St. Louis, Missouri
We have audited the accompanying consolidated statements of financial position of PGI Incorporated and Subsidiaries (“Company”) as of December 31, 20102012 and 2009,2011, and the related consolidated statements of operations, stockholders’ deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits also included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of PGI Incorporated and Subsidiaries at December 31, 20102012 and 2009,2011, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has a significant accumulated deficit, and is in default on its primary debt (Note 7), certain sinking fund and interest payments on its convertible subordinated debentures (Note 8) and its convertible debentures (Note 9). These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
St. Louis, Missouri
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNotes to Consolidated Financial Statements
| 1. | Significant Accounting Policies: |
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after eliminating all significant inter-company transactions.
Accounting Estimates
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 at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue and Profit Recognition
Homesites
The Company adoptedfollows the installment method of profit recognition in accordance with Accounting Standard Codification (ASC) Topic 360-20, “Real Estate Sales”.
Acreage
Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount, when minimum down payment and other requirements are met.
Land and Improvement Inventories
Land held for sale to customers and land held for bulk sale are stated at cost, which is not in excess of estimated net realizable value. Homesite costs are allocated to projects based on area methods, which consider footage, future improvements costs and frontage.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
New Accounting Standards
In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2010-06 "Improving Disclosures about Fair Value Measurements" effective for interim and annual financial periods beginning on or after December 15, 2009. The implementation of this new standard did not have a material impact on the Company's financial statements.
Revenues for the yearyears ended December 31, 20102012 and 2009 primarily represented2011 included interest income from a short-term note receivable with Love Investment Company (“LIC”), an affiliate of L-PGI, the Company’s primary preferred stock shareholder.
There were no real estate sales in 2010 or 2009 due2012. In the first quarter of 2011, the Company completed the sale of a single family lot at the price of $16,000. As of December 31, 2012 the Company owned six lots in Citrus County, Florida. The Company continues to be effected by a depressed real estate market in Citrus County, Florida. As of December 31, 2010 the Company owned seven lots in Citrus County, Florida.
Restricted cash includes restricted proceeds held by PGIP,LLC (“PGIP”), the Primary Lender, as collateral for debt repayment (see Note 14).
The restricted escrow funds balance was $5,000 at both December 31, 20102012 and December 31, 2009.2011.
| 4. | Land and Improvements: |
Land and improvement inventories consisted of:
| | | 2012 | | | 2011 | |
| | | | | | | | | |
| Unimproved land | | $ | 625,000 | | | $ | 625,000 | |
| Fully improved land | | | 14,000 | | | | 14,000 | |
| | | $ | 639,000 | | | $ | 639,000 | |
Other assets consisted of:
| | | 2012 | | | 2011 | |
| | | | | | | |
Deposit with Trustee of 6 ½% debentures | | $ | 184,000 | | | $ | 184,000 | |
| Prepaid expenses | | | 2,000 | | | | 4,000 | |
| Deferred charges | | | 1,000 | | | | 5,000 | |
| | | $ | 187,000 | | | $ | 193,000 | |
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
| 6. | Accounts Payable and Accrued Expenses: Accounts payable and accrued expenses consisted of: |
| 4. | | Land and Improvements: | | | | | | |
| | | Land and improvement inventories consisted of: | | | | | | |
| | | | | | 2010 | | | | 2009 | |
| | | Unimproved land | | $ | 625,000 | | | $ | 625,000 | |
| | | Fully improved land | | | 14,000 | | | | 14,000 | |
| | | | | $ | 639,000 | | | $ | 639,000 | |
| | | | | | | | | | | |
| 5. | | Other Assets: | | | | | | | | |
| | | Other assets consisted of: | | | | | | | | |
| | | | | | 2010 | | | | 2009 | |
| | | Deposit with Trustee of 6 ½% debentures | | $ | 184,000 | | | $ | 184,000 | |
| | | Prepaid Expenses | | | 4,000 | | | | 4,000 | |
| | | Deferred Charges | | | 1,000 | | | | 1,000 | |
| | | | | $ | 189,000 | | | $ | 189,000 | |
| | | | | | | | | | | |
| 6. | | Accounts Payable and Accrued Expenses: | | | | | | | | |
| | | Accounts payable and accrued expenses consisted of: | | | | | | | | |
| | | | | | 2010 | | | | 2009 | |
| | | Accounts payable | | $ | 12,000 | | | $ | 13,000 | |
| | | Accrued audit/tax expense | | | 36,000 | | | | 37,000 | |
| | | Accrued consulting fees | | | 2,000 | | | | 2,000 | |
| | | Accrued miscellaneous | | | 71,000 | | | | 71,000 | |
| | | | | $ | 121,000 | | | $ | 123,000 | |
| | | | | | | | | | | |
| | | Accrued Real Estate Taxes: | | | | | | | | |
| | | Accrued real estate taxes consisted of: | | | | | | | | |
| | | Current | | $ | 9,000 | | | $ | 11,000 | |
| | | | | | | | | | | |
19| | | 2012 | | | 2011 | |
| | | | | | | | | |
| Accounts payable | | $ | - | | | $ | 1,000 | |
| Accrued audit/tax expense | | | 36,000 | | | | 36,000 | |
| Accrued consulting fees-related party | | | 1,000 | | | | 1,000 | |
