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 subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which in total approximates 60 acres. These parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

In early 2019, the Board of Directors of PGI concluded that it meets all of the conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Regulation S-X 3-11 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 Regulation 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 Chief Accountant’s Office in the Division of Corporation Finance in February 2019.

As an Inactive Registrant, PGI currently intends to continue timely to timely file Quarterly Reports on Form 10-Q and Annual Reports on FormsForm 10-K with the Securities and Exchange Commission (the “SEC”). PGI currently intends to include in such Quarterly and Annual Reports all annual consolidated financial statements required to be included therein pursuant to Regulation S-X. However, PGI will include annualdue to its inactive status and diminishing financial resources, the aforementioned consolidated financial statements will not be reviewed or audited by a PCAOB registered public accounting firm rather than audited.for the year 2020. Such disclosure was made on Form 8-K filed with the SEC on July 2, 2020. PGI has engaged Milhouse & Neal, to be thea PCAOB registered public accounting firm, that willto review its annual consolidated financial statements to be included in the Annual Report on Form 10-K for its fiscal year ended December 31, 2019 and for its fiscal years thereafter.2019.

PGI meets all of the conditions in Regulation S-X 3-11 for an “Inactive Registrant” which are:

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 $90.9$92.6 million as of December 31, 2018.2019. 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 anticipates it will continue to provide comprehensive updates through its SEC filings.

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 final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee maintainsmaintained a debenture reserve fund with a balance of $13,000that was closed as of September 30, 2019 and2020. The balance as of December 31, 2018, respectively,2019 was $13,000, available for final distribution of $92 per $1,000 in face amount to holders of such debentures who surrender their respective debenture certificates.

DuringThe remaining balance of the ninedebenture reserve fund of $13,000 was disbursed in escheatment to the states of the respective debenture holders during the three month period ended September 30, 2019, there were no 6.5% subordinated convertible2020. The debentures thatwith a face amount of $138,000 were surrendered by theirwith the escheatment of respective debenture holders and no funds were utilized from the debenture reserve account.

As of September 30, 2020, the Company remained in default under its subordinated convertible debentures and notes payable, as well as the remaining balance of accrued interest with respect to the declining account balance.its collateralized convertible debentures.

Expenses for the three month period ended September 30, 2019 increased2020 decreased by $393,000$432,000 when compared to the same period in 2018 primarily as a result of no2019. This decrease reflects forgiveness of debt and interest in the three months ended September 30, 2019 as compared to $432,000 of forgiveness of debt and interest during the three months ended September 30, 2018. The forgiveness of debt and interest for the three months ended September 30, 2018$410,000 which is attributed to the 6.5% subordinated debentures which matured in June, 1991. A face amount of $152,000 ofThe debentures were effectively surrendered with escheatment of respective fundsescheated to the last known state of residencystates of the respective debenture holders. Accordingly, the Company recognized $138,000 in forgiveness of debt during the three months ended September 30, 2018. In addition, accrued interest of $294,000 on such debentures considered surrendered was recorded as forgiveness of interest expense during the three months ended September 30, 2018.change reflects a $1,000 decrease in consulting and accounting related party expenses, a $15,000 decrease in legal and professional fees and a $6,000 decrease in general and administrative expenses.

Interest expense relating to the Company’s current outstanding debt, held by non-related parties was $354,000 for the three month periods ended September 30, 2020 and 2019. Interest expense relating to the Company’s current outstanding debt for subordinated convertible debentures, increased by $7,000$6,000 during the three month period ended September 30, 20192020 compared to the same period in 2018,2019, primarily as a result of interest compounding on past due balances. In addition, thereThis increase was offset by a $6,000 decrease in interest expense for notes payable due to a decrease in the prime interest rate from 3.25% as of September 30, 2020 compared to 5% as of September 30, 20192019.

Consulting and accounting related party expenses decreased by $1,000 during the three month period ended September 30, 2020 compared to 5.25% asthe same period in 2019. A quarterly consulting fee is paid to Love Real Estate Company, an affiliate of September 30, 2018.LIC, of one-tenth percent of the carrying value of the Company’s assets, which decreased in 2020 compared to 2019.

