for Wind River
Systems in Alameda, CA, Ms. Lau-Branson was an integral part of the team that
brought Wind River Systems public. During her tenure with Wind River Systems
they grew to a company with over $50 million in revenues and operations in over
ten countries. Ms. Lau-Branson lives in Oakland, California and is 46 years
old.

Gene Valentine, Director. Gene Valentine is serving his second full one-year
term on the Board. He joined the Board in June 1999. Mr. Valentine is Chairman
of the Board and Chief Executive Officer of FWG. Mr. Valentine has a BS degree
from Bethany College and also attended the University of Vienna. Mr. Valentine
is also the President and Founder of Second Byte Foundation which provides
computers to at-risk children. Mr. Valentine is 52 years old.

Edward L. Price, Director. Mr. Price is serving his second term. Mr. Price is
Director and Chief Administrative Officer of FWG. Mr. Price has a BA from the
U.S. Naval Academy and a MBA from the University of California, Berkeley.
Previously a CPA with Touche Ross, Mr. Price joined FWG in 1998. Mr. Price is
51 years old.

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(b)  Family Relationships. No director, person nominated to be a director,
executive officer, or significant employee have family relationships with any
other director, executive officer, or significant employee.

(c)  Business Experience. The business experience of each director, executive
officer, and significant employee is described under (a) above.

(d)  Involvement in Certain Legal Proceedings. No director, person nominated to
be a director or executive officer of PAM has been in the last five years
involved in any action under the Bankruptcy Act, any state insolvency law, or
convicted in a criminal proceeding (excluding traffic violations and other
minor offenses).




ITEM 9. REMUNERATION OF DIRECTORS AND OFFICERS

(a)  Aggregate Annual Remuneration.

|                                            |  |                                                                                   |  |              |                        | 
|------------------------------------------- |  | --------------------------------------------------------------------------------- |  | ------------ | ---------------------- | 
|                                            |  | Capacities in which                                                               |  | Aggregate   
|Name                                        |  | Remuneration Was Received                                                         |  | Remuneration
|Peter Camejo
Eric Leenson
Catherine Cartier |  | Chair, Broker
President, CEO, CFO, Broker
Corporate Secretary, Operations Manager |  | $            | 15,000
$71,156
$15,000 | 

This information was prepared on a cash basis.

Common Stock and Options on Common Stock Issued to Members of the Board.
Pursuant to the Stock Option and Incentive Plan adopted by the Board of
Directors in 1995, the Board issued for fiscal years 2001 and 2002, common
stock and options to those directors who were not officers,
directors or employees of PAM, commonly referred to as outside directors. The
shares and options were issued after PAM became a reporting company, and thus
are not registered securities, are subject to restrictions on transfers and
cannot be publicly traded. The directors did not tender funds for the
acquisitions of these securities, but the acquisitions are taxable events for
the directors. These shares were issued pursuant to exemptions from
registration under Section 4(2) of the Securities Act of 1933 and Regulation D
issued by the Securities and Exchange Commission.

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The following are the number of shares and options issued and the value of the
shares and options at the time of issuance:

|                 |  |           |     |           |  |                      |     |        |  |   |      |  |  |  |      | 
|---------------- |  | --------- | --- | --------- |  | -------------------- | --- | ------ |  | - | ---- |  |  |  | ---- | 
|                 |  | Number of |     | Number of |  | Value of Each Option |     | Year  
|Recipient        |  | Options   |     | Shares    |  | and Each Share       |     | Issued
|                 |  |           |     |           |  |                      |     |       
|Nina Lau-Branson |  |           | 500 |           |  |                      | 500 |        |  | $ | 0.60 |  |  |  | 2002 | 
|                 |  |           | 500 |           |  |                      | 500 |        |  | $ | 0.41 |  |  |  | 2001 | 
|Michael Wyman    |  |           | 500 |           |  |                      | 500 |        |  | $ | 0.60 |  |  |  | 2002 | 
|                 |  |           | 500 |           |  |                      | 500 |        |  | $ | 0.41 |  |  |  | 2001 | 
|Kalman Stein     |  |           | 500 |           |  |                      | 500 |        |  | $ | 0.60 |  |  |  | 2002 | 
|                 |  |           | 500 |           |  |                      | 500 |        |  | $ | 0.41 |  |  |  | 2001 | 
|Peggy Saika      |  |           | 500 |           |  |                      | 500 |        |  | $ | 0.41 |  |  |  | 2001 | 

Mr. Stein resigned from the Board effective March 22, 2002. Ms. Saika resigned
from the Board effective December 7, 2000.

(b)  Future Remuneration. Peter Camejo will receive $15,000 per year in salary.
Eric Leenson will receive $65,000 per year in base salary. Catherine Cartier
will receive $15,000 per year in salary. Subsequent to the strategic alliance
with FWG, each of these corporate officers is a registered representative with
FWG and receives commission income through Financial West Group, but that
income is not generated through Progressive Asset Management, Inc.




ITEM 10. SECURITY OWNERSHIP

(a)  Principal Holders of Voting Securities. (Each of the three highest paid
persons who are officers and directors; all officers and directors as a group;
shareholders holding more than 10% of any voting class.)

|                          |  |                                                                      |  |                  |         |          |  |            |      | 
|------------------------- |  | -------------------------------------------------------------------- |  | ---------------- | ------- | -------- |  | ---------- | ---- | 
|                          |  |                                                                      |  |                  |         |          |  | Percentage
|Title of Class            |  | Name and Address                                                     |  | Amount of Shares |         | of Class
|Common Shares             |  | Peter Camejo
1010 Oak Grove Road
Concord, CA 94518                   |  |                  | 350,718 |          |  |            | 28.7 | 
|Common Shares             |  | Eric Leenson
1010 Oak Grove Road
Concord, CA 94518                   |  |                  | 78,350  |          |  |            | 6.4  | 
|Common Shares             |  | Catherine Cartier
1010 Oak Grove Road
Concord, CA 94518              |  |                  | 20,000  |          |  |            | 1.6  | 
|Common Shares             |  | All Officers and Directors                                           |  |                  | 557,834 |          |  |            | 45.7 | 
|Series B Preferred
Shares |  | Paradox Holdings, Inc.
2663 Townsgate Rd.
Westlake Village, CA 91361 |  |                  | 25,000  |          |  |            | 100  | 

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The Series B Preferred Shares, held by Paradox Holdings, Inc., when combined
with the common stock, has voting power equal to 40% of the total shares that
can be cast. Consequently, the following is the voting power of the following
persons when factoring in the voting power of the Series B Preferred Shares:
Peter Camejo 17.2% ; Eric Leenson 3.9%, Catherine Cartier 1.0%; and all
Officers and Directors, 27.4%. Under the Standstill Agreement between PAM and
Paradox, until January 1, 2003, neither party can take steps to change the
relative voting power of Paradox. This agreement is identified as Exhibit 6(b)
to this filing.

(b)  Other Holders of 10% Voting Securities. None.

(c)  Certain holders of Non-Voting Securities.

|               |  |                                            |  |           |        |            |  |  |      | 
|-------------- |  | ------------------------------------------ |  | --------- | ------ | ---------- |  |  | ---- | 
|               |  | Name and Address                           |  | Amount of |        | Percentage
|Title of Class |  | of Shareholder                             |  | Shares    |        | of Class  
|Preferred A    |  | Lakshima Inc.                              |  |           | 13.669 |            |  |  | 18.9 | 
|               |  | 36 Roseberry Ave.                          |  |           |        |            |  |  |      | 
|               |  | Ottawa, ON K1S 1W2                         |  |           |        |            |  |  |      | 
|Preferred A    |  | Dominican Sisters of Springfield, Illinois |  |           | 7,927  |            |  |  | 10.1 | 
|               |  | 1237 West Monroe Street                    |  |           |        |            |  |  |      | 
|               |  | Springfield, IL 62704                      |  |           |        |            |  |  |      | 
|Preferred A    |  | Monica Moore                               |  |           | 7,293  |            |  |  | 10.1 | 
|               |  | 842 Santa Barbara Blvd.                    |  |           |        |            |  |  |      | 
|               |  | Berkeley, CA 94707                         |  |           |        |            |  |  |      | 

(d)  Options, warrants, and rights. None of the persons listed in item (a)
above, hold any options, warrants, or rights reportable under this section.




ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

Peter Camejo, Chair of the Board of Directors has entered into an agreement
whereby certain holders of notes of Earth Trade, Inc., in which PAM held an
interest, may exchange such notes for shares of PAM held by Mr. Camejo. The
notes are payable by PAM. This transaction is explained in more detail under
PART II, ITEM 5. RECENT SALES OF UNREGISTERED SECURITIES (b) Securities Being
Offered, Shares issued in settlement with creditors of Earth Trade, Inc.

Mr. Camejo has also entered into an agreement with PAM for the office space
occupied by PAM. This transaction is explained in more detail under PART I,
ITEM 7. DESCRIPTION OF PROPERTY.

