10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K 

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 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, ST. LOUIS, Missouri  63105

(Address of principal executive offices)

(314) 512-8650

(Issuer's telephone number)

Securities registered pursuant to section 12(b) of the Act:  None

Title of each class Trading Symbol  Name of each exchange on which registered

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, Par Value $.10 per share 

6.0% Convertible Subordinated Debentures due 1992

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act: Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ 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 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.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	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 ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2021 cannot be determined.  See Item 5 of Form 10-K. 

The number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: 

As of March 31, 2022, 5,317,758 shares of Common Stock, par value $.10 per share, were outstanding.

PGI INCORPORATED AND SUBSIDIARIES

FORM 10 – K  -  2021

Contents and Cross Reference Index

Part No.	Item No.	Description	Form 10-K Page No.
I	1	Business	3
	1A	Risk Factors	5
	1B	Unresolved Staff Comments	5
	2	Properties	5
	3	Legal Proceedings	5
	4	Mine Safety Disclosures	5
II	5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	6
	6	Selected Financial Data	6
	7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7
	7A	Quantitative and Qualitative Disclosures About Market Risk	14
	8	Financial Statements and Supplementary Data	15
	9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31
	9A	Controls and Procedures	31
	9B	Other Information	32
III	10	Directors, Executive Officers and Corporate Governance	33
	11	Executive Compensation	34
	12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	34
	13	Certain Relationships and Related Transactions, and Director Independence	36
	14	Principal Accountant Fees and Services	38
IV	15	Exhibits and Financial Statement Schedules	39
	16	Form 10-K Summary	41
		Signatures	42

2

PART I

Item 1. Business

GENERAL

As used in this Annual Report on Form 10-K, the “Company” or “PGI” refers, unless the context otherwise requires, to PGI Incorporated and its subsidiaries.  The Company’s executive offices are at 212 S. Central, St. Louis, Missouri, 63105, and its telephone number is (314) 512-8650.

The Company, a Florida corporation, 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. This change was prompted by its continuing financial difficulties due to the principal and interest owed on its debt.

The Company’s remaining land inventory consists of two 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”). The single family lots and the 7 acre parcel in Citrus County have been listed for sale with a real estate agent and they are all under contract for sale for approximately $225,000.  In 2021, four single family lots were sold and Sugarmill Woods realized approximately $80,000.  In addition, sale proceeds were received by PGI for an environmentally sensitive parcel of land for which there was no cost basis.  Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximately 58 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.  

QUALIFICATION AS INACTIVE REGISTRANT FOR SEC PURPOSES

In early 2019, the Board of Directors of PGI concluded that PGI met and continues to meet all of the conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Rule 3-11 of Regulation S-X 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 Rule 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.

3

Item 1. Business (continued)

As an Inactive Registrant, PGI currently intends to continue to timely file Annual Reports on Forms 10-K with the Securities and Exchange Commission (the “SEC”), including this Form 10-K, as well as Quarterly Reports on Forms 10-Q and any other required reports. PGI currently intends to include in such Annual Reports all annual consolidated financial statements required to be included therein pursuant to Regulation S-X. The consolidated financial statements were audited prior to 2019 by BKD, LLP 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 have not been reviewed or audited by a Public Company Accounting Oversight Board (“PCAOB”) registered public accounting firm for the year 2021 and 2020. 

PGI meets all of the conditions in Rule 3-11 of Regulation S-X 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;
(d)	No material change in the business has occurred during the fiscal year;
(e)	No securities exchange or governmental authority having jurisdiction over the entity requires the entity to furnish audited financial statements.

PGI has been a SEC registrant for over 40 years.  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 $95.1 million as of December 31, 2021.  BKD, LLP (“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.  Contracts for sale of the 7 acre parcel and two other single family lots are signed for sale proceeds of approximately $225,000.  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. 

AVAILABLE INFORMATION

                We file annual and quarterly reports and file or furnish current reports (including any exhibits or amendments to those reports) and other information with the SEC. These materials may also be accessed through the SEC’s website (www.sec.gov).

4

Item 1. Business (continued)

OTHER

As of December 31, 2021, the Company had no employees, and all services provided to the Company are through contract services.

The Company’s website address is www.pgiincorporated.com. Information included on our website does not constitute part of this document.

Item 1A. Risk Factors

            Not Applicable

Item 1B. Unresolved Staff Comments

            Not Applicable

Item 2. Properties

            The Company’s remaining land inventory consists of two single family lots, an approximate 7 acre parcel (which are all under contract for sale for approximately $225,000) 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.  In addition, PGIS, a wholly owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximately 58 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.  The Company continues its efforts to dispose of all of its real estate.

            The Company believes the properties are adequately covered by insurance.

Item 3. Legal Proceedings

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business.  It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.

Item 4. Mine Safety Disclosures

Not Applicable

5

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

There is no public trading market for the Company’s common equity securities.  There have been no reported transactions in the Company’s common stock, par value $.10 (the “Common Stock”), since January 29, 1991, with the exception of the odd lot tender offer by PGIP LLC (“PGIP”), an affiliate of the Company, in 2003 which was described previously in the Company’s annual report on Form 10-KSB for the fiscal year ended December 31, 2004 and the 2,260,706 shares of Common Stock assigned by Love-PGI Partners, L.P. (“L-PGI”) to Love Investment Company (“LIC”), an affiliate of L-PGI, effective December 31, 2016.

There were also a small number of over-the-counter quotations, obtained from www.otcmarkets.com, in 2017 and 2016 which were described previously in the Company’s annual reports on Form 10-K for the fiscal years ended December 31, 2017 and December 31, 2016. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

No dividends have ever been paid on the Common Stock, and payment of dividends on the Common Stock is restricted under the terms of the two indentures (one of which matured on June 1, 1991 and the other on May 1, 1992) pursuant to which the Company’s outstanding subordinated convertible debentures were issued and by the terms of the Company’s preferred stock.  As of December 31, 2021, to the Company’s knowledge, there were 542 holders of record of the Company’s Common Stock and 317 debenture holders.

Item 6. Selected Financial Data

Not Applicable

6

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

LIQUIDITY AND CAPITAL RESOURCES

The liabilities of the Company exceed the reported value of its assets. Management’s efforts and activities have been, and continue to be, to sell assets of the Company to repay its indebtedness and to pay administrative expenditures in keeping an inactive company in existence.  The aggregate remaining land inventory is less than 68 acres, consisting of multiple parcels located in two Florida counties. These parcels have limited value because of associated development constraints such as wetlands, easements and other obstacles to development and sale. At December 31, 2021 the carrying value of the land inventory was $10,000. The Company is seeking to realize full market value for such land.  However, certain land parcels 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 de facto liquidation of such property by subjecting such property to a tax sale.

In management’s judgment, the assets will be insufficient to satisfy much, if any, of the outstanding indebtedness of the Company. Consequently, there is substantial doubt about the Company’s ability to continue as a “going concern,” as that term is used for generally accepted accounting purposes. The asset carrying values shown in the financial statements, are judged to be reasonable estimates of the value, when viewed in the context of the entirety of the financial statements.

In early 2019, the Board of Directors of PGI concluded that PGI met and continues to meet all conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Rule 3-11 of Regulation S-X 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 Rule 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 Annual Reports on Forms 10-K with the SEC, including this Form 10-K, as well as Quarterly Reports on Forms 10-Q and any other required reports. PGI currently intends to include in such Annual Reports all annual consolidated financial statements required to be included therein pursuant to Regulation S-X. The consolidated financial statements were audited prior to 2019 by BKD, LLP 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 have not been reviewed or audited by a PCAOB registered public accounting firm for the year 2021 and 2020.  

7

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

PGI meets all of the conditions in Rule 3-11 of Regulation S-X 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;
(d)	No material change in the business has occurred during the fiscal year;
(e)	No securities exchange or governmental authority having jurisdiction over the entity requires the entity to furnish audited financial statements.

PGI Has been a SEC registrant for over 40 years.  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 68 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 $95.1 million as of December 31, 2021.  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.    

The Company’s financial statement indebtedness includes its 6.0% subordinated convertible debentures which matured in May, 1992, with a remaining face amount of $8,025,000; and various notes payable, with a remaining face amount of $1,198,000.

The cumulative amount due for the 6% subordinated convertible debentures which matured in May 1992, includes the face amount of $8,025,000 plus accrued interest of $29,512,000 as of December 31, 2021.  The subordinated convertible debentures have been in payment default for over twenty-five years.  It is unclear whether any action on behalf of the bondholders is presently likely, given the negative net worth of the Company and continuing passage of time.  

8

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

RESULTS OF OPERATIONS

Revenues

Revenues for the year ended December 31, 2021 increased by $92,000 to $94,000 compared to revenues of $2,000 for the year ended December 31, 2020 primarily as a result of real estate sales of $90,000 in 2021. There were no sales of real estate in 2020.  Other income increased by $2,000 to $4,000 compared to other income of $2,000 for the year ended December 31, 2020.  Other income in 2021 represents income from a settlement claim from over 30 years ago when the Company was operating as a home builder.  Other income in 2020 represents recoveries of lot lien receivables which had been fully provided for cancellation.

