UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10 – K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2017~~2020

☐ TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to _____________________

~~Commission File Number~~

Commission File Number 1-6471

PGI INCORPORATED

(Exact name of registrant as specified in its charter)

FLORIDA	59-0867335
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

212 SOUTH CENTRAL, ST. LOUIS, MISSOURI 63105

(Address of principal executive offices)

(314) 512-8650

(Issuer's telephone number)

Securities registered pursuant to section 12(b) of the Act:

~~None~~

Title of each class	Trading Symbol	Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.10 per share

6%6.0% Convertible Subordinated Debentures due 1992

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the ~~preceeding~~preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to this Form 10-K ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~ ☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, ~~2017~~2020 cannot be determined. See Item 5 of Form 10-K.

The number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date:

As of March ~~23, 2018,~~31, 2021, 5,317,758 shares of Common Stock, par value $.10 per share, were outstanding.

PGI INCORPORATED AND SUBSIDIARIES

FORM 10 – K - ~~2017~~2020

Contents and Cross Reference Index

Part		Item		Form 10-K	Item		Form 10-K
No.		No.	Description	Page No.	No.	Description	Page No.

I		1	Business	3	1	Business	3

		1A	Risk Factors	4	1A	Risk Factors	4

		1B	Unresolved Staff Comments	4	1B	Unresolved Staff Comments	4

		2	Properties	4	2	Properties	4

		3	Legal Proceedings	4	3	Legal Proceedings	4

		4	Mine Safety Disclosures	4	4	Mine Safety Disclosures	4

II		5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5	5	Market for Registrant’s Common Equity, Related Stockholder Matters and	5
						Issuer Purchases of Equity Securities
		6	Selected Financial Data	5	6	Selected Financial Data	5

		7	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	6	7	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	6
					7A	Quantitative and Qualitative Disclosures About Market Risk	12
		7A	Quantitative and Qualitative Disclosures About Market Risks	13	8	Financial Statements and Supplementary Data	13

		8	Financial Statements and Supplementary Data	14	9	Changes in and Disagreements with Accountants on	29
						Accounting and Financial Disclosure
		9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	33	9A	Controls and Procedures	29
					9B	Other Information	29
		9A	Controls and Procedures	33

		9B	Other Information	34

III		10	Directors, Executive Officers and Corporate Governance	35	10	Directors, Executive Officers and Corporate Governance	30

		11	Executive Compensation	36	11	Executive Compensation	30

		12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36	12	Security Ownership of Certain Beneficial Owners and	31
						Management and Related Stockholder Matters
		13	Certain Relationships and Related Transactions, and Director Independence	37	13	Certain Relationships and Related Transactions, and Director Independence	32

		14	Principal Accountant Fees and Services	41	14	Principal Accountant Fees and Services	34

IV		15	Exhibits and Financial Statement Schedules	42	15	Exhibits and Financial Statement Schedules	35
					16	Form 10-K Summary	36
		16	Form 10-K Summary	44

Signatures	Signatures			45	Signatures		37

~~PART~~PART I

~~Item~~Item 1.
Business

~~Business~~

GENERAL

As used in this Annual Report on Form 10-K, the “Company” or “PGI” refers, unless the context otherwise requires, to PGI Incorporated and its subsidiaries. The Company’s executive offices are at 212 S. Central, St. Louis, Missouri, 63105, and its telephone number is (314) 512-8650.

The Company, a Florida corporation, was founded in 1958, and up until the mid 1990’s was in the business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 2530 years, the Company’s business focus and emphasis changed substantially as it has concentrated its sales and marketing efforts almost exclusively on the disposition of its remaining real estate. This change was prompted by its continuing financial difficulties due to the principal and interest owed on its debt.

During the fiscal year ended December 31, 2016, Sugarmill Woods, Inc. (“Sugarmill Woods”), a wholly-owned subsidiary of the Company, sold its largest parcel of real estate, approximately 369 acres located in Hernando County, Florida (“the Property”), to the State of Florida Department of Transportation (“Florida DOT”). The Property was encumbered by secured creditor claims, and the sale of the Property closed on June 21, 2016 for $9,000,000. The Florida DOT acquired the Property in connection with the northward extension of the Suncoast Parkway as part of the Suncoast Parkway, Project 2. On November 29, 2016 Sugarmill Woods sold a small parcel of land in Citrus County, Florida for a nominal amount.

The Company’s remaining land inventory consists of 6 single family lots, an approximate 7 acre parcel and some other minor parcels of real estate consisting of easements in Citrus County, Florida, which are owned through its ~~wholly-owned~~wholly owned subsidiary, Sugarmill ~~Woods.~~Woods, Inc. (“Sugarmill Woods”). In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a ~~wholly-owned~~wholly owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximately 60 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

~~The proceeds from~~QUALIFICATION AS INACTIVE REGISTRANT FOR SEC PURPOSES

In early 2019, the ~~sale~~Board of Directors of PGI concluded that PGI met and continues to meet all of the ~~Property~~conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Rule 3-11 of ~~$9,000,000 were received~~Regulation S-X and as the term “Inactive Registrant” is further contemplated in the Securities and Exchange Commission’s Division of Corporation Finance’s Financial Reporting Manual section 1320.2. Under Rule 3-11 of Regulation S-X, the financial statements required thereunder with respect to an Inactive Registrant for purposes of reports pursuant to the Securities Exchange Act of 1934, including but not limited to annual reports on ~~June 23, 2016 and payment~~Form 10-K, may be unaudited. A representative of PGI informally discussed its view that PGI is an Inactive Registrant with a staff member of the ~~primary lender debt totaling $500,000,~~Chief Accountant’s Office in ~~principal,~~the Division of Corporation Finance in February 2019.

As an Inactive Registrant, PGI currently intends to continue to timely file Annual Reports on Forms 10-K with the Securities and ~~all accrued interest related to such debt totaling $470,000, was made to PGIP LLC (“PGIP”~~Exchange Commission (the “SEC”), including this Form 10-K, as well as Quarterly Reports on Forms 10-Q and any other required reports. PGI currently intends to include in such Annual Reports all annual consolidated financial statements required to be included therein pursuant to Regulation S-X. However, due to its inactive status and diminishing financial resources, the ~~holder~~aforementioned consolidated financial statements have not been reviewed or audited by a Public Company Accounting Oversight Board (“PCAOB”) registered public accounting firm for the year 2020. PGI engaged Milhouse & Neal, a PCAOB registered public accounting firm, to review its annual consolidated financial statements for its year ended December 31, 2019.

PGI meets all of the ~~first mortgage note and~~conditions in Rule 3-11 of Regulation S-X for an ~~affiliate~~“Inactive Registrant” which are:

(a)

Gross receipts not in excess of $100,000;

(b)

Not purchasing or selling any of its own stock or granted options therefor;

(c)

Expenditures for all purposes not in excess of $100,000;

(d)

No material change in the ~~Company. In addition, on June 23, 2016,~~business has occurred during the ~~remaining principal of~~fiscal year;

(e)

No securities exchange or governmental authority having jurisdiction over the ~~collateralized convertible debentures totaling $1,500,000, and a portion of~~entity requires the ~~accrued interest related~~entity to such debentures totaling $5,455,000, was paid to the holders of such debentures. Love Investment Company (“LIC”), and Love-1989 Florida Partners, LP (“Love-1989”), each affiliates of Love-PGI Partners, L.P. (“L-PGI), held such collateralized convertible debentures. Prior to December 31, 2016, L-PGI was the Company’s primary preferred stock shareholder. Effective December 31, 2016, L-PGI liquidated and assigned the 2,260,706 shares of common stock offurnish audited financial statements.

As the Company ~~and 1,875,000 shares of preferred stock of~~reviews its circumstances, it has met the Company that were held by L-PGI to LIC in conjunction with settling its remaining indebtedness. LIC was the general partner of L-PGI and is owned, directly or indirectly, by Andrew S. Love and Laurence A. Schiffer, which are the directors and executive officers of the Company.conditions as an Inactive Registrant since 2017.

~~Item~~Item 1. Business (continued)

~~Business (continued)~~

The Company, formerly a Florida residential developer, is dormant with less than 70 acres of remaining landholdings, much of which has little value due to various restrictions. The Company’s consolidated financial statements show it has a Stockholders’ Deficiency of $93.7 million as of December 31, 2020. BKD, LLP (“BKD”), the Company’s PCAOB registered public accounting firm until the date the Company filed its Form 10-K for Fiscal 2018 which was February 25, 2019, expressed a “going concern” opinion with respect to the Company for its Fiscal 2018 financial statements and had expressed such opinions for many years previously. PGI has had no trading of its securities in many years. Any future real estate transactions by the Company will be limited, uncertain as to timing and as to value. Ultimately, PGI expects that proceeds from sales of its remaining real estate, if any, will provide some minimal recoveries for PGI’s senior debtholders. PGI has been an SEC registrant for over 40 years.

As an Inactive Registrant, PGI currently intends to continue to provide comprehensive updates through its SEC filings.

AVAILABLE INFORMATION

We file annual and quarterly reports and file or furnish current reports (including any exhibits or amendments to those reports) and other information with the SEC. These materials may also be accessed through the SEC’s website (www.sec.gov).

OTHER

As of December 31, ~~2017,~~2020, the Company had no employees, and all services provided to the Company are through contract services.

The Company’s website address is www.pgiincorporated.com. Information included on our website does not constitute part of this document.

~~Item~~Item 1A.

Risk Factors

Not Applicable

~~Item 1B~~Item 1B..

Unresolved Staff Comments

Not Applicable

~~Item~~Item 2.
Properties

~~Properties~~

The Company’s remaining land inventory consists of 6 single family lots, an approximate 7 acre parcel and some other minor parcels of real estate consisting of easements in Citrus County, Florida, which are owned through its ~~wholly-owned~~wholly owned subsidiary, Sugarmill Woods. In addition, PGIS, a ~~wholly-owned~~wholly owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximately 60 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale. The Company continues its efforts to dispose of all of its real estate.

The Company believes the properties are adequately covered by insurance.

~~Item~~Item 3.

Legal Proceedings

The Company is subject to ~~its knowledge, currently~~claims and lawsuits that arise primarily in the ordinary course of business. It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a ~~party in any legal proceedings.~~material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

~~Item~~Item 4.

Mine Safety Disclosures

Not Applicable

~~PART~~PART II

~~Item~~Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

There is no public trading market for the Company’s common equity securities. There have been no reported transactions in the Company’s common stock, par value $.10 (the “Common Stock”), since January 29, 1991, with the exception of the odd lot tender offer by PGIP LLC (“PGIP”), an affiliate of the Company, in 2003 which was described previously in the Company’s annual report on Form 10-KSB for the fiscal year ended December 31, 2004 and the 2,260,706 shares of Common Stock assigned by ~~L-PGI~~Love-PGI Partners, L.P. (“L-PGI”) to ~~LIC~~Love Investment Company (“LIC”), an affiliate of L-PGI, effective December 31, ~~2016 as described under Item 1.~~2016.

~~The following~~There were also a small number of over-the-counter ~~market~~ quotations, obtained from www.otcmarkets.com, in 2017 and 2016 which were described previously in the Company’s annual reports on Form 10-K for the fiscal years ended December 31, 2017 and December 31, 2016. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual ~~transactions:~~

Quarter End Date

Price

Volume
9/30/17

$.000005

  1,985
3/31/17

$.000008

  1,245
12/31/16

$.000001

67,980
9/30/16

$.0001

     123
6/30/16

$.0001(high)

  1,000
6/30/16

$.000001(low)

  1,500
transactions.