Environmental remediation obligations | | | 70,000 | | | | 70,000 | |
| Accrued debenture fees | | | 103,000 | | | | 8,000 | |
| Accrued miscellaneous | | | 1,000 | | | | 2,000 | |
| | | $ | 211,000 | | | $ | 118,000 | |
| Accrued Real Estate Taxes: | | | | | | | | |
| Accrued real estate taxes consisted of: | | | | | | | | |
| Current | | $ | 8,000 | | | $ | 8,000 | |
| 7. | Credit Agreements – Primary Lender and Notes Payable: PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
7. Credit Agreements – Primary Lender and Notes Payable:
Credit agreements with the Company’s primary lender and notes payable consisted of the following: |
| | | 2010 | | | 2009 | |
| Credit agreements – primary lender | | | | | | |
| Balance is past due, bearing interest at | | | | | | |
| prime plus 5.0% | | $ | 500,000 | | | $ | 500,000 | |
| | | | | | | | | |
| Notes payable – | | | | | | | | |
| $1,176,000 bearing interest at prime | | | | | | | | |
| rate plus 2%, the remainder | | | | | | | | |
| non-interest bearing, all past due | | | 1,198,000 | | | | 1,198,000 | |
| | | $ | 1,698,000 | | | $ | 1,698,000 | |
| | | 2012 | | | 2011 | |
| Credit agreements – | | | | | | |
Primary lender (PGIP-related party), at prime plus 5%, due June 1, 1997 | | $ | 500,000 | | | $ | 500,000 | |
| | | | | | | | | |
| Notes payable – | | | | | | | | |
| At prime plus 2%, due October 1, 1984 | | | 176,000 | | | | 176,000 | |
| At prime plus 2%, due October 1, 1987 | | | 1,000,000 | | | | 1,000,000 | |
| Non-interest bearing, due August 1, 1993 | | | 22,000 | | | | 22,000 | |
| | | $ | 1,698,000 | | | $ | 1,698,000 | |
The prime rate at both December 31, 20102012 and 2009,2011, was 3.25%.
At December 31, 20102012 assets collateralizing the Company’s credit agreements with its primary lender totaled $644,000, of which $5,000 represented escrow held by the primary lender, and $639,000 represented land and improvement inventories.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
| 7. | Credit Agreements – Primary Lender and Notes Payable (continued): |
The overall weighted averageweighted-average interest rate for the Company’s credit agreements with its primary lender and all remaining notes and mortgages was approximately 6.1%6.1% as of both December 31, 20102012 and 2009.2011.
Although substantially all of the Company’s real and personal property including all of the stock of the Company’s wholly-owned subsidiaries remains pledged as collateral, the Company negotiated agreements with its mortgage holders to allow the Company to sell part of its land holdings without requiring full payment of the secured debt.
Accrued interest due to the primary lender was $324,000 and $282,000 at December 31, 2012 and 2011, respectively. Accrued interest on other notes payable was $2,773,000$2,896,000 and $2,711,000$2,835,000 at December 31, 20102012 and 2009,2011, respectively.
All of the primary lender debt and notes payable including accrued interest are past due.
8. Subordinated Convertible Debentures Payable:| 8. | Subordinated Convertible Debentures Payable: Subordinated debentures payable consisted of: |
Subordinated debentures payable consisted of:| | | 2012 | | | 2011 | |
| | | | | | | | | |
| 6 ½%, due June 1991 | | $ | 1,034,000 | | | $ | 1,034,000 | |
| 6%, due May 1992 | | | 8,025,000 | | | | 8,025,000 | |
| | | $ | 9,059,000 | | | $ | 9,059,000 | |
| | | 2010 | | | 2009 | |
| 6 ½%, due June 1991 | | $ | 1,034,000 | | | $ | 1,034,000 | |
| 6%, due May 1992 | | | 8,025,000 | | | | 8,025,000 | |
| | | $ | 9,059,000 | | | $ | 9,059,000 | |
Since issuance, $650,000 and $152,000 of the 6½% and 6% debentures, respectively, have been converted into common stock; however, thisstock. This conversion feature is no longer in effect.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
The Company is in default of certain sinking fund and interest payments on both subordinated debentures totaling $9,059,000 in principal plus accrued and unpaid interest of $17,448,000$19,792,000 at December 31, 20102012 and $16,319,000$18,605,000 as of December 31, 2009.2011.
The debentures are not collateralized and are not subordinatedsubordinate to each other, but are subordinatedsubordinate to senior indebtedness ($3,198,000 at December 31, 2010)2012). Payment of dividends on the Company’s common stock is restricted under the terms of the two indentures pursuant to which the outstanding debentures are issued.
In order to meet liquidity needs for future periods, the Company has been and intends to continue to actively seek buyers for the remaining portion of the underdeveloped acreage, when appropriate.
No assurances can be made that the Company can achieve this objective.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
9. Convertible Debentures Payable:| 9. | Convertible Debentures Payable: |
In May 2008, LIC, an affiliate of L-PGI, the Company’s preferred shareholder, purchased $703,050 in principal amount of the Company’s convertible debentures from the previous debenture holder. The balance of the outstanding convertible debentures in the amount of $796,950, are held by Love-1989. The debentures held by Love-1989 are secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow. The total debentures balance of $1,500,000 carry a maturity date of July 8, 1997 and are in default. Interest on the debentures accrues at the rate of fourteen percent compounded quarterly. The Company’s primary lender credit agreements prohibit the payment of interest until such time as the primary lender loans are repaid.