Costs and Expenses

Costs and expenses for the year ended December 31, 2021 decreased by $399,000 when compared to the same period in 2020 as follows:

						Increase
	2021		2020			(Decrease)
			($ in thousands)
COSTS, EXPENSES AND OTHER
Cost of real estate sales	$	15	$	-		$	15
Interest expense		1,437		1,417			20
Forgiveness of debt and interest		-		(410	)		410
Taxes and assessments		5		5			-
Consulting and accounting-
related party		24		34			(10	)
Legal and professional		1		36			(35	)
General and administrative		24		25			(1	)
	$	1,506	$	1,107		$	399

The cost of real estate sales for the year ended December 31, 2021 increased by $15,000 compared to the year ended December 31, 2020, solely as a result of costs and expenses incurred in connection with sales of real estate in 2021.  There was no such expense for the comparable period in 2020 because there were no sales of real estate during such period.

Interest expense relating to the Company’s current outstanding debt held by non-related parties, increased by $20,000 during the year ended December 31, 2021 compared to the year ended December 31, 2020.  Interest expense relating to the Company’s outstanding debt for subordinated convertible debentures, increased by $23,000 during the year ended December 31, 2021 primarily as a result of interest accruing on past due balances which increased at various intervals throughout the year for accrued but unpaid interest.  This increase was offset by a $3,000 decrease in interest expense for notes payable due to a decrease in the average prime interest rate of 3.25% for 2021 compared to 3.54% for 2020.

9

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The Company recognized $410,000 in forgiveness of debt and accrued interest during the year ended December 31, 2020.  The Trustee of the 6.5% subordinated convertible debentures, which matured in June, 1991, provided notice of final distribution to the holders of such debentures on September 2, 2014.  In connection with such final distribution, the Trustee designated the remaining balance of the debenture reserve fund held by the Trustee for final distribution of $92 per $1,000 in face amount to holders of such debentures who surrender their respective debenture certificates.  

During the year ended December 31, 2020, the remaining balance of the reserve fund of $13,000 was disbursed in escheatment to the states of the respective debenture holders.  The remaining debentures with a face amount of $138,000 were surrendered with the escheatment of respective funds to the states of the debenture holders.  Accordingly, the Company has recognized $125,000 in forgiveness of debt during the year ended December 31, 2020.  In addition, accrued interest of $285,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the year ended December 31, 2020.  There were no debentures surrendered or escheated in 2021.

Taxes and assessments were $5,000 during the years ended December 31, 2021 and 2020.

Consulting and accounting expense was $24,000 and $34,000 for the years ended December 31, 2021 and 2020, respectively.  Accounting service fees paid to Love Real Estate Company (“LREC”), an affiliate of LIC, decreased by $10,000 in 2021 compared to 2020 due to a decrease in accounting services with the Company not being reviewed by a PCAOB registered public accounting firm effective with the March 31, 2020 periodic filing with the SEC.  In addition, a quarterly consulting fee is paid to LREC of one-tenth of one percent of the carrying value of the Company’s assets.

Legal and professional expenses decreased by $35,000 during the year ended December 31, 2021 when compared to the same period in 2020 as follows:

	Increase
	(Decrease)
	($ in thousands)
Legal common title matters	$	(6	)
Legal going concern alternatives		(9	)
Legal and professional fees environmental remediation		(8	)
Legal review filing of periodic reports		(12	)
	$	(35	)

10

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

General and administrative expenses decreased by $1,000 during the year ended December 31, 2021 compared to 2020 primarily due to a decrease in the quarterly consulting fees paid to LREC.  The Company pays LREC a quarterly consulting fee of one-tenth of one percent of the carrying value of the Company’s assets which have been consistently decreasing.  

The net loss was $1,412,000 ($.39 per share loss) for the year ended December 31, 2021 compared to a net loss of $1,105,000 ($.33 per share loss) for the year ended December 31, 2020.  Included in the 2021 and 2020 loss per share computation is $640,000 ($.12 per share of Common Stock) of annual cumulative preferred stock dividends in arrears.

FINANCIAL CONDITION

Total assets decreased by $241,000 at December 31, 2021 compared to total assets at December 31, 2020 reflecting the following changes:

					Increase
	2021		2020		(Decrease)
	($ in thousands)
Cash	$	58	$	81	$	(23	)
Land Inventory		10		14		(4	)
	$	68	$	95	$	(27	)

Net cash used in operating activities was $23,000 for the year ended December 31, 2021 compared to cash used in operations of $228,000 for the year ended December 31, 2020.  Net cash used in operations consists of cash received from operations less cash expended for operations.

Cash received from operations during the year ended December 31, 2021 was $94,000, which represents $90,000 from real estate sales and $4,000 in miscellaneous income from a settlement claim from when the Company was operating as a home builder.  Cash received from operations in the year ended December 31, 2020 was $2,000, which represents miscellaneous income from a recovery of a lot lien receivable which had been fully provided for cancellation.  

11

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Cash expended for operations during the year ended December 31, 2021 was $117,000 which represents a decrease of $113,000 compared to cash expended for operations of $230,000 in the year ended December 31, 2020.  

	Increase
	(Decrease)
	($ in thousands)
Cost of real estate sales paid	$	10
Interest - related party paid		(75	)
Taxes and assessments paid		5
Consulting and accounting-related party paid		(11	)
Legal and professional paid		(37	)
General and administrative paid		(5	)
	$	(113	)

The decrease of $75,000 in payments of interest for accrued related party interest is a result of interest paid on collateralized debt of $50,000 in the year ended December 31, 2021 compared to $125,000 in 2020.

Liabilities were $95,149,000 at December 31, 2021 compared to $93,764,000 at December 31, 2020, reflecting the following changes:

					Increase
	2021		2020		(Decrease)
	($ in thousands)
Accounts payable and accrued expenses	$	157	$	160	$	(3	)
Accrued real estate taxes		5		4		1
Accrued interest		33,024		31,587		1,437
Accrued interest-related party		52,740		52,790		(50	)
Notes payable		1,198		1,198		-
Convertible subordianted debentures payable		8,025		8,025		-
	$	95,149	$	93,764	$	1,385

Accounts payable and accrued expenses decreased by $3,000 at December 31, 2021, compared to December 31, 2020, primarily as a result of timing differences.

Accrued real estate taxes increased by $1,000 at December 31, 2021 compared to December 31, 2020 due to the accrual of penalties and interest on delinquent real estate taxes.   

12

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Accrued interest increased by $1,387,000 at December 31, 2021 compared to December 31, 2020 reflecting changes in the following accrued interest categories:

					Increase
	2021		2020		(Decrease)
	($ in thousands)
Convertible subordinated debentures	$	29,512	$	28,137	$	1,375
Convertible debentures-related party		52,740		52,790		(50	)
Notes Payable		3,512		3,450		62
	$	85,764	$	84,377	$	1,387

The increase in accrued interest of $1,375,000 relating to the convertible subordinated debentures represents interest expense for the year ended December 31, 2021.  The accrued interest relating to convertible subordinated debentures increased due to the additional accrual of interest and no payment of previously accrued interest on the Company’s debentures (see Note 8 to the consolidated financial statements under Item 8).  The notes payable and convertible subordinated debentures, including accrued interest, are past due.

The decrease in accrued interest of $50,000 for the related party convertible debentures is due to the payment of accrued interest on the collateralized convertible debentures during the year ended December 31, 2021.  The remaining balance of accrued interest on the collateralized convertible debentures is $52,740,000.

The increase of $62,000 of accrued interest relating to the Company’s other outstanding debt represents interest expense for the year ended December 31, 2021.  The notes payable and convertible subordinated debentures, including accrued interest, are past due.

The Company’s stockholders’ deficiency increased to $95,081,000 at December 31, 2021 from a $93,669,000 stockholders’ deficiency at December 31, 2020, reflecting the 2021 net loss of $1,412,000.

Off-Balance Sheet Arrangements

The Company has no Off-Balance Sheet Arrangements.

Recent Accounting Standards

Accounting Standards Update (ASU) No. 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, is effective for interim and annual periods ending after December 15, 2016 and, accordingly, this is discussed in Footnote 1 to the financial statements.

ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, and accordingly, this is discussed in Footnote 2 to the financial statements.

13

Forward Looking Statements

The discussion set forth in this Item 7, as well as other portions of this Form 10-K, 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-K.  When used in this Form 10-K, words such as “anticipates,” “estimates,” “believes,” “appears”, “expects,” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.  Such state-ments 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; the overall national economy and financial markets; 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 7A. Qualitative and Quantitative Disclosures About Market Risk.

            Not Applicable

14

Item 8. Financial Statements and Supplementary Data

Auditor Firm ID – 123

Auditor Name – None

Auditor Location - None

PGI INCORPORATED AND SUBSIDIARIES 

CONSOLIDATED STATEMEMENTS OF FINANCIAL POSITION (UNAUDITED) 

December 31, 2021 and 2020 

($ in thousands, except share data) 

	2021			2020
ASSETS
Cash	$	58		$	81
Land Inventory (Note 4)		10			14
	$	68		$	95
LIABILITIES
Accounts payable and accrued expenses (Note 5)	$	157		$	160
Accrued real estate taxes (Note 5)		5			4
Accrued Interest:
Subordinated convertible debentures (Note 7)		29,512			28,137
Convertible debentures-related party (Note 8)		52,740			52,790
Notes Payable (Note 6)		3,512			3,450
Credit Agreements:
Notes payable (Note 6)		1,198			1,198
Subordinated convertible debentures payable (Note 7)		8,025			8,025
		95,149			93,764
Commitments and Contingencies (Note 12)		-			-
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 10)		2,000			2,000
Common stock, par value $0.10 per share; authorized 25,000,000 shares; 5,317,758 shares issued and outstanding (Note 10)		532			532
Paid-in capital		13,498			13,498
Accumulated deficit		(111,111	)		(109,699	)
		(95,081	)		(93,669	)
	$	68		$	95

See accompanying notes to consolidated financial statements.

