FORM 10- Q
 U.S SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20192020
 
☐    TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to _____________________
 
Commission File Number 1-6471 
 
PGI INCORPORATED
(Exact name of registrant as specified in its charter)
 
FLORIDA 59-0867335
(State (State or other jurisdiction of incorporation) (I.R.S.(I.R.S. Employer Identification No.)
 
212 SOUTH CENTRAL, SUITE 304, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices)
 
(314) 512-8650
(Registrant’s telephone number, including area code)
 
Inapplicable
(Former Name, Former Address and Former Fiscal year, if changed since last report)
 
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 X  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 (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X  No _______
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 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 filerfiler___________Non-accelerated filer____________
Accelerated filer__________
 ☐Smaller reporting company X
Accelerated filer
 ☐
Non-accelerated filer
 ☐
Smaller(Do not check if a smaller reporting companycompany) ☑
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 X
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each classTrading Symbol(s)Name of each exchange on which registered
NoneInapplicableInapplicable
 
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of November 12, 2019,13, 2020, there were 5,317,758 shares of the registrant’s common stock, $.10 par value per share, outstanding.
 

 
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Form 10 – Q
For the Quarter Ended September 30, 20192020
 
Table of Contents
 
  
 Form 10 - Q
Page No.











 




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 PART I  FINANCIAL INFORMATION
Item 1. Financial Statements
 
PART I  FINANCIAL INFORMATION
Item 1. Financial Statements
PGI INCORPORATED AND SUBSIDIARIESSUBSIDIARIES
CONDENSEDCONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
($ in thousands, except share and per share data)
 
 
 
September 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
 
 
(Unaudited)
 
 
 
 
ASSETS
 
 
 
 
 
 
Cash
 $336 
 $526 
Land inventory
  14 
  14 
Restricted sinking fund
  13 
  13 
 
 $363 
 $553 
LIABILITIES
    
    
Accounts payable and accrued expenses
 $167 
 $230 
Accrued real estate taxes
  3 
  - 
Accrued interest:
    
    
Subordinated convertible debentures payable
  26,735 
  25,744 
Convertible debentures payable-related party
  52,915 
  52,915 
Notes payable
  3,365 
  3,299 
Credit agreements:
    
    
Notes payable
  1,198 
  1,198 
Subordinated convertible debentures payable
  8,163 
  8,163 
 
  92,546 
  91,549 
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 plus unpaid cumulative dividends of $15,635)
  2,000 
  2,000 
Common stock, par value $.10 per share;
    
    
authorized 25,000,000 shares; 5,317,758
    
    
shares issued and outstanding
 ��532 
  532 
Paid-in capital
  13,498 
  13,498 
Accumulated deficit
  (108,213)
  (107,026)
 
  (92,183)
  (90,996)
 
 $363 
 $553 
 
 
September 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
ASSETS
 
 
 
 
 
 
Cash
 $94 
 $309 
Land inventory
  14 
  14 
Restricted sinking fund
  - 
  13 
 
 $108 
 $336 
LIABILITIES
    
    
Accounts payable and accrued expenses
 $159 
 $169 
Accrued real estate taxes
  3 
  - 
Accrued interest:
    
    
Subordinated convertible debentures payable
  27,797 
  27,070 
Convertible debentures payable-related party
  52,790 
  52,915 
Notes payable
  3,435 
  3,385 
Credit agreements:
    
    
Notes payable
  1,198 
  1,198 
Subordinated convertible debentures payable
  8,025 
  8,163 
 
  93,407 
  92,900 
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 plus unpaid cumulative dividends of $16,275)
  2,000 
  2,000 
Common stock, par value $.10 per share;
    
    
authorized 25,000,000 shares; 5,317,758
    
    
shares issued and outstanding
  532 
  532 
Paid-in capital
  13,498 
  13,498 
Accumulated deficit
  (109,329)
  (108,594)
 
  (93,299)
  (92,564)
 
