10-Q 1 pgi_10q.htm 10-Q pgi_10q
 

FORM 10- Q
U.S SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
(Mark One)
 
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2021
 
    TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from ___________________ to _____________________
 
Commission File Number 1-6471 
 
PGI INCORPORATED
(Exact name of registrant as specified in its charter)
 
 FLORIDA
 59-0867335
 (State or other jurisdiction of incorporation)
 (I.R.S. Employer Identification No.)
 
212 SOUTH CENTRAL, SUITE 304, ST. LOUIS, MISSOURI 63105
(Address of principal executive offices)
 
(314) 512-8650
(Registrant’s telephone number, including area code)
 
Inapplicable       
(Former Name, Former Address and Former Fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X  No 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes X  No _______
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer___________
Non-accelerated filer____________
Accelerated filer__________
Smaller reporting company X
(Do not check if a smaller reporting company)
Emerging growth company __________
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No X
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
None
Inapplicable
Inapplicable
 
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of May 14, 2021, there were 5,317,758 shares of the registrant’s common stock, $.10 par value per share, outstanding.
 

 
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Form 10 – Q
For the Quarter Ended March 31, 2021
 
Table of Contents
 
 
 
 Form 10 - Q
     Page No.
PART I
FINANCIAL INFORMATION
 
Item 1.
Financial Statements (Unaudited)
Condensed Consolidated Statements of Financial Position
March 31, 2021 and December 31, 2020
3
 
Condensed Consolidated Statements of Operations
Three Months Ended March 31, 2021 and 2020
4
 
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 2021 and 2020
5
 
Condensed Consolidated Statements of Stockholders’ Deficiency
Three Months Ended March 31, 2021 and 2020
6

Notes to Condensed Consolidated Financial Statements
  7
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
 11
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
17
Item 4.
Controls and Procedures
17
PART II
OTHER INFORMATION
 
Item 1.
Legal Proceedings
 18
Item 1A.
Risk Factors
  18
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 18
Item 3.
Defaults Upon Senior Securities
 18
Item 4.
Mine Safety Disclosures
 18
Item 5.
Other Information
 18
Item 6.
Exhibits
 18
SIGNATURE  
 19
 
 
 
EXHIBIT INDEX  
 20
 
 
2
 
PART I  FINANCIAL INFORMATION
Item 1. Financial Statements
 
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
($ in thousands, except share and per share data)
 
 
 
March 31,
 
 
December 31,
 
 
 
2021
 
 
2020
 
ASSETS
 
 
 
 
 
 
Cash
 $64 
 $81 
Land inventory
  14 
  14 
 
 $78 
 $95 
LIABILITIES
    
    
Accounts payable and accrued expenses
 $158 
 $160 
Accrued real estate taxes
  2 
  4 
Accrued interest:
    
    
Subordinated convertible debentures payable
  28,478 
  28,137 
Convertible debentures payable-related party
  52,790 
  52,790 
Notes payable
  3,465 
  3,450 
Credit agreements:
    
    
Notes payable
  1,198 
  1,198 
Subordinated convertible debentures payable
  8,025 
  8,025 
 
  94,116 
  93,764 
STOCKHOLDERS' DEFICIENCY
    
    
Preferred stock, par value $1.00 per share;
    
    
authorized 5,000,000 shares; 2,000,000
    
    
Class A cumulative convertible shares issued
    
    
and outstanding; (liquidation preference of
    
    
$8,000 plus unpaid cumulative dividends of $16,595)
  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
  (110,068)
  (109,699)
 
  (94,038)
  (93,669)
 
 $78 
 $95 
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
3
 
 
Part I  Financial Information (Continued)
 
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
($ in thousands, except per share data)
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
March 31,
 
 
 
2021
 
 
2020
 
 
 
 
 
 
 
 
REVENUES
 $- 
 $- 
 
    
    