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PART II




Item 1. Market Price of Dividends on the Registrants Common Equity and Other
Shareholder Matters.

(a)  Market Information.

PAMs common stock has been reported on the OTCBB under the symbol PAMI since
1997 and the following are the highs and lows reported on the OTCBB for the
periods listed.

|                      |  |      |      |     |  |  |      | 
|--------------------- |  | ---- | ---- | --- |  |  | ---- | 
|Quarter               |  | High |      | Low
|                      |  |      |      |    
|July-September 2000   |  |      | 0.43 |     |  |  | 0.03 | 
|October-December 2000 |  |      | 0.50 |     |  |  | 0.01 | 
|January-March 2001    |  |      | 0.30 |     |  |  | 0.30 | 
|April-June 2001       |  |      | 0.51 |     |  |  | 0.25 | 
|July-September 2001   |  |      | .60  |     |  |  | .40  | 
|October-December 2001 |  |      | .60  |     |  |  | .16  | 
|January-March 2002    |  |      | .51  |     |  |  | .20  | 
|April-June 2002       |  |      | .51  |     |  |  | .51  | 

The quotations reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions. Market makers who
posted bids or offers during the period listed above are Herzog, Heine, Geduld,
Inc., Wien Securities Corp., Hill, Thompson, Magid & Co., Citadel Securities
Corp., Knight Securities, LLP, and Paragon Capital Corporation. You can find
price quotes on the OTC Bulletin Board website www.otcbb.com using the symbol
PAMI.

PAMs stock has been quoted on the Over the Counter Bulletin Board (OTCBB),
which is operated by the National Association of Securities Dealers (NASD). In
the year 2000, the NASD imposed a new requirement that any company quoted on
the OTCBB must register its stock with the Securities and Exchange Commission
(SEC), and be a reporting company. PAM undertook the financial cost and
regulatory burden to meet this requirement to maintain its position on the
OTCBB because management believed it was in the best interests of the
shareholders to have the liquidity of shares.

However, the NASD has announced it is phasing out the OTCBB in 2003 and
replacing it with
the Bulletin Board Exchange (BBX). The BBX will impose a significant initial
fee on each company that seeks to have its stock listed on the BBX, and an
annual fee. Combined with already existing legal, accounting, and other fees,
it will cost PAM and its shareholders $12,000 to $15,000 annually to have PAMs
shares quoted on the BBX.

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Therefore, Management has determined to seek to have trades in PAMs stock
reported on the Electronic Pink Sheets (EPS), starting in early 2003, as an
alternative method of maintaining liquidity in the trading of the stock of PAM
for its shareholders. EPS will not charge PAM a fee for this service and PAM
will no longer have to be a reporting company, which will mean a significant
savings. By no longer being a reporting company, PAM will cease filing annual
and quarterly reports with the SEC and certain other reports required under
regulations of the SEC. PAM anticipates that it will cease filing these reports
no later than by the end of the first calendar quarter of 2003. PAM will of
course continue to provide quarterly and annual reports to shareholders.

The PAM Board believes that one of the best ways to increase value for
shareholders is to continue buying back PAM common shares. Pam reacquired
241,121 shares of its common stock. Of these shares, 184,671 were purchased at
60 cents each through a tender offer, and the balance of 56,450 were bought on
the open market at prices ranging between 45 and 60 cents. Thus, PAM has
retired 408,143 shares of common stock, nearly 25% of the total outstanding
prior to July 1999, when Financial West Group (FWG) bought a 40% interest in
PAM. However, given the falloff in revenues and profitability, the Board of
Directors has determined to significantly reduce the repurchases of shares, and
monitor such repurchases prudently in accordance with overall firm finances and
capital resources. Because of securities industry regulations, PAM Management
and PAM Network registered representatives can not discuss the advisability of
the purchase or sale of PAM stock.

(b)  Holders of Common Stock. The number of holders of common stock is 102.

(c)  Dividends. Declaration of dividends on common stock is subject to the
discretion of the Board and will depend upon a number of factors, including the
future earnings, capital requirements and financial condition of PAM. In
December 1995, PAM declared a common stock dividend of one share for each 20
shares of common stock held as of March 1, 1995. PAM has not declared any cash
dividends on its Common Stock in the past and does not anticipate declaring
dividends in any form in the near future.




Item 2. Legal Proceedings.

There are no legal proceedings pending or threatened against PAM.




Item 3. Changes in and Disagreements with Accountants.

There have been no changes in or disagreements with accountants.




Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of security holders.

21



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##### Table of Contents






Item 5. Compliance with Section 16(a) of the Exchange Act.

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Companys directors and executive officers, and persons who own more than 10%
of a registered class of PAMs equity securities to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes of
ownership of equity securities of PAM. Officers, directors and greater than 10%
shareholders are required to furnish PAM with copies of all Section 16(a) forms
they file. To PAMs knowledge, persons as defined above have complied with all
applicable section 16(a) requirements during the preceding fiscal year.
However, the Dominican Sisters of Springfield, Illinois did not timely file an
initial Form 3, to disclose their hold of 10.1% of the Class A Series
Preferred, which is not a registered class of equity securities. The Dominican
Sisters filed a Form 3 in August 2002, and did file in a timely manner the
annual Form 5 that was due August 2002.




Item 6. Reports on Form 8-K.

No reports on Form 8-K were filed during the last quarter of the period covered
by this report.

PART F/S

The following pages, starting with page F-i, are the financial statements and
supplemental information of PAM for the fiscal year end June 30, 2002, with the
reports of independent auditors. Please note that because PAM is a registered
broker-dealer, the financial statements and supplemental information contain
information required by the Securities and Exchange Commission that a
registered broker-dealer must provide that other businesses need not provide in
comparable financial statements.

22



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##### Table of Contents



Contents

|                         |                                                                                          |  |  |      |  | 
|------------------------ | ---------------------------------------------------------------------------------------- |  |  | ---- |  | 
|                         |                                                                                          |  |  | Page
|Financial Statements     |                                                                                          |  |  |     
|                         | Report of Independent Auditors                                                           |  |  | 1    | 
|                         | Statement of Financial Condition                                                         |  |  | 2    | 
|                         | Statement of Operations                                                                  |  |  | 4    | 
|                         | Statement of Stockholders Equity                                                        |  |  | 5    | 
|                         | Statement of Cash Flows                                                                  |  |  | 6    | 
|                         | Notes to Financial Statements                                                            |  |  | 7    | 
|Supplemental Information |                                                                                          |  |  |     
|                         | Report of Independent Auditors on Supplemental Information                               |  |  | 20   | 
|                         | Statement of Changes in Liabilities Subordinated to Claims of General
Creditors          |  |  | 21   | 
|                         | Computation of Net Capital under Rule 15c3-1 of the Securities and
Exchange Commission   |  |  | 22   | 
|                         | Reconciliation Pursuant to Rule 17a-5(d)(4)                                              |  |  | 23   | 
|                         | Computation for Determination of Reserve Requirements                                    |  |  | 24   | 
|                         | Information Relating to Possession or Control Requirements                               |  |  | 24   | 
|                         | Report of Independent Auditors on Internal Accounting Control Required by SEC Rule 17a-5 |  |  | 25   | 

F-i



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Report of Independent Auditors

Board of Directors
Progressive Asset Management, Inc.

We have audited the accompanying statement of financial condition of
Progressive Asset Management, Inc. as of June 30, 2002 and 2001, and the
related statements of operations, stockholders equity and cash flows for the
years then ended. These financial statements are the responsibility of the
management of Progressive Asset Management, Inc. Our responsibility is to
express an opinion on these financial statements, based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audits 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 Progressive Asset Management,
Inc. as of June 30, 2002 and 2001, and the results of its operations and cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States.