15

PGI INCORPORATED AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) 

Years ended December 31, 2021 and 2020 

($ in thousands, except per share data)

	2021			2020
Revenues:
Real Estate Sales	$	90		$	-
Miscellaneous income		4			2
		94			2
Costs and expenses:
Cost of real estate sales		15			-
Interest		1,437			1,417
Forgiveness of Debt and interest		-			(410	)
Taxes and assessments		5			5
Consulting and accounting-related party		24			34
Legal and professional		1			36
General and administrative		24			25
		1,506			1,107
Net Loss	$	(1,412	)	$	(1,105	)
Net Loss Per Share Available to Common Stockholders Basic and Diluted (Note 15)	$	(0.39	)	$	(0.33	)

See accompanying notes to consolidated financial statements.

16

PGI INCORPORATED AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 

Years ended December 31, 2021 and 2020 

($ in thousands) 

	2021			2020
Cash flows from operating activites:
Cash received from operations:
Real estate sales	$	90		$	-
Miscellaneous income		4			2
		94			2
Cash expended for operations:
Cost of real estate sales		10			-
Interest - related party		50			125
Taxes and assessments		5			-
Consulting and accounting-related party		24			35
Legal and professional		1			38
General and administrative		27			32
		117			230
Net cash flows used in operating activities		(23	)		(228	)
Net change in cash		(23	)		(228	)
Cash at beginning of year		81			309
Cash at end of year	$	58		$	81

See accompanying notes to consolidated financial statements.

17

PGI INCORPORATED AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued) 

Years ended December 31, 2021 and 2020 

($ in thousands) 

	2021			2020
Reconciliation of net loss to net cash used in operating activities:
Net loss	$	(1,412	)	$	(1,105	)
Adjustments to reconcile net loss to net cash used in operating activities:
Forgiveness of debt & interest		-			(410	)
Decrease in assets:
Land inventory		4
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		(3	)		(9	)
Accrued real estate taxes		1			4
Accrued interest		1,387			1,292
Net cash flows used in operating activities	$	(23	)	$	(228	)

See accompanying notes to consolidated financial statements.

18

PGI INCORPORATED AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (UNAUDITED) 

Year ended December 31, 2021 

($ in thousands, except share data)

	Preferred Stock				Common Stock				Paid-in		Accumulated
	Shares		Par Value		Shares		Par Value		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		-		-		-		-		-		(1,412)		(1,412)
Balances at 12/31/21		2,000,000		$2,000		5,317,758		$532		$13,498		$(111,111)		$(95,081	)

Year ended December 31, 2020 

($ in thousands, except share data)

	Preferred Stock				Common Stock				Paid-in		Accumulated
	Shares		Par Value		Shares		Par Value		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		-		-		-		-		-		(1,105	)		(1,105	)
Balances at 12/31/20		2,000,000	$	2,000		5,317,758	$	532	$	13,498	$	(109,699	)	$	(93,669	)

See accompanying notes to consolidated financial statements.

19

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

1. Nature of Business and Going Concern

PGI Incorporated and Subsidiaries (the Company), a Florida corporation, was founded in 1958, and up until the mid 1990’s was in 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 has a significant accumulated deficit and is in default on its convertible subordinated debentures and notes payable (Notes 6 and 7).

The Company’s major efforts and activities have been, and continue to be, to sell assets of the Company to repay its indebtedness and to pay administrative expenditures in keeping an inactive company in existence.  The aggregate remaining land inventory is less than 68 acres, consisting of multiple parcels located in Florida counties.  These parcels have limited value because of associated developmental constraints such as wetlands, easements and other obstacles to development and sale. The potential values of the land parcels held for sale have been difficult to assess as the remaining land inventory is difficult to sell and difficult to value. While the Company will seek to realize full market value for each remaining asset, the amounts realized may be at substantial variance from its present financial statement carrying value.   Certain of these assets may be of so little value and marketability that the Company may elect not to pay the real estate taxes on selected parcels, which may eventually result in a de facto liquidation of such property by subjecting such property to a tax sale.

In management’s judgment, the 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. The asset carrying values shown in the financial statements, are judged to be reasonable estimates of the value, when viewed in the context of the entirety of the financial statements.

2. 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.

20

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

2. Significant Accounting Policies (continued):

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 Change in Accounting Principle

            In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” which requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.  We adopted this standard using the modified retrospective approach.  The adoption of ASU 2014-09 did not have an impact on the Company’s consolidated financial statements.

Acreage

Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount.

Land Inventory

Land inventory is stated at cost.  

Cash

The Company’s cash accounts do not exceed federally insured limits.

3.Real Estate Sales and Other Income:

Revenues totaled $94,000 for the year ended December 31, 2021 compared to revenues of $2,000 for the year ended December 31, 2020.  

Real estate sales and cost of sales consisted of:

	2021		2020
	($ in thousands)
Real estate sales	$	90	$	-
Cost of sales		15		-
Gross profit margin	$	75	$	-

21

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

3. Real Estate Sales and Other Income (continued):

Other income totaled $4,000 for the year ended December 31, 2021 compared to $2,000 for the year ended December 31, 2020.  Other income in 2021 represents income from a settlement claim from when the Company was operating as a home builder.  Other income in 2020 represents recoveries of lot lien receivables which had been fully provided for cancellation.  

4. Land Inventory:

Land inventory consisted of:

	2021		2020
	($ in thousands)
Fully improved land	$	10	$	14
	$	10	$	14

5. Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses consisted of:

	2021		2020
	($ in thousands)
Accounts payable	$	-	$	3
Accrued audit, review and tax expense		3		3
Accrued debenture fees		153		153
Accrued miscellaneous		1		1
	$	157	$	160

Accrued Real Estate Taxes:

Accrued real estate taxes consisted of:

	2021		2020
	($ in thousands)
Current	$	4	$	4
Delinquent		1		-
		5		4

22

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

6. Notes Payable:

Notes payable consisted of the following:

	2021		2020
	($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1985	$	176	$	176
At prime plus 2%, due October 1, 1987		1,000		1,000
Non-interest bearing, due August 1, 1993		22		22
	$	1,198	$	1,198

The prime rate at December 31, 2021 and 2020, was 3.25%, respectively.

The overall weighted-average interest rate for the Company’s credit agreements with its notes and mortgages was approximately 5.15% and 5.44% at December 31, 2021 and 2020, respectively.

Accrued interest on notes payable consisted of the following:

	2021		2020
	($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1985	$	496	$	486
At prime plus 2%, due October 1, 1987		3,016		2,964
	$	3,512	$	3,450

All of the outstanding notes payable including accrued interest are past due.

7. Subordinated Convertible Debentures Payable:

Subordinated debentures payable consisted of:

	2021		2020
	($ in thousands)
6%, due May, 1992	$	8,025	$	8,025

Since issuance, $152,000 of the 6% debentures have been converted into common stock.  This conversion feature is no longer in effect.

The Company is in default on the 6% subordinated convertible debentures which totals $8,025,000 in principal plus accrued and unpaid interest of $29,512,000 and $28,137,000 as of December 31, 2021 and 2020, respectively.

23

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

7. Subordianted Convertible Debentures Payable (continued):

The debentures are not collateralized and are subordinate to senior indebtedness ($1,198,000 at December 31, 2021 and 2020).  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.

To maximize the amounts realized for the debt holders, the Company has been and intends to continue to seek buyers for the remaining landholdings.  No assurances are offered regarding the timing of or the values to be realized from future land sales.

8.Convertible Debentures Payable:

In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder.  The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989.  The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow.  The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015.  In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest.  Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016.

During the years ended December 31, 2021 and 2020 the Company paid $50,000 and $125,000, respectively of accrued interest for the related party collateralized convertible debentures.  

The remaining accrued interest is $52,740,000 and $52,790,000 as of December 31, 2021 and 2020.

24

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

9. Income Taxes:

            Reconciliation of the statutory federal income tax rates, 21% for the years ended December 31, 2021 and 2020, to the Company’s effective income tax rates follows:                        

	2021						2020
	($ in thousands)
				Percent of						Percent of
	Amount of tax			Pre-tax Loss			Amount of tax			Pre-tax Loss
Expected tax credit	$	(297	)		21.0	%	$	(234	)		21.0	%
State income taxes, net of
federal tax benefits		(56	)		4.0	%		(45	)		4.0	%
Decrease in environmental
liability		-			0.0	%		-			0.0	%
Increase (decrease) in valuation
allowance		353			25.0	%		279			25.0	%
	$	-			0.0	%	$	-			0.0	%

At December 31, 2021, the Company had an operating loss carryforward of approximately $69,349,000, the majority of which will expire at various dates through 2040.

	2021			2020
	($ in thousands)
Deferred tax asset:
Net operating loss carryover	$	18,154		$	17,801
Expenses capitalized under IRC 263(a)		37			37
Tax credits (AMT)		57			57
Valuation allowance		(18,248	)		(17,895	)
Net deferred tax asset	$	-		$	-

The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2018.  It is the Company’s policy to classify interest and penalties related to its tax positions in general and administrative expense in the consolidated statements of operations.

25

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

10. Capital Stock:

Effective December 31, 2016, L-PGI liquidated and assigned the 2,260,706 shares of common stock of the Company and 1,875,000 shares of preferred stock of the Company, that were held by L-PGI to LIC, in conjunction with settling its remaining indebtedness.  LIC was the general partner of L-PGI and is owned, directly or indirectly, by Andrew S. Love and Laurence A. Schiffer, which are the directors and executive officers of the Company.