Accrued interest was $26,673,000$35,598,000 and $23,051,000$30,829,000 at December 31, 20102012 and 20092011 respectively.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
10. Income Taxes:
Reconciliation of the statutory federal income tax rates, 34% for the years ended December 31, 20102012 and 2009,2011, to the Company’s effective income tax rates follows:
| | | 2010 | | | 2009 | |
| | | ($ in thousands) | | | 2012 | | | 2011 | |
| | | | | | Percent of | | | | | | Percent of | | | ($ in thousands) | |
| | | Amount of tax | | | Pre-tax Loss | | | Amount of Tax | | | Pre-tax loss | | | Amount of tax | | | | | | Amount of Tax | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Expected tax (credit) | | $ | (1,676 | ) | | | (34.0 | %) | | $ | (1,503 | ) | | | (34.0 | %) | | $ | (2,124 | ) | | | (34.0 | %) | | $ | (1,864 | ) | | | (34.0 | %) |
| State income taxes, net of federal tax benefits | | | (197 | ) | | | (4.0 | %) | | | (177 | ) | | | (4.0 | %) | |
| Expiration of net operating loss carryovers | | | 1,186 | | | | 24.1 | % | | | 459 | | | | 10.4 | % | |
| State income taxes, net of | | | | (250 | ) | | | (4.0 | %) | | | (219 | ) | | | (4.0 | %) |
| federal tax benefits | | | | | | | | | | | | | | | | | |
| Expiration of net operating | | | | 1,247 | | | | 20.0 | % | | | 1,068 | | | | 19.5 | % |
| loss carryovers | | | | | | | | | | | | | | | | | |
| Increase in valuation allowance | | | | | | | | | | | | | | | | | | | 1,127 | | | | 18.0 | % | | | 1,015 | | | | 18.5 | % |
| | | | 687 | | | | 13.9 | % | | | 1,221 | | | | 27.6 | % | | $ | - | | | | - | | | $ | - | | | | - | |
| | | $ | - | | | | - | | | $ | - | | | | - | | |
| | | | 2010 | | | 2009 | |
| | | | ($ in thousands) | |
| Deferred tax asset: | | | | | | |
| | Net operating loss carryover | | $ | 15,887 | | | $ | 15,200 | |
| | Adjustments to reduce land to net realizable value | | | 12 | | | | 12 | |
| | Expenses capitalized under IRC 263(a) | | | 56 | | | | 56 | |
| | Environmental liability | | | 27 | | | | 27 | |
| | Valuation allowance | | | (15,810 | ) | | | (15,123 | ) |
| | | | $ | 172 | | | $ | 172 | |
| Deferred tax liability: | | | | | | | | |
| | Basis difference of land and improvement inventories | | $ | 172 | | | $ | 172 | |
| | | | | | | | | | |
| | Net deferred tax asset | | $ | - | | | $ | - | |
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
| 10. | Income Taxes (continued): |
| | | 2012 | | | 2011 | |
| | | ($ in thousands) | |
| Deferred tax asset: | | | | | | |
| Net operating loss carryover | | $ | 18,029 | | | $ | 16,902 | |
| Adjustments to reduce land to net | | | | | | | | |
| realizable value | | | 12 | | | | 12 | |
| Expenses capitalized under IRC 263(a) | | | 56 | | | | 56 | |
| Environmental liability | | | 27 | | | | 27 | |
| Valuation allowance | | | (17,952 | ) | | | (16,825 | ) |
| | | | 172 | | | | 172 | |
| Deferred tax liability: | | | | | | | | |
| Basis difference of land and | | | | | | | | |
| improvement inventories | | | 172 | | | | 172 | |
| | | | | | | | | |
| Net deferred tax asset | | $ | - | | | $ | - | |
The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2007.2009.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
11. Capital Stock:
In March 1987, the Company sold, in a private placement, 1,875,000 shares of its Class A cumulative convertible preferred stock to L-PGI for a purchase price of $7,500,000 cash ($4.00 per share). The Company also converted $500,000 of indebtedness owed to a corporation owned by the Company’s former Chairman of the Board of Directors and members of his family into 125,000 shares of the cumulative convertible preferred stock.
The holders of the preferred stock are entitled to one vote per share and, except as provided by law, will vote as one class with the holders of the common stock. Class A preferred stockholders are also entitled to receive cumulative dividends at the annual rate of $.32 per share, an effective yield of 8%. Dividends accrued for an initial two year period and, at the expiration of this period, preferred stockholders had the option of receiving accumulated dividends, when and if declared by the Board of Directors, in cash (unless prohibited by law or contract) or common stock. At December 31, 20102012 cumulative preferred dividends in arrears totaled $10,035,000$11,315,000 ($640,000 of which related to the year ended December 31, 2010)2012). On May 15, 1997 preferred dividends accrued through April 25, 1995 totaling $4,260,433 were paid in the form of 2,000,203 shares of common stock.
As of December 31, 2010,2012, the preferred stock is callable or redeemable at the option of the Company at $4.00 per share plus accrued and unpaid dividends. In addition, the preferred stock will be entitled to preference of $4.00 per share plus accrued and unpaid dividends in the event of liquidation of the Company.
At December 31, 20102012 the Company had reserved 6,355,3566,319,540 common shares for the conversion of preferred stock and debentures.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
There were no significant transactions in the fourth quarter of 2010.2012.
13. Commitments and Contingencies:| 13. | Commitments and Contingencies: |
The Company is currently not a party in any legal proceedings.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
| 14. | Related Party Transactions: |
14. Related Party Transactions:
The Company’s primary preferred shareholder is L-PGI, with LIC being its general partner. The Company’s convertible debentures (Note 9) are held by L-1989 and LIC. LIC is also the controlling general partner of L-1989. LIC is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of the Company.
As of December 31, 20102012 the Company was in default of its primary credit agreements with PGIP, its Primary Lender.Lender (Note 7).