 $108 
 $336 
See accompanying notes to Condensed Consolidated Financial Statements.
  3
Part I  Financial Information (Continued)
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
($ in thousands, except per share data)
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
September 30,
 
 
September 30,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 $- 
 $- 
 $- 
 $1 
Other income
  2 
  - 
  2 
  3 
 
  2 
  - 
  2 
  4 
COSTS AND EXPENSES
    
    
    
    
Interest
  354 
  354 
  1,062 
  1,057 
Forgiveness of debt
    
    
    
    
and interest
  (410)
  - 
  (410)
  - 
Taxes and assessments
  1 
  1 
  3 
  3 
Consulting and accounting-
    
    
    
    
related party
  8 
  9 
  26 
  27 
Legal and professional
  1 
  16 
  36 
  63 
General and administrative
  6 
  12 
  20 
  41 
 
  (40)
  392 
  737 
  1,191 
NET INCOME (LOSS)
 $42 
 $(392)
 $(735)
 $(1,187)
 
    
    
    
    
NET LOSS PER SHARE(*)
    
    
    
    
AVAILABLE TO COMMON
    
    
    
    
STOCKHOLDERS-Basic and diluted
 $(0.02)
 $(0.10)
 $(0.23)
 $(0.31)
 
    
    
    
    
 
*Considers the effect of dividends on preferred stock for the three and nine months ended
 
    
September 30, 2020 and 2019.
    
    
    
    
 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).Statements.

Part I  Financial Information (Continued)
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
($ in thousands)
 
 
Nine Months Ended  
 
 
 
September 30,
 
 
September 30,
 
 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
Net cash used in operating activities
 $(215)
 $(190)
 
    
    
Net change in cash
  (215)
  (190)
 
    
    
Cash at beginning of period
  309 
  526 
 
    
    
Cash at end of period
 $94 
 $336 
See accompanying notes to Condensed Consolidated Financial Statements.
 

 
Part I  Financial Information (Continued)
 
PGI INCORPORATED ANDAND SUBSIDIARIES
CONDENSEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSSTOCKHOLDERS' DEFICIENCY (UNAUDITED)
Three Months ended September 30, 2020
($ in thousands, except per share data)
(Unaudited)
 
 
Preferred Stock
 
 
Common Stock  
 
 
 
 
 
 
 
 
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Paid-in Capital
 
 
Accumulated Deficit
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at 6/30/20
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(109,371)
 $(93,341)
 
    
    
    
    
    
    
    
Net Income (Loss)
  - 
  - 
  - 
  - 
  - 
  42 
  42 
Balances at 9/30/20
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(109,329)
 $(93,299)
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
September 30,
 
 
September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
REVENUES
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 $- 
 $- 
 $1 
 $2 
Interest income-related party
  - 
  - 
  - 
  4 
Other income
  - 
  - 
  3 
  - 
 
  - 
  - 
  4 
  6 
COSTS AND EXPENSES
    
    
    
    
Interest
  354 
  347 
  1,057 
  1,039 
Forgiveness of debt
    
    
    
    
and interest
  - 
  (432)
  - 
  (875)
Taxes and assessments
  1 
  1 
  3 
  4 
Consulting and accounting-
    
    
    
    
related party
  9 
  9 
  27 
  27 
Legal and professional
  16 
  41 
  63 
  69 
General and administrative
  12 
  33 
  41 
  74 
 
  392 
  (1)
  1,191 
  338 
NET INCOME (LOSS)
 $(392)
 $1 
 $(1,187)
 $(332)
 
    
    
    
    
NET LOSS PER SHARE(*)
    
    
    
    
AVAILABLE TO COMMON
    
    
    
    
STOCKHOLDERS-Basic and diluted
 $(0.10)
 $(0.03)
 $(0.31)
 $(0.15)
*Considers the effect of dividends on preferred stock for the three and nine months ended September 30, 2019 and 2018.
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

Part I  Financial Information (Continued)
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
Net cash used in operating activities
 $(190)
 $(112)
Cash Flows from investing activities:
    