No dividends have ever been paid on the Common Stock, and payment of dividends on the Common Stock is restricted under the terms of the two indentures (one of which matured on June 1, 1991 and the other on ~~May1,~~May 1, 1992) pursuant to which the Company’s outstanding subordinated convertible debentures were issued and by the terms of the Company’s preferred stock. As of December 31, ~~2017,~~2020, to the Company’s knowledge, there were ~~552~~548 holders of record of the Company’s Common Stock and ~~418~~317 debenture holders.

~~Item~~Item 6.

Selected Financial Data

Not Applicable

~~Item~~Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

LIQUIDITY AND CAPITAL RESOURCES

The liabilities of the Company exceed the reported value of its assets. Management’s efforts and activities have been, and continue to be, to sell assets of the Company to repay its indebtedness and to pay the ordinary ~~on-going costs of operation of the Company. With the June 2016 sale of 369 acres to the Florida DOT for $9,000,000, and the sale of the small land parcel~~administrative expenditures in ~~Citrus County, Florida~~keeping an inactive company in ~~November 2016, the~~existence. The aggregate remaining land inventory is less than 70 acres, consisting of multiple parcels located in two Florida counties. These parcels have limited value because of associated development constraints such as wetlands, easements and other obstacles to development and sale. At December 31, ~~2017~~2020 the carrying value of the land inventory was $14,000. The Company is seeking to realize full market value for such land. However, certain land parcels may be of so little value and marketability that the Company may elect not to pay the real estate taxes on selected parcels, which may eventually result in a ~~defacto~~de facto liquidation of such property by subjecting such property to a tax sale.

In management’s judgment, ~~with~~ the ~~June 2016 land parcel sale, the remaining~~ assets will be insufficient to satisfy much, if any, of the outstanding indebtedness of the Company. Consequently, there is substantial doubt about the Company’s ability to continue as a “going concern,” as that term is used for generally accepted accounting purposes. The asset carrying values shown in the financial statements, are judged to be reasonable estimates of the value, when viewed in the context of the entirety of the financial statements.

~~The proceeds~~In early 2019, the Board of Directors of PGI concluded that PGI met and continues to meet all conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Rule 3-11 of Regulation S-X and as the term “Inactive Registrant” is further contemplated in the Securities and Exchange Commission’s Division of Corporation Finance’s Financial Reporting Manual section 1320.2. Under Rule 3-11 of Regulation S-X, the financial statements required thereunder with respect to an Inactive Registrant for purposes of reports pursuant to the Securities Exchange Act of 1934, including but not limited to annual reports on Form 10-K, may be unaudited. A representative of PGI informally discussed its view that PGI is an Inactive Registrant with a staff member of the ~~June 2016 property sale were utilized~~Chief Accountant’s Office in the Division of Corporation Finance in February 2019.

As an Inactive Registrant, PGI currently intends to ~~repay~~continue to timely file Annual Reports on Forms 10-K with the ~~entire principal~~SEC, including this Form 10-K, as well as Quarterly Reports on Forms 10-Q and any other required reports. PGI currently intends to include in such Annual Reports all annual consolidated financial statements required to be included therein pursuant to Regulation S-X. However, due to its inactive status and diminishing financial resources, the aforementioned consolidated financial statements have not been reviewed or audited by a PCAOB registered public accounting firm for the year 2020. PGI engaged Milhouse & Neal, a PCAOB registered public accounting firm, to review its annual consolidated financial statements for its year ended December.

PGI meets all of the ~~first mortgage note and related interest accrued thereto, and~~conditions in Rule 3-11 of Regulation S-X for an “Inactive Registrant” which are:

(a)

Gross receipts not in excess of $100,000;

(b)

Not purchasing or selling any of its own stock or granted options therefor;

(c)

Expenditures for all purposes not in excess of $100,000;

(d)

No material change in the business has occurred during the fiscal year;

(e)

No securities exchange or governmental authority having jurisdiction over the entity requires the entity to furnish audited financial statements.

As the Company reviews its circumstances, it has met the conditions as an Inactive Registrant since 2017.

The Company, formerly a Florida residential developer, is dormant with less than 70 acres of remaining landholdings, much of which has little value due to various restrictions. The Company’s consolidated financial statements show it has a Stockholders’ Deficiency of $93.7 million as of December 31, 2020. BKD, the Company’s PCAOB registered public accounting firm until the date the Company filed its Form 10-K for Fiscal 2018 which was February 25, 2019, expressed a “going concern” opinion with respect to the ~~collateralized convertible debentures,~~Company for its Fiscal 2018 financial statements and had expressed such opinions for many years previously. PGI has had no trading of its securities in many years. Any future real estate transactions by the Company will be limited, uncertain as to ~~repay the entire principal~~timing and ~~a portion~~as to value. Ultimately, PGI expects that proceeds from sales of ~~the accrued interest related thereto as follows:~~its remaining real estate, if any, will provide some minimal recoveries for PGI’s senior debtholders. PGI has been an SEC registrant for over 40 years.

June 23, 2016

June 23, 2016

Remaining

Principal

Interest

Accrued

Payment

Payment

Interest

($ in thousands)

Credit agreements - first mortgage note
$500
$470
$-
payable-related party







Collateralized convertible debentures



payable-related party
  1,500
  5,455
  52,915

$2,000
$5,925
$52,915

~~In addition~~Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

As an Inactive Registrant, PGI currently intends to ~~the convertible subordinated debentures noted above, the~~continue to provide comprehensive updates through its SEC filings.

The Company’s financial statement indebtedness includes ~~the: (i) 6.5% subordinated convertible debentures, which matured in June, 1991, with a remaining face amount of $1,034,000 and (ii)~~ its 6.0% subordinated convertible debentures which matured in May, 1992, with a remaining face amount of ~~$8,025,000.~~$8,025,000; and various notes payable, with a remaining face amount of $1,198,000.

~~Item 7.~~

~~Management’s Discussion and Analysis~~As of ~~Financial Condition and Results~~December 31, 2020 there was no remaining balance of ~~Operations (continued)~~

~~With respect to~~ the 6.5% subordinated convertible debentures which matured in June 1991, with an original face amount of $1,034,000. The Trustee of the ~~Trustee~~6.5% subordinated convertible debentures, provided notice of final distribution to the holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee maintained a debenture reserve fund ~~with a balance of $41,000 as of December 31, 2017 and 2016, respectively, which is~~to be available for final distribution of $92 per $1,000 in face amount to remaining holders of such debentures who surrender their respective debenture certificates.

The remaining balance of the debenture reserve fund of $13,000 was disbursed in escheatment to the states of the respective debenture holders during the year ended December 31, 2020. The remaining debentures with a face amount of $138,000 were surrendered with the escheatment of respective funds to the states of the debenture holders. Accordingly, the Company has recognized $125,000 in forgiveness of debt during the year ended December 31, 2020. In addition, accrued interest of $285,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the year ended December 31, 2020. During the year ended December 31, ~~2017 and 2016~~2019, there were no 6.5% subordinated convertible debentures that were surrendered or escheated by their respective debenture holders and no funds were utilized from the debenture reserve account.

The 6.5% ~~Subordinated~~subordinated convertible debenture balances for the years ended December 31, 2020 and 2019 are as follows:

			2020	2019
	December 31, 2017	December 31, 2016	($ in thousands)
	($ in thousands)
Original face value	$1,034		$1,034
Outstanding debenture principal balance	447		-	138
Face value of debentures surrendered	-
Face value of debentures escheated			138	-
Accrued and unpaid interest balance	846	817	-	279
Debenture reserve account balance	41		-	13
Debenture reserve funds utilized
in escheatment to states of debenture holders			13	-
Forgiveness of debt			125	-
Forgiveness of interest			285	-

~~If and when such remaining debentures are surrendered~~In addition to the ~~Trustee,~~convertible subordinated debentures noted above, the applicable portion of such principal and accrued interest will similarly be recorded as debt and interest forgiveness. As the Company has consistently stated in prior filings, the Company believes that any potential claims by the respective debenture holders on such 6.5%Company’s financial statement indebtedness includes its 6.0% subordinated convertible debentures ~~would be barred under the applicable statutes~~which matured in May, 1992, with a remaining face amount of ~~limitations.~~$8,025,000.

The cumulative amount due for the ~~6.5% and~~ 6% subordinated convertible debentures which matured in May 1992, includes the face amount of $8,025,000 plus accrued interest of $28,137,000 as of December 31, ~~2017 is as follows:~~

December 31, 2017

Principal

Unpaid

Amount Due

Interest

($ in thousands)

6.5% Subordinated debentures due June 1, 1991
$447
$846
6% Subordinated debentures due May 1, 1992
8,025
24,186

$8,472
$25,032

~~Item 7.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

~~Both issues of~~2020. The subordinated convertible debentures have been in payment default for over twenty-five years. It is unclear whether any action on behalf of the bondholders is presently likely, given the negative net worth of the Company and continuing passage of time. Further, the Company believes that if claims were to be asserted at least a portion of such claims (especially those with respect to the 6.5% subordinated convertible debentures which matured on June 1, 1991) are barred under the applicable statutes of limitations.

~~If such claims are barred, the Company will likely recognize income in like amount for income tax purposes, without the receipt~~

Item 7. Management’s Discussion and Analysis of ~~any cash. Management estimates that the potential income tax liability may be largely averted by the insolvency exception~~Financial Condition and Results of ~~the tax laws and the utilization of the Company’s tax loss carryforwards, which as of December 31, 2017 totaled approximately $67,793,000.~~Operations (continued)

Even if claims by the subordinated convertible debenture holders are barred in full and there is no cash tax consequence to the Company as a result of the utilization of the tax loss carry forwards, the Company would nonetheless have a substantial Stockholders’ Deficiency. As of December 31, 2017, the Stockholders’ Deficiency of the Company was $90,260,000.

RESULTS OF OPERATIONS

Revenues

Revenues for the year ended December 31, ~~2017~~2020 decreased by ~~$8,994,000~~$2,000 to ~~$15,000~~$2,000 compared to revenues of $9,009,000 for the year ended December 31, 2016, primarily as a result of the sale, by Sugarmill Woods, of the Property to the Florida DOT on June 21, 2016 for $9,000,000, and the sale of a small parcel of land on November 29, 2016 for $5,000. There were no sales of real estate in 2017.

~~Interest income totaled $15,000 for the year ended December 31, 2017 compared to interest income~~ of $4,000 for the year ended December 31, ~~2016. Related party interest~~2019. Interest income ~~increased~~on the Company’s money market account decreased by ~~$11,000~~$1,000 during the year ended December 31, ~~2017 to $13,000~~2020 from ~~$2,000 for~~ the comparable period in ~~2016. The related party interest~~2019 due to the declining account balance. Other income decreased by $1,000 to $2,000 compared to other income of $3,000 for the year ended December 31, ~~2017 is a result~~2019. Other income in both 2020 and 2019 represents recoveries of ~~the Company’s investment in a $560,000 short term note with LIC,~~lot lien receivables which investment was made during the year ended December 31, 2017. The Company received payment of the outstanding note receivable from LIC on March 6, 2018. The Company received payment of the previous note receivable from LIC on June 23, 2016. Interest income of $2,000, represents interest earned on the Company’s money market account during the years ended December 31, 2017 and 2016.

~~Item 7.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)~~

had been fully provided for cancellation.