PGIP is owned and managed by Love Savings Holding Company (“LSHC”), Andrew S. Love, Jr. and Laurence A. Schiffer.. Messrs. Love and Schiffer are directors and executive officers of LSHC and own 90% of all the issued and outstanding voting stock of LSHC. Messrs. Love and Schiffer serve as the executive officers and directors of the Company.
The Company maintains its administration and accounting offices with Love Real Estate Company (“LREC”). LREC, which is owned by Mr. Love and Mr. Schiffer, is paid a monthly fee for the following:
| 1. | 1. Maintain books of original entry; |
| 2. | 2. Prepare quarterly and annual SEC filings; |
| 3. | 3. Coordinate the annual audit; |
| 4. | 4. Assemble information for tax filing, review reports as prepared by tax accountants and file same; |
| 5. | 5. Track shareholder records through transfer agent; |
| 6. | 6. Maintain policies of insurance against property and liability exposure; |
| 7. | 7. Handle day-to-day accounting requirements |
In addition, the Company receives office space, telephone service and computer service from LREC. A fee of $2,800 per month was accrued in 20102012 and 2009.2011. The Company made payments of $33,600 to LREC in 20102012 and 20092011 respectively for accounting service fees. There were no accrued accounting service fees as of December 31, 20102012 and 2009, respectively.2011.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
| 14. | Related Party Transactions (continued): |
Effective March 25, 1987, the Company entered into a Management Consulting Agreement with LREC. As a consultant to the Company and in addition to the above services, LREC provides other services including, but not limited to, strategic planning, marketing and financing as requested by the Company. In consideration for these consulting services, the Company pays LREC a quarterly consulting fee of one-tenth of one percent of the carrying value of the Company’s assets, plus reasonable out-of-pocket expenses. As of December 31, 2010,2012, the carrying value of the Company’s assets was approximately $1,539,000.$1,375,000. Consulting fees totalingwere $6,000 in both 2012 and $7,000 were accrued during 2010 and 2009,2011, respectively. As of both December 31, 20102012 and 2009,2011, a total of $2,000, respectively,$1,000 of unpaid fees had accrued under this agreement.
In 1985 a corporation owned by the former Chairman of the Board and his family made an uncollateralized loan to the Company, which at December 31, 20102012 had an outstanding balance, including accrued interest, of $561,000.$579,000. Interest accrued on this loan was $9,000 in both 20102012 and 2009,2011, respectively.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
From time to time, the Company invests in short-term debt obligations of an affiliate of L-PGI, the Company’s preferred shareholder, Love Investment Company.Company (Note 2). The balance of this receivable including accrued interest at December 31, 20102012 and 20092011 was $704,000$543,000 and $780,000,$631,000, respectively. Interest on the loans was $45,000$29,000 and $64,000$40,000 for 20102012 and 2009,2011, respectively.
15. Fair Value of Financial Instruments:| 15. | Fair Value of Financial Instruments: |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value:
Cash and Restricted Cash:
The carrying amount approximates fair value because of the short maturity of those instruments.
Receivables:
The carrying amount approximates fair value because of the short-term maturity of those receivables.
Accounts Payable:
The carrying amount approximates fair value because of the short-term maturity of those debts.
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
| 15. | Fair Value of Financial Instruments (continued): |
Debt:
It was not practicable to estimate the fair value of the Company’s debt with its primary lender, its notes payable and its convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities.
The estimated fair values of the Company’s financial instruments are as follows:
| | | 2010 | | | 2009 | |
| | | Carrying | | | Fair | | | Carrying | | | Fair | |
| | | Amount | | | Value | | | Amount | | | Value | |
| | | | | | | | | | | | | |
| Cash and Restricted Cash | | $ | 6,000 | | | $ | 6,000 | | | $ | 6,000 | | | $ | 6,000 | |
| Receivables | | | 705,000 | | | | 705,000 | | | | 785,000 | | | | 785,000 | |
| Accounts Payable | | | 12,000 | | | | 12,000 | | | | 13,000 | | | | 13,000 | |
| Debt | | | 12,257,000 | | | | - | | | | 12,257,000 | | | | - | |
PGI INCORPORATED AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)| | | 2012 | | | 2011 | |
| | | Carrying | | | Fair | | | Carrying | | | Fair | |
| | | Amount | | | Value | | | Amount | | | Value | |
| | | | | | | | | | | | | |
| Cash and Restricted Cash | | $ | 6,000 | | | $ | 6,000 | | | $ | 6,000 | | | $ | 6,000 | |
| Receivables | | | 543,000 | | | | 543,000 | | | | 631,000 | | | | 631,000 | |
| Accounts Payable | | | - | | | | - | | | | 1,000 | | | | 1,000 | |
| Debt | | | 12,257,000 | | | | - | | | | 12,257,000 | | | | - | |
The following is a summary of the calculations used in computing basic and diluted (loss)loss per share:
| | | 2010 | | | 2009 | |
| Numerator: | | | | | | |
| Net (Loss) | | $ | (4,930,000 | ) | | $ | (4,420,000 | ) |
| Preferred Dividends | | | (640,000 | ) | | | (640,000 | ) |
(Loss) Available to Common Shareholders | | $ | (5,570,000 | ) | | $ | (5,060,000 | ) |
| | | | | | | | | |
| Denominator: | | | | | | | | |
| BASIC | | | | | | | | |
Weighted average amount of shares outstanding | | | 5,317,758 | | | | 5,317,758 | |
| | | | | | | | | |
| DILUTED | | | | | | | | |
Weighted average amount of shares outstanding | | | 5,317,758 | | | | 5,317,758 | |
Dilutive effect of assumed conversion of Preferred Stock | | | - | | | | - | |
| Dilutive common shares | | | 5,317,758 | | | | 5,317,758 | |
| | | | | | | | | |
| (Loss) per share | | | | | | | | |
| Basic | | $ | (1.05 | ) | | $ | (.95 | ) |
| Diluted | | | (1.05 | ) | | | (.95 | ) |
| | | 2012 | | | 2011 | |
| Numerator: | | | | | | |
| Net Loss | | $ | (6,246,000 | ) | | $ | (5,483,000 | ) |
| Preferred Dividends | | | (640,000 | ) | | | (640,000 | ) |
Loss Available to Common Shareholders | | $ | (6,886,000 | ) | | $ | (6,123,000 | ) |
| | | | | | | | | |
| Denominator: | | | | | | | | |
| BASIC | | | | | | | | |
Weighted average amount of shares outstanding | | | 5,317,758 | | | | 5,317,758 | |
| | | | | | | | | |
| DILUTED | | | | | | | | |
Weighted average amount of shares outstanding | | | 5,317,758 | | | | 5,317,758 | |
Dilutive effect of assumed conversion of Preferred Stock | | | - | | | | - | |
| Dilutive common shares | | | 5,317,758 | | | | 5,317,758 | |
| | | | | | | | | |
| Loss per share | | | | | | | | |
| Basic | | $ | (1.29 | ) | | $ | (1.15 | ) |
| Diluted | | | (1.29 | ) | | | (1.15 | ) |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
Not Applicable.