Legal and professional expenses decreased by $25,000$15,000 during the three monthsmonth period ended September 30, 20192020 when compared to the same period in 2018. Legal expenses decreased by $32,000 during2019, primarily due to legal and professional fees relating to environmental remediation incurred in the three monthsmonth period ended September 30, 2019 compared to the same period in 2018. Legal expenses were incurred during the three months ended September 30, 2018 in connection with research on the effect of surrender of debentures escheated to the states of debenture holders in 2018. There was no comparable legal expense during the three months ended September 30, 2019. Professional expenses increased by $7,000 when compared to the same period in 2018 as a result of expenses incurred on a parcel in Citrus County for which a report to the Florida Department of Environmental Protection (“FDEP”) has been filed to request satisfaction of environmental remediation efforts.

General and administrative expenses during the three month period ended September 30, 20192020 decreased by $21,000$6,000 when compared to the same period in 2018. During2019 primarily as a result of the discontinuation of the independent accounting firm review services in the current year.

The Company realized net income of $42,000 during the three monthsmonth period ended September 30, 2018, $13,000 was incurred relating2020 compared to a net loss of $392,000 for the review of the Company’s Form 10Q and disclosure of the effect of surrender of debentures escheated.. In addition, there was a decrease of approximately $4,000comparable period in expenses as an inactive registrant during2019. After deducting preferred dividends, totaling $160,000 for the three monthsmonth periods ended September 30, 2020 and 2019, with respect to the Class A Preferred Stock, a net loss per share of $(.02) and $(.10) was incurred for the three month periods ended September 30, 2020 and 2019, respectively. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through September 30, 2020 is $16,275,000.

Revenues for the nine month period ended September 30, 2020 decreased by $2,000 to $2,000 from $4,000 for the comparable period in 2019. Other income decreased by $1,000 to $2,000 from $3,000 for the comparable period in 2019. Other income of $2,000 and $3,000 received during the nine month periods ended September 30, 2020 and 2019 represent recoveries from lot lien receivables recorded in previous years which have been fully provided for cancellation. Interest income on the Company’s money market account decreased by $1,000 during the nine month period ended September 30, 2020 compared to the same period in 2018,2019 due to the declining account balance. Interest income of $1,000 was received during the nine months ended September 30, 2019. There was no interest income during the nine months ended September 30, 2020

Expenses for the nine months ended September 30, 2020 decreased by $452,000 when compared to the same period in 2019. This decrease reflects forgiveness of debt and interest of $410,000 which is attributed to the 6.5% subordinated debentures which matured in June, 1991. The debentures were escheated to the states of the respective debenture holders. In addition, the change reflects a $5,000 increase in interest expense, a $1,000 decrease of approximately $2,000 in consulting and accounting related party expenses, a $27,000 decrease in legal and professional fees and a $21,000 decrease in general and administrative expenses.

Interest expense relating to the filingCompany’s outstanding debt, held by non-related parties, increased by $5,000 during the nine month period ended September 30, 2020 compared to the same period in 2019. Interest expense relating to the Company’s current outstanding debt for subordinated convertible debentures, increased by $21,000 compared to the same nine month period in 2019, primarily as a result of interest compounding on past due balances. This increase was offset by a $16,000 decrease in interest expense for notes payable due to a decrease in the prime interest rate from 3.25% as of September 30, 2020 compared to 5% as of September 30, 2019.

Consulting and accounting related party expenses decreased by $1,000 during the nine month period ended September 30, 2020 compared to the same period in 2019. A quarterly consulting fee is paid to Love Real Estate Company, an affiliate of LIC, of one-tenth percent of the carrying value of the Company’s periodic reports and a decrease of approximately $2,000 relatingassets, which decreased in 2020 compared to the 6% subordinated convertible debenture administration fees in 2018.2019.

The Company incurred a net loss of $392,000 during the three month period ended September 30, 2019 compared to a net income of $1,000 for the comparable period in 2018. After deducting preferred dividends, totaling $160,000 for the three month periods ended September 30, 2019Legal and 2018, with respect to the Class A Preferred Stock, a net loss per share (basic) of $(.10) and $(.03) was incurred for the three month periods ended September 30, 2019 and 2018, respectively. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through September 30, 2019 is $15,635,000.