COSTS AND EXPENSES
    
    
Interest
  356 
  355 
Taxes and assessments
  1 
  1 
Consulting and accounting-
    
    
related party
  6 
  9 
Legal and professional
  - 
  30 
General and administrative
  6 
  4 
 
  369 
  399 
NET LOSS
 $(369)
 $(399)
 
    
    
NET LOSS PER SHARE(*)
    
    
AVAILABLE TO COMMON
    
    
STOCKHOLDERS-Basic and diluted
 $(0.10)
 $(0.11)
 
*Considers the effect of dividends on preferred stock for the three months ended
March 31, 2021 and 2020.
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
4
 
 
Part I  Financial Information (Continued)
 
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
($ in thousands)
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
March 31,
 
 
 
2021
 
 
2020
 
 
 
 
 
 
 
 
Net cash used in operating activities
 $(17)
 $(21)
 
    
    
Net change in cash
  (17)
  (21)
 
    
    
Cash at beginning of period
  81 
  309 
 
    
    
Cash at end of period
 $64 
 $288 
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
5
 
 
Part I  Financial Information (Continued)
 
PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED)
 
Three Months ended March 31, 2021
($ in thousands, except share data)
 
 
 
Preferred Stock
 
 
Common Stock
 
 
 
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Paid-in Capital
 
 
Deficit
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at 1/1/21
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(109,699)
 $(93,669)
 
    
    
    
    
    
    
    
Net Loss
  - 
  - 
  - 
  - 
  - 
  (369)
  (369)
Balances at 3/31/21
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(110,068)
 $(94,038)
 
Three Months ended March 31, 2020
($ in thousands, except share data)
 
 
 
Preferred Stock
 
 
Common Stock
 
 
 
 
 
Accumulated
 
 
 
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Paid-in Capital
 
 
Deficit
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balances at 1/1/20
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(108,594)
 $(92,564)
 
    
    
    
    
    
    
    
Net Loss
  - 
  - 
  - 
  - 
  - 
  (399)
  (399)
Balances at 3/31/20
  2,000,000 
 $2,000 
  5,317,758 
 $532 
 $13,498 
 $(108,993)
 $(92,963)
 
See accompanying notes to Condensed Consolidated Financial Statements.
 
 
6
 
 
PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
(1)
Basis of Presentation
 
The accompanying unaudited condensed consolidated financial statements of PGI Incorporated (“PGI”) and its subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10 - Q and therefore do not include all disclosures necessary for fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The Company's most recent audited financial statements are for the year ended December 31, 2018. As an Inactive Registrant, the year 2019 was reviewed by independent public accountants. For these years and for many years prior, the Company's independent registered public accounting firm included an explanatory paragraph regarding the Company's ability to continue as a going concern.
 
The Company was founded in 1958, and up until the mid 1990’s was in the business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 30 years, the Company’s business focus and emphasis changed substantially as it has concentrated its sales and marketing efforts almost exclusively on the disposition of its remaining real estate.
 
The Company’s major efforts and activities have been, and continue to be, to sell the remaining assets of the Company, to repay its indebtedness, and to pay the ordinary on-going administrative costs of the Company. The potential values of the land parcels held for sale has been difficult to assess. The Company will seek to realize full market value for each remaining asset. Certain of these assets may be of so little value and marketability that the Company may elect not to pay the real estate taxes on selected parcels, which may eventually result in a defacto liquidation of such property by subjecting such property to a tax sale. In management’s judgement, the remaining assets will be insufficient to satisfy much, if any, of the outstanding indebtedness and there will be no recoveries by the shareholders. Consequently, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.
 
Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2020 filed with the Securities and Exchange Commission.
 
The Company remains in default under the indentures governing its unsecured subordinated debentures. (See Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes 7, 8, and 9 to the Company's consolidated financial statements for the year ended December 31, 2020, as contained in the Company's Annual Report on Form 10 - K).
 
All adjustments (consisting of only normal recurring accruals) necessary for fair presentation of financial position, results of operations and cash flows have been made. The results for the three months ended March 31, 2021 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 2021 or any other interim period.
 