Markle Stuckey Hardesty & Bott
Larkspur, California
July 18, 2002

F-1



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Progressive Asset Management, Inc.
Statement of Financial Condition
June 30, 2002 and 2001

|       |              |                                 |                                             |  |        |         |      |  |        |         |  
|------ | ------------ | ------------------------------- | ------------------------------------------- |  | ------ | ------- | ---- |  | ------ | ------- | -
|       |              |                                 |                                             |  | 2002   |         | 2001
|       |              |                                 |                                             |  |        |         |     
|Assets |              |                                 |                                             |  |        |         |      | 
|       |              | Current assets                  |                                             |  |        |         |      |  |        |        
|       |              |                                 | Cash and cash equivalents                   |  | $      | 337,225 |      |  | $      | 479,383 |  
|       |              |                                 | Investment securities, at fair market value |  |        |        |      |  |        | 108,979 |  
|       |              |                                 | Commissions and other receivables           |  |        | 24,367  |      |  |        | 44,694  |  
|       |              |                                 | Employee advances                           |  |        | 4,477   |      |  |        | 12,874  |  
|       |              |                                 | Prepaid expenses                            |  |        | 21,612  |      |  |        | 16,308  |  
|       |              |                                 |                                             |  |        |         |      | 
|       |              |                                 | Total current assets                        |  |        | 387,681 |      |  |        | 662,238 |  
|       |              | Property and equipment, at cost |                                             |  | 34,112 |         |      |  | 30,114 |        
|       |              |                                 | Accumulated depreciation                    |  |        | (24,809 | )    |  |        | (19,189 | )
|       |              |                                 |                                             |  |        |         |      | 
|       |              |                                 | Property and equipment, net                 |  |        | 9,303   |      |  |        | 10,925  |  
|       | Other assets |                                 |                                             |  |        |         |      |  |       
|       |              |                                 | Deposits                                    |  |        | 1,216   |      |  |        | 1,467   |  
|       |              |                                 | Other investments, at cost                  |  |        | 3,300   |      |  |        | 19,300  |  
|       |              |                                 | Advances to unconsolidated subsidiary       |  |        | 100,000 |      |  |        | 24,179  |  
|       |              |                                 |                                             |  |        |         |      | 
|       |              |                                 | Total other assets                          |  |        | 104,516 |      |  |        | 44,946  |  
|       |              |                                 |                                             |  |        |         |      | 
|       |              |                                 | Total assets                                |  | $      | 501,500 |      |  | $      | 718,109 |  
|       |              |                                 |                                             |  |        |         |      | 

See accompanying notes.

F-2



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Progressive Asset Management, Inc.
Statement of Financial Condition
June 30, 2002 and 2001

|                                    |                     |                                                                                                                             |  |        |           |   |      |         |           |   | 
|----------------------------------- | ------------------- | --------------------------------------------------------------------------------------------------------------------------- |  | ------ | --------- | - | ---- | ------- | --------- | - | 
|                                    |                     |                                                                                                                             |  |        | 2002      |   | 2001
|                                    |                     |                                                                                                                             |  |        |           |   |     
|Liabilities                         |                     |                                                                                                                             |  |        |           |   |      |        
|                                    | Current liabilities |                                                                                                                             |  |        |           |   |      |         |          
|                                    |                     | Accounts payable                                                                                                            |  | $      | 3,016     |   |      | $       | 10,548    |  
|                                    |                     | Salaries and commissions payable                                                                                            |  |        | 933       |   |      |         | 5,927     |  
|                                    |                     | Accrued liabilities                                                                                                         |  |        | 7,500     |   |      |         | 13,500    |  
|                                    |                     | Income taxes payable                                                                                                        |  |        | 1,600     |   |      |         | 1,600     |  
|                                    |                     |                                                                                                                             |  |        |           |   |      |        
|                                    |                     | Total current liabilities                                                                                                   |  |        | 13,049    |   |      |         | 31,575    |  
|                                    | Other liabilities   |                                                                                                                             |  |        |           |   |      |         |          
|                                    |                     | Earth Trade settlement  Subordinated                                                                                       |  |        | 33,849    |   |      |         | 78,074    |  
|                                    |                     |                                                                                                                             |  |        |           |   |      |        
|                                    | Total liabilities   |                                                                                                                             |  | 46,898 |           |   |      | 109,649 |          
|Other commitments and contingencies |                     |                                                                                                                             |  |        |           |   |      |        
|                                    |                     | Preferred stock, Series A, $7 stated value;
200,000 shares authorized, 72,352 shares
issued and outstanding (2001 - 78,670) |  |        | 50,646    |   |      |         | 55,069    |  
|Stockholders equity                |                     |                                                                                                                             |  |        |           |   |      |        
|                                    |                     | Preferred stock, Series B, $1 stated value;
25,000 shares authorized, 25,000 shares
issued and outstanding (2001 - 25,000)  |  |        | 25,000    |   |      |         | 25,000    |  
|                                    |                     | Common stock, no par value; 5,000,000 shares
authorized, 1,220,483 shares issued and outstanding (2001 - 1,460,104)         |  |        | 1,260,871 |   |      |         | 1,418,187 |  
|                                    |                     | Retained earnings (accumulated deficit)                                                                                     |  |        | (881,915  | ) |      |         | (889,796  | )
|                                    |                     |                                                                                                                             |  |        |           |   |      |        
|                                    |                     | Total stockholders equity                                                                                                  |  |        | 403,956   |   |      |         | 553,391   |  
|                                    |                     |                                                                                                                             |  |        |           |   |      |        
|                                    |                     | Total liabilities and stockholders equity                                                                                  |  | $      | 501,500   |   |      | $       | 718,109   |  
|                                    |                     |                                                                                                                             |  |        |           |   |      |        

See accompanying notes.

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Progressive Asset Management, Inc.
Statement of Operations
Years ended June 30, 2002 and 2001

|                                         |                                    |   |        |           |      |   |         |           | 
|---------------------------------------- | ---------------------------------- | - | ------ | --------- | ---- | - | ------- | --------- | 
|                                         |                                    |   | 2002   |           | 2001
|                                         |                                    |   |        |           |     
|Revenues                                 |                                    |   |        |           |      |   |         |          
|                                         | Commissions  FWG                  |   | $      | 443,026   |      |   | $       | 569,791   | 
|                                         | Interest and dividend income       |   |        | 10,534    |      |   |         | 25,845    | 
|                                         | Other revenue                      |   |        | 44,212    |      |   |         | 7,969     | 
|                                         |                                    |   |        |           |      |   |         |          
|                                         | Total revenues                     |   |        | 497,772   |      |   |         | 603,605   | 
|Costs and expenses                       |                                    |   |        |           |      |   |         |          
|                                         | Employee compensation and benefits |   |        | 238,355   |      |   |         | 194,175   | 
|                                         | Communications                     |   |        | 12,466    |      |   |         | 1,901     | 
|                                         | Dues and subscriptions             |   |        | 40,784    |      |   |         | 39,797    | 
|                                         | Insurance                          |   |        | 27,593    |      |   |         | 28,075    | 
|                                         | Occupancy                          |   |        | 23,523    |      |   |         | 21,564    | 
|                                         | Office expenses                    |   |        | 16,056    |      |   |         | 22,195    | 
|                                         | Professional fees                  |   |        | 37,016    |      |   |         | 53,471    | 
|                                         | Promotion and advertising          |   |        | 28,902    |      |   |         | 20,514    | 
|                                         | Regulatory                         |   |        | 8,322     |      |   |         | 11,267    | 
|                                         | Taxes and licenses                 |   |        | 505       |      |   |         | 5,766     | 
|                                         | Travel and entertainment           |   |        | 9,345     |      |   |         | 3,857     | 
|                                         | Depreciation and amortization      |   |        | 5,621     |      |   |         | 4,734     | 
|                                         |                                    |   |        |           |      |   |         |          
|                                         | Total costs and expenses           |   |        | 448,488   |      |   |         | 407,316   | 
|                                         |                                    |   |        |           |      |   |         |          
|Income before income taxes               |                                    |   | 49,284 |           |      |   | 196,289 |          
|Taxes on income                          |                                    |   | 1,600  |           |      |   | 1,600   |          
|                                         |                                    |   |        |           |      |   |         |          
|Net income (loss)                        |                                    | $ | 47,684 |           |      | $ | 194,689 |          
|                                         |                                    |   |        |           |      |   |         |          
|Net income (loss) per share              |                                    |   |        |           |      |   |         |          
|                                         | Basic                              |   | $      | 0.04      |      |   | $       | 0.13      | 
|                                         |                                    |   |        |           |      |   |         |          
|                                         | Fully diluted                      |   | $      | 0.02      |      |   | $       | 0.07      | 
|                                         |                                    |   |        |           |      |   |         |          
|Shares used to compute per share amounts |                                    |   |        |           |      |   |         |          
|                                         | Basic                              |   |        | 1,328,616 |      |   |         | 1,534,094 | 
|                                         |                                    |   |        |           |      |   |         |          
|                                         | Fully diluted                      |   |        | 2,343,692 |      |   |         | 2,695,035 | 
|                                         |                                    |   |        |           |      |   |         |          

See accompanying notes.

