-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TwvXsagpYBLB3XGCPtZzzR1cXQwcCRi0Cn+VZe4CZsJEBFV2C2KIWPFyI8a7BmMF VJ21P/V6k4fSyR0L13zlSw== 0001068800-01-500096.txt : 20010409 0001068800-01-500096.hdr.sgml : 20010409 ACCESSION NUMBER: 0001068800-01-500096 CONFORMED SUBMISSION TYPE: 10KSB40 PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010402 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PGI INC CENTRAL INDEX KEY: 0000081157 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 590867335 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB40 SEC ACT: SEC FILE NUMBER: 001-06471 FILM NUMBER: 1591303 BUSINESS ADDRESS: STREET 1: 212 SOUTH CENTRAL STREET 2: SUITE 100 CITY: ST LOUIS STATE: MO ZIP: 63105 BUSINESS PHONE: 3145128650 MAIL ADDRESS: STREET 1: 212 SOUTH CENTRAL STREET 2: SUITE 100 CITY: ST LOUIS STATE: MO ZIP: 63105 FORMER COMPANY: FORMER CONFORMED NAME: PUNTA GORDA ISLES INC DATE OF NAME CHANGE: 19900403 EX-21 1 ex21.txt PGI INCORPORATED SUBSIDIARIES
EXHIBIT 21 PGI INCORPORATED PAGE 1 OF 1 - ---------- ---------------- SUBSIDIARIES ------------ State of Relationship -------- ------------ Incorporation ------------- Sugarmill Woods, Inc. Florida Wholly owned (1) Sugarmill Woods Management, Inc. Florida Wholly owned (1) Deep Creek Utilities, Inc. Florida Wholly owned (1) Southern Woods, Incorporated Florida Wholly owned by Sugarmill Woods, Inc. Burnt Store Marina, Inc. Florida Wholly owned (1) Punta Gorda Isles Sales, Inc. Florida Wholly owned (1) Burnt Store Utilities, Inc. Florida Wholly owned (1) Gulf Coast Credit Corporation Florida Wholly owned (1) Sugarmill Construction, Inc. Florida Wholly owned by Sugarmill Woods, Inc. - -------- (1) Included in the Company's consolidated financial statements.
EX-23 2 ex23.txt CONSENT OF INDEPENDENT CPAS Exhibit 23 - ---------- CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in the registration statement of PGI Incorporated and subsidiaries on Form S-8 (File 2-77149) of our report dated March 15, 2001, relating to the consolidated financial statements of PGI Incorporated and subsidiaries which report is included in this Annual Report on Form 10-KSB. Our report contains an explanatory paragraph regarding uncertainty as to the ability of the Company to continue as a going concern. St. Louis, Missouri /s/ BDO Seidman, LLP March 30, 2001 10KSB40 3 pgi10k.txt FORM 10-KSB FOR PGI INCORPORATED SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2000 ----------------- ( ) TRANSITION REPORT PURSUANT TO 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 or other jurisdiction of (IRS Employer Ident. No.) incorporation or organization) 212 S. Central, Suite 100; St. Louis, Missouri 63105 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's Telephone Number, including area code: (314) 512-8650 -------------- Securities registered pursuant to Section 12 (b) of the Exchange Act: Name of each Exchange Title of Each Class on which Registered - --------------------------------------- ------------------------------ None None None None Securities registered pursuant to Section 12 (g) of the Exchange Act: Common Stock, Par Value $.10 per share 6% Convertible Subordinated Debentures due 1992 Check whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the past 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. X Yes No --- --- Check if there is no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. (x) State the issuer's revenues for its most recent fiscal year $176,000. -------- The aggregate market value of voting stock held by non-affiliates of the registrant can not be determined. See page 4 of Form 10-KSB. State the number of shares outstanding of each of the Issuer's classes of common equity as of the last practicable date. As of March 25, 2001, 5,317,758 shares of Common Stock $.10 par --------------------------------------------------------------- value were outstanding. - ---------------------- The Index to Exhibits is located on pages 38 to 42 of this report. PGI INCORPORATED AND SUBSIDIARIES FORM 10 - KSB - 2000 Contents and Cross Reference Index
Part Item Form 10-KSB No. No. Description Page No. - --- ---- ----------- -------- I 1 Description of Business General 3 Recent Developments 3 2 Description of Property 4 3 Legal Proceedings 4 4 Submission of matters to a Vote of Security Holders 4 II 5 Market for Common Equity and Related Stockholder Matters 4 6 Management's Discussion and Analysis or Plan of Operation 5 - 9 7 Financial Statements 10 - 28 8 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 29 III 9 Directors, Executive Officers, Promoters and Control 30 Persons; Compliance with Section 16 (a) of the Exchange Act 10 Executive Compensation 30 - 31 11 Security Ownership of Certain Beneficial Owners and Management 31 - 32 12 Certain Relationships and Related Transactions 32 - 35 IV 13 Exhibits and Reports on Form 8-K 36 Signatures 37 Exhibit Index 38 - 42
PART I Item 1. Description of Business - ------- ----------------------- GENERAL As used in this Annual Report on Form 10-KSB, the "Company" refers, unless the context otherwise requires, to PGI Incorporated and its subsidiaries. The Company's executive offices are at 212 S. Central, Suite 100, St. Louis, Missouri, 63105, and its telephone number is (314) 512-8650. 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 homesites and selling undeveloped or partially developed tracts of land. In the last 5 years the Company's business focus and emphasis changed substantially as it concentrated its sales and marketing efforts almost exclusively on the disposition in bulk of its undeveloped, platted, residential real estate. This change was prompted by its continuing financial difficulties due to the principal and interest owed on its debt. Presently, the Company's remaining inventory mainly consists of 370 acres located in Hernando County, Florida. In addition, the Company has been actively pursuing collection on delinquent contract receivables from homesite sales. The Company owns approximately 40 lots, mostly located in Citrus County, Florida which are listed for sale. As of January 1, 2001 the Company had no employees, all services provided to the Company are through contract services. RECENT DEVELOPMENTS The Company believes the 370 acres located in Hernando County, Florida may become more marketable because of the property's close proximity to the planned interchange of the Suncoast Expressway with Highway 98. In December, 1999, the Hernando County Commission approved a change in land use of 40 acres of the parcel from residential to commercial use. The Company anticipates that completion of the Suncoast Expressway to Highway 98 will occur in the coming year, but will not continue beyond Highway 98 for several years. The Company has been actively pursuing repossession of lots with delinquent contracts receivable. In the past year, 16 lots were reacquired by obtaining quit claim deeds or through foreclosure, and out of the total inventory of lots owned, 10 were sold. The Company is in the process of foreclosing on 15 additional lots. -3- Item 2. Description of Property - ------- ----------------------- The Company's primary investment in properties relates to its Sugarmill Woods project. The Company generally has fee simple title to these properties, but substantially all of the Company's properties are encumbered by mortgages under either its primary lender agreement with PGIP, LLC, or other financing agreements (see Item 6 and Note 9 to the consolidated financial statements under Item 7). Item 3. Legal Proceedings - ------- ----------------- The Company is a party to a number of lawsuits incidental to the normal operation of its business. Based upon information presently available, the Company does not believe that the resolution of any of the suits individually, or collectively, will have a material adverse effect on its financial position (see Note 15 of Item 7). Item 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- A shareholders meeting was not held during the year 2000. PART II - ------- Item 5. Market for Common Equity and Related Stockholder Matters - ------- -------------------------------------------------------- There is no public trading market for the Company's common equity securities. Based on information received from the National Quotations Bureau, Inc. there have been no reported transactions in the Company's Common Stock since January 29, 1991. No dividends have ever been paid on the Common Stock, and payment of dividends is restricted under the terms of the two indentures pursuant to which the Company's outstanding debentures are issued. As of December 31, 2000 there were 649 holders of record of the Company's Common Stock and approximately 447 debenture holders. -4- Item 6. Management's Discussion and Analysis or Plan of Operation - ------- --------------------------------------------------------- PRELIMINARY NOTE Upon the anticipated completion of the Suncoast Expressway to Highway 98 in the coming year, the Company will evaluate whether it can generate more revenue by developing and selling individual commercial properties or by selling land in bulk. RESULTS OF OPERATIONS Revenues for the year ended December 31, 2000 increased by $40,000 to $176,000 compared to revenues of $136,000 for the year ended December 31, 1999 as a result of an increase in lot sales. The net loss was $1,850,000 ($.47 per share) for 2000 compared to a net loss of $2,249,000 ($.54 per share) for 1999. Included in the 2000 and 1999 earnings per share computation is $640,000 ($.19 per share of Common Stock) of annual cumulative preferred stock dividends in arrears. Real Estate Activities - ---------------------- Sales and Cost of Sales for real estate operations for the years of 2000 and 1999 were: 2000 1999 ---- ---- ($ in thousands) Homesite Sales $ 103 $ 27 Cost of Sales 39 3 ------- ------ Gross Profit Margin $ 64 $ 24 ======= ====== Other Income Activities - ----------------------- Interest income in 2000 decreased by $28,000 to $43,000 from $71,000 compared to a 1999 decrease of $11,000 from 1998, due to a decrease in restricted cash. Other income for the years of 2000 and 1999 was: 2000 1999 ---- ---- ($ in thousands) Other income $ 30 $ 38 ====== ====== Other income decreased by $8,000 in 2000 to $30,000 from $38,000 in 1999. -5- Item 6. Management's Discussion and Analysis or Plan of Operation (continued) Costs and Expenses - ------------------ General and administrative expenses decreased by $516,000 in 2000 compared to 1999 due in part to a $160,000 fee incurred in 1999 to settle on the release of $372,000 in restricted cash relating to a water quality issue regarding boat locks, and a $297,000 reduction in accrued real estate tax as a result of settlement of the taxes for 1994 through 1996. Also in 1999 $48,000 in expenses were incurred as a result of changes in valuation allowances. Interest expense for the two years ended December 31, 2000 and 1999 was: 2000 1999 ---- ---- ($ in thousands) Interest Expense $1,989 $1,847 Interest expense in 2000 increased by $142,000 compared to 1999. FINANCIAL CONDITION Assets decreased at December 31, 2000 compared to assets at December 31, 1999 reflecting the following changes:
Increase ($ in thousands) 2000 1999 (Decrease) ---- ---- ---------- Cash and Cash Equivalents $ 454 $ 28 426 Restricted Cash 333 1,441 (1,108) Receivables 49 43 6 Land and Improvement 760 763 (3) Other Assets 164 166 (2) ------- ------- ------ $ 1,760 $ 2,441 ( 681) ======= ======= ======
Cash increased by $426,000 to $454,000 at December 31, 2000 compared to $28,000 at December 31, 1999. Net cash used in operations was $568,000 for the year ended December 31, 2000 compared to net cash used in operations of $222,000 for the year ended December 31, 1999. Cash received from operations during 2000 was $123,000, a $40,000 increase from cash received during 1999. The majority of the increase is attributable to lot sales in 2000. -6- Item 6. Management's Discussion and Analysis or Plan of Operation (continued) Cash expended for operations increased by $386,000 to $691,000 during 2000 from $305,000 in 1999, reflecting increases in the following classifications; real estate operations ($11,000), consulting and accounting ($318,000), general and administrative ($140,000), interest payments ($1,000) and decreases in taxes and assessments ($48,000); and legal and professional ($36,000). The $1,009,000 provided during 2000 from investing activities included $1,029,000 of restricted cash funds released and $4,000 in proceeds from notes receivable, offset by $24,000 in expenditures relating to inventory and deferred expenditures. The $374,000 provided during 1999 from investing activities included $381,000 of restricted cash funds released of which $300,000 was used for a principal payment towards the primary lender debt and $4,000 in proceeds from notes receivable offset by $11,000 in expenditures relating to purchases of inventory and deferred expenses. The $15,000 utilized during 2000 in financing activities represents a debt repayment of $15,000 to Love Investment Company. The $285,000 utilized during 1999 in financing activities included a $300,000 payment of primary lender debt, offset by $15,000 proceeds from borrowings from Love Investment Company. In order to satisfy its debt obligations, the Company has been and intends to continue to: - actively seek buyers for the remaining portion of the undeveloped acreage, when appropriate; - diligently pursue collection of its receivables and - sell the remaining lots. No assurances can be made that the Company can achieve any of the three above alternatives. A comparison of the contract receivable delinquency status at December 31, 2000 and 1999 follows:
2000 % 1999 % ---- ----- ---- ---- ($ in thousands) Current $ - - $ - - 31 to 60 days delinquent - - - - 61 days to 90 days delinquent - - 4 1.1 Over 90 days $222 100.0 $372 98.9 ---- ----- ---- ----- Total delinquents $222 100.0 $376 100.0 ---- ----- ---- ----- Total contracts $222 100.0 $376 100.0 ==== ===== ==== =====
-7- Item 6. Management's Discussion and Analysis or Plan of Operation (continued) Contracts receivable on homesite sales and related receivables are fully provided for cancellation at December 31, 2000 and 1999. The Company has experienced deterioration in the quality of the contracts receivable portfolio over the past several years. The Company believes the deterioration is the result of the adverse publicity regarding community developers, as well as the difficulty of implementing contract collection activities for foreign receivables. Liabilities were approximately $28,000,000 at December 31, 2000 compared to approximately $26,800,000 at December 31, 1999, reflecting the following changes:
Increase 2000 1999 (Decrease) ---- ---- ---------- ($ in thousands) Accounts payable and accrued expenses $ 112 $ 553 $ (441) Accrued real estate taxes 442 703 (261) Accrued interest 14,981 13,095 1,886 Credit agreements - primary lender 700 700 - Notes payable 1,198 1,213 (15) Convertible subordinated Debentures payable 9,059 9,059 - Convertible debentures payable 1,500 1,500 - ------- ------- -------- $27,992 $26,823 $ 1,169 ======= ======= ========
The $1,886,000 increase in accrued interest at December 31, 2000 compared to year-end 1999 reflects changes in the following:
Increase 2000 1999 (Decrease) ---- ---- ---------- ($ in thousands) Debentures $13,077 $11,323 $ 1,754 Other 1,904 1,772 132 ------- ------- ------- $14,981 $13,095 $ 1,886 ======= ======= =======
The accrued interest relating to debentures increased due to the nonpayment of interest on the company's debentures (see Notes 10 and 11 to the consolidated financial statements under Item 7). The $15,000 decrease in notes payable represents payment of a note from Love Investment Company. (See Note 16 to the consolidated financial statements under Item 7). -8- Item 6. Management's Discussion and Analysis or Plan of Operation (continued) The Company's capital deficiency increased to $26,232,000 at December 31, 2000 from a $24,382,000 capital deficiency at December 31, 1999, reflecting the 2000 operating loss. As of the date of this filing, the Company is in default of the entire principal plus interest on its subordinated debentures payable in amounts indicated in the following table:
12/31/2000 ---------- Principal Unpaid Amount Due Interest ---------- -------- ($ in thousands) Subordinated debentures due June 1, 1991 1,034 $ 754 Subordinated debentures due May 1, 1992 8,025 6,707 ------ ------ 9,059 $7,461 ====== ======
The Company does not have funds available to make any payments of either principal or interest on the above debentures. (See Notes 9 and 10 to the consolidated financial statements under Item 7). The Company has investigated the consequences of a bankruptcy filing and believes that such an event is not in the best interest of either the debenture or equity holders because a bankruptcy filing would negatively impact the Company's business, as well as cause an acceleration of the primary lender indebtedness with PGIP, LLC, and secured debenture debt. Management believes that a bankruptcy filing would prompt all secured lenders to initiate foreclosure proceedings. Since Company assets are encumbered by mortgages, the secured lenders have a perfected security interest and priority over the unsecured debenture holders. New Accounting Standards - ------------------------ Statements of Financial Accounting Standards (SFAS) 133 (as amended) regarding derivative instruments will become effective for the Company immediately subsequent to the year ended December 31, 2000. Historically, the Company has not entered into derivative contracts either to hedge existing risks or for speculative purposes. Accordingly, the adoption of the standard is not expected to affect the Company's financial statements. -9- Item 7. Financial Statements - ------- -------------------- The Stockholders and Board of Directors PGI, Incorporated St. Louis, Missouri We have audited the accompanying consolidated statements of financial position of PGI Incorporated and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' deficiency and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of PGI Incorporated and subsidiaries at December 31, 2000 and 1999, and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company is currently in default of certain sinking fund and interest payments on its convertible subordinated debentures. The Company has a significant accumulated deficit, is in default of its primary debt (Note 9), certain sinking fund and interest payments on its convertible subordinated debentures (Note 10) and its convertible debentures (Note 11). These matters raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in this regard are described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ BDO Seidman, LLP St. Louis, Missouri March 15, 2001 -10- PGI INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION December 31, 2000 and 1999
ASSETS LIABILITES ====== ========== 2000 1999 2000 1999 ---- ---- ---- ---- Cash and cash equivalents $ 454,000 $ 28,000 Accounts payable $ 112,000 $ 553,000 and accrued expenses (Note 8) Restricted cash (Note 3) 333,000 1,441,000 Receivables on real estate sales- Accrued real estate net (Note 4) 10,000 - taxes (Note 8) 442,000 703,000 Other receivables 39,000 43,000 Accrued interest: Land and improvement Debentures 13,077,000 11,323,000 inventories (Note 5) 760,000 763,000 Other 1,904,000 1,772,000 Other assets (Note 7) 164,000 166,000 Credit Agreements - (Note 9) Primary lender 700,000 700,000 Notes payable 1,198,000 1,213,000 Subordinated convertible debentures payable (Note 10) 9,059,000 9,059,000 Convertible debentures payable (Note 11) 1,500,000 1,500,000 ------------ ------------ 27,992,000 26,823,000 ------------ ------------ Commitments and contingencies (Note 15) 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 13) 2,000,000 2,000,000 Common stock, par value $.10 per share; authorized 25,000,000 shares; 5,317,758 shares issued and outstanding (Note 13) 532,000 532,000 Paid-in capital 13,498,000 13,498,000 Accumulated deficit (42,262,000) (40,412,000) ------------ ------------ (26,232,000) (24,382,000) --------- ---------- ------------ ------------ $1,760,00 $2,441,000 $ 1,760,000 $ 2,441,000 ========= ========== ============ ============ See accompanying notes to consolidated financial statements.