Costs and Expenses

Costs and expenses for the year ended December 31, ~~2017~~2020 decreased by ~~$4,593,000~~$465,000 when compared to the same period in ~~2016~~2019 as follows:

Increase

2017

2016

(Decrease)

($ in thousands)

COSTS, EXPENSES AND OTHER

Cost of real estate sales
$-
$747
$(747)
Interest expense
  1,360
  1,324
  36
Interest expense -related party
  -
  3,832
  (3,832)
Taxes and assessments
  5
  6
  (1)
Consulting and accounting-



related party
  37
  38
  (1)
Legal and professional
  27
  83
  (56)
General and administrative
  95
  87
  8

$1,524
$6,117
$(4,593)

The cost of real estate sales for the year ended December 31, 2017 decreased by $747,000 compared to the year ended December 31, 2016, solely as a result of costs and expenses incurred in connection with the sales of real estate on June 21, 2016 and November 29, 2016. There was no such expense for the comparable period in 2017 because there were no sales of real estate during such period.

			Increase
	2020	2019	(Decrease)
		($ in thousands)
COSTS, EXPENSES AND OTHER
Interest expense	$1,417	$1,412	$5
Forgiveness of Debt and Interest	(410)	-	(410)
Taxes and assessments	5	5	-
Consulting and accounting-
related party	34	35	(1)
Legal and professional	36	65	(29)
General and administrative	25	55	(30)
	$1,107	$1,572	$(465)

Interest expense relating to the Company’s current outstanding debt held by non-related parties, increased by ~~$36,000~~$5,000 during the year ended December 31, ~~2017~~2020 compared to the year ended December 31, ~~2016,~~2019. Interest expense relating to the Company’s outstanding debt for subordinated convertible debentures, increased by $26,000 during the year ended December 31, primarily as a result of interest accruing on past due balances which increased at various intervals throughout the year for accrued but unpaid interest.

~~Interest expense-related party decreased~~ This increase was offset by ~~$3,832,000 during~~a $21,000 decrease in interest expense for notes payable due to a decrease in the ~~year ended~~prime interest rate to 3.25% as of December 31, ~~2017,~~2020 compared to 4.75% as of December 31, 2016. Proceeds from the June 2016 Property sale was used by the Company to repay the outstanding principal of the primary lender debt of the $500,000 first mortgage note, which was held by PGIP, and the $1,500,000 collateralized convertible debenture principal, which was held by LIC and Love-1989. With the repayment of such principal, no additional interest expense was accrued with respect to such collateralized debt subsequent to June 23, 2016.2019.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The Company recognized $410,000 in forgiveness of debt and accrued interest during the year ended December 31, 2020. The Trustee of the 6.5% subordinated convertible debentures, which matured in June, 1991, provided notice of final distribution to the holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee designated the remaining balance of the debenture reserve fund held by the Trustee for final distribution of $92 per $1,000 in face amount to holders of such debentures who surrender their respective debenture certificates.

During the year ended December 31, 2020, the remaining balance of the reserve fund of $13,000 was disbursed in escheatment to the states of the respective debenture holders. The remaining debentures with a face amount of $138,000 were surrendered with the escheatment of respective funds to the states of the debenture holders. Accordingly, the Company has recognized $125,000 in forgiveness of debt during the year ended December 31, 2020. In addition, accrued interest of $285,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the year ended December 31, 2020. There were no debentures surrendered or escheated in 2019 and no funds were utilized from the debenture reserve account.

Taxes and assessments ~~decreased by $1,000 in 2017 when compared to~~were $5,000 during the ~~same period in 2016 as a result of lower real estate tax expense due primarily to the sale of the Property sold to the Florida DOT on June 21, 2016.~~years ended December 31, 2020 and 2019.

Consulting and accounting expense was ~~$37,000~~$34,000 and ~~$38,000~~$35,000 for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively. A quarterly consulting fee is paid to Love Real Estate Company (“LREC”), an affiliate of LIC, of one-tenth of one percent of the carrying value of the Company’s assets, which decreased by $1,000 in 2020 compared to 2019 due to the decrease in the value of the Company’s assets. In addition, accounting service fees of $33,600 were paid to LREC in ~~2017~~2020 and ~~2016.~~2019.

Legal and professional expenses decreased by ~~$56,000~~$29,000 during the year ended December 31, ~~2017~~2020 when compared to the same period in ~~2016. Additional legal~~2019 as follows:

	Increase
	(Decrease)
	($ in thousands)
Legal common title matters	$(10)
Legal and professional fees environmental remediation	(9)
Legal Form 8K review	(4)
Legal review filing of periodic reports	(6)
	$(29)

General and administrative expenses ~~were incurred in 2016 in connection with the evaluation of the Company’s business alternatives. Other professional expenses of $18,000 were incurred~~decreased by $30,000 during the year ended December 31, ~~2017 relating to environmental remediation services incurred for a parcel in Citrus County, Florida.~~

~~General and administrative expenses increased by $8,000 during the year ended December 31, 2017,~~2020, compared to the year ended December 31, ~~2016,~~2019, primarily ~~due to an increase~~as a result of a reduction in ~~tax fees~~accounting review services.

The net loss was $1,105,000 ($.33 per share loss) for the year ended December 31, ~~2017 of $11,000~~2020 compared to ~~the year ended December 31, 2016. In addition, insurance expense decreased by $2,000~~a net loss of $1,568,000 ($.42 per share loss) for the year ended December 31, 2017 due to the sale of the Property on June 23, 2016. There was also a decrease in general administrative expenses of $1,000 as a result of lower stock transfer agent fees relating to common stock for the year ended December 31, 2017 compared to 2016.

~~The Company recognized an income tax expense of $57,000 during the year ended December 31, 2017 for the 2016 Alternative Minimum tax on the 2016 gain recognized on the sales of real estate.~~

A net loss of $1,566,000 ($.41 per share loss) was incurred for the year ended December 31, 2017. This compared to net income of $2,892,000 ($.42 per share-basic) realized for the year ended December 31, 2016, which included a gain of $8,258,000 from sales of real estate during the year ended December 31, 2016.2019. Included in the ~~2017~~2020 and ~~2016 income and~~2019 loss per share computation is $640,000 ($.12 per share of Common Stock) of annual cumulative preferred stock dividends in arrears.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

FINANCIAL CONDITION

Total assets decreased by ~~$226,000~~$241,000 at December 31, ~~2017~~2020 compared to total assets at December 31, ~~2016~~2019 reflecting the following changes:

	2017	2016	Increase (Decrease)	2020	2019	Increase (Decrease)
	($ in thousands)			($ in thousands)
Cash	$159	$958	$(799)	$81	$309	$(228)
Receivables-related party	573	-	573
Land inventory	14		-	14		-
Other assets	42		-	-	13	(13)
	$788	$1,014	$(226)	$95	$336	$(241)

Net cash used in operating activities was ~~$239,000~~$228,000 for the year ended December 31, ~~2017~~2020 compared to cash ~~provided by~~used in operations of ~~$2,774,000~~$217,000 for the year ended December 31, ~~2016.~~2019. Net cash ~~provided by or~~ used in operations consists of cash received from operations less cash expended for operations.

Cash received from operations during the year ended December 31, ~~2017~~2020 was $2,000, which represents ~~interest~~miscellaneous income ~~earned on the Company’s money market account.~~from a recovery of a lot lien receivable which had been fully provided for cancellation. Cash received from operations in the year ended December 31, ~~2016~~2019 was ~~$9,009,000,~~$4,000, which represented ~~$9,005,000 received from real estate sales, $2,000~~$1,000 in interest income earned on the Company’s money market account and ~~$2,000~~$3,000 in ~~related party interest payments received~~miscellaneous income from ~~the Company’s note~~a recovery of a lot lien receivable ~~with LIC.~~which had been fully provided for cancellation.

Cash expended for operations during the year ended December 31, ~~2017~~2020 was ~~$241,000,~~$230,000 which represents ~~a decrease~~an increase of ~~$5,994,000~~$9,000 compared to cash expended for operations of ~~$6,235,000~~$221,000 in the year ended December 31, ~~2016. The decrease primarily is a result~~2019. There was an increase of $125,000 in payments of ~~$5,925,000~~interest for accrued related party interest paid on collateralized ~~debt and payments of $122,000~~debt. This increase is offset by decreases in cash expended for ~~costs of real estate sales in the year ended December 31, 2016.~~

~~Related party receivables increased by $573,000~~operations during the year ended December 31, ~~2017, due~~2020 of $5,000 in real estate taxes paid, a decrease of $52,000 in legal and professional expenditures and a decrease of $59,000 in general and administrative expenditures related to two short-term notes receivable with LIC of $560,000 and accrued interest receivable of $13,000. The short-term loans to LIC bears interest at 4.5% per annum with an original maturity date of December 31, 2017; however, extended to December 31, 2018. The short-term notes receivable were subsequently paid in full during March, 2018. During the ~~year ended December 31, 2016 investing activities provided $183,000 of cash, which primarily consisted of $178,000 of net principal repayments~~filing of the Company’s ~~short-term note with LIC,~~periodic reports in ~~addition to restricted cash of $5,000 from PGIP, the first mortgage lender, which was released upon the sale of property and satisfaction of the primary lender debt obligation owed to PGIP.~~2020 as an inactive registrant.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~Net cash used~~The remaining balance of the debenture reserve fund of $13,000 was disbursed in ~~financing activities~~escheatment to the states of the respective debenture holders during the year ended December 31, ~~2016 was $2,000,000 for principal repayments consisting~~2020. The remaining debentures with a face amount of ~~$500,000 in primary lender debt paid to PGIP and $1,500,000 in collateralized convertible debentures paid to LIC and Love-1989. There~~$138,000 were ~~no financing activities during~~surrendered with the ~~year ended December 31, 2017.~~

~~Related party receivables increased by $573,000 during the year ended December 31, 2017 due~~escheatment of respective funds to the ~~short-term note receivable with LIC of $560,000 and accrued interest receivable of $13,000. The short-term loan to LIC bears interest at 4.5% per annum. The Company received payment~~states of the ~~outstanding note receivable on March 6, 2018.~~debenture holders.

Liabilities were ~~$91,048,000~~$93,764,000 at December 31, ~~2017~~2020 compared to ~~$89,708,000~~$92,900,000 at December 31, ~~2016,~~2019, reflecting the following changes:

			Increase			Increase
	2017	2016	(Decrease)	2020	2019	(Decrease)
	($ in thousands)			($ in thousands)
Accounts payable and accrued expenses	$209	$230	$(21)	$160	$169	$(9)
Accrued real estate taxes	4		-	4	-	4
Accrued interest	28,250	26,889	1,361	31,587	30,455	1,132
Accrued interest-related party	52,915		-	52,790	52,915	(125)
Notes payable	1,198		-	1,198		-
Convertible subordianted debentures payable	8,472		-	8,025	8,163	(138)
	$91,048	$89,708	$1,340	$93,764	$92,900	$864

Accounts payable and accrued expenses decreased by ~~$21,000~~$9,000 at December 31, ~~2017,~~2020, compared to December 31, ~~2016, with decreases~~2019, primarily representing current liabilities ~~as of December 31, 2016 of $20,000~~ for ~~legal services incurred in connection with~~general and administrative expenses relating to the ~~evaluation~~filing of the Company’s ~~business focus alternatives, and a decrease in accrued expenses of $19,000 in environmental remediation expenses that were previously accrued~~periodic reports as an inactive registrant.

Accrued real estate taxes increased by ~~the Company. In addition, there were increases in accrued expenses of $11,000 in increased tax fees, and $8,000 for~~$4,000 at December 31, 2020 compared to December 31, 2019 due to the accrual of real estate taxes for the ~~current year’s annual administration fees relating to the 6% subordinated convertible debentures.~~year ended December 31, 2020 that were not paid.