In March 1987, the Company sold, in a private placement, 1,875,000 shares of its Class A cumulative convertible preferred stock to 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 $0.32 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, 2021 cumulative preferred dividends in arrears totaled $17,075,000 ($640,000 of which related to the year ended December 31, 2021).  On May 15, 1997 preferred dividends accrued through April 25, 1995 totaling $4,260,000 were paid in the form of 2,000,203 shares of common stock.

As of December 31, 2021 and 2020, 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, 2021 and 2020, the Company had reserved 3,756,000 common shares for the conversion of preferred stock.

11. Quarterly Results:

The Company sold four single family lots in Citrus County, Florida that provided sale proceeds of approximately $80,000 in the fourth quarter of 2021.

12. Commitments and Contingencies:

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business.  It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.           

26

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

13. Related Party Transactions:

The Company’s primary preferred shareholder is LIC which is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer.  Messrs. Love and Schiffer serve as the executive officers and directors of the Company.  

In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder.  The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989.  The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow.  The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015.  In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest.  Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016. 

During the years ended December 31, 2021 and 2020 the Company paid $50,000 and $125,000, respectively, of accrued interest for the related party collateralized convertible debentures.  

The remaining accrued interest is $52,740,000 and $52,790,000 as of December 31, 2021 and 2020.

PGIP is owned and managed by Hallmark Investment Corporation (“HIC”).  Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC.

The Company maintains its administration and accounting offices with Love Real Estate Company (“LREC”).  LREC, which is owned by LIC, is paid a monthly fee for the following:

1.	Maintain books of original entry;
2.	Prepare quarterly and annual SEC filings;
3.	Coordinate the quarterly reviews;
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

27

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

13. Related Party Transactions (continued):

In addition, the Company receives office space, telephone service and computer service from LREC. A fee of $2,000 per month was accrued in 2021 and $2,800 in 2020.  The Company made payments of $24,000 and $33,600 to LREC in 2021 and 2020, respectively, for service fees.  The decrease in services in 2021 is due to the Company not being reviewed by a PCAOB registered public accounting firm effective with the March 31, 2020 periodic filing with the SEC. There were no accrued accounting service fees as of December 31, 2021 and 2020.  

The Company has 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 percent of the carrying value of the Company’s assets, plus reasonable out-of-pocket expenses.  As of December 31, 2021 and 2020, the carrying value of the Company’s assets was approximately $68,000 and $95,000 respectively.  Consulting fees were $300 and $1,000 in 2021 and 2020, respectively.  

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, 2021 and 2020 had an outstanding principal balance of $176,000 plus accrued interest of $496,000 and $486,000, totaling an outstanding balance of $672,000 and $663,000, respectively.  Interest accrued on this loan was $9,000 and $10,000 in 2021 and 2020, respectively.

28

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

14. 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:  

The carrying amount approximates fair value because of the short maturity of those instruments.

Receivables:  

The carrying amount approximates fair value because of the short-term maturity of those receivables.

Accounts Payable:  

The carrying amount approximates fair value because of the short-term maturity of those debts.

Debt:  

It was not practicable to estimate the fair value of the Company’s notes payable and its subordinated 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.

The estimated fair values of the Company’s financial instruments are as follows:

	2021				2020
	($ in thousands)
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Cash	$	58	$	58	$	81	$	81
Accounts payable		-		-		3		3
Debt		9,223		-		9,223		-

29

PGI INCORPORATED AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited) (continued)

15. Loss Per Share:

The following is a summary of the calculations used in computing basic and diluted loss per share:

	2021			2020
	($ in thousands, except share data)
Numerator:
Net Loss	$	(1,412	)	$	(1,105	)
Preferred Dividends		(640	)		(640	)
Loss Available to Common Shareholders	$	(2,052	)	$	(1,745	)
Denominator:
Basic and Diluted
Weighted average amount of shares outstanding		5,317,758			5,317,758
Loss per share
Basic	$	(0.39	)	$	(0.33	)
Diluted	$	(0.39	)	$	(0.33	)

16. Subsequent Events:

Management has evaluated subsequent events from the balance sheet date through March 31, 2022 and has determined that no material subsequent events exist.

30

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The Company’s independent registered public accounting firm, BKD, declined to stand for re-engagement subsequent to the audit for fiscal year ended December 31, 2018 (“Fiscal 2018”).  The Form 10-K for Fiscal 2018 was filed on February 25, 2019. There were no disagreements with BKD on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure.  

In April 2019, the Company engaged the accounting firm of Milhouse & Neal, LLP as independent accountants for the fiscal year ended December 31, 2019.  Due to the inactive status of the Company and its diminishing financial resources, the Company elected not to engage the accounting firm of Milhouse & Neal, LLP to perform a review for the fiscal year ended December 31, 2021 and 2020.

Item 9A. Controls and Procedures

The Company has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended) under the supervision and with the participation of the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Company.  Based on this evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2021.  There have been no changes in the Company’s internal control over financial reporting during the Company’s fourth fiscal quarter ending December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Management of PGI Incorporated (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).  The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles.  The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

31

Item 9A. Controls and Procedures (continued)

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls.  Accordingly, even an effective system of internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.  

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.  Based on that assessment, management concludes that, as of December 31, 2021, the Company’s internal control over financial reporting is effective.

Item 9B. Other Information

Not Applicable

32

PART III

Item 10. Directors, Executive Officers, and Corporate Governance.

The following information, regarding executive officers and directors of the Company, is as of March 31, 2022.

Name and Age	Position with Company and Business Experience During the Last Five Years
Laurence A. Schiffer (age 82)	Director of the Company since April 1987; President, Chief Executive Officer and Chief Financial 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; 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 (age 78)	Director and Chairman of the Company’s Board of Directors since May 1987; Secretary of the Company 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; 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.

The directors of the Company have determined that the Company does not have an audit committee financial expert serving on its board of directors (which acts as the Company’s audit committee).  In addition, the Company has not adopted a code of ethics that applies to its principal executive officer and principal financial officer (principal accounting officer).  The Company’s decision not to adopt a code of ethics or to have an audit committee financial expert are primarily attributable to the following reasons:  (i) as a result of its continuing financial difficulties due to amounts owed on its debt, the Company is focused almost exclusively on the disposition of its remaining real estate; (ii) as described in Item 5, there have been no reported transactions in the Company’s Common Stock since January 29, 1991, other than the odd lot tender offer in 2003, the assignment of the 2,260,706 shares of Company Common Stock by L-PGI to LIC in 2016, and the 2017 quotations; (iii) the board of directors of the Company consists of only two directors and these two directors are also the only executive officers of the Company; and (iv) the same person serves as the Company’s chief executive officer and chief financial officer.

33

Item 11. Executive Compensation

The Company’s Chief Executive Officer and Chief Financial Officer is Mr. Laurence A. Schiffer.  Because of the Company’s impaired financial condition, it does not compensate in any manner Mr. Schiffer or Mr. Love, the Company’s only other executive officer, for the services they perform for the Company in that capacity or in their capacity as directors of the Company.  Management services are provided to the Company by Love Real Estate Company (“LREC”), which is an affiliate of Love Investment Company, pursuant to that certain Management Consulting Agreement by and between the Company and LREC dated March 25, 1987 (the “Management Agreement”).  Mr. Schiffer and Mr. Love are employees of, and receive an annual salary from LREC.  Neither the 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 13. “Certain Relationships and Related Party Transactions, and Director Independence” for additional information about the Management Agreement.

Neither Mr. Schiffer nor Mr. Love has any outstanding equity awards at December 31, 2021.  The Company does not have a compensation plan or individual compensation arrangement under which its equity securities may be issued.

Neither Mr. Schiffer nor Mr. Love received fees from any source directly attributable to their services as directors of the Company during 2021.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The table below provides certain information as of March 31, 2022 regarding the beneficial ownership of the Common Stock and the Class A cumulative convertible preferred stock (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(8)	Stock			Stock			Stock (1)			Stock			Power (1)
Estate of Harold Vernon		998,777	(1)(2)		-			18.8	%		-			13.7	%
Mary Anne Johns Trust		-	(2)(3)		125,000	(3)		-	(3)		6.3	%		5.0	%
Love Investment Company		2,260,706	(4)		1,875,000	(4)		42.5	%		93.8	%		56.5	%
Andrew S. Love		2,263,215	(5)		1,875,000	(5)		42.6	%		93.8	%		56.6	%
Laurence A. Schiffer		2,263,215	(6)		1,875,000	(6)		42.6	%		93.8	%		56.6	%
All executive officers and directors
as a group (2 persons)		2,263,215	(7)		1,875,000	(7)		42.6	%		93.8	%		56.6	%