    
Payments received on notes receivable-related party
  - 
  560 
Net cash provided by (used in) investing activities
  - 
  560 
 
    
    
Net change in cash
  (190)
  448 
 
    
    
Cash at beginning of period
  526 
  159 
 
    
    
Cash at end of period
 $336 
 $607 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

Part I  Financial Information (Continued)
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
Three Months ended September 30, 2019
($ in thousands, except share data)

 
Preferred Stock
 
 
Common Stock
 
 
 Paid-in
 
 
Accumulated
 
 
 
 
 
Preferred Stock   
 
 
Common Stock   
 
 
 
 
 
 
 
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Capital
 
 
Deficit
 
 
Total
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Paid-in Capital
 
 
Accumulated Deficit
 
 
Total
 
 
 
 
 
 
 
Balances at 6/30/19
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(107,821)
 $(91,791)
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(107,821)
 $(91,791)
    
    
Net Income (Loss)
  - 
  (392)
  - 
  (392)
Balances at 9/30/19
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(108,213)
 $(92,183)
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(108,213)
 $(92,183)
 
Three
 Part I  Financial Information (Continued)
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED)
Nine Months ended September 30, 20182020
($ in thousands, except share data)
 
 
 
Preferred Stock
 
 
Common Stock
 
 
 Paid-in
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Capital
 
 
Deficit
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at 6/30/18
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(106,623)
 $(90,593)
 
    
    
    
    
    
    
    
Net Income (Loss)
  - 
  - 
  - 
  - 
  - 
  1 
  1 
Balances at 9/30/18
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(106,622)
 $(90,592)
 
 
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 Income (Loss)
  - 
  - 
  - 
  - 
  - 
  (735)
  (735)
Balances at 9/30/20
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(109,329)
 $(93,299)
 
See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

Part I  Financial Information (Continued)
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
Nine Months ended September 30, 2019
($ in thousands, except share data)
 
 
 
Preferred Stock
 
 
Common Stock
 
 
 Paid-in
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Capital
 
 
Deficit
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at 12/31/18
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(107,026)
 $(90,996)
 
    
    
    
    
    
    
    
Net Income (Loss)
  - 
  - 
  - 
  - 
  - 
  (1,187)
  (1,187)
Balances at 9/30/19
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(108,213)
 $(92,183)
 
 
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 Income (Loss)
  - 
  - 
  - 
  - 
  - 
  (1,187)
  (1,187)
Balances at 9/30/19
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(108,213)
 $(92,183)
 
Nine Months ended September 30, 2018
($ in thousands, except share data)
 
 
 
Preferred Stock
 
 
Common Stock
 
 
 Paid-in
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Capital
 
 
Deficit
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at 12/31/17
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(106,290)
 $(90,260)
 
    
    
    
    
    
    
    
Net Income (Loss)
  - 
  - 
  - 
  - 
  - 
  (332)
  (332)
Balances at 9/30/18
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(106,622)
 $(90,592)
PGI INCORPORATED AND SUBSIDIARIES
See accompanying notesNotes to Condensed Consolidated Financial Statements (unaudited).(Unaudited)
 

PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
(1)
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements of PGI Incorporated (“PGI”) and its subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10 - Q and therefore do not include all disclosures necessary for fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The Company's independent registered public accounting firm included an explanatory paragraph regarding the Company's ability to continue as a going concern in their opinionreport on the Company's consolidated financial statements for the year ended December 31, 2018.2019, as they have for many years.
 
The Company 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 30 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’s major efforts and activities have been, and continue to be, to sell the remaining assets of the Company, to repay its indebtedness, and to pay the ordinary on-going administrative costs of operation of the Company. The potential values of the land parcels held for sale have been difficult to assess. While theThe 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 liquidation of such property by subjecting such property to a tax sale. In management’s judgement, 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.
 
Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 20182019 filed with the Securities and Exchange Commission.
 