Accrued interest increased by ~~$1,361,000~~$1,007,000 at December 31, ~~2017~~2020 compared to December 31, ~~2016~~2019 reflecting changes in the following accrued interest categories:

			Increase			Increase
	2017	2016	(Decrease)	2020	2019	(Decrease)
	($ in thousands)			($ in thousands)
Convertible subordinated debentures	$25,032	$23,743	$1,289	$28,137	$27,070	$1,067
Other	3,218	3,146	72
Convertible debentures-related party				52,790	52,915	(125)
Notes Payable				3,450	3,385	65
	$28,250	$26,889	$1,361	$84,377	$83,370	$1,007

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

There was ana net increase ~~of $1,361,000~~ of accrued interest ~~relating to~~in the ~~Company’s outstanding debt~~amount of $1,007,000 during the year ended December 31, ~~2017.~~2020. The increase in accrued interest of $1,067,000 relating to the convertible subordinated debentures represents interest expense for the year ended December 31, 2020 of $1,352,000 less $285,000 in forgiveness of interest relating to the 6.5% convertible subordinated debentures that were escheated to the states of debenture holders in 2020. The accrued interest relating to convertible subordinated debentures increased due to the additional accrual of interest ~~on the nonpayment~~and no payment of previously accrued interest on the Company’s debentures (see Note 8 to the consolidated financial statements under Item 8). The notes payable and convertible subordinated debentures, including accrued interest, are past due.

The decrease in accrued interest of $125,000 for the related party convertible debentures is due to the payment of accrued interest on the collateralized convertible debentures during the year ended December 31, 2020. The remaining balance of accrued interest on the collateralized convertible debentures is $52,790,000.

The increase of $65,000 of accrued interest relating to the Company’s other outstanding debt represents interest expense for the year ended December 31, 2020. The notes payable and convertible subordinated debentures, including accrued interest, are past due.

During the year ended December 31, 2020, 6.5% subordinated debentures with face amount of $138,000 were surrendered with the escheatment of the respective debenture reserve funds by the Trustee to the states of such debenture holders.

The Company’s stockholders’ deficiency increased to ~~$90,260,000~~$93,669,000 at December 31, ~~2017~~2020 from a ~~$88,694,000~~$92,594,000 stockholders’ deficiency at December 31, ~~2016,~~2019, reflecting the ~~2017 operating~~2020 net loss of ~~$1,566,000.~~$1,105,000.

Off-Balance Sheet Arrangements

The Company has no Off-Balance Sheet Arrangements.

Recent Accounting Standards

Accounting Standards Update (ASU) No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, is effective for interim and annual periods ending after December 15, 2016 and, accordingly, this is discussed in Footnote 21 to the financial statements.

ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, is effective for ~~interim and annual periods ending~~fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and accordingly, this is discussed in Footnote 2 to the financial statements.

Forward Looking Statements

The discussion set forth in this Item 7, as well as other portions of this Form 10-K, may contain forward-looking statements. Such statements are based upon the information currently available to management of the Company and management’s perception thereof as of the date of the Form 10-K. When used in this Form 10-K, words such as “anticipates,” “estimates,” “believes,” “appears”, “expects,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Such statements are subject to risks and uncertainties. Actual results of the Company’s operations could materially differ from those forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in the real estate market in Florida and the counties in which the Company owns any property; the overall national economy and financial markets; institution of legal action by the bondholders for collection of any amounts due under the subordinated convertible debentures (notwithstanding the Company’s belief that at least a portion of such actions might be barred under applicable statute of limitations); changes in management strategy; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.

~~Item~~Item 7A.

Qualitative and Quantitative Disclosures About Market Risk.

Not Applicable

Item 8.

Financial Statements and Supplementary Data ~~Report of Independent Registered Public Accounting Firm~~

~~Report of Independent Registered Public Accounting Firm~~

~~Audit Committee, Board of Directors~~

~~and Stockholders~~

~~PGI Incorporated~~

~~St. Louis, Missouri~~

~~Opinion on the Financial Statements~~

We have audited the accompanying consolidated statements of financial position of PGI Incorporated and Subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, stockholders’ deficiency and cash flows for each of the years in the two-year period ended December 31, 2017, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

~~Emphasis of Matter – Going Concern~~

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a significant accumulated deficit and is in default of certain sinking fund and interest payments on its convertible subordinated debentures. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard to these matters are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Basis for Opinion~~

~~These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits.~~

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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 included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~/s/BKD, LLP~~

~~We have served as the Company’s auditor since 2001.~~

PGI INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

December 31, 2020 and 2019

($ in thousands, except share data)

~~St. Louis, Missouri~~

~~March 23, 2018~~

ASSETS			LIABILITIES
	2020	2019		2020	2019
Cash	$81	$309	Accounts payable and
			accrued expenses (Note 6)	$160	$169
Land Inventory (Note 4)	14	14
			Accrued real estate taxes
Other assets (Note 5)	-	13	(Note 6)	4	-

			Accrued Interest:
			Subordinated convertible
			debentures (Note 8)	28,137	27,070

			Convertible debentures-
			related party (Note 9)	52,790	52,915

			Notes Payable (Note 7)	3,450	3,385

			Credit Agreements:
			Notes payable (Note 7)	1,198	1,198
			Subordinated convertible
			debentures payable (Note 8)	8,025	8,163

				93,764	92,900
			Commitments and
			Contingencies (Note 13)	-	-

			STOCKHOLDERS' DEFICIENCY
			Preferred stock, par value
			$1.00 per share; authorized
			5,000,000 shares; 2,000,000
			Class A cumulative
			convertible shares issued
			and outstanding; (liquidation
			preference of $8,000,000
			and cumulative dividends)
			(Note 11)	2,000	2,000

			Common stock, par value
			$.10 per share; authorized
			25,000,000 shares; 5,317,758
			shares issued and outstanding
			(Note 11)	532	532

			Paid-in capital	13,498	13,498

			Accumulated deficit	(109,699)	(108,594)
				(93,669)	(92,564)
	$95	$336		$95	$336

~~PGI INCORPORATED AND SUBSIDIARIES~~
~~CONSOLIDATED STATEMENTS OF FINANCIAL POSITION~~
~~December 31, 2017 and 2016~~
~~($ in thousands, except share data)~~

ASSETS


LIABILITIES

2017

2016

2017

2016

Cash
$159
$958

Accounts payable and




accrued expenses (Note 6)
$209
$230
Receivables-related party
  573
  -



(Note 14)



Accrued real estate taxes
  4
  4
Land Inventory (Note 4)
  14
  14

(Note 6)












Accrued Interest:


Other assets (Note 5)
  42
  42

Subordinated convertible






debentures (Note 8)
  25,032
  23,743










Convertible debentures-






related party (Note 9)
  52,915
  52,915










Other (Note 7)
  3,218
  3,146










Credit Agreements:






Notes payable (Note 7)
  1,198
  1,198




Subordinated convertible






debentures payable (Note 8)
  8,472
  8,472










  91,048
  89,708




Commitments and






Contingencies (Note 13)
  -
  -










STOCKHOLDERS' DEFICIENCY




Preferred stock, par value






$1.00 per share; authorized






5,000,000 shares; 2,000,000






Class A cumulative






convertible shares issued






and outstanding; (liquidation






preference of $8,000,000






and cumulative dividends)






(Note 11)
  2,000
  2,000










Common stock, par value






$.10 per share; authorized






25,000,000 shares; 5,317,758






shares issued and outstanding






(Note 11)
  532
  532

��


Paid-in capital
  13,498
  13,498










Accumulated deficit
  (106,290)
  (104,724)




  (90,260)
  (88,694)

$788
$1,014

$788
$1,014

See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2017 and 2016

($ in thousands, except per share data)

2017

2016

Revenues:

Real estate sales
$-
$9,005
Interest income
  2
  2
Interest income-related party
  13
  2

  15
  9,009



Costs and expenses:


Cost of real estate sales
  -
  747
Interest
  1,360
  1,324
Interest-related party
  -
  3,832
Taxes and assessments
  5
  6
Consulting and accounting-related party
  37
  38
Legal and professional
  27
  83
General and administrative
  95
  87

  1,524
  6,117
Net Income (Loss)


before income taxes
  (1,509)
  2,892
Income tax expense
  (57)
  -
Net Income (Loss)
$(1,566)
$2,892



Net Income (Loss) Per Share


Available to Common Stockholders


Basic (Note 16)
$(0.41)
$0.42



Net Income (Loss) Per Share


Available to Common Stockholders


Diluted (Note 16)
$(0.41)
$0.35




See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Years ended December 31, 2020 and 2019

($ in thousands, except per share data)

	2020	2019
Revenues:
Interest income	$-	$1
Miscellaneous income	2	3
	2	4

Costs and expenses:
Interest	1,417	1,412
Forgiveness of Debt and interest	(410)	-
Taxes and assessments	5	5
Consulting and accounting-related party	34	35
Legal and professional	36	65
General and administrative	25	55
	1,107	1,572

Net Loss	$(1,105)	$(1,568)

Net Loss Per Share
Available to Common Stockholders
Basic and Diluted (Note 16)	$(0.33)	$(0.42)

See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2017 and 2016

($ in thousands)

2017

2016

Cash flows from operating activites:

Cash received from operations:

Real estate sales
$-
$9,005
Interest Income
  2
  2
Interest income-related party
  -
  2

  2
  9,009
Cash expended for operations:





Cost of real estate sales
  1
  122
Interest-related party
  -
  5,925
Taxes and assessments
  5
  10
Consulting and accounting-related party
  38
  37
Legal and professional
  66
  74
General and administrative
  74
  67
Income tax
  57
  -

  241
  6,235
Net cash flows provided by (used in)


operating activites
  (239)
  2,774



Cash flows from investing activities:


Net (advances) repayments of notes receivable


-related party
  (560)
  178
Release of restricted cash
  -
  5
Net cash flows provided by (used in)


investing activities
  (560)
  183



Cash flows from financing activities:


Principal payments on notes payable
  -
  (2,000)
Net cash flows used in financing activities
  -
  (2,000)



Net change in cash
  (799)
  957



Cash at beginning of year
  958
  1
Cash at end of year
$159
$958




See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Years ended December 31, 2020 and 2019

($ in thousands)

	2020	2019
Cash flows from operating activites:

Cash received from operations:

Interest income	$-	$1
Miscellaneous income	2	3
	2	4
Cash expended for operations:

Interest - related party	125	-
Taxes and assessments	-	5
Consulting and accounting-related party	35	35
Legal and professional	38	90
General and administrative	32	91
	230	221

Net cash flows used in operating activities	(228)	(217)


Net change in cash	(228)	(217)

Cash at beginning of year	309	526
Cash at end of year	$81	$309

See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

Years ended December 31. 2017 and 2016

($ in thousands)

2017

2016

Reconciliation of net income (loss) to net cash

provided by (used in) operating activities:

Net income (loss)
$(1,566)
$2,892



Decrease (increase) in assets:


Land Inventory
  -
  625
Interest receivable-related party
  (13)
  -
Prepaid Expenses
  -
  2



Increase (decrease) in liabilities:


Accounts payable and accrued expenses
  (21)
  24
Accrued interest
  1,361
  1,324
Accrued interest-related party
  -
  (2,093)



Net cash flows provided by (used in)


operating activities
$(239)
$2,774



Supplemental Cash Flow:


Income taxes paid
$57
$-




See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)

Years ended December 31, 2020 and 2019

($ in thousands)

	2020	2019

Reconciliation of net loss to net cash
used in operating activities:

Net loss	$(1,105)	$(1,568)

Adjustments to reconcile net loss to net
cash used in operating activities:
Forgiveness of debt and interest	(410)	-

Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(9)	(61)
Accrued real estate taxes	4	-
Accrued interest	1,292	1,412

Net cash flows used in operating activities	$(228)	$(217)

See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) Year ended December 31, 2020
~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY~~
~~Years ended December 31, 2017 and 2016~~
($ in thousands, except share data)

Preferred Stock

Common Stock

Paid-in

Accumulated

Shares

Par Value

Shares

Par Value

Capital

Deficit

Total

Balances at 1/1/16
  2,000,000
$2,000
  5,317,758
$532
$13,498
$(107,616)
$(91,586)








Net Income
  -
  -
  -
  -
  -
  2,892
  2,892
Balances at 12/31/16
  2,000,000
  2,000
  5,317,758
  532
  13,498
  (104,724)
$(88,694)








Net Loss
  -
  -
  -
  -
  -
  (1,566)
  (1,566)
Balances at 12/31/17
  2,000,000
$2,000
  5,317,758
$532
$13,498
$(106,290)
$(90,260)









See accompanying notes to consolidated financial statements.