34

1.	The shares of Common Stock owned by the Estate of 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.
2.	Information obtained from filings made with the Securities and Exchange Commission.
3.	Includes the beneficial ownership of shares of Common Stock which represent less than 5% of the outstanding shares of Common Stock; sole voting and investment power over 125,000 shares of Preferred Stock, which shares are held in the name of Mary Anne Johns, as Trustee of the Mary Anne Johns Declaration of Trust.
4.	Love Investment Company (“LIC”) is a Missouri Corporation owned by Mr. Love, a Love trust and Mr. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of LIC.
5.	These shares are the same shares owned by LIC together with the 2,509 shares of Common Stock owned by PGIP, LLC. Mr. Love is an indirect and direct owner of LIC and an indirect owner of PGIP, LLC. See Footnote 4 above and Item 13. “Certain Relationships and Related Party Transactions, and Director Independence” for more information. Accordingly, Mr. Love has shared voting and investment power over all of these shares.
6.	These shares are the same shares owned by LIC, together with the 2,509 shares of Common Stock owned by PGIP, LLC. Mr. Schiffer is an indirect and direct owner of LIC and an indirect owner of PGIP, LLC. See Footnote 4 above and Item 13. “Certain Relationships and Related Transactions, and Director Independence” for more information. Accordingly, Mr. Schiffer has shared voting and investment power over all of these shares.
7.	These shares are the same shares reflected in Footnotes 4, 5 and 6. See Footnote 4 above and Item 13. “Certain Relationships and Related Transactions, and Director Independence” for more information.
8.	Addresses for beneficial owners are as follows:

Estate of Harold Vernon 3201 W. Rolling Hills Circle Davie, FL 33328	Love Investment Company 212 So. Central, Suite 304 St. Louis, MO 63105	Laurence A. Schiffer 212 So. Central, Suite 201 St. Louis, MO 63105
Mary Anne Johns Trust One Woodland Drive Punta Gorda, FL 33982	Andrew S. Love 212 So. Central, Suite 201 St. Louis, MO 63105

As of December 31, 2021, the Company did not have a compensation plan or individual compensation arrangement under which its equity securities may be issued.

35

Item 13. Certain Relationships and Related Transactions, and Director Independence

The Company’s primary preferred shareholder is LIC which is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer.  Messrs. Love and Schiffer serve as the executive officers and directors of the Company.  See also Note 13 to the Notes to Consolidated Financial Statements.  

In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder.  The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989.  The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow.  The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015.  In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest.  Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016. 

During the year ended December 31, 2021 and 2020 the Company paid $50,000 and $125,000 of accrued interest for the related party collateralized convertible debentures. 

The remaining accrued interest is $52,740,000 and $52,790,000 as of December 31, 2021 and 2020.

PGIP is owned and managed by Hallmark Investment Corporation.  Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC.  

The Company maintains its administration and accounting offices with the offices of LREC in St. Louis, Missouri.  LREC, a Missouri Corporation, is owned by LIC, and is located at 212 South Central Avenue, St. Louis, Missouri 63105.  A fee of $2,000 per month was accrued in 2021 and $2,800 in 2020.  The Company made payments of $24,000 and $33,600 to LREC in 2021 and 2020, respectively, for the services described in the next paragraph.  There were no accrued accounting service fees as of December 31, 2021 and 2020.

The following is a list of services provided by LREC during 2021:

1.	Maintain books of original entry;
2.	Prepare quarterly and annual SEC filings;
3.	Coordinate the quarterly reviews;
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.

36

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 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.

The Company has a Management Agreement with LREC.  As a consultant to the Company and in addition to the services listed on the previous page, 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 percent of the book value of the Company’s assets, plus reasonable out-of-pocket expenses. As of December 31, 2021 and 2020, the book value of the Company’s assets was $68,000 and $95,000. Consulting fees were $300 and $1,000 in 2021 and 2020, respectively.  The Management Agreement will continue in effect until terminated upon 90 days prior written notice by a majority vote of the Company’s directors.

Mr. Schiffer and Mr. Love receive a salary from LREC, such salary compensates them for their 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 or 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.

The Company believes that the affiliated transactions are on terms comparable to those which would be obtained from unaffiliated persons.

Neither of the two directors of the Company is independent pursuant to the definition of “independent director” set forth in the NYSE American Company Guide because both of them are executive officers of the Company.  The Company does not have a separate designated audit, compensation or nominating committee or committee performing similar functions.

37

Item 14. Principal Accountant Fees and Services

Accounting review services and tax fees were rendered by Milhouse & Neal, LLP, the principal accountant of the Company, for the years ended December 31, 2021 and 2020 as follows:

	2021		2020
	($ in thousands)
Review fees	$	-	$	12
Tax fees		3		4
	$	3	$	16

Tax fees are comprised of fees for tax compliance, tax planning, and tax advice.  Corporate tax services encompass a variety of permissible services, including technical tax advice related to U.S. tax matters as well as preparation of applicable tax returns.

The Board of Directors of the Company pre-approved all review and other permissible services to be provided by Milhouse & Neal, LLP and BKD, LLP and the estimated fees for these services.  

The Company’s independent registered public accounting firm, BKD, LLP, declined to stand for re-engagement subsequent to the audit for Fiscal 2018.  The Form 10-K for Fiscal 2018 was filed on February 25, 2019.  

In April 2019, the Company engaged the accounting firm of Milhouse & Neal, LLP as independent accountants for the fiscal year ended December 31, 2019.  Due to the inactive status of the Company and its diminishing financial resources, the Company elected not to engage the accounting firm of Milhouse & Neal, LLP to perform a review for the fiscal years ended December 31, 2021 and 2020.

38

PART IV

Item 15. Exhibits and Financial Statement Schedules

1. The following financial statements and the report of independent registered public accounting firm are filed as part of this Report:

a.	Report of Independent Registered Public Accounting Firm
b.	Consolidated Statements of Financial Position as of December 31, 2021 and 2020
c.	Consolidated Statements of Operations for the Years Ended December 31, 2021 and 2020
d.	Consolidated Statements of Cash Flows for the Years Ended December 31, 2021 and 2020
e.	Consolidated Statements of Stockholders' Deficiency for the Years Ended December 31, 2021 and 2020
f.	Notes to Consolidated Financial Statements

2.	Financial statement schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable and therefore have been omitted.
3.	Exhibit Index
	The following exhibits are filed or incorporated herein by reference and are numbered in accordance with the Exhibit Table of Item 601 of Regulation S-K.

2.	Inapplicable.
3.1(a)	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).
3.1(b)	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”).
3.2	Bylaws of PGI Incorporated and all amendments (filed as Exhibit 3.(ii) to the Registrant’s March 31, 2018 Form 10-Q dated 5/11/18 and incorporated herein by reference).
4.1	Description of Registrant’s Securities, filed herein

39

9.	Inapplicable.
10.1	Purchase Agreement by and between Sugarmill Woods, Inc. and State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.1 to the Registrant’s Form 8-K current report dated June 23, 2016 and incorporated herein by reference).
10.2	Purchase and Sale Agreement (for Parcel No. 104) by and between Sugarmill Woods, Inc. and the State of Florida, Department of Transportation, including addendum thereto, effective June 17, 2016 (filed as Exhibit 10.2 to the Registrant’s Form 8-K current report dated June 23, 2016 and incorporated herein by reference).
10.3	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).
10.4	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).
11.	See Note 16 to the consolidated financial statements.
13.	Inapplicable.
14.	Inapplicable (See discussion regarding code of ethics under Item 10. of this Form 10-K).
16.	Inapplicable.
18.	Inapplicable.
21.	Subsidiaries of the Registrant, filed herein.
22.	Inapplicable.
23.	Inapplicable.
24.	Inapplicable.
31(i).1	Principal Executive Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.
31(i).2	Principal Financial Officer certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as amended, filed herein.

40

32.1	Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.
32.2	Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herein.
33.	Not applicable.
34.	Not applicable.
35.	Not applicable
95.	Not applicable.
99.	Not applicable.
100.	Not applicable.
101.	Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.*

*Furnished with this report.

Item 16. Form 10-K Summary

Not applicable.

41

PGI INCORPORATED AND SUBSIDIARIES

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.

	PGI INCORPORATED (Registrant)
Date: March 31, 2022	By:	/s/ Laurence A. Schiffer
		Laurence A. Schiffer, President
		(Duly Authorized Officer and
		Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Andrew S. Love	Chairman of the Board	March 31, 2022
Andrew S. Love	Secretary
/s/ Laurence A. Schiffer	Vice Chairman of the Board,	March 31, 2022
Laurence A. Schiffer	President, Principal Executive
	Officer, Principal Financial Officer, and Principal Accounting Officer

42

EX-4.1

Exhibit 4.1

Description of Registrant’s Securities

Description of Common Stock

The following description of our Common Stock (as defined below) is qualified in its entirety by reference to our Restated Articles of Incorporation (the “Articles of Incorporation”) and our By-laws (the “Bylaws”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part.

Authorized Capital Shares.

Our authorized capital shares consist of 25,000,000 shares of common stock, par value $.10 per share (“Common Stock”) and 5,000,000 shares of preferred stock, par value $1.00 per share (“Preferred Stock”).

General.

Each share of Common Stock has the same relative rights as, and is identical in all respects to, each other share of Common Stock. The outstanding shares of our Common Stock are fully paid and nonassessable.

Voting Rights.

Each share of Common Stock entitles the holder thereof to one vote on all matters upon which stockholders have the right to vote. Our Common Stock does not have cumulative voting rights.

Dividend Rights.

No dividends have ever been paid on the Common Stock. Payment of dividends on the Common Stock is subject to the rights of the holders of outstanding shares of Preferred Stock to receive cumulative dividends, which rights are described in Note 11 to the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K of which this Exhibit 4.1 is a part. Payment of dividends on the Common Stock is also restricted under the terms of the two indentures (one of which matured on June 1, 1991 and the other on May 1, 1992) pursuant to which the Company’s outstanding subordinated convertible debentures were issued, the terms of which debentures are further described in Note 8 to the Notes to Consolidated Financial Statements in Annual Report on Form 10-K of which this Exhibit 4.1 is a part.  