Item 9A. Controls and Procedures
The Company has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) under the supervision and with the participation of the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Company. Based on this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2010.2012. There have been no changes in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter ending December 31, 20102012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control over Financial Reporting
Management of PGI Incorporated (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.
Item 9A. Controls and Procedures (continued)ITEM 9A. | CONTROLS AND PROCEDURES (CONTINUED) |
Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010,2012, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on that assessment, management concludes that, as of December 31, 2010,2012, the Company’s internal control over financial reporting is effective.
Item 9B. Other Information
Not Applicable
PART III
Item | Directors, Executive Officers, and Corporate Governance.DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE. |
The following information, regarding executive officers and directors of the Company, is as of March 21, 2011.29, 2013.
Name and Age | | Position with Company and Business Experience During the Last Five Years | |
| | | |
Laurence A. Schiffer (age 71)(age 73)
| | Director of the Company since April 1987; President, Chief Executive Officer and Chief Financial Officer of the Company since February 1994; Vice Chairman of the Board since May 1987; President and Chief Executive Officer of Love Real Estate Company and Love Investment Company since 1973; Chairman of Heartland Bank and President of LSHC, the parent company of Heartland Bank since December 1985; Manager of PGIP since 1995; member of the Real Estate Board of Metropolitan St. Louis and the National Association of Real Estate Boards. | |
| | | |
Andrew S. Love Jr. (age 67)(age 69)
| | Director and Chairman of the Company’s Board of Directors since May 1987; Secretary since February 1994; Chairman of the Board of Love Real Estate Company and Secretary of Love Investment Company since 1973; Partner in St. Louis based law firm of Bryan, Cave, McPheeters & McRoberts until 1991; Director of Heartland Bank and Chairman of LSHC, the parent company of Heartland Bank since December 1985; Manager of PGIP since 1995. | |
Executive officers of the Company are appointed annually by the Board of Directors to hold office until their successors are appointed and qualify.
The directors of the Company have determined that the Company does not have an audit committee financial expert serving on its board of directors which(which acts as the Company’s audit committee). In addition, the Company has not adopted a code of ethics that applies to its principal executive officer and principal financial officer (principal accounting officer). The Company’s decision not to adopt a code of ethics or to have an audit committee financial expert are primarily attributable to the following reasons: (i) as a result of its continuing financial difficulties due to amounts owed on its debt, the Company is focused almost exclusively on the disposition of its remaining real estate; (ii) as described in Item 5, there have been no reported transactions in the Company’s Common Stock since January 29, 1991, other than the odd lot tender offer in 2003; (iii) the board of directors of the Company consists of only two directors and these two directors are also the only executive officers of the Company; and (iv) the same person serves as the Company’s chief executive officer and chief financial officer.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company was not furnished any Forms 3, 4 or 5, or any amendments thereto, during our most recent fiscal year. Accordingly, the Company is not aware of any officer, director or beneficial owner of more than 10 percent of the Company’s registered securities that failed to file on a timely basis Forms 3, 4 and 5 required under Section 16(a) of the Securities Exchange Act of 1934, as amended, during fiscal year ended 2010.2012.
Item 11. Executive Compensation
The Company’s Chief Executive Officer and Chief Financial Officer is Mr. Laurence A. Schiffer. Because of the Company’s impaired financial condition, it does not compensate in any manner Mr. Schiffer or Mr. Love, the Company’s only other executive officer, for the services they perform for the Company in that capacity or in their capacity as directors of the Company. Management services are provided to the Company by Love Real Estate Company (“LREC”), which is an affiliate of L-PGI, pursuant to that certain Management Consulting Agreement by and between the Company and LREC dated March 25, 1987 (the “Management Agreement”). Mr. Schiffer is an employee of, and receives an annual salary from LREC. Mr. Love receives only a nominal salary from LREC. Neither the Company nor LREC maintains records, which would allow either of them to attribute any portion of the remuneration Mr. Schiffer receives from LREC to the management services he performs for the Company. See Item 13. “Certain Relationships and Related Party Transactions, and Director Independence” for additional information about the Management Agreement.