	Preferred Stock		Common Stock
	Shares	Par Value	Shares	Par Value	Paid-in Capital	Accumulated Deficit	Total

Balances at 1/1/20	2,000,000	$2,000	5,317,758	$532	$13,498	$(108,594)	$(92,564)

Net Loss	-	-	-	-	-	(1,105)	(1,105)
Balances at 12/31/20	2,000,000	$2,000	5,317,758	$532	$13,498	$(109,699)	$(93,669)

	Preferred Stock		Common Stock
	Shares	Par Value	Shares	Par Value	Paid-in Capital	Accumulated Deficit	Total
Balances at 1/1/19	2,000,000	$2,000	5,317,758	$532	$13,498	$(107,026)	$(90,996)

Net Loss	-	-	-	-	-	(1,568)	(1,568)
Balances at 12/31/19	2,000,000	$2,000	5,317,758	$532	$13,498	$(108,594)	$(92,564)

See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES

~~Notes~~Notes to Consolidated Financial Statements (Unaudited)

Nature of Business and Going Concern

PGI Incorporated and Subsidiaries (the Company), a Florida corporation, was founded in 1958, and up until the mid 1990’s was in business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 2530 years, the Company’s business focus and emphasis changed substantially as it has concentrated its sales and marketing efforts almost exclusively on the disposition of its remaining real estate.

The Company has a significant accumulated deficit and is in default ~~of certain sinking fund and interest payments~~ on its convertible subordinated debentures ~~(Note~~and notes payable (Notes 7 and 8).

The Company’s major efforts and activities have been, and continue to be, to sell assets of the Company to repay its indebtedness and to pay the ordinary ~~on-going costs~~administrative expenditures in keeping an inactive company in existence. The aggregate remaining land inventory is less than 70 acres, consisting of ~~operation~~multiple parcels located in Florida counties. These parcels have limited value because of ~~the Company.~~associated development.constraints such as wetlands, easements and other obstacles to development and sale. The potential values of the land parcels held for sale has been difficult to ~~assess. With the 2016 sale of 369 acres to the Florida DOT for $9,000,000,~~assess as the remaining land inventory ~~are~~is difficult to sell and difficult to value. While the Company will seek to realize full market value for each remaining asset, the amounts realized may be at substantial variance from its present financial statement carrying value. Certain of these assets may be of so little value and marketability that the Company may elect not to pay the real estate taxes on selected parcels, which may eventually result in a ~~defacto~~de facto liquidation of such property by subjecting such property to a tax sale.

In management’s judgment, ~~with~~ the ~~2016 land parcel sale, the remaining~~ assets will be insufficient to satisfy much, if any, of the outstanding indebtedness and there will be no recoveries by the shareholders. Consequently, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. The asset carrying values shown in the financial statements, are judged to be reasonable estimates of the value, when viewed in the context of the entirety of the financial statements.

Significant Accounting Policies:

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its ~~wholly-owned~~wholly owned subsidiaries after eliminating all significant inter-company transactions.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

Significant Accounting Policies (continued):

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 Change in Accounting Principle

In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” which requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or ~~servies.~~services. We ~~anticipate adopting~~adopted this standard using the modified retrospective approach. The adoption of ASU 2014-09 ~~will~~did not have ~~a material~~an impact on the Company’s consolidated financial statements.

Acreage

Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount.

Land Inventory

Land inventory is stated at cost.

Cash

The Company’s cash accounts do not exceed federally insured limits.

~~Real Estate Sales and Interest Income:~~Revenues:

~~Real estate sales~~Revenues totaled $2,000 for the year ended December 31, 2020 compared to revenues of $4,000 for the year ended December 31, 2019. Interest income on the Company’s money market account decreased by $1,000 during the year ended December 31, 2020 from the comparable period in 2019 due to the declining account balance. Other income of $2,000 and ~~cost~~$3,000 was received during the years ended December 31, 2020 and 2019. Other income in both years represent recoveries of ~~real estate sales consisted of:~~

2017

2016

($ in thousands)

Real estate sales
$-
$9,005
Cost of real estate sales
-
747
Gross profit margin
$-
$8,258
lot lien receivables which has been fully provided for cancellation.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

~~Real Estate Sales and Interest Income (continued):~~

During the year ended December 31, 2016, the Company sold approximately 369 acres located in Hernando County, Florida (“the Property”) for $9,000,000 to the State of Florida Department of Transportation (“Florida DOT”) and sold a small parcel of land to the South Oak Village Association in Citrus County, Florida. There were no real estate sales in 2017.

Interest income totaled $15,000 for the year ended December 31, 2017 compared to interest income of $4,000 for the year ended December 31, 2016. Related party interest income increased by $11,000 during the year ended December 31, 2017 to $13,000 from $2,000 for the comparable period in 2016. The related party interest income for the year ended December 31, 2017 is a result of the Company’s investment in a $560,000 short term note with LIC, which investment was made during the year ended December 31, 2017 with an original maturity of December 31, 2017, which was extended one year. The Company received payment of the outstanding note receivable from LIC in March, 2018. The Company received payment of the previous note receivable from LIC on June 23, 2016. Interest income of $2,000, represents interest earned on the Company’s money market account during the years ended December 31, 2017 and 2016.

Land Inventory:

Land inventory consisted of:

2017

2016

($ in thousands)

Fully improved land
14
14

$14
$14

	2020	2019
	($ in thousands)
Fully improved land	$14	$14
	$14	$14

Other Assets:

Other assets consisted of:

	2017	2016	2020	2019
	($ in thousands)		($ in thousands)
Deposit with Trustee of 6.5%
debentures	$41		$-	$13
Deferred charges	1
	$42		$-	$13

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses consisted of:

	2017	2016	2020	2019
	($ in thousands)		($ in thousands)
Accounts payable	$15	$26	$3	$-
Accrued audit/tax expense	47	46
Accrued audit, review and tax expense			3	13
Accrued consulting fees-related party	1		-	1
Environmental remediation
obligations	-	19
Accrued legal			-	1
Accrued debenture fees	145	137	153
Accrued miscellaneous	1		1
	$209	$230	$160	$169

Accrued Real Estate Taxes:

Accrued real estate taxes consisted of:

2017

2016

($ in thousands)

Current accrued real estate taxes
$4
$4

	2020	2019
	($ in thousands)
Current accrued real estate taxes	$4	$-

Notes Payable:

Notes payable consisted of the following:

	2017	2016	2020	2019
	($ in thousands)		($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1984	$176
At prime plus 2%, due October 1, 1985			$176
At prime plus 2%, due October 1, 1987	1,000		1,000
Non-interest bearing, due August 1, 1993	22		22
	$1,198		$1,198

The prime rate at December 31, ~~2017~~2020 and ~~2016,~~2019, was ~~4.5%~~3.25% and ~~3.75%~~4.75%, respectively.

During the year ended December 31, 2016, the Company paid the primary lender debt of $500,000 and all accrued interest totaling $470,000 to PGIP, the holder of the first mortgage note and an affiliate of the Company upon receipt of the proceeds of the sale of the Property on June 23, 2016.

The overall weighted-average interest rate for the Company’s credit agreements with its notes and mortgages was approximately ~~6.0%~~5.44% and ~~5.9~~7.15% at December 31, ~~2017~~2020 and ~~2016,~~2019, respectively.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

Notes Payable (continued):

Accrued interest on notes payable ~~was $3,218,000 and $3,146,000 at December 31, 2017 and 2016, respectively.~~consisted of the following:

	2020	2019
	($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1985	$486	$477
At prime plus 2%, due October 1, 1987	2,964	2,908
	$3,450	$3,385

All of the outstanding notes payable including accrued interest are past due.

Subordinated Convertible Debentures Payable:

Subordinated debentures payable consisted of:

	2017	2016	2020	2019
	($ in thousands)		($ in thousands)
6.5%, due June, 1991	$447		$-	$138
6%, due May, 1992	8,025		8,025
	$8,472		$8,025	$8,163

The Trustee of the 6.5% subordinated convertible debentures, which matured in June 1991, with an original face amount of $1,034,000, provided notice of a final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee has maintained a debenture reserve fund ~~with a balance of $41,000 as of December 31, 2017 and 2016,~~to be available for final distribution of $92 per $1,000 in face amount to remaining holders of such debentures who ~~surrender~~surrendered their respective debenture certificates.

~~The 6.5% Subordinated convertible debenture balances are as follows:~~

2017

2016

($ in thousands)

Original face value
$1,034
$1,034
Outstanding debenture principal balance
  447
  447
Accrued and unpaid interest balance
  846
  817
Debenture reserve account balance
  41
  41

~~If and when such remaining debentures are surrendered to the Trustee, the applicable portion of such principal and accrued interest will be recorded as debt and interest forgiveness. As~~ Accordingly, the Company has ~~consistently stated~~recognized $125,000 in ~~prior filings,~~forgiveness of debt during the ~~Company believes that any potential claims by the respective debenture holders~~year ended December 31, 2020. In addition, accrued interest of $285,000 on such ~~6.5% subordinated convertible~~ debentures ~~would be barred under~~that are considered surrendered was recorded as forgiveness of interest expense during the ~~applicable statutes of limitations.~~year ended December 31, 2020.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

Subordinated Convertible Debentures Payable (continued):

The 6.5% Subordinated convertible debenture balances for the years ended December 31, 2020 and 2019 are as follows:

	2020	2019
	($ in thousands)

Original face value	$1,034	$1,034
Outstanding debenture principal balance	-	138
Face value of debentures escheated	138	-
Accrued and unpaid interest balance	-	279
Debenture reserve account balance	-	13
Debenture reserve funds utilized
in escheatment to states of debenture holders	13	-
Forgiveness of debt	125	-
Forgiveness of interest	285	-

Since issuance, $650,000 and $152,000 of the 6.5% and 6% debentures, respectively, have been converted into common stock. This conversion feature is no longer in effect.

The Company is in default ~~of certain sinking fund and interest payments~~ on ~~both~~the 6% subordinated convertible debentures ~~totaling $8,472,000~~which totals $8,025,000 in principal plus accrued and unpaid interest of ~~$25,032,000~~$28,137,000 and ~~$23,743,000~~$26,791,000 as of December 31, ~~2017~~2020 and ~~2016,~~2019, respectively.

The debentures are not collateralized and are not subordinate to each other, but are subordinate to senior indebtedness ($1,198,000 at December 31, ~~2017~~2020 and ~~2016)~~2019). 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~~To maximize the amounts realized for the debt holders, the Company has been and intends to continue to seek buyers for the remaining landholdings.

No assurances are offered regarding the timing of or the values to be realized from future land sales.

~~Convertible Debentures Payable:~~

After repayment of the first mortgage note (“the primary lender debt”), proceeds received from the June 2016 Property sale to Florida DOT were also utilized to repay the remaining principal of the collateralized convertible debentures totaling $1,500,000 and a portion of the accrued interest related to such debentures totaling $5,455,000. The current holders of the collateralized convertible debentures were LIC and Love-1989 Florida Partners, LP (“Love-1989”), each affiliates of Love-PGI Partners, L.P. (“L-PGI”).