 
7
 
 
 PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
 
(2)
Per Share Data
 
Basic per share amounts are computed by dividing net income (loss), after deducting current period dividends on the Company's preferred stock, by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for the three months ended March 31, 2021 and 2020 was 5,317,758.
 
Diluted per share amounts are computed by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, after adjusting for the estimated effect of the assumed conversion of all cumulative convertible preferred stock and outstanding convertible debentures, if dilutive, into shares of common stock. For the three months ended March 31, 2021 and 2020, the assumed conversion of all outstanding 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 months ended March 31, 2021 and 2020.
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
March 31,
 
 
 
2021
 
 
2020
 
 
 
($ in thousands,
 
 
 
except share and per share data)
 
 
 
 
 
 
 
 
Net Loss
 $(369)
 $(399)
 
    
    
Preferred dividends
  (160)
  (160)
 
    
    
Loss Available to
 $(529)
 $(559)
Common shareholders
    
    
 
    
    
Weighted Average Number
    
    
Of Common Shares
    
    
Outstanding
  5,317,758 
  5,317,758 
 
    
    
Basic and Diluted Loss
    
    
Per Common Share
 $(0.10)
 $(0.11)
 
 
8
 
 
PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
 
(3)
Statement of Cash Flows
 
The Financial Accounting Standards Board Accounting Standards Codification Topic No. 230, “Statement of Cash Flows”, requires a statement of cash flows as part of a full set of financial statements. For quarterly reporting purposes, the Company has elected to condense the reporting of its net cash flows. There were no payments of interest for the three month periods ended March 31, 2021 and March 31, 2020.
 
(4)
Land Inventory
 
Land inventory consisted of
 
 
 
March 31,
 
 
December 31,
 
 
 
2021
 
 
2020
 
 
 
($ in thousands)
 
Fully improved land
 $14 
 $14 
 
(5)
Accounts Payable and Accrued Expenses
 
Accounts payable and accrued expenses consisted of:
 
 
 
March 31,
 
 
December 31,
 
 
 
2021
 
 
2020
 
 
 
($ in thousands)
 
Accounts payable
 $- 
 $3 
Accrued accounting review and
    
    
    tax preparation expense
  4 
  3 
Accrued debenture fees
  153 
  153 
Accrued miscellaneous
  1 
  1 
 
 $158 
 $160 
 
    
    
Accrued real estate taxes consisted of:
    
    
Current real estate taxes
 $2 
 $4 
 
 
 
9
 
 
PGI INCORPORATED AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (continued)
 
(6)
       Credit Agreements: Notes Payable and Subordinated Convertible Debentures Payable
 
Credit agreements consisted of the following:
 
 
 
March 31,
 
 
December 31,
 
 
 
2021
 
 
2020
 
 
 
($ in thousands)
 
Notes payable - $1,176,000 bearing
 
 
 
 
 
 
interest at prime plus 2%,
 
 
 
 
 
 
the remainder non-interest bearing,
 
 
 
 
 
 
all past due
 $1,198 
 $1,198 
 
    
    
Subordinated convertible debentures payable:
    
    
At 6% interest; due May 1992
  8,025 
  8,025 
 
  8,025 
  8,025 
 
 $9,223 
 $9,223 
 
(7)
Income Taxes
 
At December 31, 2020, the Company had an operating loss carryforward of approximately, $70,080,000 available to reduce future taxable income. These operating losses expire at various dates through 2038.
 
The following summarizes the temporary differences of the Company at March 31, 2021 and December 31, 2020 at the statutory rate:
 
 
 
March 31,
 
 
December 31,
 
 
 
2021
 
 
2020
 
 
 
($ in thousands)
 
Deferred tax asset
 
 
 
 
 
 
Net operating loss carryforward
 $17,893 
 $17,801 
Expenses capitalized under IRC 263(a)
  37 
  37 
Tax credits (AMT)
  57 
  57 
Valuation allowance
  (17,987)
  (17,895)
Total deferred tax asset
 $- 
 $- 
 
(8)
Fair Value of Financial Instruments
 
The carrying amount of the Company’s financial instruments, other than debt, approximates fair value at March 31, 2021 and December 31, 2020 because of the short maturity of those instruments. It was not practicable to estimate the fair value of the Company’s notes payable and its convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities.
 