No Preemptive or Conversion Rights.

Holders of shares of our Common Stock do not have preemptive rights to purchase additional shares of our Common Stock and have no conversion or redemption rights.

Liquidation Rights.

Subject to the liquidation preference of the holders of outstanding shares of Preferred Stock, which preference is described in Note 11 to the Notes to Consolidated Financial Statements in Annual Report on Form 10-K of which this Exhibit 4.1 is a part, in the event of our liquidation, dissolution, or winding up, the holders of shares of our Common Stock shall be entitled to share ratably in any assets legally available for distribution to holders of capital stock of the Company.

Trading

There is no public trading market for the Company’s Common Stock.

EX-21

Exhibit 21

PGI INCORPORATED

SUBSIDIARIES

	State of Incorporation	Relationship
Sugarmill Woods, Inc.	Florida	Wholly owned (1)
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)

_______________________________________

(1)        Included in the Company’s consolidated financial statements.

EX-31.1

Exhibit 31(i).1

RULE 13a – 14(a)

CERTIFICATION

I, Laurence A. Schiffer, certify that;

1.	I have reviewed this annual report on Form 10-K 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 registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s accountants and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.

 

/s/ Laurence A Schiffer	March 31, 2022
Laurence A. Schiffer
Principal Executive Officer

EX-31.2

Exhibit 31(i).2

RULE 13a – 14(a)

CERTIFICATION

I, Laurence A. Schiffer, certify that;

1.	I have reviewed this annual report on Form 10-K 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 registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant 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 registrant, 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)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s accountants and the audit committee of the registrant’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 registrant’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 registrant’s internal control over financial reporting.

 

/s/ Laurence A. Schiffer	March 31, 2022
Laurence A. Schiffer
Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350 *

In connection with the Annual Report of PGI Incorporated (the “Company”) on Form 10-K for the period ended December 31, 2021 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) , as applicable, 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)	March 31, 2022

*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

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350*

In connection with the Annual Report of PGI Incorporated (the “Company”) on Form 10-K for the period ended December 31, 2021 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), as applicable, 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)	March 31, 2022

*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.

XML

Cover - USD ($)	12 Months Ended
	Dec. 31, 2021	Mar. 31, 2022	Jun. 30, 2021
Cover [Abstract]
Entity Registrant Name	PGI INCORPORATED
Entity Central Index Key	0000081157
Document Type	10-K
Amendment Flag	false
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Well Known Seasoned Issuer	No
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Dec. 31, 2021
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2021
Entity Common Stock Shares Outstanding		5,317,758
Entity Public Float			$ 0
Document Annual Report	true
Document Transition Report	false
Entity File Number	1-6471
Entity Address Address Line 1	212 SOUTH CENTRAL
Entity Address City Or Town	ST. LOUIS
Entity Tax Identification Number	59-0867335
Entity Address State Or Province	MO
Entity Address Postal Zip Code	63105
City Area Code	314
Local Phone Number	512-8650
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	FL
Auditor Firm Id	123
Auditor Name	None
Auditor Location	None

XML

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
ASSETS
Cash	$ 58	$ 81
Land Inventory (Note 4)	10	14
Total Assets	68	95
LIABILITIES
Accounts payable and accrued expenses (Note 5)	157	160
Accrued real estate taxes (Note 5)	5	4
Accrued Interest:
Subordinated convertible debentures (Note 7)	29,512	28,137
Convertible debentures-related party (Note 8)	52,740	52,790
Notes Payable (Note 6)	3,512	3,450
Credit Agreements:
Notes payable (Note 6)	1,198	1,198
Subordinated convertible debentures payable (Note 7)	8,025	8,025
Total Liablities	95,149	93,764
Commitments and Contingencies (Note 12)	0	0
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 10)	2,000	2,000
Common stock, par value $.10 per share; authorized 25,000,000 shares; 5,317,758 shares issued and outstanding (Note 10)	532	532
Paid-in capital	13,498	13,498
Accumulated deficit	(111,111)	(109,699)
Stockholder deficit	(95,081)	(93,669)
Stockholders' deficit and Liablities	$ 68	$ 95

XML

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
STOCKHOLDERS' DEFICIENCY
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, authorized	5,000,000	5,000,000
Preferred stock - Class A cumulative convertible shares, issued	2,000,000	2,000,000
Preferred stock - Class A cumulative convertible shares, outstanding	2,000,000	2,000,000
Preferred stock, liquidation preference (excluding cumulative dividends)	$ 8,000,000
Common stock, par value	$ 0.10	$ 0.10
Common stock, authorized	25,000,000	25,000,000
Common stock, issued	5,317,758	5,317,758
Common stock, outstanding	5,317,758	5,317,758

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Revenues:
Real estate sales	$ 90	$ 0
Miscellaneous income	4	2
Total revenue	94	2
Costs and expenses:
Cost of real estate sales	15	0
Interest	1,437	1,417
Forgiveness of debt and interest	0	(410)
Taxes and assessments	5	5
Consulting and accounting-related party	24	34
Legal and professional	1	36
General and administrative	24	25
Total cost and expenses	1,506	1,107
NET LOSS	$ (1,412)	$ (1,105)
Net Loss Per Share Available to Common Stockholders Basic and Diluted (Note 15)	$ 0.39	$ 0.33

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Cash received from operations:
Real estate sales	$ 90	$ 0
Miscellaneous income	4	2
Total cash received from operations	94	2
Cash expended for operations:
Cost of real estate sales	10	0
Interest - related party	50	125
Taxes and assessments	5	0
Consulting and accounting-related party	24	35
Legal and professional	(1)	(38)
General and administrative	27	32
Total cash expended	117	230
Net cash flows used in operating activities	(23)	(228)
Net change in cash	(23)	(228)
Cash at beginning of year	81	309
Cash at end of year	58	81
Reconciliation of net loss to net cash used in operating activities:
Net loss	(1,412)	(1,105)
Adjustments to reconcile net loss to net cash used in operating activities:
Forgiveness of debt & interest	0	(410)
Decrease in assets:
Land inventory	4
Increase (decrease) in liabilities:
Accounts payable and accrued expenses	(3)	(9)
Accrued real estate taxes	1	4
Accrued interest	$ 1,387	$ 1,292

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($) $ in Thousands	Total	Preferred Stock	Common Stock	Accumulated Deficit	Additional Paid-In Capital
Balance, shares at Dec. 31, 2019		2,000,000	5,317,758
Balance, amount at Dec. 31, 2019	$ (92,564)	$ 2,000	$ 532	$ (108,594)	$ 13,498
Net Loss	(1,105)			(1,105)
Balance, shares at Dec. 31, 2020		2,000,000	5,317,758
Balance, amount at Dec. 31, 2020	(93,669)	$ 2,000	$ 532	(109,699)	13,498
Net Loss	(1,412)			(1,412)
Balance, shares at Dec. 31, 2021		2,000,000	5,317,758
Balance, amount at Dec. 31, 2021	$ (95,081)	$ 2,000	$ 532	$ (111,111)	$ 13,498

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Nature of Business and Going Concern

12 Months Ended

Dec. 31, 2021

Nature of Business and Going Concern

Nature of Business and Going Concern

1. Nature of Business and Going Concern

PGI Incorporated and Subsidiaries (the Company), a Florida corporation, was founded in 1958, and up until the mid 1990’s was in 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 has a significant accumulated deficit and is in default on its convertible subordinated debentures and notes payable (Notes 6 and 7).

The Company’s major efforts and activities have been, and continue to be, to sell assets of the Company to repay its indebtedness and to pay administrative expenditures in keeping an inactive company in existence.  The aggregate remaining land inventory is less than 68 acres, consisting of multiple parcels located in Florida counties.  These parcels have limited value because of associated developmental constraints such as wetlands, easements and other obstacles to development and sale. The potential values of the land parcels held for sale have been difficult to assess as the remaining land inventory is difficult to sell and difficult to value. While the Company will seek to realize full market value for each remaining asset, the amounts realized may be at substantial variance from its present financial statement carrying value.   Certain of these assets may be of so little value and marketability that the Company may elect not to pay the real estate taxes on selected parcels, which may eventually result in a de facto liquidation of such property by subjecting such property to a tax sale.

In management’s judgment, the 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. The asset carrying values shown in the financial statements, are judged to be reasonable estimates of the value, when viewed in the context of the entirety of the financial statements.

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Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Significant Accounting Policies

Significant Accounting Policies

2. 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 Change in Accounting Principle

            In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” which requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.  We adopted this standard using the modified retrospective approach.  The adoption of ASU 2014-09 did not have an impact on the Company’s consolidated financial statements.

Acreage

Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount.

Land Inventory

Land inventory is stated at cost.  

Cash

The Company’s cash accounts do not exceed federally insured limits.

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Real Estate Sales and Other Income

12 Months Ended

Dec. 31, 2021

Real Estate Sales and Other Income

Real Estate Sales and Other Income

3.Real Estate Sales and Other Income:

Revenues totaled $94,000 for the year ended December 31, 2021 compared to revenues of $2,000 for the year ended December 31, 2020.  

Real estate sales and cost of sales consisted of:

	2021		2020
	($ in thousands)
Real estate sales	$	90	$	-
Cost of sales		15		-
Gross profit margin	$	75	$	-

Other income totaled $4,000 for the year ended December 31, 2021 compared to $2,000 for the year ended December 31, 2020.  Other income in 2021 represents income from a settlement claim from when the Company was operating as a home builder.  Other income in 2020 represents recoveries of lot lien receivables which had been fully provided for cancellation.  