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Progressive Asset Management, Inc.
Statement of Stockholders Equity
Years ended June 30, 2002 and 2001

|                                                                                |  |  |                  |  |              |   |          |  |              |  |                    |   |               |   |           |   |  |   |            |   |  |   |          |   | 
|------------------------------------------------------------------------------- |  |  | ---------------- |  | ------------ | - | -------- |  | ------------ |  | ------------------ | - | ------------- | - | --------- | - |  | - | ---------- | - |  | - | -------- | - | 
|                                                                                |  |  | Preferred stock, |  |              |   |          |  |              |  |                    |   |               |   |           |   |  |   |           
|                                                                                |  |  | Series B         |  | Common stock |   |          |  |              |  |                    |   |              
|                                                                                |  |  |                  |  |              |   | Retained |  | Stockholders
|                                                                                |  |  | Shares           |  | Amount       |   | Shares   |  | Amount       |  | earnings (deficit) |   | equity totals
|                                                                                |  |  |                  |  |              |   |          |  |              |  |                    |  
|Balances, June 30, 2000                                                         |  |  | 25,000           |  |              | $ | 25,000   |  |              |  | 1,583,557          |   |               | $ | 1,468,657 |   |  | $ | (1,047,678 | ) |  | $ | 445,979  |  
|Redemption of preferred stock,
Series A, at stated value, net of issuance value |  |  |                 |  |              |   |         |  |              |  |                   |   |               |   |          |   |  |   | (36,807    | ) |  |   | (36,807  | )
|Issuance of common stock                                                        |  |  |                  |  |              |   |          |  |              |  | 1,500              |   |               |   | 615       |   |  |   |           |   |  |   | 615      |  
|Repurchases of common stock                                                     |  |  |                 |  |              |   |         |  |              |  | (124,953           | ) |               |   | (51,085   | ) |  |   |           |   |  |   | (51,085  | )
|Net income (loss)                                                               |  |  |                 |  |              |   |         |  |              |  |                   |   |               |   |          |   |  |   | 194,689    |   |  |   | 194,689  |  
|                                                                                |  |  |                  |  |              |   |          |  |              |  |                    |   |               |   |           |   |  |   |            |   |  |   |          |  
|Balances, June 30, 2001                                                         |  |  | 25,000           |  |              |   | 25,000   |  |              |  | 1,460,104          |   |               |   | 1,418,187 |   |  |   | (889,796   | ) |  |   | 553,391  |  
|Redemption of preferred stock,
Series A, at stated value, net of issuance value |  |  |                 |  |              |   |         |  |              |  |                   |   |               |   |          |   |  |   | (39,803    | ) |  |   | (39,803  | )
|Issuance of common stock                                                        |  |  |                 |  |              |   |         |  |              |  | 1,500              |   |               |   | 900       |   |  |   |           |   |  |   | 900      |  
|Repurchases of common stock                                                     |  |  |                 |  |              |   |         |  |              |  | (241,121           | ) |               |   | (158,216  | ) |  |   |           |   |  |   | (158,216 | )
|Net income (loss)                                                               |  |  |                 |  |              |   |         |  |              |  |                   |   |               |   |          |   |  |   | 47,684     |   |  |   | 47,684   |  
|                                                                                |  |  |                  |  |              |   |          |  |              |  |                    |   |               |   |           |   |  |   |            |   |  |   |          |  
|Balances, June 30, 2001                                                         |  |  | 25,000           |  |              | $ | 25,000   |  |              |  | 1,220,483          |   |               | $ | 1,260,871 |   |  | $ | (881,915   | ) |  | $ | 403,956  |  
|                                                                                |  |  |                  |  |              |   |          |  |              |  |                    |   |               |   |           |   |  |   |            |   |  |   |          |  

See accompanying notes.

F-5



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Progressive Asset Management, Inc.
Statement of Cash Flows
Years ended June 30, 2002 and 2001

|                                                  |                                                                                                |                                            |                                     |          |       |         |         |          |       |         |  
|------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------ | ----------------------------------- | -------- | ----- | ------- | ------- | -------- | ----- | ------- | -
|                                                  |                                                                                                |                                            |                                     |          | 2002  |         | 2001   
|                                                  |                                                                                                |                                            |                                     |          |       |         |        
|Cash flows from operating activities              |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Net income (loss)                                                                              |                                            | $                                   | 47,684   |       |         | $       | 194,689  |      
|                                                  | Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities |                                            |                                     |          |       |         |         |          |      
|                                                  |                                                                                                | Unrealized loss (gain) on investments      |                                     |          |      |         |         |          | (855  | )      
|                                                  |                                                                                                | Depreciation and amortization              |                                     |          | 5,621 |         |         |          | 4,734 |        
|                                                  |                                                                                                | Issuance of common stock for director fees |                                     |          | 900   |         |         |          | 615   |        
|                                                  |                                                                                                | Changes in current assets and liabilities  |                                     |          |       |         |         |          |       |        
|                                                  |                                                                                                |                                            | Investment securities               |          |       | 108,979 |         |          |       | (95,000 | )
|                                                  |                                                                                                |                                            | Commissions and other receivables   |          |       | 20,327  |         |          |       | 30,053  |  
|                                                  |                                                                                                |                                            | Employee advances                   |          |       | 8,397   |         |          |       | 3,966   |  
|                                                  |                                                                                                |                                            | Prepaid expenses                    |          |       | (5,304  | )       |          |       | 4,020   |  
|                                                  |                                                                                                |                                            | Accounts payable                    |          |       | (7,532  | )       |          |       | (4,012  | )
|                                                  |                                                                                                |                                            | Salaries and commissions payable    |          |       | (4,994  | )       |          |       | (4,146  | )
|                                                  |                                                                                                |                                            | Accrued liabilities                 |          |       | (6,000  | )       |          |       | (13,383 | )
|                                                  |                                                                                                |                                            | Earth Trade settlement payment      |          |       | (44,225 | )       |          |       | (40,926 | )
|                                                  |                                                                                                |                                            | Income taxes receivable and payable |          |       |        |         |          |       | 1,600   |  
|                                                  |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Net cash provided (used) by operating activities                                               |                                            |                                     | 123,853  |       |         |         | 81,355   |      
|Cash flows from investing activities              |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Purchase of furniture and equipment                                                            |                                            |                                     | (3,999   | )     |         |         | 0        |      
|                                                  | Change in deposits                                                                             |                                            |                                     | 251      |       |         |         | 8,065    |      
|                                                  |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Net cash provided (used) by investing activities                                               |                                            |                                     | 12,252   |       |         |         | 8,065    |      
|Cash flows from financing activities              |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Advances to unconsolidated subsidiary                                                          |                                            |                                     | (75,821  | )     |         |         | (24,179  | )    
|                                                  | Redemption of preferred stock, Series A                                                        |                                            |                                     | (44,226  | )     |         |         | (40,898  | )    
|                                                  | Repurchase of common stock                                                                     |                                            |                                     | (158,216 | )     |         |         | (51,085  | )    
|                                                  |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Net cash provided (used) by financing activities                                               |                                            |                                     | (278,263 | )     |         |         | (116,162 | )    
|                                                  |                                                                                                |                                            |                                     |          |       |         |         |         
|Net change in cash and cash equivalents           |                                                                                                |                                            | (142,158                            | )        |       |         | (26,742 | )       
|Cash and cash equivalents,                        |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Beginning of year                                                                              |                                            |                                     | 479,383  |       |         |         | 506,125  |      
|                                                  |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | End of year                                                                                    |                                            | $                                   | 337,225  |       |         | $       | 479,383  |      
|                                                  |                                                                                                |                                            |                                     |          |       |         |         |         
|Supplemental disclosures of cash flow information |                                                                                                |                                            |                                     |          |       |         |         |         
|                                                  | Cash paid during the year for income taxes                                                     |                                            | $                                   | 1,600    |       |         | $       |         |      
|                                                  |                                                                                                |                                            |                                     |          |       |         |         |         

See accompanying notes.

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Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 1  Summary of significant accounting policies

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Basis of presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | Progressive Asset Management, Inc. (Company) incorporated in California
in 1987 and registered as a broker-dealer under the Securities and
Exchange Act of 1934. Through May 1999, the Company was a full-service
investment firm specializing in socially responsible investing. As more
fully discussed in Note 12, the Company transferred all customer accounts
and relationships with client representatives to another broker-dealer.
The Company remains registered as a broker-dealer, continues to provide
research and referrals in consideration for commission-based fees and
recruits brokers for FWG (Note 12).

| |                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In its policies, practices and programs, the Company commits to provide
its clients with the highest quality financial products and investment
services and to operate as a strong, positive force for social justice
and environmental protection. The headquarters of the Company is in
Concord, California.

| |                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The accompanying financial statements include the accounts of the Company
and exclude the accounts of its 70%-owned subsidiary, ProgressiveTrade
Securities, Inc., a start-up enterprise incorporated on November 1, 2000
and that had no significant activity during the years ended June 30, 2002
and 2001. The Company invested $100,000 in ProgressiveTrade Securities,
Inc. during the year ended June 30, 2002 (Note 6).

| |                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company claims exemption from Securities Exchange Commission Rule
15c3-3 because it does not carry customer funds or handle customer
securities.

| |                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                   
|
| | Cash and cash equivalents consist of cash on hand and demand deposits
held by commercial banks and money market funds held by registered
investment companies. All cash and cash equivalents are available to the
Company within 90 days of demand. The carrying amount of cash and cash
equivalents approximates fair value due to their short-term nature.