 
10
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
Preliminary Note
 
The Company’s remaining land inventory consists of 6 single family lots, an approximate 7 acre parcel and some other minor parcels of real estate consisting of easements in Citrus County Florida, which are owned through its wholly-owned subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which in total approximates 60 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.
 
In early 2019, the Board of Directors of PGI concluded that it meets all of the conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Regulation S-X 3-11 and as the term “Inactive Registrant” is further contemplated in the Securities and Exchange Commission’s Division of Corporation Finance’s Financial Reporting Manual section 1320.2. Under Regulation 3-11 of Regulation S-X, the financial statements required thereunder with respect to an Inactive Registrant for purposes of reports pursuant to the Securities Exchange Act of 1934, including but not limited to annual reports on Form 10-K, may be unaudited. A representative of PGI informally discussed its view that PGI is an Inactive Registrant with a staff member of the Chief Accountant’s Office in the Division of Corporation Finance in February 2019.
 
As an Inactive Registrant, PGI currently intends to continue to timely file Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K with the Securities and Exchange Commission (the “SEC”). PGI currently intends to include in such Quarterly and Annual Reports all consolidated financial statements required to be included therein pursuant to Regulation S-X. The consolidated financials statements were audited prior to 2019 by BKD, LLP and a review was performed with respect to 2019 by Milhouse & Neal. However, due to its inactive status and diminishing financial resources, the aforementioned consolidated financial statements will not be reviewed or audited by a PCAOB registered public accounting firm. Such disclosure was made on Form 8-K filed with the SEC on July 2, 2020.
 
PGI meets all of the conditions in Regulation S-X 3-11 for an “Inactive Registrant” which are:
 
(a)
Gross receipts not in excess of $100,000;
(b)
Not purchasing or selling any of its own stock or granted options therefor;
(c)
Expenditures for all purposes not in excess of $100,000 (see discussion);
(d)
No material change in the business has occurred during the fiscal year;
(e)
No securities exchange or governmental authority having jurisdiction over the entity requires the entity to furnish audited financial statements.
 
 
11
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
As the Company reviews its circumstances, it has met the conditions as an Inactive Registrant since 2017.
 
The Company, formerly a Florida residential developer, is dormant with less than 70 acres of remaining landholdings, much of which has little value due to various restrictions. The Company’s consolidated financial statements show it has a Stockholders’ Deficiency of $93.7 million as of December 31, 2020. BKD, the Company’s PCAOB registered public accounting firm until the date the Company filed its Form 10-K for Fiscal 2018 which was February 25, 2019, expressed a “going concern” opinion with respect to the Company for its Fiscal 2018 financial statements and had expressed such opinions for many years previously. PGI has had no trading of its securities in many years. Any future real estate transactions by the Company will be limited, uncertain as to timing and as to value. Ultimately, PGI expects that proceeds from sales of its remaining real estate, if any, will provide some minimal recoveries for PGI’s senior debtholders. PGI has been an SEC registrant for over 40 years.
 
As an Inactive Registrant, PGI anticipates it will continue to provide updates through its SEC filings.
 
As of March 31, 2021, the Company remained in default under its subordinated convertible debentures and notes payable, as well as the accrued interest with respect to its collateralized convertible debentures.
 
 
12
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
Results of Operations
 
There was no revenue for the three month periods ended March 31, 2021 and 2020.
 
Expenses for the three month period ended March 31, 2021 decreased by $30,000 when compared to the same period in 2020. This change reflects a $30,000 decrease in legal and professional expenses and a $3,000 decrease in consulting and accounting fees-related party which is offset by an increase of $1,000 in interest expense and an increase of $2,000 in general and administrative expenses.
 