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Land Inventory

12 Months Ended

Dec. 31, 2021

Land Inventory

Land Inventory

4. Land Inventory:

Land inventory consisted of:

	2021		2020
	($ in thousands)
Fully improved land	$	10	$	14
	$	10	$	14

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Accounts Payable and Accrued Expenses

12 Months Ended

Dec. 31, 2021

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

5. Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses consisted of:

	2021		2020
	($ in thousands)
Accounts payable	$	-	$	3
Accrued audit, review and tax expense		3		3
Accrued debenture fees		153		153
Accrued miscellaneous		1		1
	$	157	$	160

Accrued Real Estate Taxes:

Accrued real estate taxes consisted of:

	2021		2020
	($ in thousands)
Current	$	4	$	4
Delinquent		1		-
		5		4

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Notes Payable

12 Months Ended

Dec. 31, 2021

Notes Payable

Notes Payable

6. Notes Payable:

Notes payable consisted of the following:

	2021		2020
	($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1985	$	176	$	176
At prime plus 2%, due October 1, 1987		1,000		1,000
Non-interest bearing, due August 1, 1993		22		22
	$	1,198	$	1,198

The prime rate at December 31, 2021 and 2020, was 3.25%, respectively.

The overall weighted-average interest rate for the Company’s credit agreements with its notes and mortgages was approximately 5.15% and 5.44% at December 31, 2021 and 2020, respectively.

Accrued interest on notes payable consisted of the following:

	2021		2020
	($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1985	$	496	$	486
At prime plus 2%, due October 1, 1987		3,016		2,964
	$	3,512	$	3,450

All of the outstanding notes payable including accrued interest are past due.

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Subordinated Convertible Debentures Payable

12 Months Ended

Dec. 31, 2021

Subordinated Convertible Debentures Payable

Subordinated Convertible Debentures Payable

7. Subordinated Convertible Debentures Payable:

Subordinated debentures payable consisted of:

	2021		2020
	($ in thousands)
6%, due May, 1992	$	8,025	$	8,025

Since issuance, $152,000 of the 6% debentures have been converted into common stock.  This conversion feature is no longer in effect.

The Company is in default on the 6% subordinated convertible debentures which totals $8,025,000 in principal plus accrued and unpaid interest of $29,512,000 and $28,137,000 as of December 31, 2021 and 2020, respectively.

The debentures are not collateralized and are subordinate to senior indebtedness ($1,198,000 at December 31, 2021 and 2020).  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.

To maximize the amounts realized for the debt holders, the Company has been and intends to continue to seek buyers for the remaining landholdings.  No assurances are offered regarding the timing of or the values to be realized from future land sales.

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Convertible Debentures Payable

12 Months Ended

Dec. 31, 2021

Notes Payable

Convertible Debentures Payable

8.Convertible Debentures Payable:

In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder.  The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989.  The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow.  The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015.  In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest.  Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016.

During the years ended December 31, 2021 and 2020 the Company paid $50,000 and $125,000, respectively of accrued interest for the related party collateralized convertible debentures.  

The remaining accrued interest is $52,740,000 and $52,790,000 as of December 31, 2021 and 2020.

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Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

9. Income Taxes:

            Reconciliation of the statutory federal income tax rates, 21% for the years ended December 31, 2021 and 2020, to the Company’s effective income tax rates follows:                        

	2021						2020
	($ in thousands)
				Percent of						Percent of
	Amount of tax			Pre-tax Loss			Amount of tax			Pre-tax Loss
Expected tax credit	$	(297	)		21.0	%	$	(234	)		21.0	%
State income taxes, net of
federal tax benefits		(56	)		4.0	%		(45	)		4.0	%
Decrease in environmental
liability		-			0.0	%		-			0.0	%
Increase (decrease) in valuation
allowance		353			25.0	%		279			25.0	%
	$	-			0.0	%	$	-			0.0	%

At December 31, 2021, the Company had an operating loss carryforward of approximately $69,349,000, the majority of which will expire at various dates through 2040.

	2021			2020
	($ in thousands)
Deferred tax asset:
Net operating loss carryover	$	18,154		$	17,801
Expenses capitalized under IRC 263(a)		37			37
Tax credits (AMT)		57			57
Valuation allowance		(18,248	)		(17,895	)
Net deferred tax asset	$	-		$	-

The Company is no longer subject to U.S. federal or state income tax examinations by tax authorities for years before 2018.  It is the Company’s policy to classify interest and penalties related to its tax positions in general and administrative expense in the consolidated statements of operations.

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Capital Stock

12 Months Ended

Dec. 31, 2021

Capital Stock

Capital Stock

10. Capital Stock:

Effective December 31, 2016, L-PGI liquidated and assigned the 2,260,706 shares of common stock of the Company and 1,875,000 shares of preferred stock of the Company, that were held by L-PGI to LIC, in conjunction with settling its remaining indebtedness.  LIC was the general partner of L-PGI and is owned, directly or indirectly, by Andrew S. Love and Laurence A. Schiffer, which are the directors and executive officers of the Company.

In March 1987, the Company sold, in a private placement, 1,875,000 shares of its Class A cumulative convertible preferred stock to 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 $0.32 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, 2021 cumulative preferred dividends in arrears totaled $17,075,000 ($640,000 of which related to the year ended December 31, 2021).  On May 15, 1997 preferred dividends accrued through April 25, 1995 totaling $4,260,000 were paid in the form of 2,000,203 shares of common stock.

As of December 31, 2021 and 2020, 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, 2021 and 2020, the Company had reserved 3,756,000 common shares for the conversion of preferred stock.

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Quarterly Results

12 Months Ended

Dec. 31, 2021

Quarterly Results

Quarterly Results

11. Quarterly Results:

The Company sold four single family lots in Citrus County, Florida that provided sale proceeds of approximately $80,000 in the fourth quarter of 2021.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies

Commitments and Contingencies

12. Commitments and Contingencies:

The Company is subject to claims and lawsuits that arise primarily in the ordinary course of business.  It is the opinion of management that the disposition or ultimate resolution of such claims and lawsuits will not have a material adverse effect on the consolidated financial position, results of operations and cash flows of the Company.           

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Related Party Transactions

12 Months Ended

Dec. 31, 2021

Related Party Transactions

Related Party Transactions

13. Related Party Transactions:

The Company’s primary preferred shareholder is LIC which is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer.  Messrs. Love and Schiffer serve as the executive officers and directors of the Company.  

In May 2008, LIC purchased $703,000 in principal amount of the Company’s convertible debentures from the previous debenture holder.  The balance of the outstanding convertible debentures in the amount of $797,000, were held by Love-1989.  The debentures held by Love-1989 and LIC were secured by a second mortgage behind PGIP on the 366 acres retained by the Company and a security interest behind that held by PGIP in the restricted proceeds escrow.  The total debentures balance of $1,500,000 carried a maturity date of July 8, 1997 and were in default as of December 31, 2015.  In 2016 the 366 acres were sold and the primary lender obligation to PGIP was respectively paid, in addition to the convertible debentures principal of $1,500,000 and a portion of the accrued interest.  Interest on the debentures accrued at the rate of fourteen percent compounded quarterly until the principal was paid in 2016. 

During the years ended December 31, 2021 and 2020 the Company paid $50,000 and $125,000, respectively, of accrued interest for the related party collateralized convertible debentures.  

The remaining accrued interest is $52,740,000 and $52,790,000 as of December 31, 2021 and 2020.

PGIP is owned and managed by Hallmark Investment Corporation (“HIC”).  Messrs. Love and Schiffer are directors and executive officers of HIC and own 90% of all the issued and outstanding voting stock of HIC.

The Company maintains its administration and accounting offices with Love Real Estate Company (“LREC”).  LREC, which is owned by LIC, is paid a monthly fee for the following:

1.	Maintain books of original entry;
2.	Prepare quarterly and annual SEC filings;
3.	Coordinate the quarterly reviews;
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

In addition, the Company receives office space, telephone service and computer service from LREC. A fee of $2,000 per month was accrued in 2021 and $2,800 in 2020.  The Company made payments of $24,000 and $33,600 to LREC in 2021 and 2020, respectively, for service fees.  The decrease in services in 2021 is due to the Company not being reviewed by a PCAOB registered public accounting firm effective with the March 31, 2020 periodic filing with the SEC. There were no accrued accounting service fees as of December 31, 2021 and 2020.  

The Company has 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 percent of the carrying value of the Company’s assets, plus reasonable out-of-pocket expenses.  As of December 31, 2021 and 2020, the carrying value of the Company’s assets was approximately $68,000 and $95,000 respectively.  Consulting fees were $300 and $1,000 in 2021 and 2020, respectively.  

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, 2021 and 2020 had an outstanding principal balance of $176,000 plus accrued interest of $496,000 and $486,000, totaling an outstanding balance of $672,000 and $663,000, respectively.  Interest accrued on this loan was $9,000 and $10,000 in 2021 and 2020, respectively.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2021

Fair Value of Financial Instruments

Fair Value of Financial Instruments

14. 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:  

The carrying amount approximates fair value because of the short maturity of those instruments.

Receivables:  

The carrying amount approximates fair value because of the short-term maturity of those receivables.

Accounts Payable:  

The carrying amount approximates fair value because of the short-term maturity of those debts.

Debt:  

It was not practicable to estimate the fair value of the Company’s notes payable and its subordinated 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.