F-7



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Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 1  Summary of significant accounting policies (continued)

| |                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Investment securities and investments                                                                                                                                                                                                                                                    
|
| | The Company classifies investments in marketable securities as investment
securities and records them at their fair market value. The Company
classifies investments without a ready market as other investments and
records them at the lower of cost or estimated net realizable value.

| |                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Property and equipment                                                                                                                                                                                                                                                                 
|
| | Property and equipment consists of office and computer equipment and
furniture. The Company computes depreciation of property and equipment
using the straight-line method over the estimated useful lives of the
respective property and equipment, ranging from three to seven years.

| |                                                                                  
| | ---------------------------------------------------------------------------------
| | Investment in unconsolidated subsidiary                                          
|
| | The Company records its investment in unconsolidated subsidiary (Note 6)
at cost.

| |                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Security transactions and commissions                                                                                                                                                                           
|
| | The Company records net commission revenue from FWG (Note 12) and on its
limited security transactions on a settlement-date basis. Net commission
revenue on unsettled transactions at year-end is not material.

| |                                                                                      
| | -------------------------------------------------------------------------------------
| | Advertising costs                                                                    
|
| | The Company expenses costs for producing and communicating advertising
when incurred.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|
| | The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events
that are included in financial statements and tax returns in different
periods. Under this method, the Company determines deferred tax assets
and liabilities based on the difference between financial statement and
tax bases of assets and liabilities using enacted tax rates in effect for
the years when the Company estimates the differences to reverse. As of
June 30, 2002 and 2001, there were no significant deferred tax assets or
liabilities except for a deferred tax asset (net of a 100% valuation
allowance) resulting from available income tax loss carryforwards (Note
7).

F-8



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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 1  Summary of significant accounting policies (continued)

| |                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Earnings per share                                                                                                                                                                                                                                                                                                                                            
|
| | The Company calculates basic earnings per share based on the weighted
average number of common shares outstanding during the year. The Company
calculates fully diluted earnings per share based on the weighted average
number of common shares and common stock equivalents, including options
and convertible preferred stock, outstanding during the year.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Estimated fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| | Statement of Financial Accounting Standards No. 107, Disclosure about
Fair Value of Financial Instruments, requires the disclosure of the fair
value of financial instruments, including assets and liabilities
recognized on the statement of financial condition. Management estimates
that the aggregate net fair value of financial instruments recognized on
the statement of financial condition (including receivables, payables and
accrued expenses) approximates their carrying value, as such financial
instruments are short-term in nature, bear interest at current market
rates or are stated at their fair value.

| |                                                                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                        
|
| | The preparation of financial statements in conformity with accounting
principle generally accepted in the United States requires management to
make estimates and assumptions that affect the amounts reported in these
financial statements and notes. Although management of the Company bases
the estimates on its knowledge of current events and actions it may
undertake in the future, actual results may differ.

Note 2  Earth Trade settlement

| |                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Earth Trade, Inc. (Earth Trade) organized in 1992 to promote sustainable
development by marketing both organic and conventional food products from
farm cooperatives in the developing world. In prior years, the Company
acted as a sales agent in connection with the placement of certain Earth
Trade debt and equity securities.

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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 2  Earth Trade settlement (continued)

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Principally due to continuing losses, the shareholders of Earth Trade
voted in May 1997 to voluntarily dissolve and liquidate its net assets.
In April 1997, the Company Board of Directors, with consideration of its
mission and standards of social responsibility, its 30% ownership of
Earth Trade and its role as placement agent for debt and equity
securities issued by Earth Trade, offered a settlement agreement to the
Earth Trade note holders. Under the agreement, in exchange for their
residual Earth Trade debt and a general release of liability, the note
holders could receive either Company Series A preferred stock (Note 8)
with a stated value of $7.00 (fair market value on settlement date of
$0.70) or Company common stock with a stated value of $5.00 (fair market
value on settlement date of $0.50). Substantially all the Earth Trade
note holders accepted the settlement agreement in January 1998.
|
| | During the years ended June 30, 1999 and 1998, the Company issued stock
and cash to close the settlement agreement, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            



|                    |  |        |        |        |  |   |         | 
|------------------- |  | ------ | ------ | ------ |  | - | ------- | 
|                    |  | Shares |        | Amount
|                    |  |        |        |       
|Preferred, Series A |  |        | 94,879 |        |  | $ | 66,416  | 
|Common              |  |        | 91,852 |        |  |   | 45,925  | 
|Cash                |  |        |       |        |  |   | 27,022  | 
|                    |  |        |        |        |  |   |         | 
|Total               |  |        |        |        |  | $ | 139,363 | 
|                    |  |        |        |        |  |   |         | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In February 1999, the shareholders approved an additional settlement with
certain remaining Earth Trade note holders. Under the agreement, in
exchange for their residual Earth Trade debt, a general release of
liability and a subordination agreement acceptable to the NASD, the note
holders will receive a total of $380,000. A reconciliation of the
additional settlement subordinated liability and current and future
payments follow. Future payments depend upon the gross revenue of the
Company limited by the ability of the Company to meet the NASD net
capital requirements (Note 16). The remaining note holders may elect to
exchange their debt for Company common shares held by its chair.
Outstanding amounts, if any, owed to the chair of the Company due to any
exchange of debt for common shares are further subordinated to debt owed
the remaining note holders.

| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | Earth Trade settlement subordinated liability and current and future
payments as of June 30, 2002 and 2001 reconcile as follows:

F-10



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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 2  Earth Trade settlement (continued)

|                                                                  |                                           |   |         |         | 
|----------------------------------------------------------------- | ----------------------------------------- | - | ------- | ------- | 
|Additional settlement                                             |                                           | $ | 380,000 |        
|                                                                  | Total payments through June 30, 2000      |   |         | 261,000 | 
|                                                                  |                                           |   |         |         | 
|Earth Trade settlement subordinated liability as of June 30, 2000 |                                           |   | 119,000 |        
|                                                                  | Paid by the Company on September 27, 2000 |   |         | 40,926  | 
|                                                                  |                                           |   |         |         | 
|Earth Trade settlement subordinated liability as of June 30, 2001 |                                           |   | 78,074  |        
|                                                                  | Paid by the Company on September 25, 2001 |   |         | 44,225  | 
|                                                                  |                                           |   |         |         | 
|Earth Trade settlement subordinated liability as of June 30, 2002 |                                           | $ | 33,849  |        
|                                                                  |                                           |   |         |         | 

| |                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Remaining minimum and maximum amounts payable by the Company during the
years ended June 30, subject to the ability of the Company to meet the
NASD net capital requirements (Note 16), total as follows:

|          |  |           |  |         |              | 
|--------- |  | --------- |  | ------- | ------------ | 
|          |  | Minimum   |  | Maximum
|          |  |           |  |        
|2003
2004 |  | $30,000
 |  | $       | 33,849
3,849 | 

| |                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Before the settlement agreements, the Company owed nothing to Earth Trade
or its share- or note holders. Accordingly, the settlement agreement is
not a debt extinguishment. However, due to the mandatory redemption
feature of the Series A preferred stock (Note 8) issued as part of the
first Earth Trade settlement agreement, management does not classify it
with stockholders equity.

Note 3  Investment securities

As of June 30, 2002, the Company held no investment securities. On July 16,
2001, the Company redeemed its matured zero coupon bonds for $14,000. On
August 30, 2001, the Company redeemed its matured bank certificate of deposit
for $95,000 plus accrued interest.

Investment securities as of June 30, 2001 consisted of a bank certificate of
deposit that bore interest at 3.50%, matured August 30, 2001 and totaled
$95,000 and zero coupon bonds that matured July 15, 2001 and totaled $13,979.

F-11



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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

| |                                                                                
| | -------------------------------------------------------------------------------
| | Property and equipment as of June 30, 2002 and 2001, consists of the
following:

|                                |  |      |         |      |  |   |         |  
|------------------------------- |  | ---- | ------- | ---- |  | - | ------- | -
|                                |  | 2002 |         | 2001
|                                |  |      |         |     
|Furniture                       |  | $    | 18,673  |      |  | $ | 18,673  |  
|Equipment                       |  |      | 4,457   |      |  |   | 4,457   |  
|Computer equipment              |  |      | 10,982  |      |  |   | 6,984   |  
|                                |  |      |         |      |  |   |         |  
|Property and equipment, at cost |  |      | 34,112  |      |  |   | 30,114  |  
|Accumulated depreciation        |  |      | (24,809 | )    |  |   | (19,189 | )
|                                |  |      |         |      |  |   |         |  
|Property and equipment, net     |  | $    | 9,303   |      |  | $ | 10,925  |  
|                                |  |      |         |      |  |   |         |  

Note 5  Other investments

| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other investments as of June 30, 2002 consist of 300 warrants to purchase
the common stock of the NASDAQ Stock Market, Inc., beginning June 28,
2002 and totaling $3,300.

| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | On October 25, 2001 and January 24, 2002, the Company redeemed its
matured notes receivable from Oikocredit USA for $1,000 and $15,000,
respectively.

| |                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Other investments as of June 30, 2001 consisted of notes receivable from
Oikocredit USA (formerly Ecumenical Development Cooperative Society) that
matured during the year ending June 30, 2002 and totaled $16,000 and 300
warrants to purchase the common stock of the NASDAQ Stock Market, Inc.,
beginning June 28, 2002 and totaled $3,300.