~~The June 23, 2016 payments of principal and interest and the remaining accrued interest were as follows:~~

~~Accrued interest was $52,915,000 at December 31, 2017 and 2016, respectively.~~

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

Convertible Debentures ~~Payable (continued):~~

Payable:

In May 2008, LIC purchased $703,000 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 $797,000, were held by Love-1989. The debentures held by Love-1989 and LIC were 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 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015. In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest. Interest on the debentures accrued at the rate of fourteen percent compounded ~~quarterly. The Company’s primary lender credit agreements prohibit~~quarterly until the ~~payment~~principal was paid in 2016.

During the year ended December 31, 2020 the Company paid $125,000 of accrued interest for the related party collateralized convertible debentures. There were no payments of interest ~~until such time as~~in the ~~primary lender loans are repaid.~~year ended December 31, 2019.

~~10.~~The remaining accrued interest is $52,790,000 and $52,915,000 as of December 31, 2020 and 2019.

10. Income Taxes:

Reconciliation of the statutory federal income tax rates, ~~34%~~21% for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, to the Company’s effective income tax rates follows:

2017

2016

($ in thousands)

Percent of

Percent of

Amount of tax

Pre-tax Income

Amount of tax

Pre-tax Loss

Expected tax (credit)
$(513)
  -34.0%
$986
  34.0%
State income taxes, net of




federal tax benefits
  (60)
  -4.0%
  116
  4.0%
Decrease in land inventory basis
  -
  0.0%
  (160)
  -6.0%
Decrease in environmental




liability
  7
  0.0%
  2
  0.0%
Increase (decrease) in valuation




allowance
  623
  41.0%
  (944)
  -32.0%

$57
  3.0%
$-
  -

~~The Company recognized an income tax expense of $57,000 during the year ended December 31, 2017 for the 2016 Alternative Minimum tax on the 2016 gain recognized on the sales of real estate.~~

	2020		2019
	($ in thousands)
		Percent of		Percent of
	Amount of tax	Pre-tax Loss	Amount of tax	Pre-tax Loss
Expected tax credit	$(234)	-21.0%	$(338)	-21.0%
State income taxes, net of
federal tax benefits	(45)	-4.0%	(65)	-4.0%
Decrease in environmental
liability	-	0.0%	-	0.0%
Increase (decrease) in valuation
allowance	279	25.0%	403	25.0%
	$-	0.0%	$-	0.0%

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

~~10.~~

~~Income Taxes (continued):~~

At December 31, ~~2017,~~2020, the Company had an operating loss carryforward of approximately ~~$67,793,000~~$71,188,000, the majority of which will expire at various dates through ~~2036.~~2039.

	2017	2016	2020	2019
	($ in thousands)		($ in thousands)
Deferred tax asset:
Net operating loss carryover	$16,948	$25,240	$17,801	$17,522
Expenses capitalized under IRC 263(a)	37	56	37
Environmental liability	-	7
Tax credits (AMT)	57	-	57
Valuation allowance	(17,042)	(25,303)	(17,895)	(17,616)

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 ~~2014.~~2017. It is the Company’s policy to classify interest and penalties related to its tax positions in general and administrative expense in the consolidated statements of operations.

11.

Capital Stock:

Effective December 31, 2016, L-PGI liquidated and assigned the 2,260,706 shares of common stock of the Company and 1,875,000 shares of preferred stock of the Company, that were held by L-PGI to LIC, in conjunction with settling its remaining indebtedness. ~~LICwas~~LIC was the general partner of L-PGI and is owned, directly or indirectly, by Andrew S. Love and Laurence A. Schiffer, which are the directors and executive officers of the Company.

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, ~~2017~~2020 cumulative preferred dividends in arrears totaled ~~$14,515,000~~$16,435,000 ($640,000 of which related to the year ended December 31, ~~2017)~~2020). On May 15, 1997 preferred dividends accrued through April 25, 1995 totaling $4,260,000 were paid in the form of 2,000,203 shares of common stock.

~~PGI INCORPORATED AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (continued)~~

~~11.~~

~~Capital Stock (continued):~~

As of December 31, ~~2017~~2020 and ~~2016,~~2019, 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, ~~2017~~2020 and 2019, the Company had reserved 3,756,000 common shares for the conversion of preferred stock.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

12.

Quarterly Results:

There were no significant transactions in the fourth quarter of ~~2017.~~2020.

13.

Commitments and Contingencies:

The Company is ~~currently not a party~~subject to claims and lawsuits that arise primarily in ~~any legal proceedings.~~

~~14.~~

~~Related Party Transactions:~~

~~The entire outstanding principal~~the ordinary course of business. It is the ~~primary lender debt~~opinion of ~~$500,000 and all accrued interest totaling $470,000 was paid to PGIP,~~management that the holder of the first mortgage note and an affiliate of the Company on June 23, 2016, upon receipt of proceeds from the June 2016 Property Sale to the Florida DOT. In addition, on June 23, 2016, the remaining principal of the collateralized convertible debentures totaling $1,500,000 and a portion of the accrued interest related to such debentures totaling $5,455,000 was paid to the current holdersdisposition or ultimate resolution of such ~~debentures. LIC~~claims and ~~Love-1989, each affiliates~~lawsuits will not have a material adverse effect on the consolidated financial position, results of L-PGI, held the collateralized convertible debentures. With the principal repaid, there was no incremental interest expense accrued with respect to such collateralized debt subsequent to June 23, 2016.

~~The June 23, 2016 payments of principal~~operations and ~~interest and the remaining accrued interest are as follows:~~

~~PGI INCORPORATED AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (continued)~~

~~14.~~

~~Related Party Transactions (continued):~~

Effective December 31, 2016, L-PGI liquidated and assigned the 2,260,706 shares of common stock of the Company and 1,875,000 shares of preferred stock of the Company, that were held by L-PGI to LIC, in conjunction with settling its remaining indebtedness. LIC was the general partner of L-PGI and is owned, directly and indirectly, by Andrew S. Love and Laurence A. Schiffer, which are the directors and executive officerscash flows of the Company.

The Company received the balance of restricted cash of $5,000 from PGIP, the first mortgage lender, which was released subsequent to the sale of the Property and satisfaction of the primary lender debt obligation owed to PGIP during the year ended December 31, 2016.

14.

Related Party Transactions:

The Company’s primary preferred shareholder is LIC which 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.

The remaining accrued interest is $52,790,000 and $52,915,000 as of December 31, 2020 and 2019.

PGIP is owned and managed by Hallmark Investment Corporation (“HIC”). Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC.

The Company maintains its administration and accounting offices with Love Real Estate Company (“LREC”). LREC, which is owned by ~~Mr. Love and Mr. Schiffer,~~LIC, is paid a monthly fee for the following:

Maintain books of original entry;

Prepare quarterly and annual SEC filings;

Coordinate the ~~annual audit;~~quarterly reviews;

Assemble information for tax filing, review reports as prepared by tax accountants and file same;

Track shareholder records through transfer agent;

Maintain policies of insurance against property and liability exposure;

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 ~~2017~~2020 and ~~2016.~~2019. The Company made payments of $33,600 to LREC in ~~2017~~2020 and ~~2016 respectively~~2019 for accounting service fees. There were no accrued accounting service fees as of December 31, ~~2017~~2020 and ~~2016.~~2019.

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

14.

Related Party Transactions (continued):

~~Effective March 25, 1987, the~~The Company ~~entered into~~has 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, ~~2017~~2020 and ~~2016,~~2019, the carrying value of the Company’s assets was approximately ~~$788,000~~$95,000 and ~~$1,014,000, including $159,000 and $958,000 of cash,~~$336,000 respectively. Consulting fees were ~~$4,000~~$1,000 and $2,000 in ~~2017~~2020 and ~~2016. As of both December 31, 2017 and 2016, a total of $1,000 of unpaid fees had accrued under this agreement.~~2019, respectively.

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, ~~2017~~2020 and ~~2016~~2019 had an outstanding principal balance of $176,000 plus accrued interest of ~~$452,000~~$486,000 and ~~$441,000,~~$477,000, totaling an outstanding balance of ~~$628,000~~$662,000 and ~~$617,000,~~$653,000, respectively. Interest accrued on this loan was ~~$11,000~~$10,000 and ~~$10,000~~$13,000 in ~~2017~~2020 and ~~2016,~~2019, respectively.

The Company invested in a short-term note receivable of $560,000 with LIC during 2017, bearing interest at 4.5% per annum with an original maturity of December 31, 2017, which was extended one year through December 31, 2018. The interest receivable on the related party note receivable is $13,000 at December 31, 2017. The Company received payment of the outstanding note receivable from LIC in March, 2018.

The Company received payments of $178,000 for an outstanding note receivable balance from LIC during the year ended December 31, 2016. Interest income on this note receivable was $2,000 for the year ended December 31, 2016.

~~PGI INCORPORATED AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (continued)~~

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:

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.

Debt:

It was not practicable to estimate the fair value of the Company’s ~~debt with its primary lender, its~~ notes payable and its subordinated 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:

	2017		2016
	($ in thousands)				2020		2019
	Carrying	Fair	Carrying	Fair	($ in thousands)
	Amount	Value	Amount	Value	Carrying Amount	Fair Value	Carrying Amount	Fair Value
Cash	$159		$958		$81		$309
Receivables	573		-
Accounts payable	15		26		3		-
Debt	9,670	-	9,670	-	9,223	-	9,361	-

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

16.

~~Income (Loss)~~Loss Per Share:

The following is a summary of the calculations used in computing basic and diluted ~~income (loss)~~loss per share:

2017

2016

($ in thousands, except share data)

Numerator:

BASIC

Net Income (Loss)
$(1,566)
$2,892
Preferred Dividends
  (640)
  (640)
Income (Loss) Available to Common Shareholders
$(2,206)
$2,252



DILUTED


Income (Loss) Available to Common Shareholders
$(2,206)
$2,252
Dilutive effect - Preferred Dividends
  -
  640
Dilutive effect - Converible debenture interest
  -
  614
Adjusted Income (Loss) Available to


Common Shareholders
$(2,206)
$3,506



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
  -
  3,760,000
Dilutive effect of assumed conversion of


Debentures
  -
  872,418
Dilutive common shares
  5,317,758
  9,950,176



Income (Loss) per share


Basic
$(0.41)
$0.42
Diluted
$(0.41)
$0.35

	2020	2019
	($ in thousands, except share data)
Numerator:
Net Loss	$(1,105)	$(1,568)
Preferred Dividends	(640)	(640)
Loss Available to Common Shareholders	$(1,745)	$(2,208)

Denominator:
Basic and Diluted
Weighted average amount of shares outstanding	5,317,758	5,317,758

Loss per share
Basic	$(0.33)	$(0.42)
Diluted	$(0.33)	$(0.42)

17.

Subsequent Events:

Management has evaluated subsequent events from the balance sheet date through March 31, 2021 and has determined that no material subsequent events exist.

~~Item~~Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

~~Not Applicable.~~

The Company’s independent registered public accounting firm, BKD, declined to stand for re-engagement subsequent to the audit for fiscal year ended December 31, 2018 (“Fiscal 2018”). The Form 10-K for Fiscal 2018 was filed on February 25, 2019. There were no disagreements with BKD on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.

In April 2019, the Company engaged the accounting firm of Milhouse & Neal, LLP as independent accountants for the fiscal year ended December 31, 2019. Due to the inactive status of the Company and its diminishing financial resources, the Company elected not to engage the accounting firm of Milhouse & Neal, LLP to perform a review for the fiscal year ended December 31, 2020.

