-----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, LdPUMDU1opR6MYLwm9BcoB1XMrLVXudt/5HCZKuEuunK8sHzWwld5nAYveZ8LcGR ZecKk+JLwWogXV/3fCU72A== 0001068800-07-001390.txt : 20070807 0001068800-07-001390.hdr.sgml : 20070807 20070807163206 ACCESSION NUMBER: 0001068800-07-001390 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20070630 FILED AS OF DATE: 20070807 DATE AS OF CHANGE: 20070807 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: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-06471 FILM NUMBER: 071031994 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 10QSB 1 pgi10q.txt U.S SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 - QSB (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2007 ----------------- [ ] 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 small business issuer as specified in its charter) FLORIDA 59-0867335 ---------------------------------------------- ------------------------------------ (State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
212 SOUTH CENTRAL, SUITE 100, ST. LOUIS, MISSOURI 63105 -------------------------------------------------------- (Address of principal executive offices) (314) 512-8650 -------------- (Issuer's telephone number) N/A ----------------------------------------------------------------------- (Former Name, Former Address and Former Fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act 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. Yes X No --------- --------- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X --------- --------- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of August 6, 2007, there were 5,317,758 shares of the issuer's common stock, $.10 par value per share, outstanding. Transitional Small Business Disclosure Format (Check one): Yes No X --------- --------- 1 PGI INCORPORATED AND SUBSIDIARIES Form 10 - QSB For the Quarter Ended June 30, 2007 Table of Contents -----------------
Form 10 - QSB Page No. --------- PART I Financial Information Item 1. Financial Statements Condensed Consolidated Statements of Financial Position June 30, 2007 (Unaudited) and December 31, 2006 3 Condensed Consolidated Statements of Operations (Unaudited) Three and Six Months Ended June 30, 2007 and 2006 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 2007 and 2006 5 Notes to Consolidated Financial Statements (Unaudited) 6 Item 2. Management's Discussion and Analysis or Plan of Operation 12 Item 3. Controls and Procedures 16 PART II Other Information Item 1. Legal Proceedings 17 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17 Item 3. Defaults Upon Senior Securities 17 Item 4. Submission of Matters to a Vote of Security Holders 17 Item 5. Other Information 17 Item 6. Exhibits 17 SIGNATURE 18 EXHIBIT INDEX 19
2 PART I FINANCIAL INFORMATION Item 1. Financial Statements PGI INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ($ in thousands)
June 30, December 31, 2007 2006 ---- ---- (Unaudited) ASSETS Cash and cash equivalents $ 16 $ 3 Restricted cash 5 5 Receivables 890 926 Land and improvement inventories 639 641 Other assets 178 199 ------- ------- $ 1,728 $ 1,774 ======= ======= LIABILITIES Accounts payable & accrued expenses $ 107 $ 52 Accrued real estate taxes 9 18 Accrued interest: Primary Lender 73 39 Debentures 29,528 27,854 Other 2,507 2,448 Credit Agreements - Primary lender 500 500 Notes payable 1,198 1,198 Subordinated debentures payable 9,059 9,059 Convertible debentures payable 1,500 1,500 ------- ------- $44,481 $42,668 ------- ------- 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) 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 (58,783) (56,924) ------- ------- (42,753) (40,894) ------- ------- $ 1,728 $ 1,774 ======= ======= See accompanying notes to condensed consolidated financial statements.