Note 6  Investment in unconsolidated subsidiary

| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | The investment in unconsolidated subsidiary as of June 30, 2002 totals
$100,000 from an investment made March 31, 2002 (Note 1).

| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The investment in unconsolidated subsidiary as of June 30, 2001 consisted
of a note receivable that bore interest at 10%, matured December 1, 2001
and totaled $16,000 and other reimbursable expenses that totaled $8,179.

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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 7  Income taxes receivable, payable and provision

| |                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of June 30, 2002 and 2001, the Company had net operating loss
carryforwards available to reduce future federal and California income
taxes estimated as follows:

|                                         |                                                 |         |          |            |        
|---------------------------------------- | ----------------------------------------------- | ------- | -------- | ---------- | -------
|Expiring June 30                         |                                                 | Federal |          | California
|                                         |                                                 |         |          |           
|                                         | 2004                                            |         |         |            | $52,000
|                                         | 2013                                            |         | 86,000   |            |       
|                                         | 2019                                            |         | 560,000  |            |       
|                                         |                                                 |         |          |            |        
|                                         | Totals available as of June 30, 2001            |         | 646,000  |            | 52,000 
|Used during the year ended June 30, 2002 |                                                 |         |          |           
|                                         | 2004                                            |         |         |            | 9,000  
|                                         | 2013                                            |         | 6,000    |            |        
|                                         | 2019                                            |         |         |            |       
|                                         |                                                 |         |          |            |        
|                                         | Totals used during the year ended June 30, 2002 |         | 6,000    |            | 9,000  
|Expiring June 30                         |                                                 |         |          |           
|                                         | 2004                                            |         |         |            | 43,000 
|                                         | 2013                                            |         | 80,000   |            |       
|                                         | 2019                                            |         | 560,000  |            |       
|                                         |                                                 |         |          |            |        
|                                         | Totals available as of June 30, 2002            |         | $640,000 |            | $43,000
|                                         |                                                 |         |          |           

As of June 30, 2002 and 2001, the Company had carryforwards of unused tax
credits related to low-income housing of approximately $75,000 and $58,000,
respectively, from several partnerships in which the Company has invested or
received participating interests.

Under certain 1986 Tax Reform Act provisions, the availability of the net
operating loss carryforwards is subject to limitation upon a change in
ownership of more than 50% of the stock of the Company.

The income tax provision for the years ended June 30, 2002 and 2001 consists of
minimum state franchise taxes.

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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 8  Series A preferred stock

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Series A preferred stock issued during the years ended June 30, 1999
and 1998, in connection with the Earth Trade settlement (Note 2), does
not pay dividends, is non-voting, has a $7.00 per share liquidation
preference over the common and Series B preferred stock and is
convertible 1:1 into shares of common stock at the option of the holder
or automatically upon the occurrence of certain events. The Series A
preferred stock is subject to mandatory redemption annually each November
1 at $7.00 per share.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company will redeem a portion of the Series A preferred stock based
on 1% of its gross revenues, as adjusted, and limited by the ability of
the Company to meet the NASD net capital requirements (Note 16). The
liquidation preference and remaining redemption requirement of the Series
A preferred stock as of June 30, 2002 and 2001 totaled $506,466 and
$550,691, respectively. The Company includes the Series A preferred
stock on the consolidated statement of financial condition at its value
when issued (Note 2) and excludes it from stockholders equity.

Note 9  Series B preferred stock

| |                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company, as part of a May 1999 agreement and amended November 1,
2001, with Paradox Holdings, Inc., parent of FWG (Note 12), agreed to
sell a 40% ownership interest in the Company; represented by Series B
preferred stock, for $25,000. Following approval by the NASD in June
1999, the Company received payment and issued 25,000 shares of Series B
preferred stock in July 1999.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Series B preferred stock is entitled to 40% of the total dividends
declared on common stock, is entitled to vote as if converted to a 40%
share of the common stock, has a $1.00 per share liquidation preference
(plus declared but unpaid dividends) over the common stock and is
convertible into shares of common stock equal to 40% of the common stock
after conversion at the option of the holder or automatically after the
sooner of the Company receiving $875,000 under the agreement (Note 12) or
January 1, 2003.
|
| | As of June 30, 2002, two of the seven directors of the Company are
officers of FWG.                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-14



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Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 10  Common stock

| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | During the year ended June 30, 2002, the Company completed a tender offer
to acquire 184,671 shares of its common stock for $0.60 per share plus
expenses totaling $16,915.

Note 11  Common stock options

| |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In December 1995, the Company adopted a stock option and incentive plan
that allows for the issuance of up to 200,000 shares of common stock.
The plan provides for the award of stock options, employee stock
purchases and restricted stock grants. Of the options awarded, all vest
immediately and must be held for up to two years before exercise.
Options awarded before December 1995 had holding requirements of up to
seven years.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company Board of Directors determines awards of additional stock
options, vesting, exercise prices and other option terms. The exercise
prices for all options awarded have not been less than the fair market
value of the stock as determined by the Board of Directors at the date of
grant. Certain options require a 10% premium on the option price under
certain circumstances. Outstanding options as of June 30, 2002 and 2001
expire from December 31, 2002 through 2007 and reconcile as follows:

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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 11  Common stock options (continued)

|                                            |        |       |      |        |  |            |         |        |  |  |      |      | 
|------------------------------------------- | ------ | ----- | ---- | ------ |  | ---------- | ------- | ------ |  |  | ---- | ---- | 
|Outstanding as of June 30, 2001 and granted |        |       |      |        |  |            |         |       
|during the calendar year ended December 31  |        | Price |      | Shares |  | Expiration
|                                            |        |       |      |        |  |           
|                                            | 1991-4 |       |      | $1.00  |  |            |         | 6,000  |  |  |      | 2001 | 
|                                            | 1995   |       |      | 2.00   |  |            |         | 3,227  |  |  |      | 2001 | 
|                                            | 1995   |       |      | 2.00   |  |            |         | 2,000  |  |  |      | 2002 | 
|                                            | 1996   |       |      | 1.00   |  |            |         | 32,000 |  |  |      | 2002 | 
|                                            | 1996   |       |      | 2.00   |  |            |         | 2,500  |  |  |      | 2002 | 
|                                            | 1997   |       |      | 1.00   |  |            |         | 31,628 |  |  |      | 2002 | 
|                                            | 1997   |       |      | 1.00   |  |            |         | 14,500 |  |  |      | 2003 | 
|                                            | 1998   |       |      | 0.24   |  |            |         | 1,500  |  |  |      | 2003 | 
|                                            | 1998   |       |      | 0.24   |  |            |         | 1,000  |  |  |      | 2004 | 
|                                            | 1999   |       |      | 0.49   |  |            |         | 1,500  |  |  |      | 2005 | 
|                                            | 2000   |       |      | 0.41   |  |            |         | 1,500  |  |  |      | 2006 | 
|                                            |        |       |      |        |  |            |         |        |  |  |      |     
|Outstanding as of June 30, 2001             |        |       |      |        |  |            | 97,355  |        |  |  |      |     
|Granted as of December 31, 2001             |        |       | 0.60 |        |  |            | 1,500   |        |  |  | 2007 |     
|Expired December 31, 2001                   |        |       | 1.00 |        |  |            | (6,000) |        |  |  | 2001 |     
|Expired December 31, 2001                   |        |       | 2.00 |        |  |            | (3,277) |        |  |  | 2001 |     
|                                            |        |       |      |        |  |            |         |        |  |  |      |     
|Outstanding as of June 30, 2002             |        |       |      |        |  |            | 89,628  |        |  |  |      |     
|                                            |        |       |      |        |  |            |         |        |  |  |      |     

The Company, with consideration of its mission and standards of social
responsibility, desires to expense its stock options. However, the value of
its outstanding stock options as of June 30, 2002 is immaterial. Consequently,
the Company records its stock-based awards using the intrinsic value method of
accounting in accordance with Accounting Principles Board No. 25, Accounting
for Stock Issued to Employees and its related interpretations. Accordingly,
the Company recognized no compensation expense in the accompanying financial
statements. Statement of Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation (SFAS 123), requires the disclosure of pro forma
net income had the Company adopted the fair value method of accounting. Under
SFAS 123, the fair value of stock-based awards to employees is calculated
through the use of option pricing models, even though such models were
developed to estimate the fair value of freely tradable, fully transferable
options without vesting restrictions, which significantly differs from the
stock-based awards of the Company. These models also require subjective
assumptions, including future stock price volatility and expected time to
exercise, which significantly affect the calculated values.

