SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [x] Quarterly Report Pursuant to Section 13 or 15(d) Securities Exchange Act of 1934 for Quarterly Period Ended December 31, 1999 - -OR- [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities And Exchange Act of 1934 for the transaction period from _________ to________ Commission File Number 0-15413 Progressive Telecommunications Corporation - ---------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 95-3480640 - ---------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 601 Cleveland Street, Suite 930, Clearwater, Florida 33755 - ---------------------------------------------------------------------------- (Address of principal executive offices, Zip Code) (727) 466-9898 - ---------------------------------------------------------------------------- (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of outstanding shares of the registrant's common stock, par value $.001 as of January 20, 2000 is 9,760,967 PART I -- FINANCIAL INFORMATION ITEM 1 -- FINANCIAL STATEMENTS PROGRESSIVE TELECOMMUNICATIONS CORPORATION CONDENSED BALANCE SHEETS 			 DECEMBER 31, 1999 SEPTEMBER 30, 1999 				 (NOTE 1)	 (NOTE 1) 				 (Audited)	 (Unaudited) ASSETS Current assets: Cash and cash equivalents	$ 303,743	$ 33,346 Certificates of deposit		 52,602		52,133 Notes receivable		 127,900 100,000 Accounts receivable, net	 270,811	 541,545 Inventory	 10,948	 35,478 Prepaid and other assets	 30,000	 45,035 Total current assets	 796,004	 807,537 Property and equipment, net	 1,222,972	 944,392 Other assets: 	Goodwill, net	 4,291,571	 4,348,039 	Intangible assets, net	 316,291	 205,174 	Deferred charges	 51,413	 50,000 	Deposits	 60,118	 27,002 	Total other assets	 4,719,393	 4,630,215 	Total assets	 $ 6,738,369	 $ 6,382,144 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable		 $ 1,015,075	 $ 1,380,378 Accrued liabilities: Accrued payroll and taxes	 606,359	 567,378 		Other	 360,411	 599,064 Convertible debentures	 		228,000	 - Notes payable to related parties	906,025	 	 41,200 Lines of credit	 			 32,764	 32,834 Current maturities of long-term debt	119,556	 139,386 Current portion of capital lease obligation141,712	143,466 Deposits on unissued common stock 438,800 151,000 	Total current liabilities 3,848,702 3,545,706 Long-term liabilities: Long-term debt, net of current maturities100,030	207,334 Long-term portion of capital 21,974		 56,886 lease obligation 		Total liabilities 3,970,706 3,718,926 Minority interest			 747,303	747,303 Stockholders' equity: Common stock par value $.001, 50,000,000 shares authorized, 9,014,467 and 8,222,122 shares issued and outstanding at December 31, 1999 and September 30, 1999, respectively	9,014	 8,222 Additional paid-in capital	 10,350,309 8,546,226 	Accumulated deficit	 (8,338,963) (6,638,533) 	Total stockholders' equity 2,020,360 1,915,915 				 $ 6,738,369 $ 6,382,144 The accompanying notes are an integral part of these financial statements. PROGRESSIVE TELECOMMUNICATIONS CORPORATION CONDENSED STATEMENT OF OPERATIONS 					THREE MONTHS ENDED 					DECEMBER 31, 					 1999		 1998 REVENUES: 		 	 $ 1,425,503	 $ 105,131 COSTS AND EXPENSES: Cost of sales	 	 1,116,586	 79,061 Selling, general & administrative 2,021,066		 889,269 	 			 3,137,652	 968,330 OPERATING LOSS	 		 (1,712,149)	 (863,199) OTHER INCOME (EXPENSE)	 	 11,720	 (26,033) NET LOSS			 $(1,700,429)	$(889,232) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING	 8,541,848	 2,824,831 NET LOSS PER SHARE			 (.20)	 (.31) Unaudited -- See accompanying notes to condensed financial statements. PROGRESSIVE TELECOMMUNICATIONS CORPORATION CONDENSED STATEMENTS OF CASH FLOWS 		 		 Three Months Ended 		 	 December 31, 		 		 1999	 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss				$(1,700,429)	$ (889,232) Adjustments to reconcile net loss to net cash flows used in operating activities: 	Depreciation and amortization 130,272	 8,450 	Bad debt expense		 10,365	 16,801 	Issuance of stock for services	 846,250	 475,000 	Decrease in accounts receivable	 260,369	 2,877 	(Increase) in notes receivable	 (27,900)	 - 	Decrease in inventory		 24,530 	 - 	Decrease (increase) in prepaid 	and other		 13,152 (53,000) 	(Decrease) increase in accounts 	payable		 (326,322)	 203,217 	(Decrease) in