Interest expense relating to the Company’s outstanding debt, held by non-related parties, increased by $1,000 during the three month period ended March 31, 2021 compared to the same period in 2020. Interest expense relating to the Company’s outstanding debt for the 6% subordinated convertible debentures, increased by $7,000 primarily as a result of interest compounding on past due balances. Interest expense relating to the 6.5% subordinated debentures decreased by $2,000 compared to the same period in 2020. The debentures were surrendered in 2020 with the escheatment to the respective states of the debenture holders In addition, interest expense for notes payable decreased by $4,000 due to a decrease in the average prime interest rate to 3.25% for the three months ended March 31, 2021 compared to 4.42% for the same period in 2020.
 
Consulting and accounting related party expenses decreased by $3,000 when compared to the same period in 2020 as a result of a decrease in services provided by Love Real Estate Company, an affiliate of Love Investment Company, the Company’s primary preferred stock shareholder.
 
Legal and professional expenses decreased by $30,000 during the three month period ended March 31, 2021 when compared to the same period in 2020 as follows:
 
 
 
(Decrease)
 
 
 
($ in thousands)
 
Legal review filing of periodic reports
 $(11)
Legal research "going concern" alternatives
  (9)
Legal common title matters
  (5)
Legal and professional fees environmental remediation
  (5)
 
 $(30)
 
General and administrative expenses during the three month period ended March 31, 2021 increased by $2,000 when compared to the same period in 2020 due to expenses incurred for the Company’s tax return preparation.
 
 
13
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
The Company incurred a net loss of $369,000 during the three month period ended March 31, 2021 compared to a net loss of $399,000 for the comparable period in 2020. After deducting preferred dividends, totaling $160,000 for the three month periods ended March 31, 2021 and 2020, with respect to the Class A Preferred Stock, a net loss per share of $(.10) and $(.11) was incurred for three month periods ended March 31, 2021 and 2020,respectively. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through March 31, 2021 is $16,595,000.
 
Cash Flow Analysis
 
During the three month period ended March 31, 2021, the Company’s net cash used in operating activities was $17,000 compared to $21,000 for the comparable period in 2020. There was no cash provided from financing or investing activities during the three month periods ended March 31, 2021 and 2020.
 
Analysis of Financial Condition
 
Total assets decreased by $17,000 at March 31, 2021 compared to total assets at December 31, 2020, reflecting the following changes:
 
 
 
March 31,
 
 
December 31,
 
 
Increase
 
 
 
2021
 
 
2020
 
 
(Decrease)
 
 
 
($ in thousands)
 
Cash
 $64 
 $81 
 $(17)
Land inventory
  14 
  14 
  - 
 
 $78 
 $95 
 $(17)
 
During the three month period ended March 31, 2021, cash decreased by $17,000 compared to December 31, 2020 as a result of the Company funding its administrative costs.
  
 
14
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
Liabilities were $94,116,000 at March 31, 2021 compared to $93,764,000 at December 31, 2020, reflecting the following changes which resulted in an increase of $352,000 of liabilities:
 
 
 
March 31,
 
 
December 31,
 
 
Increase
 
 
 
2021
 
 
2020
 
 
(Decrease)
 
 
 
($ in thousands)
 
Accounts payable and accrued expenses
 $158 
 $160 
 $(2)
Accrued real estate taxes
  2 
  4 
  (2)
Accrued interest
  84,733 
  84,377 
  356 
Credit agreements:
    
    
    
Notes payable
  1,198 
  1,198 
  - 
Subordinated convertible
    
    
    
   debentures payable
  8,025 
  8,025 
  - 
 
    
    
    
 
 $94,116 
 $93,764 
 $352 
 
During the three month period ended March 31, 2021, the amount of accounts payable and accrued expenses decreased by $2,000 primarily as a result of timing differences. Accrued real estate taxes decreased by $2,000 during the three month period ended March 31, 2021 due to the payment of a portion of the 2020 accrued real estate taxes in the three month period ended March 31, 2021 and the accrual of real estate taxes for the respective period. Accrued interest during the three month period ended March 31, 2021 increased by $356,000 due to the amount of interest expense for such period. During the three month period ended March 31, 2021, the Company made no interest or principal payments on its outstanding notes payable and subordinated convertible debentures.
 