-11- PGI INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years ended December 31, 2000 and 1999
2000 1999 ---- ---- Revenues: Real estate sales (Note 2) $ 103,000 $ 27,000 Interest income 43,000 71,000 Other income (Note 2) 30,000 38,000 ------------- ------------- 176,000 136,000 ------------- ------------- Costs and expenses: Cost of real estate sales (Note 2) 39,000 3,000 Interest 1,989,000 1,847,000 Taxes and assessments, net of refunds of $297,000 (Note 15) (185,000) 117,000 Consulting and accounting 42,000 48,000 Legal and professional 67,000 77,000 General and administrative 74,000 293,000 ------------- ------------- 2,026,000 2,385,000 ------------- ------------- Net (Loss) $ (1,850,000) $ (2,249,000) ============= ============= (Loss) Per Share Available to Common Stockholders - Basic and Diluted (Note 18) (.47) (.54) ==== ==== See accompanying notes to consolidated financial statements.
-12- PGI INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended December 31, 2000 and 1999
2000 1999 ---- ---- Cash flows from operating activities: Cash received from operations: Collections from real estate sales and receivables on such sales $ 94,000 $ 58,000 Interest received 12,000 12,000 Other operating receipts 17,000 13,000 ---------- --------- $ 123,000 $ 83,000 ---------- --------- Cash expended for operations: Payments for real estate sales 14,000 3,000 Interest paid 1,000 - Taxes and assessments 72,000 120,000 Consulting and accounting 351,000 33,000 Legal and professional 43,000 79,000 General and administrative 210,000 70,000 ---------- --------- 691,000 305,000 ---------- --------- Net cash flow (used in) operating activities (568,000) (222,000) ---------- --------- Cash flows from investing activities: Purchases of inventory and deferred expenditures (24,000) (11,000) Proceeds from release of restricted cash 1,029,000 381,000 Proceeds from notes receivable 4,000 4,000 ---------- --------- Net cash flow provided by investing activities 1,009,000 374,000 ---------- --------- Cash flows from financing activities: Proceeds from borrowings - 15,000 Principal payments on debt (15,000) (300,000) ---------- --------- Net cash flow (used in) financing activities (15,000) (285,000) ---------- --------- Net increase (decrease) in cash and cash equivalents 426,000 (133,000) Cash and cash equivalents at beginning of year 28,000 161,000 ---------- --------- Cash and cash equivalents at end of year $ 454,000 $ 28,000 ========== ========= Non-cash investing and financing activities: Earnings capitalized into restricted cash $ 22,000 $ 55,000 ---------- --------- Interest paid from restricted cash $ 101,000 $ 142,000 ---------- --------- See accompanying notes to consolidated financial statements.
-13- PGI INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Years ended December 31, 2000 and 1999
2000 1999 ---- ---- Reconciliation of net (loss) to net cash (used in) operating activities: Net (loss) $(1,850,000) $(2,249,000) Adjustments to reconcile net (loss) to net cash (used in) operating activities: Net allowance and valuations related to real estate sales - (160,000) Earnings capitalized into restricted cash (22,000) (55,000) Interest released from restricted cash 101,000 142,000 (Increase) decrease in assets: Contracts and mortgages receivable - 257,000 Other receivables (10,000) - Land and improvement inventories-net 16,000 129,000 Prepaid expenses & deposits 13,000 (2,000) Increase (decrease) in liabilities: Accounts payable and accrued expenses (441,000) 16,000 Accrued real estate taxes (261,000) (4,000) Accrued interest 1,886,000 1,704,000 ----------- ----------- Net cash flow (used in) operating activities $ (568,000) $ (222,000) =========== =========== See accompanying notes to consolidated financial statements.
-14- PGI INCOPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY Years ended December 31, 2000 and 1999
Preferred Stock Common Stock Retained --------------- ------------ Earnings Shares Par Value Shares Par Value Paid-In Capital (Deficit) ------ --------- ------ --------- --------------- --------- Balances at 1/1/99 2,000,000 $2,000,000 5,317,758 $532,000 $13,498,000 $(38,163,000) Net Loss - - - - - (2,249,000) --------- ---------- --------- -------- ----------- ------------ Balances at 12/31/99 2,000,000 $2,000,000 5,317,758 $532,000 $13,498,000 $(40,412,000) Net Loss - - - - - (1,850,000) --------- ---------- --------- -------- ----------- ------------ Balances at 12/31/00 2,000,000 $2,000,000 5,317,758 $532,000 $13,498,000 $(42,262,000) ========= ========== ========= ======== =========== ============ See accompanying notes to consolidated financial statements.