The condensed consolidated statement of financial position of the Company as of December 31, 2018 has been derived from the audited consolidated statement of financial position as of that date.
The Company remains in default under the indentures governing its unsecured subordinated debentures. (See Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes 7, 8, and 9 to the Company's consolidated financial statements for the year ended December 31, 2018,2019, as contained in the Company's Annual Report on Form 10 - K).
 
All adjustments (consisting of only normal recurring accruals) necessary for fair presentation of financial position, results of operations and cash flows have been made. The results for the three and nine months ended September 30, 20192020 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 20192020 or any other interim period.
 

PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
(2)
Per Share Data
 
Basic per share amounts are computed by dividing net income (loss), after deducting current period dividends on the Company's preferred stock, by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for the three and nine months ended September 30, 20192020 and 20182019 was 5,317,758.
 
Diluted per share amounts are computed by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, after adjusting for the estimated effect of the assumed conversion of all cumulative convertible preferred stock and outstanding convertible debentures, if dilutive, into shares of common stock. For the three and nine months ended September 30, 20192020 and 2018,2019, the assumed conversion of all outstanding convertible preferred stock and collateralized convertible debentures would have been anti-dilutive.

PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
The following is a summary of the calculations used in computing basic and diluted loss per share for the three and nine months ended September 30, 20192020 and 2018.2019.
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
Three Months Ended  
 
 
Nine Months Ended  
 
 
September 30,
 
 
September 30,
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
 
($ in thousands, except share and per share data)
 
 
($ in thousands, except share and per share data)   
 
 
 
 
 
 
 
Net Income (Loss)
 $(392)
 $1 
 $(1,187)
 $(332)
 $42 
 $(392)
 $(735)
 $(1,187)
    
    
Preferred dividends
  (160)
  (480)
  (160)
  (480)
    
    
Loss Available to
 $(552)
 $(159)
 $(1,667)
 $(812)
 $(118)
 $(552)
 $(1,215)
 $(1,667)
Common shareholders
    
    
    
    
Basic and Diluted
    
    
Weighted Average Number
    
    
Of Common Shares
    
    
Outstanding
  5,317,758 
  5,317,758 
    
    
Basic and Diluted Loss
    
    
Per Common Share
 $(0.10)
 $(0.03)
 $(0.31)
 $(0.15)
 $(0.02)
 $(0.10)
 $(0.23)
 $(0.31)
 

 
PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
 
(3)
Statement of Cash Flows
 
The Financial Accounting Standards Board Accounting Standards Codification Topic No. 230, “Statement of Cash Flows”, requires a statement of cash flows as part of a full set of financial statements. For quarterly reporting purposes, the Company has elected to condense the reporting of its net cash flows. Interest was paid during the nine months ended September 30, 2020 in the amount of $125,000 in connection with the collateralized convertible debentures. There were no payments of interest for the nine month periodsperiod ended September 30, 2019 and 2018.2019.
 
(4)
Land Inventory
 
Land inventory consisted of
 
 
 
September 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
 
 
 ($ in thousands)    
 
Fully improved land
 $14 
 $14 
 
 
September 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
 
 
($ in thousands)  
 
Fully improved land
 $14 
 $14 
 
(5)
Accounts Payable and Accrued Expenses
 
Accounts payable and accrued expenses consisted of:
 
 
September 30,
 
 
December 31,
 
 
September 30,
 
 
December 31,
 
 
2019
 
 
2018
 
 
2020
 
 
2019
 
 
($ in thousands)   
 
 
($ in thousands)  
 
Accounts payable
 $- 
 $18 
 $2 
 $- 
Accrued professional fees
  12 
  43 
Accrued legal fees
  - 
  14 
Accrued accounting review and
    
tax preparation expense
  3 
  13 
Accrued consulting fees-related party
  1 
  - 
  1 
Accrued legal
  - 
  1 
Accrued debenture fees
  153 
  153 
Accrued miscellaneous
  1 
  1 
 $167 
 $230 
 $159 
 $169 
    