accrued expenses	 (113,653)	 (22,576) Net cash flows used in operating activities(883,366)	 (258,463) CASH FLOWS FROM INVESTING ACTIVITIES: 	Purchase of property and equipment (332,479)	 (4,765) 	Purchase of intangible assets	 (131,022)	 - 	Decrease in loans to stockholders	-	 11,150 	(Increase) in deposits		 (33,116)	 (25,000) 	Net cash (used for) investing 		activities		 (496,617)	 (18,615) CASH FLOWS FROM FINANCING ACTIVITIES: 	Issuance of common stock	 603,500	 54,954 	Proceeds from deposits on unissued 		common stock		 291,750	 - 	Increase (decrease) in loans from 	stockholders 	 591,000		(7,000) 	Increase in convertible debentures 228,000	 - 	Proceeds from line of credit		(70)	 291,200 	Payments on capital lease 	obligations			 (36,666) - 	Payments on long-term debt (27,134)	 - 	Net cash flows provided by 	financing activities		 1,650,380	 339,154 NET CHANGE IN CASH AND CASH EQUIVALENTS	 270,397	 62,076 CASH AND CASH EQUIVALENTS, 	BEGINNING OF PERIOD		 33,346	 4,886 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 303,743	 $ 66,962 SUPPLEMENTAL INFORMATION: 	Cash paid for interest		 $ 31,501		 $- 	Conversion of debt into common stock$ 230,125		 $- Unaudited-See accompanying notes to condensed financial statements. PROGRESSIVE TELECOMMUNICATIONS CORPORATION NOTES TO CONDENSED FINANCIAL STATEMENTS NOTE 1-BASIS OF PRESENTATION: The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-QSB and do not include all of the information and footnotes required by generally accepted accounting principles for complete statements. Management believes that all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such financial statements, have been included. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. If such differences prove significant and material, Progressive Telecommunications Corporation (the "Company") will file an amendment to this report on Form 10-QSB. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS NOTE CONCERNING FORWARD-LOOKING INFORMATION Some of the information in this report contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "estimate" and "continue" or similar words. You should read statements that contain these words carefully because they: (1) discuss our future expectations; (2) contain projections of our future results of operations or of our financial condition; or (3) state other "forward-looking" information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we have not accurately predicted or over which we have no control. These events may include future operating results, our efforts to address Year 2000 issues and potential competition, among other things. Cautionary language in this report provides examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should be aware that the occurrence of the events described in this report could have a material adverse effect on our business, operating results and financial condition. OVERVIEW Progressive Telecommunications Corporation ("Progressive" or the "Company"), a Nevada corporation, is a fully-integrated provider of advanced telecommunications, communications management and e-commerce services to businesses. The Company plans to capitalize upon trends in technology convergence, marketplace preference for single source suppliers and the advent of e-commerce in several ways. First, it manages global telecommunications services capable of transporting all types of voice, data and wireless communications. This includes all aspects of network planning and management, operation of switches, transmission capacity, enhances service delivery platforms, and billing systems. Second, it offers, through its OPUS division, a communications and messaging management service using human voice commands to manage voice, fax and e-mail messaging and communications from North America. Finally, the Company plans to offer an array of e-commerce applications enabling businesses of all kinds to utilize the Internet and World Wide Web. Combined, these capabilities enable Progressive to provide services in two areas to growing companies: communications and e-commerce. More specifically, Progressive's business strategy revolves around four areas: Internet directory that targets small to medium businesses through its subsidiary, The