-15- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Significant Accounting Policies: -------------------------------- Principles of Consolidation - --------------------------- The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after eliminating all significant inter-company transactions. Accounting Estimates - -------------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue and Profit Recognition - ------------------------------ Homesites - --------- The Company adopted the installment method of profit recognition in accordance with Statement of Financial Accounting Standard No. 66 "Accounting for Sales of Real Estate". Acreage - ------- Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount, when minimum down payment and other requirements are met. Land and Improvement Inventories - -------------------------------- Land held for sale to customers and land held for bulk sale are stated at cost, which is not in excess of estimated net realizable value. Homesite costs are allocated to projects based on area methods, which consider footage, future improvements costs and frontage. Property and Equipment - ---------------------- Property and equipment are stated at cost. Depreciation is provided principally by the straight-line method over the estimated useful lives of the related assets. Gains or losses resulting from the disposition of property and equipment are respectively included in other income and other expense. -16- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) Cash and Cash Equivalents - ------------------------- For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. New Accounting Standards - ------------------------ SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended, requires companies to recognize all derivative contracts as either assets or liabilities in the balance sheet and to measure them at fair value. If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of the gain or loss recognition on the hedging derivative with the recognition of (1) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (2) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. SFAS No. 133, as amended, is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Management has determined that implementation of FAS 133 on January 1, 2001 will not have an effect on the Company's financial statements. Rounding - -------- The dollar amounts in the accompanying financial statements and notes to the financial statements have been rounded to the nearest thousand. 2. Real Estate Sales and Other Income: ----------------------------------- Real estate sales and cost of sales consisted of:
2000 1999 ---- ---- Homesites sales $103,000 $ 27,000 Cost of Sales 39,000 3,000 -------- -------- Gross Profit Margin $ 64,000 $ 24,000 ======== ======== Other income for the years of 2000 and 1999 was: 2000 1999 ---- ---- Other income $ 30,000 $ 38,000 ======== ========
-17- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) 3. Restricted Cash: ---------------- Restricted cash includes restricted proceeds held by the primary lender as collateral for debt repayment, an escrow for payment of disputed real estate taxes, funds pledged to Florida agencies related to water quality standards, and escrowed receipts related to sold contracts receivable. Restricted cash of $372,000 was released on February 24, 2000. The restricted fund had been established with the deposit of $250,000 in escrow for twenty years pursuant to a Permit Agreement entered into June 19, 1973. The agreement provided for state certification of water quality standards in conjunction with construction of navigable waterways in Charlotte County, Florida. Restricted cash of $557,000 was released on October 25, 2000 with confirmation from Citrus County property appraisers office that no additional taxes are due for 1994 through 1996 tax years. The restricted fund had been established in May, 1998 for payment of disputed taxes for 1994 through 1997 with Citrus County regarding agricultural exemption status. Restricted cash of $100,000 and $50,000 was released in 2000 and 1999, respectively from the restricted funds held by the primary lender to pay operating expenditures. -18- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) 4. Receivables on Real Estate Sales: --------------------------------- Net receivables on real estate consisted of:
2000 1999 ---- ---- Contracts receivable on homesite sales $ 222,000 $ 376,000 Other 10,000 - --------- --------- $ 232,000 376,000 Less: Allowance for cancellations (222,000) (376,000) --------- --------- $ 10,000 $ 0 ========= =========
The Company generally considers receivables on real estate sales delinquent if the scheduled installment payment is over 30 days past due. At December 31, 2000 and 1999 delinquent receivables approximated $222,000 and $376,000 respectively. Contracts receivable on homesite sales and related receivables are fully provided for cancellation at December 31, 2000 and 1999. The Company has been actively pursuing collection on the delinquent receivables. An assessment is made for each contract receivable as to the economic benefit of reacquisition of the lot considering the cost of foreclosure, delinquent taxes and association fees due, and estimated current sale value of the lot. For those with benefit, foreclosure action is begun in the absence of payment or receipt of a quit claim deed of the property back to the Company. Eleven lots were reacquired through foreclosure in the year ended December 31, 2000. At December 31, 2000, 51% of the Company's receivables from real estate sales represented customers who maintain foreign status, and 4% represented accounts which are IRA's. Other receivables on real estate sales at December 31, 2000 represents receivables on lot sales which occurred in December, 2000. 5. Land and Improvements: ---------------------- Land and improvement inventories consisted of:
2000 1999 ---- ---- Unimproved land $613,000 $613,000 Fully improved land 147,000 150,000 -------- -------- $760,000 $763,000 ======== ========
-19- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) 6. Property and Equipment: ----------------------- Property and equipment consisted of:
2000 1999 ---- ---- Furniture, fixtures and other $ 31,000 $ 31,000 equipment Less accumulated depreciation (31,000) (31,000) -------- -------- $ - $ - ======== ========
7. Other Assets: ------------- Other assets consisted of:
2000 1999 ---- ---- Deposit with Trustee of 6 1/2% debentures $152,000 $144,000 Other 12,000 22,000 -------- -------- $164,000 $166,000 ======== ========
8. Accounts Payable and Accrued Expenses: -------------------------------------- Accounts payable and accrued expenses consisted of:
2000 1999 ---- ---- Accounts payable $ 56,000 $ 37,000 Accrued audit/tax expense 33,000 25,000 Accrued consulting fees 2,000 308,000 Accrued legal expense 4,000 2,000 Accrued miscellaneous - 160,000 Estimated recourse liability 17,000 21,000 for receivables sold ---------- --------- $ 112,000 $ 553,000 ========== ========= Accrued Real Estate Taxes: Accrued real estate taxes consisted of: Current 37,000 35,000 Delinquent 405,000 668,000 ---------- --------- $ 442,000 $ 703,000 ========== =========
-20- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) 9. Credit Agreements - Primary Lender and Notes Payable: ----------------------------------------------------- Credit agreements with the Company's primary lender and notes payable consisted of the following:
2000 1999 ---- ---- Credit agreements - primary lender (Balance is past due, bearing interest at prime plus 5.0%): $ 700,000 $ 700,000 Notes payable - $1,176,000 bearing interest at prime rate plus 2%, the remainder bearing interest at 12%; all past due 1,198,000 1,213,000 ---------- ---------- $1,898,000 $1,913,000 ========== ==========
The prime rate at December 31, 2000 was 9.50%. At December 31, 2000 assets collateralizing the Company's credit agreements with its primary lender and notes payable totaled $1,297,000, of which $327,000 represented escrow held by the primary lender, $222,000 represented gross receivables on real estate sales, $39,000 represented other receivables, and $709,000 represented land and improvement inventories. The overall weighted average interest rate for the Company's credit agreements with its primary lender and all remaining notes and mortgages was approximately 12.3% as of December 31, 2000 and 11.2% as of December 31, 1999. Although substantially all of the Company's real and personal property including all of the stock of the Company's wholly-owned subsidiaries remains pledged as collateral, the Company negotiated agreements with its mortgage holders to allow the Company to sell part of its land holdings without requiring full payment of the secured debt. All of the primary lender debt and notes payable are past due. -21- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) 10. Subordinated Convertible Debentures Payable: -------------------------------------------- Subordinated debentures payable consisted of:
2000 1999 ---- ---- 6 1/2%, due June 1991 $1,034,000 $1,034,000 6%, due May 1992 8,025,000 8,025,000 ---------- ---------- $9,059,000 $9,059,000 ========== ==========
Since issuance, $650,000 and $152,000 of the 6 1/2% and 6% debentures, respectively, have been converted into common stock; however, this conversion feature is no longer in effect. The Company is in default of certain sinking fund and interest payments on both subordinated debentures totaling $9,059,000 in principal plus accrued and unpaid interest of $7,461,000 at December 31, 2000 and $6,622,000 as of December 31, 1999. The debentures are not collateralized and are not subordinated to each other, but are subordinated to senior indebtedness ($3,398,000 at December 31, 2000). 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 satisfy the obligation to debenture holders, the Company has been and intends to continue to: - - actively seek buyers for the remaining portion of the undeveloped acreage, when appropriate; - - diligently pursue collection of its receivables; and - - sell the remaining lots. No assurances can be made that the Company can achieve any of the three above alternatives. -22- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) 11. Convertible Debentures Payable: ------------------------------- In July and September 1989, the Company sold $1,282,000 and $1,000,000 respectively, of convertible debentures to a partnership affiliated with the Company's preferred shareholder. In connection with the July 1992 Secured Lender Transaction in partial consideration for the conveyance of 350 acres of property, the principal amount due to convertible debenture holders was reduced by $782,000 and accrued interest thereon was reduced by $389,000 leaving a balance of $1,500,000. The maturity date on all the remaining debentures was extended to July 8, 1997 so that the debentures are in default. The past due debentures accrue interest at 14% compounded quarterly. The Company's primary lender credit agreements, however, prohibit the payment of interest until such time as the primary lender loans are repaid. At maturity the Convertible Debentures purchased on July 24, 1989, were convertible into 868,788 common shares and those purchased on September 29, 1989, were convertible into 1,726,568 common shares, or a total of 2,595,356 shares of common stock at an initial conversion price of $1.72 per share. The conversion price may be adjusted upon the occurrence of certain events. The debentures held by Love-1989 Florida Partners, L.P., which total $796,950 in principal amount are secured by a second mortgage behind PGIP, LLC on the approximate 370 acres retained by the Company and a security interest behind that held by PGIP, LLC in the restricted proceeds escrow. Accrued interest was $5,616,000 and $4,701,000 at December 31, 2000 and 1999 respectively. 12. Income Taxes: ------------- Reconciliation of the statutory federal income tax rates, 34% for the years ended December 31, 2000 and 1999, to the Company's effective income tax rates follows:
2000 1999 ---- ---- ($ in thousands) Amount of tax Percent of Amount of tax Percent of ------------- Pre-tax Loss ------------- Pre-tax Loss ------------ ------------ Expected tax (credit) $(629) (34.0%) $ (765) (34.0%) State income taxes, net of (74) (4.0%) (90) (4.0%) federal tax benefits Current year unused book 703 38.0% 855 38.0% ---- ----- ------- ------ operating loss $ - - $ - - ===== ===== ======= ======
-23- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) At December 31, 2000, the Company had an operating loss carry forward of approximately $36,000,000 which will expire at various dates through 2012. In addition, the Company had unused investment tax credits of approximately $215,000 which will expire at varying dates through 2004.