    
Accrued real estate taxes consisted of:
    
    
Current real estate taxes
 $3 
 $- 
 $3 
 $- 
 

 
PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
 
(6)
Credit Agreements: Notes Payable and Subordinated and Convertible Debentures Payable
 
Credit agreements consisted of the following:
 
 
September 30,
 
 
December 31,
 
 
September 30,
 
 
December 31,
 
 
2019
 
 
2018
 
 
2020
 
 
2019
 
 
 ($ in thousands)
 
 
($ in thousands)  
 
Notes payable - $1,176,000 bearing
 
 
 
 
 
 
interest at prime plus 2%,
 
 
 
interest at prime plus 2%
 
 
 
the remainder non-interest bearing,
 
 
 
 
 
 
all past due
 $1,198 
 $1,198 
    
    
Subordinated convertible debentures payable:
    
    
At 6.5% interest; due June 1991
  138 
  - 
  138 
At 6% interest; due May 1992
  8,025 
  8,025 
  8,163 
  8,025 
  8,163 
 $9,361 
 $9,223 
 $9,361 
Accrued interest consisted of the following:
 
 
September 30,
 
 
December 31,
 
 
 
2020
 
 
2019
 
 
 
($ in thousands)  
 
Notes payable
 $3,435 
 $3,385 
Subordinated convertible debentures payable:
    
    
At 6.5% interest; due June 1991
  - 
  279 
At 6% interest; due May 1992
  27,797 
  26,791 
 
  27,797 
  27,070 
Convertible debentures -related party:
    
    
Principal balance paid 6/23/16
  52,790 
  52,915 
 
 $84,022 
 $83,370 
 
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 maintainshas maintained a debenture reserve fund with a balance of $13,000that was closed as of September 30, 2019 and2020. The balance as of December 31, 2018,2019 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.
 
During
PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
(6) Credit Agreements: Notes Payable and Subordinated Convertible Debentures Payable (continued)
The 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 that were surrendered or escheated by their respective debenture holders and no funds were utilized from the debenture reserve account. During the nine month period ended September 30, 2018, $28,000 of the debenture reserve funds were utilized with $2,000 disbursed in final distribution to debenture holders and $26,000 disbursed in escheatment to states of respective debenture holders as debentures witha face amount of $22,000 were surrendered by debenture holders and $287,000 in face amount of debentures$138,000 were effectively surrendered with the escheatment of the respective funds to the states of the debenture holders, respectively.holders. Accordingly, the Company has recognized $281,000$125,000 in forgiveness of debt during the nine monthsthree month period ended September 30, 2018.2020. In addition, accrued interest of $594,000$285,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the nine monthsthree month period ended September 30, 2018.2020. There were no debentures surrendered or escheated in 2019.
 
As of September 30, 2019 and December 31, 2018, the outstanding principal balance on suchThe 6.5% subordinated convertible debentures that were not surrendered by the respective holders, or escheated by the Trustee to the states of residence of the respective holders, equals $138,000 plus accrued and unpaid interest of $277,000 and $270,000, respectively. If and when such remaining debentures are surrendered to the Trustee, or escheated to the states of residence of the respective debenture holders, the applicable portion of such principal and accrued interest will be recorded as debt and accrued 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% subordinated convertible debentures would be barred under the applicable statutes of limitations.

PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
(9)
Other Income
Other incomebalances for the nine months ended September 30, 2020 and year ended December 31, 2019 was $3,000. Other income represents a recovery from a lot lien receivable recorded in 1999 which has been fully provided for cancellation. There was no other income recorded forare as follows:
September 30, 2020
December 31, 2019
($ in thousands)
Outstanding debenture principal balance
$-
$138
Face value of debentures escheated
138
-
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
-
During the nine monthsmonth ended September 30, 2018.2020 the Company paid $125,000 of collateralized convertible debenture accrued interest to Love Investment Company (“LIC”), the Company’s primary preferred stock shareholder, and Love-1989 Florida Partners (“Love-1989”), also an affiliate of the Company, which held the collateralized convertible debentures.
 