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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 12  Paradox Holding, Inc. and FWG agreement

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In May 1999, the Company entered into agreement with Paradox Holdings,
Inc., parent of Financial West Investment Group, Inc. (FWG), in which the
Company transferred all of its customer accounts and relationships with
client representatives to FWG. FWG retains 4.75% of all gross
commissions generated by the transferred representatives (and any other
representatives recruited by the Company in the future), pays commissions
and reimburses certain expenses to the transferred representatives and
remits the net commissions to the Company. FWG retains only 2.25% of all
gross commissions until the difference (2.50% of all gross commissions)
paid to the Company totals $875,000.

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company records payments from FWG in connection with the transfer as
commission revenue. Of the total FWG commissions the Company recorded as
revenue during the years ended June 30, 2002 and 2001, $106,315 and
$109,916, respectively, represent payments against the $875,000 with
$549,732 and $656,047, respectively, still due as of June 30, 2002 and
2001. Paradox Holdings, Inc. has guaranteed payments to the Company by
FWG, Inc.

Note 13  Employee benefit plans

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company offers a SIMPLE profit sharing plan for the benefit of its
employees. The SIMPLE profit sharing plan allows for both Company and
employee elective contributions. Additionally, the Company is required
to match employee elective contributions up to the lesser of each
employees actual elective contributions or 3% of each employees salary.
Company matching contributions paid or accrued on employee salary earned
and deferred during the year ended June 30, 2002 and 2001 totaled $6,056
and $5,819, respectively.

Note 14  Credit risk and concentrations

| |                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As of and during the years ended June 30, 2002 and 2001, the Company
maintained deposit balances at a commercial bank in excess of federal
deposit insurance amounts. Federal deposit insurance does not cover
money market amounts held by registered investment companies.

F-17



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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 14  Credit risk and concentrations (continued)

| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Amounts held by, due from and earned from FWG (Note 12) represent
concentrations in the following percentages as of or during the years
ended June 30, 2002 and 2001, as follows:

|                          |  |      |     |      |  |  |     |  
|------------------------- |  | ---- | --- | ---- |  |  | --- | -
|                          |  | 2002 |     | 2001
|                          |  |      |     |     
|Cash and cash equivalents |  |      | 29  | %    |  |  | 2   | %
|Investment securities     |  |      |    | %    |  |  | 100 | %
|Commissions receivable    |  |      | 100 | %    |  |  | 100 | %
|Commission revenues       |  |      | 91  | %    |  |  | 100 | %

Note 15  Commitments and contingencies

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The company leases its office facility in Concord, California under an
operating lease from September 12, 2000 through October 1, 2002 from an
entity owned or otherwise controlled by its chair. As of June 30, 2002,
remaining future minimum lease payments for the year ended June 30, 2003
totaled $4,980. During the years ended June 30, 2002 and 2001, rent
expense, net of sublease payments, totaled $23,523 and $21,564,
respectively.

| |                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company, in the ordinary course of its business, is named in matters
arising from its activities as a broker-dealer. In the opinion of
management, based upon discussions with legal counsel, the resolution of
these matters will not have a material adverse effect on the financial
condition of the Company.

Note 16  Net capital requirement

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Pursuant to the net capital provisions of Rule 15c3-1 of the Securities
and Exchange Act of 1934, the Company is required to maintain both
minimum net capital, as defined under such provisions, and a ratio of
aggregate indebtedness to net capital not to exceed 15 to 1. As of June
30, 2002 and 2001, the Company had net capital of $293,275 and $520,322,
respectively, which is $288,275 and $515,322, respectively, in excess of
its required net capital of $5,000 and $5,000, respectively. As of June
30, 2002 and 2001, the ratio of aggregate indebtedness to net capital was
0.0445 and 0.0607 to 1, respectively.

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##### Table of Contents



Progressive Asset Management, Inc.
Notes to Financial Statements
June 30, 2002

Note 17  Subsequent event

The NASD conducted a review of the books and records of PAM on June 18, 2002,
and concluded in its Exit Conference Summary Form dated July 2, 2002, that
the NASD did not consider certain money market funds, deposited in a brokerage
account with FWG and totaling $99,338, to be an allowable asset of PAM for its
computation of net capital (Note 16) because no Proprietary Accounts of
Introducing Broker-Dealer (PAIB) agreement exists between FWG and PAM.

PAM made no adjustments to its computation of net capital due to the NASD
finding because the Exit Conference Summary Form is not binding or final, the
money market funds are fully transferable and do not constitute a good-faith
deposit requirement by FWG, PAM meets the minimum net capital requirements
even if it excludes the money market funds from its allowable assets and, if a
binding and final determination by the NASD concludes that a PAIB agreement is
required between FWG and PAM, then FWG and PAM will make such an agreement.

Note 18  Quarterly financial results (unaudited)

| |                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------
| | The unaudited revenues and income (loss) of the Company for the four
quarters ending June 30, 2002 and 2001, total as follows:

|                   |  |          |         |        |  |   |        | 
|------------------ |  | -------- | ------- | ------ |  | - | ------ | 
|                   |  | Revenues |         | Income
|                   |  |          |         |       
|September 30, 2001 |  | $        | 122,790 |        |  | $ | 20,762 | 
|December 31, 2001  |  |          | 146,752 |        |  |   | 21,552 | 
|March 31, 2002     |  |          | 110,472 |        |  |   | 3,656  | 
|June 30, 2002      |  |          | 115,687 |        |  |   | 1,714  | 
|September 30, 2000 |  | $        | 140,558 |        |  | $ | 39,174 | 
|December 31, 2000  |  |          | 189,125 |        |  |   | 74,074 | 
|March 31, 2001     |  |          | 128,938 |        |  |   | 40,981 | 
|June 30, 2001      |  |          | 144,984 |        |  |   | 40,460 | 

| |                                                                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company originally reported unaudited income during the quarters
ended December 31, 2001 and March 31, 2002, totaling $7,305 and $988,
respectively. The unaudited income during the quarters ended December
31, 2001 and March 31, 2002, reported herein, reflects adjustments
related to the common stock tender offer (Note 10) of $14,247 and $2,668,
respectively.

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Report of Independent Auditors on Supplemental Information

Board of Directors
Progressive Asset Management, Inc.

We have audited the financial statements of Progressive Asset Management, Inc.
as of and for the year ended June 30, 2002, and have issued our report thereon
dated July 18, 2002. Our audit was made primarily for the purpose of forming
an opinion on the basic financial statements taken as a whole. The
accompanying supplemental information presented hereinafter is presented for
purposes of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by Rule 17a-5
of the Securities and Exchange Commission. Such information has been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.

Markle Stuckey Hardesty & Bott
Larkspur, California
July 18, 2002

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Progressive Asset Management, Inc.
Statement of Changes in Liabilities Subordinated to Claims of General Creditors
June 30, 2002

|                           |  |   |         |  
|-------------------------- |  | - | ------- | -
|Balance, beginning of year |  | $ | 78,074  |  
|Increase (decrease)        |  |   | (44,225 | )
|                           |  |   |         |  
|Balance, end of year       |  | $ | 33,849  |  
|                           |  |   |         |  

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Progressive Asset Management, Inc.
Computation of Net Capital under Rule 15c3-1 of the
Securities and Exchange Commission
June 30, 2002

|                                   |  |                                                                                      |                                                        |                                         |             |         |         | 
|---------------------------------- |  | ------------------------------------------------------------------------------------ | ------------------------------------------------------ | --------------------------------------- | ----------- | ------- | ------- | 
|                                   |  | Aggregate indebtedness                                                               |                                                        |                                         |             |        
|                                   |  |                                                                                      |                                                        | Total liabilities                       |             | $       | 46,898  | 
|                                   |  |                                                                                      |                                                        | Less subordinated liabilities           |             |         | 33,849  | 
|                                   |  |                                                                                      |                                                        |                                         |             |         |         | 
|                                   |  | Total aggregate indebtedness                                                         |                                                        | $                                       | 13,049      |        
|                                   |  |                                                                                      |                                                        |                                         |             |         |         | 
|Net capital                        |  |                                                                                      |                                                        |                                        
|                                   |  | Stockholders equity                                                                 |                                                        | $                                       | 403,956     |        
|                                   |  | Addition                                                                             |                                                        |                                         |             |        
|                                   |  |                                                                                      |                                                        | Subordinated liabilities                |             |         | 33,849  | 
|                                   |  | Deductions                                                                           |                                                        |                                         |             |        
|                                   |  |                                                                                      |                                                        | Petty cash                              |             |         | 200     | 
|                                   |  |                                                                                      |                                                        | Other receivables                       |             |         | 4,477   | 
|                                   |  |                                                                                      |                                                        | Prepaid expenses                        |             |         | 21,612  | 
|                                   |  |                                                                                      |                                                        | Property and equipment, net             |             |         | 9,303   | 
|                                   |  |                                                                                      |                                                        | Deposits                                |             |         | 1,216   | 
|                                   |  |                                                                                      |                                                        | Other investments, at cost              |             |         | 3,300   | 
|                                   |  |                                                                                      |                                                        | Investment in unconsolidated subsidiary |             |         | 100,000 | 
|                                   |  |                                                                                      |                                                        | Securities haircuts                     |             |         | 3,146   | 
|                                   |  |                                                                                      |                                                        | Undue concentration                     |             |         | 1,276   | 
|                                   |  |                                                                                      |                                                        |                                         |             |         |         | 
|                                   |  |                                                                                      |                                                        | Total deductions                        |             |         | 144,530 | 
|                                   |  |                                                                                      |                                                        |                                         |             |         |         | 
|                                   |  | Net capital                                                                          |                                                        | $                                       | 293,275     |        
|                                   |  |                                                                                      |                                                        |                                         |             |         |         | 
|Net capital requirements and ratio |  |                                                                                      |                                                        |                                        
|                                   |  | Minimum
net capital requirements Higher of
6-2/3% x aggregate indebtedness or $5,000 |                                                        | $                                       | 5,000       |        
|                                   |  |                                                                                      | Excess net capital                                     |                                         | $           | 288,275 |        
|                                   |  |                                                                                      | Excess net capital at 1,000% of aggregate indebtedness |                                         | $           | 291,970 |        
|                                   |  |                                                                                      | Aggregate indebtedness to net capital ratio            |                                         | 0.0445 to 1