 
15
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
The Company remains in default on the entire principal amount plus interest of its subordinated convertible debentures and notes payable as well as the remaining accrued interest owed with respect to the collateralized convertible debentures.
 
The principal and accrued interest amounts due as of March 31, 2021 are as indicated in the following table:
 
 
 
March 31, 2021
 
 
 
Principal
 
 
Accrued
 
 
 
Amount Due
 
 
Interest
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
Subordinated convertible debentures:
 
 
 
 
 
 
At 6%, due May 1992
 $8,025 
 $28,478 
 
    
    
Collateralized convertible debentures-related party:
    
    
At 14%, due July 8, 1997
 $- 
 $52,790 
 
    
    
Notes payable:
    
    
At prime plus 2%, all past due
 $1,176 
 $3,465 
Non-interest bearing
  22 
  - 
 
 $1,198 
 $3,465 
 
The Company does not have sufficient funds available (after payment of, or the reserving for the payment of, anticipated future operating expenses) to satisfy the principal or interest obligations on the above debentures and notes payable or any arrearage in preferred dividends.
 
The Company remains totally dependent upon the sale of parcels of its various remaining properties with respect to its ability to make any future debt service payments.
 
The Company has discontinued the services of independent registered public accounting firms due to the Company’s diminishing financial resources. For 2019, and many years prior, the accounting firms have included an explanatory paragraph regarding the Company’s ability to continue as a going concern in their reports on the Company’s consolidated financial statements.
 
 
16
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
Forward Looking Statements
 
The discussion set forth in this Item 2, as well as other portions of this Form 10-Q, may contain forward-looking statements. Such statements are based upon the information currently available to management of the Company and management’s perception thereof as of the date of the Form 10-Q. When used in this Form 10-Q, words such as “anticipates,” “estimates,” “believes,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties. Actual results of the Company’s operations could materially differ from those forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in the real estate market in Florida and the counties in which the Company owns any property; institution of legal action by the bondholders for collection of any amounts due under the subordinated convertible debentures (notwithstanding the Company’s belief that at least a portion of such actions might be barred under applicable statute of limitations); changes in management strategy; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.
 
Item 3. Quantitative and Qualitative Disclosures About Market Risk
 
Not applicable.
 
Item 4. Controls and Procedures
 
The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under the supervision and with the participation of its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2021. There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
 
 
17
 
 
PGI INCORPORATED AND SUBSIDIARIES
 
 
PART II OTHER INFORMATION
 
Item 1. Legal Proceedings
 
The Company, to its knowledge, currently is not a party to any material legal proceedings.
 
Item 1A. Risk Factors
 
Not applicable.
 
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 I with respect to defaults under the Company's subordinated convertible debentures, collateralized convertible debentures and other indebtedness and with respect to cumulative preferred dividends in arrears, which discussions are incorporated herein by this reference.
 
Item 4. Mine Safety Disclosures
 
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 or furnished under this Item.
 
 
18
 
 PGI INCORPORATED AND SUBSIDIARIES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
PGI INCORPORATED
(Registrant)
 
 
 
 
 
Date: May 14, 2021
By:  
/s/ Laurence A. Schiffer  
 
 
 
Laurence A. Schiffer
 
 
 
President
(Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)
 
 
 
 
19
 
 
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.
 
22.
Inapplicable.
 
23.
Inapplicable.
 
24.
Inapplicable.
 
Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
 
Principal Financial Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
 
Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350.
 
Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350.
 
95.
Inapplicable.
 
99.
Inapplicable.
 
100.
Inapplicable.
 
101.
Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.*
 
* Furnished with this report.
 
 
20