3 Part I Financial Information (Continued) PGI INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per share data) (Unaudited)
Three Months Ended Six Months Ended ------------------ ---------------- June 30, June 30, June 30, June 30, 2007 2006 2007 2006 ---- ---- ---- ---- REVENUES Real Estate Sales $ - $ 10 $ 30 $ 10 Interest Income 21 20 43 38 Other Income - 3 1 5 -------- ---------- ---------- ------- 21 33 74 53 -------- ---------- ---------- ------- COSTS AND EXPENSES Cost of Real Estate Sales $ - $ - $ 5 $ - Interest 895 811 1,767 1,599 Taxes & Assessments 7 5 12 9 Consulting & Accounting 11 10 21 20 Legal & Professional 6 18 99 23 General & Administrative 16 19 29 33 -------- ---------- ---------- ------- 935 863 1,933 1,684 -------- ---------- ---------- ------- NET (LOSS) $ (914) $ (830) $ (1,859) $(1,631) ======== ========== ========== ======= NET (LOSS) PER SHARE (*) $ (.20) $ (.19) $ (.41) $ (.37) ======== ========== ========== ======= * Considers the effect of cumulative preferred dividends in arrears for the three and six months ended June 30, 2007 and 2006. See accompanying notes to condensed consolidated financial statements
4 Part I Financial Information (Continued) PGI INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in thousands) (Unaudited)
Six Months Ended ---------------- June 30, June 30, 2007 2006 ---- ---- Net cash provided by (used in) operating activities $ 14 $ (91) ------ --------- Cash flows from investing activities: Proceeds from restricted cash - 232 Proceeds from notes receivable 290 - Investment in notes receivable (291) (273) Purchases of inventory and deferred expenditures - (11) ------ --------- Net cash used in investing activities (1) (52) ------ --------- Net increase (decrease) in cash 13 (143) Cash at beginning of period 3 147 ------ --------- Cash at end of period $ 16 $ 4 ====== ========= See accompanying notes to condensed consolidated financial statements
5 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 and its subsidiaries (the "Company") have been prepared in accordance with the instructions to Form 10 - QSB 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 accountants included an explanatory paragraph regarding the Company's ability to continue as a going concern in their opinion on the Company's condensed consolidated financial statements for the year ended December 31, 2006. 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-KSB annual report for 2006 filed with the Securities and Exchange Commission. The condensed consolidated balance sheet as of December 31, 2006 has been derived from the audited consolidated balance sheet as of that date. The Company remains in default under the indentures governing its unsecured subordinated debentures and collateralized convertible debentures and in default of its primary debt obligations. (See Management's Discussion and Analysis or Plan of Operation and Notes 7, 8, and 9 to the Company's consolidated financial statements for the year ended December 31, 2006, as contained in the Company's Annual Report on Form 10 - KSB). 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 six months ended June 30, 2007 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 2007 or any other interim period. (2) Per Share Data Basic per share amounts are computed by dividing net income (loss), after considering cumulative dividends in arrears on the Company's preferred stock, by the average number of common shares and common stock equivalents outstanding. For this purpose, the Company's cumulative convertible preferred stock and collateralized convertible debentures are not deemed to be common stock equivalents. The average number of common shares outstanding for the six months ended June 30, 2007 and 2006 was 5,317,758. 6 PGI INCORPORATED AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (continued) Diluted per share amounts are computed by dividing net income (loss) by the average number of common shares outstanding, after adjusting for the estimated effect of the assumed conversion of all cumulative convertible preferred stock and collateralized convertible debentures into shares of common stock. For the six months ended June 30, 2007 and 2006, the assumed conversion of all cumulative convertible preferred stock and collateralized convertible debentures would have been anti-dilutive. The following is a summary of the calculations used in computing basic and diluted (loss) per share for the three and six months ended June 30, 2007 and 2006.