Neither Mr. Schiffer nor Mr. Love received fees from any source directly attributable to their services as directors of the Company during 2010.2012.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The table below provides certain information as of March 21, 201129, 2013 regarding the beneficial ownership of the Common Stock and the Class A cumulative convertible preferred stock (the “Preferred Stock”) by each person known by the Company to be the beneficial owner of more than five percent of either the Common Stock or the Preferred Stock, each director of the Company (which persons are also the Company’s only executive officers), and by virtue of the foregoing, the directors and executive officers of the Company as a group.
| | | | | | | | | | | | Percent of | | | | | | | | Percent of Total | | | Percent of | |
| | | Common | | Preferred | | Common | | Preferred | | Total Voting | | Common | | | Preferred | | | Common | | | Preferred | | | Total Voting | |
| Name(9) | | Stock | | Stock | | Stock (1) | | Stock | | Power (1) | | Stock | | | Stock | | | Stock (1) | | | Stock | | | Power (1) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Estate of Harold Vernon | | | 998,777 | (2)(3) | | | - | | | | 18.8 | % | | | - | | | | 13.7 | % | | | 998,777 | (2)(3) | | - | | | 18.8 | % | | - | | | 13.7 | % |
| Alfred M. Johns | | | 426,514 | (4) | | | 125,000 | (4) | | | 8.0 | % | | | 6.3 | % | | | 7.5 | % | |
| Mary Anne Johns Trust | | | | - | (4) | | 125,000 | (4) | | - | (4) | | 6.3 | % | | 5.0 | % |
| Love-PGI Partners, L.P.(“L-PGI”) | | | 2,260,706 | (5) | | | 1,875,000 | (5) | | | 42.5 | % | | | 93.8 | % | | | 56.5 | % | | | 2,260,706 | (5) | | 1,875,000 | (5) | | 42.5 | % | | 93.8 | % | | 56.5 | % |
| Andrew S. Love, Jr. | | | 2,263,215 | (6) | | | 1,875,000 | (6) | | | 42.5 | % | | | 93.8 | % | | | 56.5 | % | | | 2,263,215 | (6) | | 1,875,000 | (6) | | 42.5 | % | | 93.8 | % | | 56.5 | % |
| Laurence A. Schiffer | | | 2,263,215 | (7) | | | 1,875,000 | (7) | | | 42.5 | % | | | 93.8 | % | | | 56.5 | % | | | 2,263,215 | (7) | | 1,875,000 | (7) | | 42.5 | % | | 93.8 | % | | 56.5 | % |
| All executive officers and directors | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| as a group (2 persons) | | | 2,263,215 | (8) | | | 1,875,000 | (8) | | | 42.5 | % | | | 93.8 | % | | | 56.5 | % | | | 2,263,215 | (8) | | 1,875,000 | (8) | | 42.5 | % | | 93.8 | % | | 56.5 | % |
| 1. | The above table does not include 2,595,356 shares that may be received upon conversion of the Company’s secured convertible debentures. |
| 2. | The shares of Common Stock owned by the Estate of Mr. Vernon are currently in the possession of the Federal Deposit Insurance Corporation (“FDIC”) which is the receiver for First American Bank and Trust, Lake Worth, Florida (“First American”). First American previously made a loan to Mr. Vernon, which was secured by these shares. The loan is in default and the Company understands that the FDIC has the right, pursuant to a pledge agreement, to vote the shares at any annual or special meeting of shareholders. |
| 3. | Information obtained from filings made with the Securities and Exchange Commission. |
| 4. | Sole voting and investment power over 405,613 sharesIncludes the beneficial ownership of Common Stock; shared voting and investment power over 20,901 shares of Common Stock included inwhich represent less than 5% of the table which are owned by Mr. John’s wife;outstanding shares of Common Stock; sole voting and investment power over the 125,000 shares of Preferred Stock.Stock, which shares are held in the name of Mary Anne Johns, as Trustee of the Mary Anne Johns Declaration of Trust. |
| 5. | The controlling general partner of L-PGI is Love Investment Company, a Missouri Corporation owned by Mr. Love, Love family members and trusts and Mr. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of Love Investment Company. |
| 6. | These shares are the same shares owned by L-PGI and PGIP, LLC (2,509 shares of Common Stock). Mr. Love is an indirect owner of L-PGI and PGIP, LLC. See Footnote 5 above and Item 13. “Certain Relationships and Related Transactions,RelatedTransactions, and Director Independence” for more information. Accordingly, Mr. Love has shared voting and investment power over all of these shares. |
| 7. | These shares are the same shares owned by L-PGI and PGIP, LLC (2,509 shares of Common Stock). Mr. Schiffer is an indirect owner of L-PGI and PGIP, LLC. See Footnote 5 above and Item 13. “Certain Relationships and Related Transactions, and Director Independence” for more information. Accordingly, Mr. Schiffer has shared voting and investment power over all of these shares. |
| 8. | These shares are the same shares reflected in Footnotes 5, 6 and 7. See Footnote 5 above and Item 13. “Certain Relationships and Related Transactions, and Director Independence” for more information. |
| 9. | Addresses for beneficial owners are as follows: |
Estate of Harold Vernon | Love-PGI Partners, L.P | Laurence A. Schiffer |
3201 W. Rolling Hills Circle Davie, FL 33328 | Love-PGI Partners, L.P 212 So. Central, Suite 100 St. Louis, MO 63105 | Laurence A. Schiffer 212 So. Central, Suite 201 |
Davie, FL 33328 | St. Louis, MO 63105 | St. Louis, MO 63105 |
| | | | |
Alfred M.Mary Anne Johns One Woodland Drive Punta Gorda, FL 33982 | Andrew S. Love, Jr. | |
One Woodland Drive | 212 So. Central, Suite 201 | |
Punta Gorda, FL 33982 | St. Louis, MO 63105 | | |
As of December 31, 2010,2012, the Company did not have a compensation plan or individual compensation arrangement under which its equity securities may be issued.
| CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Item 13. Certain Relationships and Related Transactions, and Director Independence
The Company’s primary lender debt of $500,000 as of December 31, 2010,2012, and which remained at this amount during all of fiscal year 2010,2012, is with PGIP, LLC, an affiliate of the Company (“PGIP”) and is secured by substantially all of the Company’s real estate. PGIP became the primary lender in March 1996, with the assignment by First Union, the Company’s former primary bank lender, of all its right, title and interest in and to the loan documents. PGIP is 100% owned by Love Savings Holding Company (“LSHC”). Messrs. Love and Schiffer own approximately 90% of all of the issued and outstanding voting stock of LSHC and serve as the directors and officers of LSHC. LSHC along with Messrs. Love and Schiffer are the managers of PGIP. There were no principal or interest payments made during fiscal year 20102012 to PGIP with respect to this debt. See also Note 7 to the Notes to Consolidated Financial Statements.
As further security to the primary lender indebtedness with PGIP, a restricted proceeds escrow was established in connection with the closing of the bulk acreage sale in May 1998. The escrow agreement permits funds to be paid (i) as requested by PGI and agreed to by PGIP, or (ii) as deemed necessary and appropriate by PGIP to protect its interest in the remaining real estate, including its right to receive principal and interest payments on the indebtedness, or (iii) to PGIP
to pay any other obligations owed to PGIP by the Company. The restricted escrow balance was $ 5,000 at both December 31, 20102012 and 2009.2011.
The Company maintains its administration and accounting offices with the offices of LREC in St. Louis, Missouri. LREC, a Missouri Corporation, is owned by Mr. Love and Mr. Schiffer, and is located at 212 South Central Avenue, St. Louis, Missouri 63105. A fee of $2,800 per month was accrued in 20102012 and 20092011 and the Company made payments of $33,600 to LREC in 20102012 and 20092011 respectively, for the services described in the next paragraph. There were no accrued accounting service fees as of December 31, 20102012 and 2009,2011, respectively.
The following is a list of services provided:
| 1. | 1. Maintain books of original entry; |
| 2. | Prepare quarterly and annual SEC filings; |
| 3. | Coordinate the annual audit; |
| 4. | Assemble information for tax filing, review reports as prepared by tax accountants and file same;
|
| 5. | Track Shareholder records through transfer agent; |
| 6. | Maintain policies of insurance against property and liability exposure; |
| 7. | Handle day-to-day accounting requirements; and |
| 8. | Provide telephone and computer service. |
2. Prepare quarterly and annual SEC filings;
3. Coordinate the annual audit;
4. Assemble information for tax filing, review reports as prepared by tax accountants and file same;
5. Track shareholder records through transfer agent;
6. Maintain policies of insurance against property and liability exposure;
7. Handle day-to-day accounting requirements; and
8. Provide telephone and computer service.
Although an amount is paid to LREC as reimbursement for expenses and as a fee for providing management services to the Company, neither the Company nor LREC maintain records which would allow them to attribute any portion of the aforementioned monthly fee to reimbursement of particular expenses or to payment for the management services performed for the Company by individual employees of LREC, including Messrs. Love and Schiffer.
Effective as of March 25, 1987, the Company entered into the Management Agreement with LREC. As a consultant to the Company and in addition to the above services, LREC provides other services including, but not limited to, strategic planning, marketing, and financing as requested by the Company. In consideration for these consulting services, the Company pays LREC a quarterly consulting fee of one-tenth of one percent of the book value of the Company’s assets, plus reasonable out-of-pocket expenses. As of December 31, 2010,2012, the book value of the Company’s assets was approximately $1.5$1.4 million. Consulting fees totalingaccrued and paid were $6,000 in both 2012 and $7,000 were accrued during 2010 and 2009,2011, respectively. As of both December 31, 20102012 and 2009,2011, a total of $2,000,$1,000 and $1,000, respectively, of unpaid fees had accrued under the Management Agreement. The Management Agreement will continue in effect until terminated upon 90 days prior written notice by a majority vote of the Company’s directors.
Mr. Love receives a nominal salary from LREC. Although Mr. Schiffer receives a salary from LREC, such salary compensates him for his services to LREC, which provides consulting services for numerous other entities affiliated with the Company, and none of the amount earned by LREC under the Management Agreement is intended to be allocated or attributable to any officer or employee, including Mr. Schiffer, of LREC. No part of Mr. Schiffer’s annual salary from LREC is directly attributable to the management services he performs for the Company as an employee of LREC pursuant to the Management Agreement.
In 1989, the Company sold an aggregate $2,282,451 principal amount of the Convertible Debentures (“Debentures”) in a private placement to Love-1989 Florida Partners, L.P. (“Love-1989”). The controlling general partner of Love-1989 is Love Investment Company (“LIC”), which is owned by Mr. Love, Love family members and trusts and Mr. Schiffer. The above purchase by Love-1989 of the Debentures was funded in part with a loan from L-PGI. Love-1989 repaid the debt to L-PGI in full, in part by transferring a portion of the Debentures held by Love-1989 to L-PGI. In July 1992, as partial consideration for the Company’s conveyance of 350 acres of property to L-PGI, the Company retired $782,000 in principal amount of the Debentures held by L-PGI together with $389,000 in accrued interest. The maturity date on all of the remaining Debentures was extended to July 8, 1997. The Debentures are past due and in default.