2000 1999 ---- ---- ($ in thousands) Deferred tax asset: Net operating loss carryover $ 14,303 $ 13,600 Adjustments to reduce land to net realizable value 12 12 Expenses capitalized under IRC 263(a) 56 56 ITC carry forward 215 215 Valuation allowance (14,414) (13,711) -------- --------- $ 172 $ 172 Deferred tax liability: Basis difference of land and improvement inventories $ 172 $ 172 -------- --------- Net deferred tax asset $ 0 $ 0 ======== =========
13. Capital Stock: -------------- In March 1987, the Company sold in a private placement 1,875,000 shares of its Class A cumulative convertible preferred stock to Love-PGI Partners, L.P. ("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, 2000 cumulative preferred dividends in arrears totaled $3,636,000 ($640,000 of which related to the year ended December 31, 2000). On May 15, 1997 preferred dividends accrued through April 25, 1995 totaling $4,260,433 were paid in the form of 2,000,203 shares of common stock. -24- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) As of December 31, 2000, 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, 2000 the Company had reserved 4,684,138 common shares for the conversion of debentures. 14. Quarterly Results: ------------------ In the fourth quarter of 2000 the Company received confirmation from the Citrus County property appraisers office that no additional taxes are due for the 1994 through 1996 tax years. An adjustment was made to reduce accrued real estate taxes and real estate tax expense by $297,000. 15. Commitments and Contingencies: ------------------------------ The Company is a party to various legal proceedings incidental to the normal operation of its business. One instance of litigation involves Sugarmill Woods, Inc. and Citrus County Tax Collector. In 1994, the Citrus County Tax Appraiser denied agricultural exemption status for the undeveloped Sugarmill Woods property and the Company was forced to sue the County to reclaim the tax benefit. In 1995, the Citrus County Tax Appraiser again denied agricultural exemption status for the undeveloped Sugarmill Woods property, but was overruled by the Value Adjustment Board. As a result, the Tax Appraiser sued Sugarmill Woods, and was again successful in denying the agricultural exemption for the property. The Company won on appeal, but the Tax Assessor appealed to the Supreme Court of Florida to reinstate the exemption. On April 1, 1999, the Supreme Court of Florida issued their opinion in favor of Sugarmill Woods, Inc. On November 9, 1999 the Circuit Court of Citrus County adjudged the agricultural classification applicable to tax years 1994, 1995 and 1996 for exemption. The restricted escrow of $557,000 was released in October, 2000 with the confirmation of no further liability for tax years 1994, 1995 and 1996. Tax year 1997 remains in dispute on a matter of timely filing of petition for exemption. -25- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) The aggregate outstanding balances of receivables sold or exchanged with recourse by the Company totaled approximately $34,000 and $42,000 at December 31, 2000 and 1999 respectively. Based on its collateral experience with such receivables, the Company maintained an allowance at December 31, 2000 and 1999 classified in other liabilities, of approximately $17,000 and $21,000 respectively for the recourse provisions related to all receivables sold. Under the terms of the receivables sale agreements the Company must repurchase contracts greater than 90 days past due or exchange current contracts owned by the Company. The repurchase price is equal to the outstanding principal balance of the delinquent contract plus accrued interest. At December 31, 2000, sold contracts receivable greater than 90 days past due totaled $17,000. The related accrued interest is considered immaterial. 16. Related Party Transactions: --------------------------- As of December 31, 2000 the Company was in default of its primary credit agreements with PGIP, LLC ("PGIP"). In September 1999, the Company made a payment of $300,000 on primary lender debt utilizing restricted cash funds. PGIP is owned and managed by Love Savings Holding Company ("LSHC"), Andrew S. Love, Jr. and Laurence A. Schiffer. Messrs. Love and Schiffer are directors and executive officers of LSHC and own slightly more than half of all the issued and outstanding voting stock of LSHC. Messrs. Love and Schiffer serve as the executive officers and directors of the Company and the other Borrowers and the Guarantors. In 1994, the Company moved its administration and accounting offices to Love Real Estate Company ("LREC"). LREC, which is an affiliate of L-PGI, the Company's preferred shareholder, is paid a monthly fee for the following: 1. Maintain books of original entry; 2. Prepare quarterly and annual SEC filings; 3. Coordinate the annual audit; 4. Assemble information for tax filing, review reports as prepared by tax accountants and file same; 5. Track shareholder records through transfer agent; 6. Maintain policies of insurance against property and liability exposure; 7. Handle day-to-day accounting requirements -26- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) In addition, the Company receives office space, telephone service and computer service from LREC. The fee was reduced to $2,800 per month from $3,000 per month effective January 1, 2000. Effective March 25, 1987, the Company entered into a Management Consulting Agreement with LREC. As a consultant to the Company and in addition to the above services, LREC provides other services including, but not limited to, strategic planning, marketing and financing as requested by the Company. In consideration for these consulting services, the Company pays LREC a quarterly consulting fee of one-tenth of one per cent of the book value of the Company's assets, plus reasonable out-of-pocket expenses. As of December 31, 2000, the book value of the Company's assets was approximately $1,760,000. Consulting fees totaling $8,000 and $12,000 were accrued during 2000 and 1999 respectively. The Company made payments of $315,000 in 2000 for consulting fees. As of December 31, 2000 and 1999, a total of $2,000 and $308,000 respectively of unpaid fees had accrued under this agreement. An affiliate of L-PGI, the Company's preferred shareholder, Love Investment Company made an uncollateralized loan to the Company of $15,000 in August 1999. The 1999 loan balance plus accrued interest was paid on February 28, 2000. Interest charged on the loan was $1,000 for the period August, 1999 through February, 2000. 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, 2000 had an outstanding balance, including accrued interest of $431,000. Interest accrued on this loan for years 2000 and 1999 was $20,000 and $18,000 respectively. From time to time, the Company invests in short-term debt obligations of an affiliated bank and holding company. An investment of $250,000 was made in January, 2001 earning interest at the prime rate. 17. Fair Value of Financial instruments: ------------------------------------ The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value: Cash and Short-Term Investments: The carrying amount approximates fair value because of the short maturity of those instruments. -27- PGI INCORPORATED AND SUBSIDIARIES Notes to Consolidated Financial Statements (continued) Debt: It was not practicable to estimate the fair value of the Company's debt with its primary lender, its notes payable and its convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities. Accounts Payable: The carrying amount approximates fair value because of the short-term maturity of those debts. The estimated fair values of the Company's financial instruments are as follows:
Carrying Fair 2000 Amount Value ---- -------- ----- Cash and short-term investments $ 787,000 $787,000 Accounts payable 56,000 56,000 Debt 12,457,000 -
18. (Loss) Per Share: ----------------- The following is a summary of the calculations used in computing basic and diluted (loss) per share:
2000 1999 ---- ---- Numerator: Net (Loss) $(1,850,000) $(2,249,000) Preferred Dividends (640,000) (640,000) ----------- ----------- (Loss) Available to Common Shareholders $(2,490,000) $(2,889,000) =========== =========== Denominator: BASIC Weighted average amount of shares outstanding 5,317,758 5,317,758 DILUTED Weighted average amount of shares outstanding 5,317,758 5,317,758 Dilutive effect of assumed conversion of Preferred Stock - - ----------- ----------- Dilutive common shares 5,317,758 5,317,758 =========== =========== (Loss) per share Basic (.47) (.54) Diluted (.47) (.54)