Three Months Ended Six Months Ended ------------------ ---------------- June 30, June 30, June 30, June 30, 2007 2006 2007 2006 ---- ---- ---- ---- Net (Loss) $ (914,000) $ (830,000) $(1,859,000) $(1,631,000) Preferred Dividends $ (160,000) $ (160,000) $ (320,000) $ (320,000) ----------- ---------- ----------- ----------- (Loss) Available to Common Shareholders $(1,074,000) $ (990,000) $(2,179,000) $(1,951,000) =========== ========== =========== =========== Weighted Average Number Of Shares Outstanding 5,317,758 5,317,758 5,317,758 5,317,758 Basic and Diluted (Loss) Per Share $(.20) $.19) $(.41) $(.37)
(3) Statement of Cash Flows The Financial Accounting Standards Board issued Statement No. 95, "Statement of Cash Flows", which 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. There were no payments of interest for the six months ended June 30, 2007. Interest paid for the six months ended June 30, 2006 was $32,000. (4) Restricted Cash Restricted cash includes restricted proceeds held by the primary lender as collateral for debt repayment. 7 PGI INCORPORATED AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (continued) (5) Receivables Net receivables consisted of:
June 30, December 31, 2007 2006 ---- ---- ($ in thousands) Notes receivable - related party $ 874 $ 873 Interest receivable - related party 16 53 ------ ------ $ 890 $ 926 ====== ======
(6) Land and Improvements Land and improvement inventories consisted of:
June 30, December 31, 2007 2006 ---- ---- ($ in thousands) Unimproved land $ 625 $ 625 Fully improved land 14 16 ------ ------ $ 639 $ 641 ====== ======
(7) Other Assets Other assets consisted of:
June 30, December 31, 2007 2006 ---- ---- ($ in thousands) Deposit with Trustee of 6-1/2% debentures $ 176 $ 172 Other 2 27 ------ ------ $ 178 $ 199 ====== ======
8 PGI INCORPORATED AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (continued) (8) Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of:
June 30, December 31, 2007 2006 ---- ---- ($ in thousands) Accounts payable $ 9 $ 12 Accrued audit & professional 25 32 Accrued legal 2 - Accrued consulting fees - 2 Accrued accounting services - 5 Accrued miscellaneous 71 1 ------ ------ $ 107 $ 52 ====== ====== Accrued Real Estate Taxes consisted of: Current real estate taxes $ 9 $ 18 ====== ======
(9) Primary Lender Credit Agreements, Notes Payable, Subordinated and Convertible Debentures Payable Credit agreements with the Company's primary lender and notes payable consisted of the following:
June 30, December 31, 2007 2006 ---- ---- ($ in thousands) Credit agreements - primary lender: (maturing June 1, 1997, bearing interest at prime plus 5%) $ 500 $ 500 Notes payable - bearing interest at prime plus 2% 1,198 1,198 ------ ------- $1,698 $ 1,698 ------ ------- Subordinated debentures payable: At 6-1/2% interest; due June 1, 1991 1,034 1,034 At 6% interest; due May 1, 1992 8,025 8,025 ------ ------- $9,059 $ 9,059 ------ -------
9 PGI INCORPORATED AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (continued) Collateralized convertible debentures payable: At 14% interest; due July 8, 1997, convertible into shares of common stock at $1.72 per share 1,500 1,500 ------- ------- $12,257 $12,257 ======= =======
(10) Real Estate Sales and Other Income Real Estate Sales and Cost of Sales for the three and six months ended June 30, 2007 and 2006 were as follows:
Three Months Ended Six Months Ended ------------------ ---------------- ($ in thousands) ($ in thousands) June 30, June 30, June 30, June 30, 2007 2006 2007 2006 ---- ---- ---- ---- Real Estate Sales $ - $ 10 $ 30 $ 10 Cost of Sales - - 5 -
In the first quarter of 2007, the Company completed the sale of a single family lot at the price of $30,000. There were no sales of real estate in the second quarter of 2007. In the second quarter of 2006, the Company completed the sale of a small piece of land at the price of $10,000. This odd remnant of a lot was not carried for any value on the Company's books. There was no other income for the three months ended June 30, 2007. Other income for the three months ended June 30, 2006 was $3,000. Other income mainly consists of recoveries of contracts receivable which have been fully provided for cancellation. Other income for the six months ended June 30, 2007 and 2006 was $1,000 and $5,000, respectively. (11) Income Taxes At December 31, 2006, the Company had an operating loss carryforward of approximately $41,000,000 to reduce future taxable income. These operating losses expire at various dates through 2026. 10 PGI INCORPORATED AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (continued) The following summarizes the temporary differences of the Company at June 30, 2007 and December 31, 2006 at the current statutory rate:
June 30, December 31, 2007 2006 ---- ---- ($ in thousands) Deferred tax asset: Net operating loss carryforward $ 16,590 $ 15,884 Adjustments to reduce land to net realizable value 12 12 Expenses capitalized under IRC 263(a) 56 56 Valuation allowance (16,486) (15,780) --------- ---------- 172 172 Deferred tax liability: Basis difference of land and improvement inventories 172 172 --------- ---------- Net deferred tax asset $ - $ - ========= ==========
11 PGI INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation Preliminary Note The Company's most valuable remaining asset is a parcel of 366 acres located in Hernando County, Florida. As of June 30, 2007, the Company also owned 7 single family lots, located in Citrus County, Florida. In addition, the Company also owns some minor parcels of real estate in Charlotte County, Florida and Citrus County, but these have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale. The 366 acre parcel in Hernando County is difficult to value because of uncertainty related to the possible extension of the Suncoast Expressway, which terminates on the south side of Route 98 opposite this property. Planning continues for the proposed northward continuation of the Suncoast Expressway, and based on a recent endorsement by the Citrus County Commission to re-adopt a project that was originally approved in 1998, the route that is presently believed to be the most probable is through the middle of this parcel of property. However, until and unless the uncertainty regarding the future expansion of the Suncoast Expressway is resolved, planning with respect to this property is difficult. Results of Operations Revenues for the three months ended June 30, 2007 decreased by $12,000 to $21,000 from $33,000 for the comparable 2006 period primarily as a result of decreased real estate sales revenue in the respective three month period. Expenses for the three months ended June 30, 2007 increased by $72,000 when compared to the same period in 2006 primarily due to an increase in interest expense. As a result, a net loss of $914,000 was incurred for the three months ended June 30, 2007 compared to a net loss of $830,000 for the comparable period in 2006. Revenues for the first six months of 2007 increased by $21,000 to $74,000 from $53,000 for the comparable 2006 period primarily as a result of increased real estate sales revenue in the current year. Expenses for the six month period ended June 30, 2007 increased by $249,000 when compared to the same period in 2006 primarily resulting from an increase in interest expense of $168,000 and an increase in legal and professional expenses of $76,000. This increase in legal and professional expenses is primarily due to costs and expenses incurred during the first quarter of 2007 on a parcel of property located in Citrus County requiring some environmental remediation. As a result, a net loss of $1,859,000 was incurred for the first six months of 2007 compared to a net loss of $1,631,000 for the first six months of 2006. After consideration of cumulative preferred dividends in arrears, totaling $320,000 for each of the six months ended June 30, 2007 and 2006(based on $160,000 for each three month period therein), a net loss per share of $(.41) and $(.37) was reported for the six month periods ended June 30, 2007 and 2006, respectively. The total cumulative preferred dividends in arrears through June 30, 2007 is $7,795,000. Real Estate Sales and Cost of Sales consisted of:
Three Months Ended Six Months Ended ------------------ ---------------- ($ in thousands) ($ in thousands) June 30, June 30, June 30, June 30, 2007 2006 2007 2006 ---- ---- ---- ---- Real Estate Sales $ - $ 10 $ 30 $10 Cost of Sales - - 5 -
12 PGI INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation (continued) In the first quarter of 2007, the Company completed the sale of a single family lot at the price of $30,000. There were no sales of real estate in the second quarter of 2007. In the second quarter of 2006, the Company completed the sale of a small piece of land at the price of $10,000. This odd remnant of a lot was not carried for any value on the Company's books. There were no sales of real estate in the first quarter of 2006. There was no other income for the three months ended June 30, 2007. Other income for the three months ended June 30, 2006 was $3,000. Other income primarily consists of recoveries of contracts receivable, which had been fully provided for cancellation. Other income for the six months ended June 30, 2007 and 2006 was $1,000 and $5,000, respectively. Interest expense during the three month and six month periods ended June 30, 2007 increased by $84,000 and $168,000, respectively, when compared to the same periods during 2006 as a result of (i) interest accruing on past due balances which increase at various intervals during the year for