Yellow Page Directory.Com Corp. ("Yellow Page"); business to business e-commerce through its subsidiary, BusinessMall.com, Inc.; traditional local, long distance and international telephone services, including calling cards, wireless services and paging with integrated access and data networks through its subsidiary, StormTel, Inc.; and Computer Telephony (a unified messaging, voice activated virtual assistant) through its subsidiary, OPUS(TM) Assistant, Inc. On July 30, 1999 Progressive Telecommunications Corporation, a Florida corporation ("Progressive Florida") and Marquee Entertainment, Inc. ("Marquee") completed the first part of a transaction whereby Marquee acquired in excess of 82% of the issued and outstanding shares of Progressive Florida. As a condition to consummating the transaction, Marquee amended its Certificate of Incorporation so as to increase its authorized common shares from 25,000,000 to 50,000,000, authorized a 1 for 5 reverse stock split, changed its name to Progressive Telecommunications Corporation and reduced its par value from $.04 to $.001. RESULTS OF OPERATIONS The Company had revenue from operations of $1,426,000 for the three months ended December 31, 1999 compared to $105,000 in the three months ended December 31, 1998. Gross profit for the three months ended December 31, 1999 was $309,000 compared to $26,000 for the three months ended December 31, 1998. The significant increases in revenue and gross profit were due to the acquisition of CCC Communications Corporation as of December 31, 1998. Selling, general and administrative expenses were $2,057,000 for the three months ended December 31, 1999 compared to $889,000 in the three months ended December 31, 1998. The increase in expenses resulted from the acquisition of CCC Communications Corporation and the start-up of The Yellow Page Directory.Com Corp., BusinessMall.Com, Inc., and Opus (tm) Assistant, Inc. LIQUIDITY AND CAPITAL RESOURCES Net cash used in operating activities was $883,000 for the three months ended December 31, 1999 compared to $258,000 for the comparable period in 1998. The change was primarily due to increased operating expenses from the acquisition of CCC Communications Corporation and increases in accounts payable. Net cash used for investing activities was $497,000 for the three months ended December 31, 1999 compared to $19,000 for the comparable period in 1999. The increase is primarily due to leasehold improvements on a new facility for The Yellow Page Directory.Com Corp. Net cash provided by financing activities was $1,650,000 for the three months ended December 31, 1999 compared to $339,000 for the comparable period in 1998. During the three months ended December 31, 1999, the Company raised $895,000 through private placements, received $600,000 from a stockholder, and issued $228,000 in convertible debentures. Part II ITEM 1 - LEGAL PROCEEDINGS We are involved in legal proceedings from time to time, none of which we believe, if decided adversely to us, would have a material adverse effect on our business, financial condition or results of operations. ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 		Not applicable. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 		Not applicable. ITEM 5 - OTHER INFORMATION 		Not applicable. ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibit is filed herewith: Exhibit 27.1 Financial Data Schedule SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROGRESSIVE TELECOMMUNICATIONS CORPORATION Dated: December 30, 1999 By: /s/ Barry L. Shevlin - -------------------------- 	Barry L. Shevlin 				 	Chief Executive Officer EXHIBIT 27 ARTICLE 	5 MULTIPLIER PERIOD - TYPE	3 MONTHS FISCAL YEAR END	SEPTEMBER 30, 2000 PERIOD END	DECEMBER 31, 1999 CASH SECURITIES $356,345 RECEIVABLES $270,811 ALLOWANCES 0 INVENTORY $10,948 CURRENT ASSETS $796,004 DEPOSIT $60,118 PP&E $1,472,363 DEPRECIATION $249,391 TOTAL ASSETS $6,738,369 CURRENT LIABILITIES $3,848,702 BONDS 0 COMMON $9,014 OTHER - SE $2,011,346 TOTAL LIABILITY AND EQUITY 		 $6,738,369 SALES $1,425,503 TOTAL REVENUES $1,425,503 CGS 0 TOTAL COSTS $3,137,652 OTHER EXPENSES $11,720 LOSS PROVISION 0 INTEREST EXPENSE $31,271 INCOME PRETAX 0 INCOME TAX 0 NET LOSS $(1,700,429) EPS PRIMARY $(.20) EPS DILUTED $(.20) 9