General and professionaladministrative expenses decreased by $21,000 during the nine month period ended September 30, 2019 decreased by $6,0002020 when compared to the same period in 2018. Legal expenses were incurred in 2018 as a result of legal expenses incurred in connection with research on the effect of surrender of debentures escheated. and in connection with legal research relating to the Company’s going concern alternatives and SEC Regulation S-X for inactive registrants. Professional expenses increased by $2,000 during the nine months ended September 30, 2019 compared to 2018 as a result of expenses incurred during the nine months ended September 30, 2019 on a parcel in Citrus County requiring additional environmental remediation.

The Company incurred a net loss of $1,187,000$735,000 during the nine month period ended September 30, 20192020 compared to a net loss of $332,000$1,187,000 for the comparable period in 2018.2019. After deducting preferred dividends, totaling $480,000 for the nine month periods ended September 30, 20192020 and 2018,2019, with respect to the Class A Preferred Stock, net loss per share of $(.31)$(.21) and $(.15)$(.31) was incurred for the nine month periods ended September 30, 20192020 and 2018,2019, respectively.

During the nine month period ended September 30, 2019,2020, the Company’s net cash used in operating activities was $190,000$215,000 which includes $125,000 of interest paid to related parties which held the collateralized convertible debentures. This compared to $112,000cash used in operating activities of $190,000 for the comparable period in 2018.2019 period. There was no cash provided fromby or used in financing or investing activities during the nine month periodperiods ended September 30, 2019 compared to $560,000 of net cash provided from investing activities in the comparable period in 2018 which consisted of note receivable proceeds received from LIC.2020 and 2019.

 

During the nine month period ended September 30, 2019,2020, cash decreased by $190,000,$215,000, compared to December 31, 20182019 as a result of the Company funding its operating activities. Based on its current expenditure level,administrative costs of $90,000 and payment to related parties of $125,000 of accrued interest payable in connection with the Company will be able to fund ongoing operating activity for less than two years unless it is able to sell remaining land parcels.collateralized convertible debentures.

During the nine month period ended September 30, 2019,2020, the amount of accounts payable and accrued expenses decreased by $63,000$10,000 primarily as a result of timing differences. In addition, the Company’s general and administrative expenses have decreased in 2019 as an inactive registrant. Accrued real estate taxes increased by $3,000 during the nine month period ended September 30, 20192020 due to the accrual of real estate taxes for the respective period. Accrued interest during the nine month period ended September 30, 20192020 increased by $1,057,000 due$652,000 as a result of $1,062,000 of interest expense for such period which was offset by $285,000 in forgiveness of accrued interest on the 6.5% subordinated debentures escheated to the amountstates of debenture holders and also offset by the payment of $125,000 of accrued interest for such period. the collateralized convertible debentures which are held by related parties.

During the nine month periodmonths ended September 30, 2019,2020, 6.5% subordinated debentures with face amount of $138,000 were effectively surrendered with the Company made no interest or principal payments on its outstanding notes payable and subordinated convertible debentures.escheatment of respective debenture reserve funds by the Trustee to the states of such debenture holders.

The Company remains in default on the entire principal amount plus interest (including certain sinking fund and interest payments with respect to the subordinated convertible debentures) of its subordinated convertible debentures and notes payable as well as the remaining accrued interest owed with respect to the collateralized convertible debentures.

The Company does not have sufficient funds available (after payment of, or the reserving for the payment of, anticipated future operatingadministrative expenses) to satisfy the principal or interest obligations on the above debentures and notes payable or any arrearage in preferred dividends.

The Company remains totally dependent upon the sale of parcels of its various remaining properties with respect to its ability to make any future debt service payments.

The Company’s independent registered public accounting firmfirms have included an explanatory paragraph regardingexpressing concerns as to the Company’s ability to continue as a going concern in their opinionreports on on the Company’s consolidated financial statements for many years including the year ended December 31, 2018.2019.

The discussion set forth in this Item 2, as well as other portions of this Form 10-Q, 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-Q. When used in this Form 10-Q, words such as “anticipates,” “estimates,” “believes,” “expects,” and similar expressions are intended to identify forward-looking 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; 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.

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under the supervision and with the participation of its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2019.2020. There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 20192020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

See discussion in Item 2 of Part I with respect to defaults under the Company's subordinated convertible debentures, collateralized convertible debentures and other indebtedness and with respect to cumulative preferred dividends in arrears, which discussions are incorporated herein by this reference.