-28- PGI INCORPORATED AND SUBSIDIARIES Item 8. Changes in and Disagreements with Accountants on Accounting and - ------- --------------------------------------------------------------- Financial Disclosure -------------------- Not Applicable. -29- PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; - ------- ------------------------------------------------------------- Compliance with Section 16(a) of the Exchange Act ------------------------------------------------- The following information, regarding executive officers and directors of the Company, is as of March 25, 2001. Position with Company and Business Experience Name and Age During the Last Five Years ------------ --------------------------------------------- Laurence A. Schiffer Director of the Company since April 1987; President and (age 61) Chief Executive Officer of the Company since February 1994; Vice Chairman of the Board since May 1987; President and Chief Executive Officer of Love Real Estate Company and Love Investment Company since 1973; Chairman of Heartland Bank and President of LSHC, the parent company of Heartland Bank since December 1985; Manager of PGIP since 1995; member of the Real Estate Board of Metropolitan St. Louis and the National Association of Real Estate Boards. Andrew S. Love, Jr. Chairman of the Company's Board of Directors since May (age 57) 1987; Secretary since February 1994; Chairman of the Board of Love Real Estate Company and Secretary of Love Investment Company since 1973; Partner in St. Louis based law firm of Bryan, Cave, McPheeters & McRoberts until 1991; Director of Heartland Bank and Chairman of LSHC, the parent company of Heartland Bank since December 1985; Manager of PGIP since 1995. Executive officers of the Company are appointed annually by the Board of Directors to hold office until their successors are appointed and qualify. Item 10. Executive Compensation - -------- ---------------------- The Company's Chief Executive Officer is Mr. Laurence A. Schiffer. Because of the Company's impaired financial condition, it does not compensate Mr. Schiffer or Mr. Love, the Company's only other executive officer, for the services they perform for the Company in that capacity. Management services are provided to the Company by Love Real Estate Company ("LREC") pursuant to that certain Management Consulting Agreement by and between the Company and LREC dated March 25, 1987 (the "Management Agreement"). Mr. Schiffer is an employee of, and receives an annual salary from LREC. Mr. Love receives only a nominal salary from LREC. Neither the -30- 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 12. "Certain Relationships and Related Party Transactions" for additional information about the Management Agreement. Neither Mr. Schiffer nor Mr. Love received fees from any source directly attributable to their services as directors of the Company during 2000. Item 11. Security Ownership of Certain Beneficial Owners and Management - -------- -------------------------------------------------------------- The table below provides certain information as of March 25, 2001 regarding the beneficial ownership of the Common Stock and 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 Common Preferred Common Preferred Total Voting Name Stock Stock Stock (1) Stock Power (1) ---- ----- ----- --------- ----- --------- Estate of Harold Vernon(9) 998,777(2)(3) - 18.8% - 13.7% Alfred M. Johns(9) 437,414(4) 125,000(4) 8.2% 6.3% 7.7% Love-PGI Partners, L.P.(9) 2,260,706(5) 1,875,000(5) 42.5% 93.8% 56.5% Andrew S. Love, Jr.(9) 385,516(6) 1,875,000(6) 42.5% 93.8% 56.5% Laurence A. Schiffer(9) 385,516(7) 1,875,000(7) 42.5% 93.8% 56.5% All executive officers and directors as a group (2 persons) 385,516(8) 1,875,000(8) 42.5% 93.8% 56.5% 1. The above table does not include 2,595,356 shares that may be received upon conversion of the Company's Convertible Secured Debentures. 2. The shares of Common Stock owned by Mr. Vernon are currently in the possession of the Federal Deposit Insurance Corporation ("FDIC") which is the receiver for First American Bank and Trust, Lake Worth, Florida ("First American"). First American previously made a loan to Mr. Vernon, which was secured by these shares. The loan is in default and the Company understands that the FDIC has the right, pursuant to a pledge agreement, to vote the shares at any annual or special meeting of shareholders. 3. Information obtained from filings made with the Securities and Exchange Commission. 4. Sole voting and investment power over 302,401 shares of Common Stock; shared voting and investment power over 10,100 shares of Common Stock included in the table which are owned by Mr. John's wife; sole voting and investment power over the 125,000 shares of Preferred Stock. 5. The controlling general partner of L-PGI is Love Investment Company, a Missouri Corporation owned by Mr. Love, Love family members and trusts, the Estate of Martha Love Symington and Mr. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of Love Investment Company. 6. These shares are the same shares owned by L-PGI. Mr. Love is an indirect owner of L-PGI. See Footnote 5 above and Item 12. "Certain Relationships and Related Transactions" for more information. 7. These shares are the same shares owned by L-PGI. Mr. Schiffer i an indirect owner of L-PGI. See Footnote 5 above and Item 12. "Certain Relationships and Related Transactions" for more information. 8. These shares are the same shares reflected in Footnotes 5, 6 and 7. See Footnote 5 above and Item 12. "Certain Relationships and Related Transactions" for more information. -31- 9. Addresses for beneficial owners are as follows: Estate of Harold Vernon Love-PGI Partners, L.P. Laurence A. Schiffer 3201 W. Rolling Hills Circle 212 So. Central, Suite 100 212 So. Central, Suite 201 Fort Lauderdale, FL 33328 St. Louis, MO 63105 St. Louis, MO 63105 Alfred M. Johns Andrew S. Love, Jr. One Woodland Drive 212 South Central, Suite 201 Punta Gorda, FL 33950 St. Louis, MO 63105
Item 12. Certain Relationships and Related Transactions - -------- ---------------------------------------------- In order to conserve cash and permit management to concentrate on achieving a sale of all or a portion of its real estate, in 1994 the Company moved its administration and accounting offices to the offices of Love Real Estate Company ("LREC") in St. Louis, Missouri. LREC, a Missouri Corporation, is an affiliate of L-PGI, and is located at 212 South Central Avenue, Suite 100, St. Louis, Missouri 63105. A fee of $3,000 per month was paid to LREC in 1999, and was reduced to $2,800 per month January 1, 2000. The following is a list of services provided: 1. Maintain books of original entry; 2. Prepare quarterly and annual SEC filings; 3. Coordinate the annual audit; 4. Assemble information for tax filing, review reports as prepared by tax accountants and file same; 5. Track Shareholder records through transfer agent; 6. Maintain policies of insurance against property and liability exposure; 7. Handle day-to-day accounting requirements; and 8. Provide telephone and computer service. 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 to any portion of the aforementioned monthly fee to reimbursement of particular expenses or to payment for the management services performed for the Company by individual employees of LREC, including Messrs. Love and Schiffer. Effective as of March 25, 1987, the Company entered into the Management Agreement with LREC. As a consultant to the Company and in addition to the above services, LREC provides other services including, but not limited to, strategic planning, marketing and financing as requested by the Company. In consideration for these consulting services, the Company pays LREC a quarterly consulting fee of one-tenth of one per cent of the book value of the Company's assets, plus reasonable out-of-pocket expenses. As of December 31, 2000, the book value of the Company's assets was approximately $1.8 million. Consulting fees totaling $8,000 were accrued during 2000 and the Company made payments of $315,000 in consulting fees in 2000. As of December 31, 2000, a total of $2,000 of unpaid fees had accrued under the Management Agreement. -32- The Management Agreement will continue in effect until terminated upon 90 days prior written notice by a majority vote of the Company's directors who have no financial interest in LREC or in any LREC affiliated entity. Currently all directors have a financial interest in LREC or one of its affiliates. Mr. Love receives a nominal salary from LREC. Although Mr. Schiffer receives a salary from LREC, such salary compensates him for his services to LREC, which provides consulting services for numerous other entities affiliated with the Company, and none of the amount earned by LREC under the Management Agreement is intended to be allocated or attributable to any officer of 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. An affiliate of L-PGI, Love Investment Company, made uncollateralized loans to the Company, with a balance of $15,000 at December 31, 1999. The loan plus accrued interest was paid off on February 28, 2000. Interest