~~Item 9A~~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, ~~2017.~~2020. There have been no changes in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter ending December 31, ~~2017~~2020 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)~~

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2017,~~2020, 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, ~~2017,~~2020, the Company’s internal control over financial reporting is effective.

~~Item~~Item 9B.

Other Information

Not Applicable

~~PART~~PART III

~~Item~~Item 10.

Directors, Executive Officers, and Corporate Governance.

The following information, regarding executive officers and directors of the Company, is as of March ~~23, 2018.~~31, 2021.

Name and Age		Position with Company and Business Experience During the Last Five Years

Laurence A. Schiffer (age ~~78)~~81)		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; 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 (age ~~74)~~77)		Director and Chairman of the Company’s Board of Directors since May 1987; Secretary of the Company 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; 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 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, ~~and~~ the assignment of the 2,260,706 shares of Company Common Stock by L-PGI to LIC in ~~2016;~~2016, and the 2017 quotations; (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 2017.

~~Item~~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 Love Investment Company, pursuant to that certain Management Consulting Agreement by and between the Company and LREC dated March 25, 1987 (the “Management Agreement”). Mr. Schiffer and Mr. Love are employees of, and receive an annual 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 has any outstanding equity awards at December 31, 2020. The Company does not have a compensation plan or individual compensation arrangement under which its equity securities may be issued.

Neither Mr. Schiffer nor Mr. Love received fees from any source directly attributable to their services as directors of the Company during ~~2017.~~2020.

~~Item~~Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The table below provides certain information as of March ~~23, 2018~~31, 2021 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 Total		Percent of			Percent of Total
	Common	Preferred	Common	Preferred	Total Voting
Name(8)	Stock		Stock (1)	Stock	Power (1)
Name (8)						Common Stock	Preferred Stock	Common Stock (1)	Preferred Stock	Percent of Total Voting Power (1)
Estate of Harold Vernon	998,777(1)(2)	-	18.80%	-	13.70%	998,777(1)(2)	-	18.8%	-	13.7%
Mary Anne Johns Trust	- (2)(3)	125,000(3)	- (3)	6.30%	5.00%	-(2)(3)	125,000(3)	-(3)	6.3%	5.0%
Love Investment Company	2,260,706(4)	1,875,000(4)	42.50%	93.80%	56.50%	2,260,706(4)	1,875,000(4)	42.5%	93.8%	56.5%
Andrew S. Love	2,263,215(5)	1,875,000(5)	42.60%	93.80%	56.50%	2,263,215(5)	1,875,000(5)	42.6%	93.8%	56.5%
Laurence A. Schiffer	2,263,215(6)	1,875,000(6)	42.60%	93.80%	56.50%	2,263,215(6)	1,875,000(6)	42.6%	93.8%	56.5%
All executive officers and directors
as a group (2 persons)	2,263,215(7)	1,875,000(7)	42.60%	93.80%	56.50%
All executive officers and directors as a group (2 persons)						2,263,215(7)	1,875,000(7)	42.6%	93.8%	56.5%

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.

Information obtained from filings made with the Securities and Exchange Commission.

Includes the beneficial ownership of shares of Common Stock which represent less than 5% of the outstanding shares of Common Stock; sole voting and investment power over 125,000 shares of Preferred Stock, which shares are held in the name of Mary Anne Johns, as Trustee of the Mary Anne Johns Declaration of Trust.

Love Investment Company (“LIC”) is a Missouri Corporation owned by Mr. Love, a Love trust and Mr. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of LIC.

These shares are the same shares owned by LIC together with the 2,509 shares of Common Stock owned by PGIP, LLC. Mr. Love is an indirect and direct owner of LIC and an indirect owner of PGIP, LLC. See Footnote 4 above and Item 13. “Certain Relationships and Related Party Transactions, and Director Independence” for more information. Accordingly, Mr. Love has shared voting and investment power over all of these shares.

These shares are the same shares owned by LIC, together with the 2,509 shares of Common Stock owned by PGIP, LLC. Mr. Schiffer is an indirect and direct owner of LIC and an indirect owner of PGIP, LLC. See Footnote 4 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.

These shares are the same shares reflected in Footnotes 4, 5 and 6. See Footnote 4 above and Item 13. “Certain Relationships and Related Transactions, and Director Independence” for more information.

Addresses for beneficial owners are as follows:

Estate of Harold Vernon	~~Love Investment Company~~	~~Laurence A. Schiffer~~
3201 W. Rolling Hills Circle Davie, FL 33328	Love Investment Company 212 So. Central, Suite 304 St. Louis, MO 63105	Laurence A. Schiffer 212 So. Central, Suite 201
~~Davie, FL 33328~~	St. Louis, MO 63105	~~St. Louis, MO 63105~~

Mary Anne Johns Trust One Woodland Drive Punta Gorda, FL 33982	Andrew S. Love
~~One Woodland Drive~~	212 So. Central, Suite 201
~~Punta Gorda, FL 33982~~	St. Louis, MO 63105

As of December 31, ~~2017,~~2020, the Company did not have a compensation plan or individual compensation arrangement under which its equity securities may be issued.

~~Item~~Item 13.

Certain Relationships and Related Transactions, and Director Independence

The ~~outstanding principal of the~~Company’s primary ~~lender debt of $500,000~~preferred shareholder is LIC which is primarily owned and ~~all accrued interest totaling $470,000 was paid to PGIP, the holder of the first mortgage note~~managed by Andrew S. Love and an affiliate of the Company on June 23, 2016, upon receipt of proceeds from the sale of the Property to the Florida DOT. The primary lender debt was 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 Hallmark Investment Corporation (“HIC”).Laurence A. Schiffer. Messrs. Love and Schiffer ~~own approximately 90% of all the issued and outstanding voting stock of HIC and~~ serve as the executive officers and directors ~~and officers~~ of ~~HIC. HIC along with Messrs. Love and Schiffer are~~ the ~~managers of PGIP.~~Company. See also Note 14 to the Notes to Consolidated Financial Statements.

The restricted proceeds escrow of $5,000 associated with the primary lender debt with PGIP was released on June 28, 2016, subsequent to the sale of the Property and satisfaction of the primary lender debt obligation owed to PGIP. The respective 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.

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 $782,451May 2008, LIC purchased $703,000 in principal amount of the ~~Debentures~~Company’s convertible debentures from the previous debenture holder. The balance of the outstanding convertible debentures in the amount of $797,000, were held by ~~L-PGI together with $389,000 in accrued interest.~~Love-1989. The ~~maturity date on all of the remaining Debentures was extended to July 8, 1997.~~

~~The Debentures~~debentures held by Love-1989 and LIC were ~~in part collateralized~~secured by a second mortgage ~~in favor of Love-1989~~behind PGIP on ~~650~~the 366 acres ~~of the property owned~~retained 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 the Debenture holders (including, without limitation, 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.~~

~~In May 2008, LIC purchased $703,050 in principal amount of Debentures from the previous debenture holder.~~escrow. The total debentures balance of $1,500,000 ~~of Debentures have~~ carried a maturity date of July 8, 1997 and ~~interest~~were in default as of December 31, 2015. In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest. Interest on the ~~Debentures has~~debentures accrued at the rate of fourteen percent compounded ~~quarterly.~~quarterly until the principal was paid in 2016.

~~On June 23, 2016,~~During the ~~remaining principal~~year ended December 31, 2020 the Company paid $125,000 of accrued interest for the related party collateralized convertible ~~debentures totaling $1,500,000 and a portion~~debentures. There were no payments of interest in the accrued interest related to such debentures totaling $5,455,000 was paid to the current holders of such debentures, LIC, and Love-1989, each affiliates of L-PGI. There was no interest expense with respect to such collateralized debt subsequent to June 23, 2016. See Note 9 and Note 14 to the Notes to Consolidated Financial Statements.

year ended December 31, 2019.

The ~~June 23, 2016 payments of principal and interest and the~~ remaining accrued interest ~~are~~is $52,790,000 and $52,915,000 as ~~follows:~~of December 31, 2020 and 2019.

~~Effective December 31, 2016, L-PGI liquidated~~PGIP is owned and ~~assigned~~managed by Hallmark Investment Corporation. Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the ~~2,260,706 shares of common~~issued and outstanding voting stock of ~~the Company and 1,875,000 shares of preferred stock of the Company, that were held by L-PGI to LIC, in conjunction with settling its remaining indebtedness.~~HIC.

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,~~LIC, and is located at 212 South Central Avenue, St. Louis, Missouri 63105. A fee of $2,800 per month was accrued in ~~2017~~2020 and ~~2016~~2019 and the Company made payments of $33,600 to LREC in ~~2017~~2020 and ~~2016,~~2019, for the services described in the next paragraph. There were no accrued accounting service fees as of December 31, ~~2017~~2020 and ~~2016.~~2019.

The following is a list of services provided by LREC during ~~2017:~~2020:

Maintain books of original entry;

Prepare quarterly and annual SEC filings;

Coordinate the ~~annual audit;~~quarterly reviews;

Assemble information for tax filing, review reports as prepared by tax

accountants and file same;

Track shareholder records through transfer agent;

Maintain policies of insurance against property and liability exposure;

Handle day-to-day accounting requirements; and

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~~The Company ~~entered into the~~has a Management Agreement with LREC. As a consultant to the Company and in addition to the ~~above~~ services listed on the previous page, 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, ~~2017~~2020 and ~~2016,~~2019, the book value of the Company’s assets was ~~$788,000~~$95,000 and ~~$1,014,000.~~$336,000. Consulting fees ~~accrued~~were $1,000 and ~~paid were $4,000~~$2,000 in ~~both 2017~~2020 and ~~2016. As of December 31, 2017 and 2016, a total of $1,000 of unpaid fees had accrued under the Management Agreement.~~2019, respectively. 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. Schiffer and Mr. Love receive a salary from LREC, such salary compensates them for their 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.

The Company invested in a short-term note receivable of $560,000 with LIC during 2017, bearing interest at 4.5% per annum. With an original maturity of December 31, 2017, which was extended one year through December 31, 2018. The interest receivable on the related party note receivable is $13,000 at December 31, 2017. The Company received payment of the outstanding note receivable in March, 2018.

~~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 NYSE ~~Amex Equities’~~American 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~~Item 14.

Principal Accountant Fees and Services

~~Audit~~Accounting review services and tax fees were rendered by ~~BKD,~~Milhouse & Neal, LLP, the principal accountant of the Company, for the ~~fiscal~~ years ended December 31, ~~2017~~2020 and 2019 as follows:

	2020	2019
	($ in thousands)
Review fees	$12	$24
Tax fees	4	-
	$16	$24

Audit and tax fees were rendered in 2019 by BKD, LLP for the fiscal year ended December 31, ~~2016 were:~~2018 as follows:

2017

2016

($ in thousands)

Audit Fees
$41
$41
Audit related fees
  2
  2
Tax fees
  13
  4

$56
$47

	2019
	($ in thousands)
Audit Fees	$38
Tax fees	5
Other fees	5
	$48

Audit related fees are comprised of administrative fees related to the audit of the financial statements.

Review related fees are comprised of administrative fees related to the review of the financial statements.

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.

Other fees relate to filing of Form 8-K to disclose the principal accounting firm, BKD, LLP declined to stand for re-engagement subsequent to the audit for fiscal year ending December 31, 2018.

The Board of Directors of the Company ~~pre-approves~~pre-approved all ~~audit~~review and other permissible services to be provided by Milhouse & Neal, LLP and BKD, LLP and the estimated fees for these services.