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Progressive Asset Management, Inc.
Reconciliation Pursuant to Rule 17a-5(d)(4)
June 30, 2002

|                                                                         |                                                            |                                     |         |   |         |   | 
|------------------------------------------------------------------------ | ---------------------------------------------------------- | ----------------------------------- | ------- | - | ------- | - | 
|Reconciliation with Computation of the Company                           |                                                            |                                     |         |  
|                                                                         | (Included in Part IIA of Form X-17A-5 as of June 30, 2002) |                                     |         |   |        
|Net
capital, as reported in Part IIA
(unaudited) FOCUS Report            |                                                            | $                                   | 345,465 |  
|                                                                         |                                                            | Audit adjustments                   |         |   | (52,190 | )
|                                                                         |                                                            |                                     |         |  
|                                                                         |                                                            | Net capital, as adjusted            |         | $ | 293,275 |  
|                                                                         |                                                            |                                     |         |  
|Aggregate
indebtedness, as reported in Part IIA
(unaudited) FOCUS Report |                                                            | $                                   | 20,213  |  
|                                                                         |                                                            | Audit adjustments                   |         |   | (7,164  | )
|                                                                         |                                                            |                                     |         |  
|                                                                         |                                                            | Aggregate indebtedness, as adjusted |         | $ | 13,049  |  
|                                                                         |                                                            |                                     |         |  

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Progressive Asset Management, Inc.
Computation for Determination of Reserve Requirements under
Rule 15c3-3 of the Securities and Exchange Commission
June 30, 2002

The computation for determination of the reserve requirements under Exhibit A
of Rule 15c3-3 of the Securities and Exchange Commission has not been prepared
because the exemption under Reg. Section 240, 15c3-3 (k)(i)(C) is met.



---

Progressive Asset Management, Inc.
Information Relating to Possession or Control Requirements under
Rule 15c3-3 of the Securities and Exchange Commission
June 30, 2002

A supplementary report pursuant to Rule 17a-5(d)(4) and the information
relating to possession or control requirements under Rule 15c3-3 are not
required under Rule 17a-5(e)(1)(i)(A) and Rule 15c3-3(k), respectively.

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Report of Independent Auditors on Internal Accounting Control
Required by SEC Rule 17a-5

Board of Directors
Progressive Asset Management, Inc.

We have audited the financial statements of Progressive Asset Management, Inc.
as of and for the year ended June 30, 2002, and have issued our report thereon
dated July 18, 2002. As part of our audit, we made a study and evaluation of
the system of internal accounting control (internal control structure) of the
Company to the extent we considered necessary to evaluate the system as
required by auditing standards generally accepted in the United States. The
purpose of our study and evaluation, which included obtaining an understanding
of the accounting system, was to determine the nature, timing and extent of the
auditing procedures necessary for expressing an opinion on the financial
statements.

We also made a study of the practices and procedures followed by the Company in
making the periodic computations of aggregate indebtedness and net capital
under rule 17a-3(a)(11) and the procedures for determining compliance with the
exemptive provisions of rule 15c3-3. We did not review the practices and
procedures followed by the Company in making the quarterly securities
examinations, counts, verifications and comparisons and the recordation of
differences required by rule 17a-13 or in complying with the requirements for
prompt payment for securities under section 8 of Regulation T of the Board of
Governors of the Federal Reserve System, because the Company does not carry
security accounts for customers or perform custodial functions relating to
customer securities.

The management of the Company is responsible for establishing and maintaining a
system of internal accounting 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 control procedures 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 Commissions above-mentioned
objectives.

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The objectives of a system 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 the
authorization of management and recorded properly to permit the preparation of
financial statements in accordance with accounting principles generally
accepted in the United States. Rule 17a-5(g) lists additional objectives of
the practices and procedures listed in the preceding paragraph.

Because of inherent limitations in any internal accounting control procedure or
the practices and procedures referred to above, errors or irregularities may
nevertheless occur and not be detected. In addition, 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 degree of
compliance with them may deteriorate. Our study and evaluation made for the
limited purpose described in the first paragraph would not necessarily disclose
all material weaknesses in the system. Accordingly, we do not express an
opinion on the system of internal accounting control of Progressive Asset
Management, Inc. taken as a whole. However, our study and evaluation disclosed
no condition that we believe to be a material weakness.

We understand that practices and procedures that accomplish the objectives
referred to in the second paragraph of this report are considered by the
Commission 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 on our
study, we believe that the practices and procedures of the Company were
adequate as of June 30, 2002 to meet the Commissions objectives.

This report is intended solely for the use of the Board of Directors,
management, the Securities and Exchange Commission, the National Association of
Securities Dealers 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 should not be used for any other purpose.

Markle Stuckey Hardesty & Bott
Larkspur, California
July 18, 2002

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PART III

|           |  |                                                                                                                                                                       
|---------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 2  |  | (a) Restated Articles of Incorporation(1)                                                                                                                             
|           |  | (b) Bylaws(1)                                                                                                                                                         
|Exhibit 6  |  | (a) Stock Option Plan(1)                                                                                                                                              
|           |  | (b) Standstill Agreement between PAM and Paradox Holdings(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)                                                                                                         

Footnotes:

(1)  Incorporated by reference to PAMs Registration Statement on Form 10SB,
Amendment 2, filed August 9, 2000.

(2)  Incorporated by reference to PAMs Annual Report on Form 10-KSB, filed
September 28, 2000.

(3)  Incorporated by reference to the Companys Schedule TO (Exhibit (d)(3)),
filed on November 14, 2001.




SIGNATURES

In accordance with Section 13 or 15(d) 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.

|                                                                                         |  |                         
|---------------------------------------------------------------------------------------- |  | ------------------------
|/s/ ERIC LEENSON
        
        by Eric Leenson, President
and Chief Executive Officer |  | Date: September 26, 2002

In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.

|                                                                                                              |  |                         
|------------------------------------------------------------------------------------------------------------- |  | ------------------------
|/s/ PETER CAMEJO                                                                                              |  | Date: September 26, 2002
|                                                                                                              |  |                         
|Peter Camejo, Chairman of the Board                                                                           |  |                         
|                                                                                                             
|/s/ ERIC LEENSON                                                                                              |  | Date: September 26, 2002
|                                                                                                              |  |                         
|Eric Leenson, President Chief Executive
Officer, Chief Financial Officer
and Member of the Board of Directors |  |                         
|                                                                                                             
|/s/ CATHERINE CARTIER                                                                                         |  | Date: September 26, 2002
|                                                                                                              |  |                         
|Catherine Cartier, Secretary
and Member of the Board of Directors                                             |  |                         

23



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|                                                   |  |                         
|-------------------------------------------------- |  | ------------------------
|/s/ MICHAEL S. WYMAN                               |  | Date: September 26, 2002
|                                                   |  |                         
|Michael S. Wyman,
Member of the Board of Directors |  |                         
|                                                  
|/s/ NINA LAU-BRANSON                               |  | Date: September 26, 2002
|                                                   |  |                         
|Nina Lau-Branson,
Member of the Board of Directors |  |                         
|                                                  
|/s/ GENE VALENTINE                                 |  | Date: September 26, 2002
|                                                   |  |                         
|Gene Valentine,
Member of the Board of Directors   |  |                         
|                                                  
|/s/ EDWARD L. PRICE                                |  | Date: September 26, 2002
|                                                   |  |                         
|Edward L. Price,
Member of the Board of Directors  |  |                         

24