charged on the loan was $1,000 for August, 1999 through February, 2000. In 1989, the Company sold an aggregate $2,282,451 principal amount of the Convertible Debentures in a private placement to Love-1989 Florida Partners, L.P. ("Love-1989") The general partner of Love-1989 is Love Investment Company, which is owned by Mr. Love, Love family members and trusts, the Estate of Martha Love Symington and Mr. Schiffer. The above purchase by Love-1989 of the Debentures was funded in part with a loan from L-PGI. Love-1989 has since repaid the debt to L-PGI in full, in part by transferring a portion of the Debentures held by Love-1989 to L-PGI. In July 1992, as partial consideration for the Company's conveyance of 350 acres of property to L-PGI, the Company retired $782,000 in principal amount of the Debentures held by L-PGI together with $389,000 in accrued interest. The maturity date on all of the remaining Debentures was extended to July 8, 1997 so that the Debentures are in default. The Debentures were in part collateralized by a second mortgage in favor of Love-1989 on 650 acres of the Property owned by the Company, which was sold in May 1998. The 350 acres transferred to L-PGI as described above were also included in the Property sold. Messrs. Love and Schiffer have caused the Company to grant a second mortgage on the Retained Acreage to Love-1989 and in their capacities as control persons of Love-1989, they caused Love-1989 to release its second mortgage on the 650 acres of the Property sold and they caused the Company to grant a security interest to Love-1989 behind that held by PGIP in the escrow of the Restricted Proceeds which is under the control of Messrs. Love and Schiffer since they and a company they control are the managers of PGIP. -33- As of December 31, 2000, Love-1989 held $796,950 in principal amount of the Debentures with respect to which there was at that date accrued and unpaid interest in the amount of $3,011,000. In 1990, $703,050 principal amount of the Debentures was transferred by Love-1989 to one of its (now former) limited partners. That former limited partner continues to hold such Debentures and as of December 31, 2000 there was accrued and unpaid interest with respect thereto in the amount of $2,604,000. In 1985, a corporation owned by Alfred M. Johns, the former Chairman of the Company, and his family made an uncollateralized loan to the Company, which at December 31, 2000 had an outstanding balance, excluding accrued interest, of $176,000. Besides being a direct owner of Common and Preferred Stock, Mr. Johns has no other direct or indirect affiliations with the Company. For the past several years, First Union, the Company's former primary bank lender, had been threatening to foreclose on substantially all of the Company's real estate. This would have forced a liquidation of the Company. To prevent foreclosure, Messrs. Love and Schiffer, who control a large portion of the Voting Capital Stock through their affiliation with L-PGI and who are the Company's only directors and executive offices, formed PGIP in August 1995 to purchase the Company's First Mortgage Indebtedness and to accept the assignment from First Union of the first mortgage securing repayment of the First Mortgage Indebtedness. On March 28, 1996, First Union assigned to PGIP all of its right, title and interest in and to the loan documents (i) evidencing First Union's credit agreements with the Company and Company's subsidiaries, Sugarmill Woods, Burnt Store Marina, Inc., and Gulf Coast Credit Corporation, and (ii) securing such indebtedness with substantially all of the Company's real estate (the "Loan Documents"). At the time of the assignment, the First Mortgage Indebtedness was approximately $9,007,000 in principal and accrued interest. The largest investor in PGIP is Love Savings Holding Company ("LSHC") which holds 100% interest in, and is a manager of PGIP. Messrs. Love and Schiffer own approximately 52% of all the issued and outstanding voting stock of LSHC and serve as the directors and officers of LSHC. Messrs. Love and Schiffer are the managers of PGIP. The holders of the remaining limited liability company interests do not have any affiliation with PGI, LSHC, L-PGI or Love-1989 Florida Partners, L.P. As the purchaser of the loan documents from First Union, PGIP obtained a first mortgage (the "First Mortgage") on the PGI Property. PGIP accepted assignment of the credit agreements, which were in default and with respect to which maturity of the First Mortgage Indebtedness secured by the first mortgage had been accelerated, and advised the Company that so long as the Company were to market and sell its remaining undeveloped land with satisfactory efforts and results, including payments to PGIP out of the proceeds received from the sale of such undeveloped land, PGIP would not proceed -34- with enforced collection of the principal and interest comprising the First Mortgage Indebtedness. During 1998, PGIP further advanced $186,240 to the company to pay fees incurred to continue professional work on the bulk sale of property under the aforementioned Option Agreement, as Amended. On May 13, 1998 upon closing of the bulk acreage sale, the Company paid PGIP $10,362,193 in principal and accrued interest which left $1,000,000 in principal outstanding. After payment of its debts and liabilities with the closing of the bulk acreage sale in May of 1998, PGIP made cash distributions to its members in accordance with its Operating Agreement. LSHC, which held approximately 75% of the PGIP limited liability company interests, received approximately $2,505,097 in excess of its investment in PGIP. Because Messrs. Love and Schiffer, the Company's only directors and executive officers, together own 52% of LSHC, they could be deemed to have "profited" by an aggregate of approximately $1,302,650. The amount of profit to LSHC and Messrs. Love and Schiffer is based on the use of proceeds set forth above. It could increase upon payment of the remaining $1,000,000 mortgage amount and interest and by an additional amount of up to ten percent of PGIP's profit over a specified minimum rate of return based upon the incentive arrangements that PGIP has with its members. At closing, the Company and PGIP executed an escrow agreement (the "Escrow Agreement"). The Escrow Agreement provides that $1,000,000 of the PGI Purchase Price would not be used to repay the First Mortgage Indebtedness, so that $1,000,000 (the "Remaining Indebtedness") of the First Mortgage Indebtedness would remain in place. The $1,000,000 was placed in escrow with PGIP as the escrow agent. Pursuant to the Escrow Agreement, the escrowed funds are to be paid out (i) as requested by PGI and agreed to by PGIP, or (ii) as deemed necessary and appropriate by PGIP, in either case, to protect PGIP's interest in the Retained Acreage (as hereinafter defined), including PGIP's right to receive principal and interest under the First Mortgage securing the Remaining Indebtedness, or (iii) to PGIP to pay any other obligations owed to PGIP by the Company. The real estate owned by the Company, which was not sold to the Purchaser (approximately 370 acres) (the "Retained Acreage") remains subject to the First Mortgage. Since closing, funds have been disbursed from the $1,000,000 escrow to pay interest on the First Mortgage Indebtedness, to make a $300,000 principal payment on the Mortgage in September, 1999, and to release $50,000 to the Company to pay operating expenses in 1999, and $100,000 to pay operating expenses in 2000. The Company believes that the affiliated transactions are on terms comparable to those, which would be obtained from unaffiliated persons. -35- Item 13. Exhibits, Financial Statement Schedules & Reports on Form 8-K - -------- ------------------------------------------------------------- 10-KSB Form (a) 1. Financial Statements Page Number Report of Independent Accountants 10 -- Consolidated Statements of Financial Position December 31, 2000 and 1999 11 -- Consolidated Statements of Operations Years Ended December 31, 2000 and 1999 12 -- Consolidated Statements of Cash Flows Years Ended December 31, 2000 and 1999 13-14 ----- Consolidated Statements of Stockholders' Deficiency Years Ended December 31, 2000 and 1999 15 -- Notes to Consolidated Financial Statements 16-28 ----- (a) 2. Exhibits Reference is made to the Exhibit Index contained on pages 38 to 42 herein for a list of exhibits including each management contract, compensatory plan or arrangement required to be filed under this Item. (b) Reports on Form 8-K. None were filed in the fourth quarter of 2000. -36- SIGNATURES ---------- 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, in the County of St. Louis, State of Missouri, on this 2nd day of April, 2001. PGI INCORPORATED (Registrant) By: /s/ Laurence A. Schiffer ------------------------ Laurence A. Schiffer, President Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ Andrew S. Love, Jr. Chairman of the Board April 2, 2001 - ----------------------- Secretary Andrew S. Love, Jr. /s/ Laurence A. Schiffer Vice Chairman of the April 2, 2001 - ------------------------ Board, President, Principal Laurence A. Schiffer Executive Officer, Principal Financial Officer and Principal Accounting Officer