(10)
(7) Income Taxes
 
At December 31, 2018,2019, the Company had an operating loss carryforward of approximately $68,476,000$70,074,000 available to reduce future taxable income. These operating losses expire at various dates through 2037.2038.
 
The following summarizes the temporary differences of the Company at September 30, 20192020 and December 31, 20182019 at the statutory rate:        
 
 
September 30,
 
 
December 31,
 
 
September 30,
 
 
December 31,
 
 
2019
 
 
2018
 
 
2020
 
 
2019
 
 
 ($ in thousands)
 
 
($ in thousands)  
 
Deferred tax asset
 
 
 
 
 
 
Net operating loss carryforward
 $17,424 
 $17,119 
 $17,708 
 $17,522 
Expenses capitalized under IRC 263(a)
  37 
  37 
Tax credits (AMT)
  57 
  57 
Valuation allowance
  (17,518)
  (17,213)
  (17,802)
  (17,616)
Total deferred tax asset
  - 
  - 
 
(11)
(8) Fair Value of Financial Instruments
 
The carrying amount of the Company’s financial instruments, other than debt, approximates fair value at September 30, 20192020 and December 31, 20182019 because of the short maturity of those instruments. It was not practicable to estimate the fair value of the Company’s notes payable and its convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities.
 

 
PGI INCORPORATED AND SUBSIDIARIES
 
ItemItem 2. Management's DiscussionDiscussion and Analysis of Financial Condition and Results of Operations
 
Preliminary Note
 
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:
(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 (see discussion);
(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.
 

PGI INCORPORATED AND SUBSIDIARIES
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
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 $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, 2019 and December 31, 2018, the remaining outstanding principal balance on such 6.5% subordinated convertible debentures that have not been surrendered by the respective holders equals $138,000 plus accrued and unpaid interest of $277,000 and $270,000, respectively. If and when such remaining debentures are surrendered to the Trustee, or escheated to the states of residence of the respective debenture holders, the applicable portion of such principal and accrued interest will be recorded as debt and accrued interest forgiveness. Asholders. Accordingly, the Company has consistently statedrecognized $125,000 in prior filings,forgiveness of debt during the Company believes that any potential claims by the respective debenture holdersthree month period ended September 30, 2020. In addition, accrued interest of $285,000 on such 6.5% subordinated convertible debentures would be barred underthat are considered surrendered was recorded as forgiveness of interest expense during the applicable statutes of limitations.
As ofthree month period ended September 30, 2019, the Company remained2020. There were no debentures surrendered or escheated in default under its subordinated convertible debentures and notes payable, as well as the accrued interest with respect to its collateralized convertible debentures.2019.
 

 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
Results of Operations
There was no revenue forDuring the three month periodsperiod ended September 30, 2019 and 2018 as2020 the Company paid $125,000 of collateralized convertible debenture accrued interest earned onto LIC, the Company’s money market account is minimal dueprimary preferred stock shareholder, and Love-1989, also an affiliate of the Company, which held the collateralized convertible debentures.
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.
Results of Operations
 
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.
 