accrued but unpaid interest, and (ii) an increase in interest rates during the first six months of 2007 when compared to the same period in 2006. The average prime interest rate was 8.25% and 7.25% in the first six months of 2007 and 2006, respectively. As of June 30, 2007, the Company remained in default of its primary lender indebtedness with PGIP, LLC ("PGIP") of $500,000, as well as in default under its subordinated and convertible debentures. PGIP holds restricted funds of the Company pursuant to an escrow agreement whereby funds may be disbursed (i) as requested by the Company and agreed to by PGIP, (ii) as deemed necessary and appropriate by PGIP, to protect PGIP's interest in the Retained Acreage (as hereinafter defined), including PGIP's right to receive principal and interest under the note agreement securing the remaining indebtedness, or (iii) to PGIP to pay any other obligations owed to PGIP by the Company. The restricted escrow funds held by PGIP were $5,000 at June 30, 2007 and December 31, 2006. The Company did not utilize any of the restricted escrow funds during the six months ended June 30, 2007. The primary parcel of real estate owned by the Company, totaling 366 acres and located in Hernando County, Florida (the "Retained Acreage"), remains subject to the primary lender indebtedness. Cash Flow Analysis During the six month period ended June 30, 2007, the Company's cash flow increased by $13,000, as compared to a decrease of $143,000 during the same period in 2006. Net cash provided by operating activities for the six months ended June 30, 2007 was $14,000 compared to net cash used in operating activities of $91,000 for the comparable 2006 period, primarily as a result of the proceeds of $30,000 received by the Company from its real estate sale in the first quarter of 2007 and the interest payment of $62,000 received by the Company from its investment in a short term note with Love Investment Company, an affiliate of L-PGI, the Company's preferred shareholder, in the second quarter of 2007. 13 PGI INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation (continued) Analysis of Financial Condition Total assets decreased by $46,000 at June 30, 2007 compared to total assets at December 31, 2006, reflecting the following changes:
June 30, December 31, Increase 2007 2006 (Decrease) ---- ---- ---------- ($ in thousands) Cash and cash equivalents $ 16 $ 3 $ 13 Restricted cash 5 5 - Receivables 890 926 (36) Land and improvement inventories 639 641 (2) Other assets 178 199 (21) ------ ------ ------ $1,728 $1,774 $ (46) ====== ====== ======
Receivables decreased at June 30, 2007 due to the receipt by the Company of an interest payment from Love Investment Company in the amount of $62,000 in the second quarter of 2007. Other assets decreased during the six months ended June 30, 2007 due to the realization of certain deferred expenses in the amount of $21,000 related to an environmental remediation matter discussed above. Liabilities were approximately $44.5 million at June 30, 2007 compared to approximately $42.7 million at December 31, 2006, reflecting the following changes:
June 30, December 31, Increase 2007 2006 (Decrease) ---- ---- ---------- ($ in thousands) Accounts payable & accrued expenses $ 107 $ 52 $ 55 Accrued real estate taxes 9 18 (9) Accrued interest 32,108 30,341 1,767 Credit agreements - primary lender 500 500 - Notes 1,198 1,198 - Convertible subordinated debentures payable 9,059 9,059 - Convertible debentures payable 1,500 1,500 - ------- ------- ------ $44,481 $42,668 $1,813 ======= ======= ======
Accrued expenses increased at June 30, 2007 compared to December 30, 2006 as a result of the accrual of expenses during this period related to an environmental remediation matter discussed above. The Company remains totally dependent upon the sale of property to fund its operations and debt service requirements. 14 PGI INCORPORATED AND SUBSIDIARIES Item 2. Management's Discussion and Analysis or Plan of Operation (continued) The Company remains in default of the entire principal plus interest on its subordinated and convertible debentures and notes payable, as well as its primary lender indebtedness with PGIP. The amounts due are as indicated in the following table:
June 30, 2007 ------------- Principal Accrued Amount Due Interest ---------- -------- ($ in thousands) Subordinated debentures: ------------------------ At 6 1/2%, due June 1, 1991 $ 1,034 $ 1,219 At 6%, due May 1, 1992 8,025 12,404 -------- ------- $ 9,059 $13,623 ======== ======= Collateralized convertible debentures: -------------------------------------- At 14%, due July 8, 1997 $ 1,500 $15,905 ======== ======= Notes Payable: -------------- At prime plus 2% $ 1,176 $ 2,507 Non-interest bearing 22 - -------- ------- $ 1,198 $ 2,507 ======== ======= Primary Lender: $ 500 $ 73 --------------- ======== =======