-37- EXHIBIT INDEX 2. Inapplicable. 3.1 Articles of Incorporation (filed as Exhibit 3.1 to Registrant's Form 10-K Annual Report for the year ended December 31, 1980 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") and incorporated herein by reference). 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, 1997 ("Original 1987 Form 10-K") dated as of March 29, 1987 and incorporated herein by reference). 3.4 Amendments to the Articles of Incorporation effective March 13, 1990 and July 27, 1990, dated as of November 13, 1990 (filed as Exhibit 19 to the September 30, 1990 Form 10-Q and incorporated herein by reference). 3.5 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 10KSB and incorporated herein by reference). 3.6 Articles of Incorporation of PGI Incorporated as amended through December 22, 1997 (filed as Exhibit 3.1 to Registrant's June 30, 1998 Form 10-QSB and incorporated herein by reference). 3.7 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). 4.1 Extension and Forbearance Agreement among PGI Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation and BancFlorida (formerly Naples Federal Savings and Loan Association), dated as of March 25, 1987 (filed as Exhibit 4.4 to the 1986 Form 10-K and incorporated herein by reference). -38- 4.2 Seventh Mortgage and Loan Modification Agreement among PGI Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation and BancFlorida, dated as of March 25, 1987 (filed as Exhibit 4.5 to the 1986 Form 10-K and incorporated herein by reference). 4.3 Eighth Mortgage and Loan modification Agreement among PGI Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation and BancFlorida, dated as of March 25, 1987 (filed as Exhibit 4.6 to the 1986 Form 10-K and incorporated herein by reference). 4.4 Restated Loan and Security Agreement among PGI Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation and BancFlorida, as well as Restated Consolidating Substituted Renewal Note and Future Advance Mortgage Note related thereto, dated as of March 25, 1987 (filed as Exhibit 4.7 to the 1986 Form 10-K and incorporated herein by reference). 4.5 Forbearance Agreement among PGI Incorporated, Punta Gord Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation and BancFlorida (Restated Loan Agreement No. 1), dated as of October 19, 1985 (filed as Exhibit 4.1 to the Registrant's Form 10-Q Quarterly Report for the quarter ended September 30, 1985 and incorporated herein by reference). 4.6 Amendment to Restated Loan Agreement No. 1 (Receivables Loan), as well as Restated Consolidating Substituted Renewal Note relating thereto, dated as of March 25, 1987 (filed as Exhibit 4.9 to the 1986 Form 10-K and incorporated herein by reference). 4.7 Extension, Forbearance and Modification Agreement between PGI Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation, and BancFlorida, dated as of May 20, 1988 (filed as Exhibit 4.1 to the Registrant's Form 10-Q Quarterly Report for the quarter ended June 30, 1988 and incorporated herein by reference). 4.8 Ninth Mortgage and Loan Modification Agreement between PGI Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation, and BancFlorida, dated as of May 20, 1988 (filed as Exhibit 4.2 to Registrant's Form 10-Q Quarterly Report for the quarter ended June 30, 1988 and incorporated herein by reference). 4.9 Purchase Agreement among Finova Financial Services, PGI Incorporated and Punta Gorda Developers, Inc., as well as certain Exhibits and the Mortgage related thereto, dated March 15, 1988 (filed as Exhibit 1 to Registrant's Form 8-K dated as of March 28, 1988 and incorporated herein by reference). -39- 4.10 Tenth Mortgage and Loan Modification Agreement between PGI Incorporated, Punta Gorda Developers, Inc., as well as certain Exhibits and the Mortgage related thereto, dated May 30, 1989 (filed as Exhibit 1 to Registrant's Form 8-K dated as of June 8, 1989 and incorporated herein by reference). 4.11 Eleventh Mortgage and Loan Modification among PGI Incorporated (formerly Punta Gorda Isles, Inc.), Sugarmill Woods, Inc. (formerly Punta Gorda Developers, Inc.), Burnt Store Marina, Inc. and Gulf Coast Credit Corporation and BancFlorida (formerly Naples Federal Savings and Loan Association), dated as of June 1, 1990 (filed as Exhibit 4.2 to Registrant's Form 10-Q Quarterly Report for the quarter ended June 30, 1990 and incorporated herein by reference). 4.12 Loan Forbearance Agreement among PGI Incorporated (formerly Punta Gorda Isles, Inc.), Sugarmill Woods, Inc, (formerly Punta Gorda Developers, Inc.), Burnt Store Marina, Inc. and Gulf Coast Credit Corporation and BancFlorida (formerly Naples Federal Savings and Loan Association), dated as of October 17, 1991 (filed as Exhibit 4.12 to Registrant's Form 10-K dated March 30, 1994 and incorporated herein by reference). 4.13 Twelfth mortgage and loan modification among PGI Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc. and Gulf Coast Credit Corporation and BancFlorida, dated as of July 8, 1992 (filed as Exhibit 4.1 to Registrant's Form 8-K dated as of July 24, 1992, and incorporated herein by reference). 4.14 Thirteenth mortgage and loan modification agreement among PGI Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc., Gulf Coast Credit Corporation and First Union, dated as of May 13, 1994 (filed as Exhibit 4.1 to Registrant's Form 8-K dated May 27, 1994 and incorporated herein by reference). 4.15 Forbearance Agreement dated as of October 12, 1995 by First Union National Bank of Florida, PGI Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc., Gulf Coast Credit Corporation, Southern Woods, Incorporated, Punta Gorda Isles, Inc., Deep Creek Utilities, Inc., Burnt Store Utilities, Inc., and Sugarmill Woods Sales, Inc. (filed as Exhibit 4(i) to Registrant's Form 8-K on November 1, 1995 and incorporated herein by reference). 4.16 Note and Loan Document Purchase Agreement dated as of October 12, 1995 by First Union National Bank of Florida, PGIP, L.L.C., PGI Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation (filed as Exhibit 4 (ii) to Registrant's Form 8-K on November 1, 1995 and incorporated herein by reference). -40- 4.17 Note Purchase and Loan Transaction dated as of March 28, 1996, by First Union National Bank of Florida, PGIP, LLC, PGI Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc. and Gulf Coast Credit Corporation (filed as Exhibit 4.17 to Registrant's Form 10-KSB/A dated August 27, 1997, and incorporated herein by reference). 9. Inapplicable. 10.1 PGI Incorporated Restated 1981 Incentive Stock Option Plan, as amended (filed as Exhibit 10.1 to the Original 1987 Form 10-K and incorporated herein by reference). 10.2 PGI Incorporated 1987 Non-Qualified Stock Option and Stock Appreciation Rights Plan (filed as Exhibit 10.2 to the Original 1987 Form 10-K and incorporated herein by reference). 10.3 Preferred Stock Purchase Agreement by and between PGI Incorporated and Love Development and Investment Company, dated as of February 16, 1987 (filed as Exhibit (i) to the Registrant's Form 8-K Current Report dated February 25, 1987 and incorporated herein by reference). 10.4 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 and incorporated herein by reference). 10.5 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 and incorporated herein by reference). 10.6 Option Agreement For Sale and Purchase dated January 31, 1997, between Sugarmill Woods, Inc., Love-PGI Partners, L.P., and The Nature Conservancy (filed as Exhibit 10.6 to Registrant's Form 10-KSB/A dated August 27, 1997 and incorporated herein by reference). 10.7 First Amendment to Option Agreement for Sale and Purchase dated August 25, 1997 between Sugarmill Woods, Inc., Love-PGI Partners, L.P., and The Nature Conservancy (filed as part of Appendix B to Registrant's Proxy Statement dated December 8, 1997 and incorporated herein by reference). -41- 10.8 Second Amendment to Option Agreement for Sale and Purchase dated September 29, 1997 between Sugarmill Woods, Inc., Love-PGI Partners, L.P., and The Nature Conservancy (filed as part of Appendix B to Registrant's Proxy Statement dated December 8, 1997 and incorporated herein by reference). 11. See Note 18 to the consolidated financial statements. 13. Inapplicable. 16. Inapplicable. 18. Inapplicable. 21. Subsidiaries of the Registrant, filed herein. 22. Inapplicable. 23. Consent of Independent Certified Public Accountants, filed herein. 24. Inapplicable. 99. Inapplicable. -42- -----END PRIVACY-ENHANCED MESSAGE-----