The Debentures were in part collateralized by a second mortgage in favor of Love-1989 on 650 acres of the property owned by the Company, which was sold in May 1998. The 350 acres transferred to L-PGI as described above were also included in the property sold. Messrs. Love and Schiffer caused the Company to grant a second mortgage on the remaining 366 acre parcel of property located in Hernando County, Florida to Love-1989 and in their capacities as control persons of Love-1989, they caused Love-1989 to release its second mortgage on the 650 acres of the property sold and they caused the Company to grant a security interest to Love-1989 behind that held by PGIP in the restricted proceeds escrow which is under the control of Messrs. Love and Schiffer since they and a company they control are the managers of PGIP.
As of and during December 31, 2010,2012, Love-1989 held $796,950 in principal amount of the Debentures with respect to which there was as of December 31, 20102012 accrued and unpaid interest in the amount of $14,282,000.$19,059,000. In May 2008, LIC, an affiliate of L-PGI, the Company’s preferred shareholder, purchased $703,050 in principal amount of Debentures from the previous debenture holder for which there was as of December 31, 20102012 accrued and unpaid interest in the amount of $12,391,000.$16,540,000. The total debentures balance of $1,500,000 carry a maturity date of July 8, 1997 and are in default. Interest on the Debentures accrues at the rate of fourteen percent compounded quarterly, and no interest payments were made during December 31, 2010.2012.
In 1985, a corporation owned by Alfred M. Johns, the former Chairman of the Company, and his family made an uncollateralized loan to the Company, which during and at December 31, 2010 had an outstanding balance, excluding accrued interest, of $176,000. This loan is past due. Besides being a direct owner of Common and Preferred Stock, Mr. Johns has no other direct or indirect affiliations with the Company.
From time to time, the Company invests in short term debt obligations with LIC. The balance of this receivable at December 31, 20102012 and 20092011 was $704,000$542,000 and $780,000,$630,000, respectively. Interest on such receivables was $45,000$29,000 and $64,000$40,000 for 20102012 and 2009,2011, respectively.
The Company believes that the affiliated transactions are on terms comparable to those which would be obtained from unaffiliated persons.
Neither of the two directors of the Company is independent pursuant to the definition of “independent director” set forth in the American Stock ExchangeNYSE Amex Equities’ Company Guide because both of them are executive officers of the Company. The Company does not have a separate
designated audit, compensation or nominating committee or committee performing similar functions.
Item 14. Principal Accountant Fees and Services32
| PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Audit and tax fees rendered by BKD, LLP, the principal accountant of the Company, for the fiscal years ended December 31, 20102012 and December 31, 20092011 were:
| | | 2012 | | | 2011 | |
| | | | | | | |
| Audit Fees | | $ | 32,600 | | | $ | 32,800 | |
| Audit Related Fees | | | 0 | | | | 0 | |
| Tax Fees | | | 4,000 | | | | 4,500 | |
| All Other Fees | | | 0 | | | | 0 | |
| | | $ | 36,600 | | | $ | 37,300 | |
| | | 2010 | | | 2009 | |
| | | | | | | |
| Audit Fees | | $ | 33,100 | | | $ | 33,100 | |
| Audit Related Fees | | | 0 | | | | 0 | |
| Tax Fees | | | 4,400 | | | | 4,400 | |
| All Other Fees | | | 0 | | | | 0 | |
| | | $ | 37,500 | | | $ | 37,500 | |
Tax fees are comprised of fees for tax compliance, tax planning, and tax advice. Corporate tax services encompass a variety of permissible services, including technical tax advice related to U.S. tax matters as well as preparation of applicable tax returns.
The Board of Directors of the Company pre-approves all audit and other permissible services to be provided by BKD, LLP and the estimated fees for these services.
PART IV
Item 15. Exhibits and Financial Statement Schedules | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
| 1. | The following financial statements and the report of independent registered public accounting firm are filed as part of this Report: |
| | a. | Report of Independent Registered Public Accounting Firm |
| | b. | Consolidated Statements of Financial Position as of December 31, 20102012 and 20092011 |
| | c. | Consolidated Statements of Operations for the Years Ended December 31, 20102012 and 20092011 |
| | d. | Consolidated Statements of Cash Flows for the Years Ended December 31, 20102012 and 20092011 |
| | e. | Consolidated Statements of Stockholders' Deficiency for the Years Ended December 31, 20102012 and 20092011 |
| | f. | Notes to Consolidated Financial Statements |
| 2. | Financial statement schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted. |
| 3. | Reference is made to the Exhibit Index contained on page 3736 herein for a list of exhibits required to be filed or furnished under this Item. |
In accordance withPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | PGI INCORPORATED (Registrant) |
| | (Registrant) |
| | | | |
Date: March 21, 2011 29, 2013 | By:By:
| /s/Laurence A. Schiffer | |
| | Laurence A. Schiffer, President | |
| | (Duly Authorized Officer and |
| Principal Executive Officer) | |
In accordance withPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | | Title | | Date |
| | | | |
| /s/Andrew S. Love | | Chairman of the Board | | March 21, 201129, 2013 |
| Andrew S. Love | | Secretary | | |
| | | | |
| | | | | |
| /s/Laurence A. Schiffer | | Vice Chairman of the Board, | | March 21, 201129, 2013 |
| Laurence A. Schiffer | | President, Principal Executive Officer, | | |
| | Officer, | Principal Financial Officer, and | | |
| | Officer, and | Principal Accounting Officer | |
| Officer | |