The Company does not have sufficient funds available to satisfy either principal or interest obligations on the above debentures and notes payable. Forward Looking Statements - -------------------------- The discussion set forth in this Item 2, as well as other portions of this Form 10-QSB, 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-QSB. When used in this Form 10-QSB, 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 or convertible debentures; continued failure by governmental authorities to make a decision with respect to the Suncoast Expressway as described under Item 2; 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. 15 PGI INCORPORATED AND SUBSIDIARIES Item 3. Controls and Procedures We have evaluated the effectiveness of the design and operation of our disclosure controls and procedures under the supervision and with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"). Based on this evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2007. There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 16 PGI INCORPORATED AND SUBSIDIARIES PART II OTHER INFORMATION Item 1. Legal Proceedings The Company is a party to routine legal proceedings incidental to the normal operation of its business. The Company does not believe that the resolution of any such proceedings individually, or collectively, will have a material effect on its financial position. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. Item 3. Defaults Upon Senior Securities See discussion in Item 2 of Part 1 with respect to defaults on the Company's subordinated debentures and collateralized convertible debentures and with respect to cumulative preferred dividends in arrears, which discussions are incorporated herein by this reference. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits Reference is made to the Exhibit Index hereof for a list of exhibits filed under this Item. 17 PGI INCORPORATED AND SUBSIDIARIES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PGI INCORPORATED ---------------- (Registrant) Date: August 7, 2007 /s/ Laurence A. Schiffer ----------------- ------------------------- Laurence A. Schiffer President (Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer) 18 PGI INCORPORATED 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. 20. Inapplicable. 22. Inapplicable. 23. Inapplicable. 24. Inapplicable. 31.1 Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended. 31.2 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. 19 EX-31.1 2 ex31p1.txt Exhibit 31.1 RULE 13a - 14(a) CERTIFICATION ------------- I, Laurence A. Schiffer, certify that; 1. I have reviewed this quarterly report on Form 10-QSB of PGI Incorporated; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [reserved for future use;] c) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. /s/ Laurence A. Schiffer August 7, 2007 - --------------------------------------- Laurence A. Schiffer Principal Executive Officer EX-31.2 3 ex31p2.txt Exhibit 31.2 RULE 13a - 14(a) CERTIFICATION ------------- I, Laurence A. Schiffer, certify that; 1. I have reviewed this quarterly report on Form 10-QSB of PGI Incorporated; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) [reserved for future use;] c) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. /s/ Laurence A. Schiffer August 7, 2007 - --------------------------------------- Laurence A. Schiffer Principal Financial Officer EX-32.1 4 ex32p1.txt Exhibit 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350* In connection with the Quarterly Report of PGI Incorporated (the "Company") on Form 10-QSB for the period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Laurence A. Schiffer, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Laurence A. Schiffer - --------------------------------------------- Laurence A. Schiffer Chief Executive Officer (Principal Executive Officer) August 7, 2007 *A signed original of this written statement has been provided to the Company and will be retained by the Company and will be furnished to the Securities and Exchange Commission or its staff upon request. EX-32.2 5 ex32p2.txt Exhibit 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350* In connection with the Quarterly Report of PGI Incorporated (the "Company") on Form 10-QSB for the period ended June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Laurence A. Schiffer, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Laurence A. Schiffer - --------------------------------------------- Laurence A. Schiffer Chief Financial Officer (Principal Financial Officer) August 7, 2007 *A signed original of this written statement has been provided to the Company and will be retained by the Company and will be furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----