 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
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.
Revenues for the nine months ended September 30, 2019professional expenses decreased by $2,000 when compared to the same period in 2018 primarily as a result of no related party interest income earned on the short-term note receivable with Love Investment Company (“LIC”), the Company’s primary preferred stock shareholder in 2019. Related party interest income was $4,000 for the nine months ended September 30, 2018. The Company received payment of the note receivable balance from LIC on March 6, 2018. Interest income on the Company’s money market account decreased by $1,000 during the nine months ended September 30, 2019 from the comparable period in 2018 due to the declining account balance. Other income of $3,000, received during the nine months ended September 30, 2019 represents a recovery of a lot lien receivable recorded in 1999 which has been fully provided for cancellation. There was no other revenue during the nine months ended September 30, 2018.
Expenses for the nine months ended September 30, 2019 increased by $853,000 when compared to the same period in 2018. There was no forgiveness of debt and interest in the nine months ended September 30, 2019 as compared to $875,000 of forgiveness of debt and interest during the nine months ended September 30, 2018. The forgiveness of debt and interest for the nine months ended September 30, 2018 is attributed to the 6.5% subordinated debentures which matured in June 1991. A face amount of $287,000 of debentures were effectively surrendered with escheatment of respective funds to the states of debenture holders. In addition, debentures with a face amount of $22,000 were surrendered by debenture holders. Accordingly, the Company has recognized $281,000 in forgiveness of debt during the nine months ended September 30, 2018. In addition, accrued interest of $594,000 on such debentures that are now considered surrendered was recorded as forgiveness of interest expense during the nine months ended September 30, 2018
Interest expense relating to the Company’s current outstanding debt, held by non-related parties, increased by $18,000$27,000 during the nine month period ended September 30, 20192020 when compared to the same period in 2018, primarily2019 as a result of interest compounding on past due balances. In addition, there was a decrease in the prime interest rate to 5% as of September 30, 2019 compared to 5.25% as of September 30, 2018.follows:
 
(Decrease)
($ in thousands)
Legal and professional fees environmental remediation
$(15)
Legal common title matters
(7)
Legal Form 8K review
(4)
Legal review filing of periodic reports
(1)
$(27)
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.

PGI INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
Taxes and assessments expense decreased by $1,000 during the nine month period ended September 30, 2019 when compared to the same period in 2018. General and administrative expenses decreased by $33,000 during the nine month period ended September 30, 2019 when compared to the same period in 2018 primarily as a result of decreased fees related to the filing of the Company’s periodic reportsa reduction in 2019 as an inactive registrant and a decreaseaccounting review services in the 6% subordinated convertible debenture administration fees in 2018.current year.
 
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.
 
Cash Flow Analysis
 
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.
 
Analysis of Financial Condition
 
Total assets decreased by $190,000$228,000 at September 30, 20192020 compared to total assets at December 31, 2018,2019, reflecting the following changes:
 
 
September 30,
 
 
December 31,
 
 
Increase
 
 
September 30,
 
 
December 31,
 
 
 
 
 
2019
 
 
2018
 
 
(Decrease)
 
 
2020
 
 
2019
 
 
(Decrease)
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
($ in thousands)
 
 
 
 
Cash
 $336 
 $526 
 $(190)
 $94 
 $309 
 $(215)
Land inventory
  14 
  - 
  14 
  - 
Restricted sinking fund
  13 
  - 
  - 
  13 
  (13)
 $363 
 $553 
 $(190)
 $108 
 $336 
 $(228)
 
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.
 

 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Liabilities were approximately $92,546,000$93,407,000 at September 30, 20192020 compared to approximately $91,549,000$92,900,000 at December 31, 2018,2019, reflecting the following changes which resulted in an increase of $997,000$507,000 of liabilities:
 
 
September 30,
 
 
December 31,
 
 
Increase
 
 
September 30,
 
 
December 31,
 
 
Increase
 
 
2019
 
 
2018
 
 
(Decrease)
 
 
2020
 
 
2019
 
 
(Decrease)
 
 
 
 
 
($ in thousands)
 
 
 
 
 
  ($ in thousands)  
 
Accounts payable and accrued expenses
 $167 
 $230 
 $(63)
 $159 
 $169 
 $(10)
Accrued real estate taxes
  3 
  - 
  3 
  3 
  - 
  3 
Accrued interest
  83,015 
  81,958 
  1,057 
  84,022 
  83,370 
  652 
Credit agreements:
    
  - 
    
  - 
Notes payable
  1,198 
  - 
  1,198 
  - 
Subordinated convertible
    
    
debentures payable
  8,163 
  - 
  8,025 
  8,163 
  (138)
    
    
 $92,546 
 $91,549 
 $997 
 $93,407 
 $92,900 
 $507 
 
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.
 

