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-ownedwholly owned subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). The single family lots and the 7 acre parcel in Citrus County have been listed for sale with a real estate agent. Subsequent to September 30, 2021, three of the single family lots were sold and PGI realized approximately $60,000. In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-ownedwholly owned subsidiary of the Company, owns 1211 parcels of real estate in Charlotte County, Florida, which in total approximates 6058 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 to timely to file Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K with the Securities and Exchange Commission (the “SEC”). PGI currently intends to include in such Quarterly and Annual Reports all consolidated financial statements required to be included therein pursuant to Regulation S-X. The consolidated financial statements were audited prior to 2019 by BKD, LLP (“BKD”) and a review was performed with respect to 2019 by Milhouse & Neal, LLP. However, due 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 for the year 2020.periods after 2019. Such disclosure was made on Form 8-K filed with the SEC on July 2, 2020. PGI engaged Milhouse & Neal, a PCAOB registered public accounting firm, to review its annual consolidated financial statements for its fiscal year ended December 31, 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 $92.6$93.7 million as of December 31, 2019.2020. 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 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 of September 30, 2020,2021, 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 its collateralized convertible debentures.

There was no revenue for the three month period ended September 30, 2021 compared to revenue of $2,000 for the three month period ended September 30, 2020. Revenue for the three months ended September 30, 2020 represents other income from a lot lien receivable recovery recorded in previous years which had been fully provided for cancellation.

Expenses for the three month period ended September 30, 2020 decreased2021 increased by $432,000$416,000 when compared to the same period in 2019. This decrease reflects2020 as follows:

PGI INCORPORATED AND SUBSIDIARIES

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Interest expense relating to the Company’s outstanding debt, held by non-related parties, increased by $6,000 during the three month period ended September 30, 2021 compared to the same period in 2020. Interest expense relating to the Company’s outstanding debt for the 6% subordinated convertible debentures, increased by $7,000 primarily as a result of interest compounding on past due balances. Interest expense relating to the 6.5% subordinated debentures decreased by $1,000 compared to the same period in 2020. The debentures were surrendered in 2020 with the escheatment to the respective states of debenture holders.

There was no forgiveness of debt and interest for the three months ended September 30, 2021 compared to $410,000 for the three month period ended September 30, 2020. The forgiveness of $410,000 whichdebt and interest in the three months ended September 30, 2020 is attributed to the 6.5%6.25% 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 $1,000 decrease in consulting

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.

General and administrative expenses during the three month period ended September 30, 2020 decreased2021 increased by $6,000$2,000 when compared to the same period in 2019 primarily as a result of2020 due to expenses incurred with listing the discontinuation ofsingle family lots and the independent accounting firm review services7 acre parcel in the current year.

The Company realizedincurred a net incomeloss of $42,000$376,000 during the three month period ended September 30, 20202021 compared to a net lossincome of $392,000$42,000 for the comparable period in 2019.2020. After deducting preferred dividends, totaling $160,000 for the three month periods ended September 30, 20202021 and 2019,2020, with respect to the Class A Preferred Stock, a net loss per share of $(.02)$(.10) and $(.10)$(.02) was incurred for the three month periods ended September 30, 20202021 and 2019,2020, respectively. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through September 30, 20202021 is $16,275,000.