The Company’s independent registered public accounting firm, BKD, LLP, declined to stand for re-engagement subsequent to the audit for Fiscal 2018. The Form 10-K for Fiscal 2018 was filed on February 25, 2019.

~~PART~~PART IV

~~Item~~Item 15.

Exhibits and Financial Statement Schedules

The following financial statements and the report of independent registered public accounting firm are filed as part of this Report:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Position as of December 31, ~~2017~~2020 and ~~2016~~2019

Consolidated Statements of Operations for the Years Ended December 31, ~~2017~~2020 and ~~2016~~2019

Consolidated Statements of Cash Flows for the Years Ended December 31, ~~2017~~2020 and ~~2016~~2019

Consolidated Statements of Stockholders' Deficiency for the Years Ended December 31, ~~2017~~2020 and ~~2016~~2019

Notes to Consolidated Financial Statements

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.

Exhibit Index

The following exhibits are filed or incorporated herein by reference and are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

2. Inapplicable.

~~3.1~~

3.1(a) Restated Articles of Incorporation of PGI Incorporated executed September 4, 1998 with certificate from the State of Florida dated October 27, 1998 (filed as Exhibit 3.1 to Registrant’s September 30, 1998 Form 10-QSB and incorporated herein by reference). ~~3.2~~ Certificate of the Designation, Powers, Preferences and Relative Rights, and the Qualifications, Limitations or Restrictions Thereof, which have not been set forth in the Articles of Incorporation, of the Class A Cumulative Convertible Preferred Stock, effective as of March 24, 1987 (filed as Exhibit 3.2 to Registrant’s Form 10-K Annual Report for the year ended December 31, 1986 (“1986 Form 10-K”). ~~3.3~~ Bylaws of Registrant, as amended September 1987 (filed as Exhibit 3.3 to Registrant’s original Form 10-K Annual Report for the year ended December 31, 1987 (“Original 1987 Form 10-K”) dated as of March 29, 1987 and incorporated herein by reference).	Restated Articles of Incorporation of PGI Incorporated executed September 4, 1998 with certificate from the State of Florida dated October 27, 1998 (filed as Exhibit 3.1 to Registrant’s September 30, 1998 Form 10-QSB and incorporated herein by reference).

3.1(b)	Certificate of the Designation, Powers, Preferences and Relative Rights, and the Qualifications, Limitations or Restrictions Thereof, which have not been set forth in the Articles of Incorporation, of the Class A Cumulative Convertible Preferred Stock, effective as of March 24, 1987 (filed as Exhibit 3.2 to Registrant’s Form 10-K Annual Report for the year ended December 31, 1986 (“1986 Form 10-K”).

3.2	Bylaws of PGI Incorporated and all amendments (filed as Exhibit 3.(ii) to the Registrant’s March 31, 2018 Form 10-Q dated 5/11/18 and incorporated herein by reference).

4.1	Description of Registrant’s Securities, filed herein

9.	Inapplicable.

10.1	Purchase Agreement by and between Sugarmill Woods, Inc. and State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.1 to the Registrant’s Form 8-K current report dated June 23, 2016 and incorporated herein by reference).

10.2	Purchase and Sale Agreement (for Parcel No. 104) by and between Sugarmill Woods, Inc. and the State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.2 to the Registrant’s Form 8-K current report dated June 23, 2016 and incorporated herein by reference).

10.3	Form of Convertible Debenture Agreement due April 30, 1992 between PGI Incorporated and Love-1989 Florida Partners, L.P. and Mortgage and Security Agreement dated July 28, 1989 between Sugarmill Woods, Inc. and Love-1989 Florida Partners, L.P. (filed as Exhibit 10.9 to the Registrant’s Form 10-K Annual Report for the year ended December 31, 1989).

10.4	Consulting Agreement between PGI Incorporated and Love Real Estate Company, dated as of March 25, 1987 (filed as Exhibit 10.7 to the 1986 Form 10-K).

11.	See Note 16 to the consolidated financial statements.

13.	Inapplicable.

~~3.4~~

Amendments to the Bylaws of the Registrant by the Board of Directors of PGI Incorporated by the Unanimous Written Consent, dated as of March 17, 1995 (filed as Exhibit 3.5 to the December 31, 1995 Form 10-KSB and incorporated herein by reference).

~~Inapplicable.~~

~~10.1~~

Purchase Agreement by and between Sugarmill Woods, Inc. and State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.1 to the Registrant’s Form 8-K current report dated June 23, 2016 and incorporated herein by reference).

~~10.2~~

Purchase and Sale Agreement (for Parcel No. 104) by and between Sugarmill Woods, Inc. and the State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.2 to the Registrant’s Form 8-K current report dated June 23, 2016 and incorporated herein by reference).


14. ~~10.3~~ Form of Convertible Debenture Agreement due April 30, 1992 between PGI Incorporated and Love-1989 Florida Partners, L.P. and Mortgage and Security Agreement dated July 28, 1989 between Sugarmill Woods, Inc. and Love-1989 Florida Partners, L.P. (filed as Exhibit 10.9 to the Registrant’s Form 10-K Annual Report for the year ended December 31, 1989). ~~10.4~~ ~~Consulting Agreement between PGI Incorporated and Love Real Estate Company, dated as of March 25, 1987 (filed as Exhibit 10.7 to the 1986 Form 10-K).~~ ~~11.~~ ~~See Note 16 to the consolidated financial statements.~~ ~~13.~~ ~~Inapplicable.~~ ~~14.~~ ~~Inapplicable (See discussion regarding code of ethics under Item 10. of this Form 10-K).~~ ~~16.~~ ~~Inapplicable.~~ ~~18.~~ ~~Inapplicable.~~ ~~21.~~ ~~Subsidiaries of the Registrant, filed herein.~~ 43 ~~22.~~ ~~Inapplicable.~~ ~~23.~~ ~~Inapplicable.~~ ~~24.~~ ~~Inapplicable.~~ ~~31(i).1~~ ~~Principal Executive Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.~~ ~~31(i).2~~ ~~Principal Financial Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.~~ ~~32.1~~ ~~Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.~~ ~~32.2~~ ~~Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.~~ ~~33.~~ ~~Not applicable.~~ ~~34.~~ ~~Not applicable.~~ ~~35.~~ ~~Not applicable~~ ~~95.~~ ~~Not applicable.~~ ~~99.~~ ~~Not applicable.~~ ~~100.~~ ~~Not applicable.~~ ~~101.~~ Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.*	Inapplicable (See discussion regarding code of ethics under Item 10. of this Form 10-K).

16.	Inapplicable.

18.	Inapplicable.

21.	Subsidiaries of the Registrant, filed herein.

22.	Inapplicable.

23.	Inapplicable.

24.	Inapplicable.

31(i).1	Principal Executive Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.

31(i).2	Principal Financial Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.

32.1	Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.

32.2	Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.

33.	Not applicable.

34.	Not applicable.

35.	Not applicable.

95.	Not applicable.

99.	Not applicable.

100.	Not applicable.

101.	Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.*

*Furnished with this report.

~~Item~~Item 16.

Form 10-K Summary

Not applicable.

~~PGI~~PGI INCORPORATED AND SUBSIDIARIES

Pursuant 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)

Date: March ~~23, 2018~~ 31, 2021	By:	/s/ Laurence A. Schiffer
		Laurence A. Schiffer, President
		(Duly Authorized Officer and Principal Executive Officer)

Pursuant 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	Secretary	March ~~23, 2018~~31, 2021
Andrew S. Love


/s/Laurence A. Schiffer		March 31, 2021
Laurence A. Schiffer	Vice Chairman of the Board,		~~March 23, 2018~~
~~Laurence A. Schiffer~~		President, Principal Executive
		Officer, ~~Officer,~~ Principal Financial Officer, and Principal Accounting Officer

4537

Quarter End Date	Price	Volume
9/30/17	$.000005	1,985
3/31/17	$.000008	1,245
12/31/16	$.000001	67,980
9/30/16	$.0001	123
6/30/16	$.0001(high)	1,000
6/30/16	$.000001(low)	1,500

	June 23, 2016	June 23, 2016	Remaining
	Principal	Interest	Accrued
	Payment	Payment	Interest
	($ in thousands)
Credit agreements - first mortgage note	$500	$470	$-
payable-related party

Collateralized convertible debentures
payable-related party	1,500	5,455	52,915
	$2,000	$5,925	$52,915

	December 31, 2017
	Principal	Unpaid
	Amount Due	Interest
	($ in thousands)
6.5% Subordinated debentures due June 1, 1991	$447	$846
6% Subordinated debentures due May 1, 1992	8,025	24,186
	$8,472	$25,032

PGI INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2017 and 2016
($ in thousands, except per share data)

	2017	2016
Revenues:
Real estate sales	$-	$9,005
Interest income	2	2
Interest income-related party	13	2
	15	9,009

Costs and expenses:
Cost of real estate sales	-	747
Interest	1,360	1,324
Interest-related party	-	3,832
Taxes and assessments	5	6
Consulting and accounting-related party	37	38
Legal and professional	27	83
General and administrative	95	87
	1,524	6,117
Net Income (Loss)
before income taxes	(1,509)	2,892
Income tax expense	(57)	-
Net Income (Loss)	$(1,566)	$2,892

Net Income (Loss) Per Share
Available to Common Stockholders
Basic (Note 16)	$(0.41)	$0.42

Net Income (Loss) Per Share
Available to Common Stockholders
Diluted (Note 16)	$(0.41)	$0.35

See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2017 and 2016
($ in thousands)

	2017	2016
Cash flows from operating activites:

Cash received from operations:

Real estate sales	$-	$9,005
Interest Income	2	2
Interest income-related party	-	2
	2	9,009
Cash expended for operations:

Cost of real estate sales	1	122
Interest-related party	-	5,925
Taxes and assessments	5	10
Consulting and accounting-related party	38	37
Legal and professional	66	74
General and administrative	74	67
Income tax	57	-
	241	6,235
Net cash flows provided by (used in)
operating activites	(239)	2,774

Cash flows from investing activities:
Net (advances) repayments of notes receivable
-related party	(560)	178
Release of restricted cash	-	5
Net cash flows provided by (used in)
investing activities	(560)	183

Cash flows from financing activities:
Principal payments on notes payable	-	(2,000)
Net cash flows used in financing activities	-	(2,000)

Net change in cash	(799)	957

Cash at beginning of year	958	1
Cash at end of year	$159	$958

See accompanying notes to consolidated financial statements.

PGI INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years ended December 31. 2017 and 2016
($ in thousands)

	2017	2016
Reconciliation of net income (loss) to net cash
provided by (used in) operating activities:

Net income (loss)	$(1,566)	$2,892

Decrease (increase) in assets:
Land Inventory	-	625
Interest receivable-related party	(13)	-
Prepaid Expenses	-	2

Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(21)	24
Accrued interest	1,361	1,324
Accrued interest-related party	-	(2,093)

Net cash flows provided by (used in)
operating activities	$(239)	$2,774

Supplemental Cash Flow:
Income taxes paid	$57	$-

See accompanying notes to consolidated financial statements.

	Preferred Stock		Common Stock		Paid-in	Accumulated
	Shares	Par Value	Shares	Par Value	Capital	Deficit	Total
Balances at 1/1/16	2,000,000	$2,000	5,317,758	$532	$13,498	$(107,616)	$(91,586)

Net Income	-	-	-	-	-	2,892	2,892
Balances at 12/31/16	2,000,000	2,000	5,317,758	532	13,498	(104,724)	$(88,694)

Net Loss	-	-	-	-	-	(1,566)	(1,566)
Balances at 12/31/17	2,000,000	$2,000	5,317,758	$532	$13,498	$(106,290)	$(90,260)

See accompanying notes to consolidated financial statements.