PGI INCORPORATED AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
The principal and accrued interest amounts due as of September 30, 20192020 are as indicated in the following table:
 
 
September 30, 2019
 
 
Principal
 
 
Accrued
 
 
September 30, 2020   
 
 
Amount Due
 
 
Interest
 
 
Principal
 
 
Accrued
 
 ($ in thousands)
 
Amount Due
 
 
Interest
 
 
 
 
 
($ in thousands)  
 
Subordinated convertible debentures:
 
 
 
 
 
 
At 6.5%, due June 1991
 $138 
 $277 
At 6%, due May 1992
  8,025 
  26,458 
 $8,025 
 $27,797 
 $8,163 
 $26,735 
    
Collateralized convertible debentures-related party:
    
    
At 14%, due July 8, 1997
 $- 
 $52,915 
 $- 
 $52,790 
    
    
Notes payable:
    
    
At prime plus 2%, all past due
 $1,176 
 $3,365 
 $1,176 
 $3,435 
Non-interest bearing
  22 
  - 
  22 
  - 
 $1,198 
 $3,365 
 $1,198 
 $3,435 
 
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.
 

 
PGI INCORPORATED AND SUBSIDIARIES
 
Forward Looking Statements
 
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.
 
ItemItem 3. Quantitative and QualitativeQualitative Disclosures About Market Risk
 
Not applicable.
 
ItemItem 4. ControlsControls and Procedures
 
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.
 

 
PGI INCORPORATED AND SUBSIDIARIES
 
PARTPART II OTHER INFORMATIONINFORMATION
 
ItemItem 1. Legal ProceedingsProceedings
 
The Company, to its knowledge, currently is not a party to any material legal proceedings.
 
Item 1AI.tem 1A. Risk Factors
 
Not applicable.
 
ItemItem 2. UnregisteredUnregistered Sales of Equity Securities and Use of Proceeds
 
Not applicable.
 
ItemItem 3. DefaultsDefaults Upon Senior Securities
 
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.
 
ItemItem 4. MineMine Safety Disclosures
 
Not applicable.
 
ItemItem 5. Other InformationInformation
 
Not applicable.
 
ItemItem 6. ExhibitsExhibits
 
Reference is made to the Exhibit Index hereof for a list of exhibits filed or furnished under this Item.
 

 
PGI INCORPORATED AND SUBSIDIARIESIGNATURES
 
Pursuant to the requirements 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: November 12, 201913, 2020 
By:  
/s/ Laurence A. Schiffer
Laurence A. Schiffer 
  Laurence A. Schiffer 
President
(Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)
 

 

 
PGI INCORPORATEDINCORPORATED AND SUBSIDIARIES
EXHIBIT INDEX
2. Inapplicable.
3.(i) Inapplicable.
3.(ii) Inapplicable.
4. Inapplicable.
10. Inapplicable.
11. Statement re: Computation of Per Share Earnings (Set forth in Note 2 of the Notes to
 Condensed Consolidated Financial Statements (Unaudited) herein).
15 Inapplicable.
18. Inapplicable.
19. Inapplicable.
22. Inapplicable.
23. Inapplicable.
24. Inapplicable.
 
31(i).1E Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.XHIBIT INDEX
 
31(i).2 Principal Financial Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1 Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350.
32.2 Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350.
95. Inapplicable.
99. Inapplicable.
100. Inapplicable.
101.
2.Inapplicable.
3.(i)Inapplicable.
3.(ii)Inapplicable.
4.Inapplicable.
10.Inapplicable.
11.Statement re: Computation of Per Share Earnings (Set forth in Note 2 of the Notes to Condensed Consolidated Financial Statements (Unaudited) herein).
15Inapplicable.
18.Inapplicable.
19.Inapplicable.
22.Inapplicable.
23.Inapplicable.
24.Inapplicable.
Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
Principal Financial Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350.
Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350.
95.Inapplicable.

99. Inapplicable.
100.Inapplicable.
101.Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.*
 
* Furnished with this report.
 
 
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