The estimated fair values of the Company’s financial instruments are as follows:

	2021				2020
	($ in thousands)
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Cash	$	58	$	58	$	81	$	81
Accounts payable		-		-		3		3
Debt		9,223		-		9,223		-

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Loss Per Share

12 Months Ended

Dec. 31, 2021

Loss Per Share

Loss Per Share

15. Loss Per Share:

The following is a summary of the calculations used in computing basic and diluted loss per share:

	2021			2020
	($ in thousands, except share data)
Numerator:
Net Loss	$	(1,412	)	$	(1,105	)
Preferred Dividends		(640	)		(640	)
Loss Available to Common Shareholders	$	(2,052	)	$	(1,745	)
Denominator:
Basic and Diluted
Weighted average amount of shares outstanding		5,317,758			5,317,758
Loss per share
Basic	$	(0.39	)	$	(0.33	)
Diluted	$	(0.39	)	$	(0.33	)

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Subsequent Events

12 Months Ended

Dec. 31, 2021

Subsequent Events

Subsequent Events

16. Subsequent Events:

Management has evaluated subsequent events from the balance sheet date through March 31, 2022 and has determined that no material subsequent events exist.

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

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 Change in Accounting Principle

            In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)” which requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.  We adopted this standard using the modified retrospective approach.  The adoption of ASU 2014-09 did not have an impact on the Company’s consolidated financial statements.

Acreage

Sales of undeveloped and developed acreage tracts are recognized, net of any deferred revenue and valuation discount.

Land Inventory

Land inventory is stated at cost.  

Cash

The Company’s cash accounts do not exceed federally insured limits.

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Real Estate Sales and Other Income (Tables)

12 Months Ended

Dec. 31, 2021

Real Estate Sales and Other Income

Real Estate Sales and Other Income

	2021		2020
	($ in thousands)
Real estate sales	$	90	$	-
Cost of sales		15		-
Gross profit margin	$	75	$	-

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Land Inventory (Tables)

12 Months Ended

Dec. 31, 2021

Land Inventory

Land inventory

	2021		2020
	($ in thousands)
Fully improved land	$	10	$	14
	$	10	$	14

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Accounts Payable and Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2021

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist

	2021		2020
	($ in thousands)
Accounts payable	$	-	$	3
Accrued audit, review and tax expense		3		3
Accrued debenture fees		153		153
Accrued miscellaneous		1		1
	$	157	$	160

	2021		2020
	($ in thousands)
Current	$	4	$	4
Delinquent		1		-
		5		4

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Notes Payable (Tables)

12 Months Ended

Dec. 31, 2021

Notes Payable

Credit agreements with the Company's primary lender and notes payable

	2021		2020
	($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1985	$	176	$	176
At prime plus 2%, due October 1, 1987		1,000		1,000
Non-interest bearing, due August 1, 1993		22		22
	$	1,198	$	1,198

Accrued interest on notes payable

	2021		2020
	($ in thousands)
Notes Payable-
At prime plus 2%, due October 1, 1985	$	496	$	486
At prime plus 2%, due October 1, 1987		3,016		2,964
	$	3,512	$	3,450

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Subordinated Convertible Debentures Payable (Tables)

12 Months Ended

Dec. 31, 2021

Subordinated Convertible Debentures Payable

Subordinated debentures payable

	2021		2020
	($ in thousands)
6%, due May, 1992	$	8,025	$	8,025

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Taxes

Reconciliation of the statutory federal income tax rates

	2021						2020
	($ in thousands)
				Percent of						Percent of
	Amount of tax			Pre-tax Loss			Amount of tax			Pre-tax Loss
Expected tax credit	$	(297	)		21.0	%	$	(234	)		21.0	%
State income taxes, net of
federal tax benefits		(56	)		4.0	%		(45	)		4.0	%
Decrease in environmental
liability		-			0.0	%		-			0.0	%
Increase (decrease) in valuation
allowance		353			25.0	%		279			25.0	%
	$	-			0.0	%	$	-			0.0	%

Deferred tax assets/liabilities

	2021			2020
	($ in thousands)
Deferred tax asset:
Net operating loss carryover	$	18,154		$	17,801
Expenses capitalized under IRC 263(a)		37			37
Tax credits (AMT)		57			57
Valuation allowance		(18,248	)		(17,895	)
Net deferred tax asset	$	-		$	-

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2021

Fair Value of Financial Instruments

Estimated fair values of the Company's financial instruments

	2021				2020
	($ in thousands)
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Cash	$	58	$	58	$	81	$	81
Accounts payable		-		-		3		3
Debt		9,223		-		9,223		-

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Loss Per Share (Tables)

12 Months Ended

Dec. 31, 2021

Loss Per Share

Summary of the calculations used in computing basic and diluted loss per share

	2021			2020
	($ in thousands, except share data)
Numerator:
Net Loss	$	(1,412	)	$	(1,105	)
Preferred Dividends		(640	)		(640	)
Loss Available to Common Shareholders	$	(2,052	)	$	(1,745	)
Denominator:
Basic and Diluted
Weighted average amount of shares outstanding		5,317,758			5,317,758
Loss per share
Basic	$	(0.39	)	$	(0.33	)
Diluted	$	(0.39	)	$	(0.33	)

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Real Estate Sales and Other Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Land Inventory
Real estate sales	$ 90	$ 0
Cost of sales	15	0
Gross profit margin	$ 75	$ 0

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Real Estate Sales and Other Income (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Land Inventory
Revenues	$ 94,000	$ 2,000
Other income	$ 4,000	$ 2,000

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Land Inventory (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Land inventory consisted of:
Fully improved land	$ 10	$ 14
Total	$ 10	$ 14

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Accounts Payable and Accrued Expenses (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Accounts payable and accrued expenses consisted of:
Accounts payable	$ 0	$ 3,000
Accrued audit, review and tax expense	3,000	3,000
Accrued debenture fees	153,000	153,000
Accrued miscellaneous	1,000	1,000
Total	157,000	160,000
Accrued real estate taxes consisted of:
Current	4	4
Delinquent	1	0
Accrued real estate taxes	$ 5	$ 4

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Notes Payable (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Total	$ 1,198,000	$ 1,198,000
Notes payable (Note 7)	1,198,000	1,198,000
At prime plus 2%, due October 1, 1985
Notes payable (Note 7)	176,000	176,000
At prime plus 2%, due October 1, 1987
Notes payable (Note 7)	1,000,000	1,000,000
Non-interest bearing, due August 1, 1993
Notes payable (Note 7)	$ 22,000	$ 22,000

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Notes Payable (Details 1) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Accrued interest on notes payable	$ 3,512	$ 3,450
At prime plus 2%, due October 1, 1985
Accrued interest on notes payable	496	486
At prime plus 2%, due October 1, 1987
Accrued interest on notes payable	$ 3,016	$ 2,964

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Notes Payable (Details Narrative)	Dec. 31, 2021	Dec. 31, 2020
Notes Payable
Prime rate	3.25%	3.25%
Weighted-average interest rate	5.15%	5.44%

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Subordinated Convertible Debentures Payable (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Subordinated convertible debentures payable	$ 8,025,000
6%, due May 1992
Subordinated convertible debentures payable	$ 8,025,000	$ 8,025,000

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Subordinated Convertible Debentures Payable (Details Narrative) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
6% Subordinated convertible debenture
Debentures converted into common stock	$ 152,000
Debentures converted into common stock percentage	6.00%
Subordinated convertible debentures payable	$ 8,025,000
Principal plus accrued and unpaid interest	29,512,000	$ 28,137,000
Indebtedness	$ 1,198,000	$ 1,198,000

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Convertible Debentures Payable (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended
	May 31, 2008	Dec. 31, 2021	Dec. 31, 2020
Subordinated Convertible Debentures Payable
Maturity date		Jul. 08, 1997
Accrued interest remaining		$ 52,740,000	$ 52,790,000
Total debentures balance	$ 1,500,000
Additionaly convertible debentures principal amount	1,500,000
Accrued interest convertible debentures paid - related party		$ 50,000	$ 125,000
LIC purchased amount	703,000
Outstanding convertible debentures amount	$ 797,000

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Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Taxes
Expected tax credit	$ (297)	$ (234)
State income taxes, net of federal tax benefits	(56)	(45)
Decrease in environmental liability	0	0
Increase (decrease) in valuation allowance	353	279
Income tax expense benefit continuing operations	$ 0	$ 0
Expected tax (credit), percentage	21.00%	21.00%
State income taxes, net of federal tax benefits, percentage	4.00%	4.00%
Decrease in environmental liability, percentage	0.00%	0.00%
Increase (decrease) in valuation allowance percentage	25.00%	25.00%
Effective income tax rate continuing operations	0.00%	0.00%

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Income Taxes (Details 1) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred tax asset:
Net operating loss carryover	$ 18,154	$ 17,801
Expenses capitalized under IRC 263(a)	37	37
Tax credits (AMT)	57	57
Valuation allowance	(18,248)	(17,895)
Total tax asset	$ 0	$ 0

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Income Tax (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Income Taxes
Operating loss carryforward	$ 69,349,000
Operating losses expiry date	2040
Statutory federal income tax rates	(21.00%)	(21.00%)

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Capital Stock (Details Narrative) - USD ($)	1 Months Ended	12 Months Ended		25 Months Ended
	Mar. 31, 1987	Dec. 31, 2021	Dec. 31, 2020	May 15, 1997	Dec. 31, 2016
Assigned common stock shares					2,260,706
Cumulative preferred dividends in arrears		$ 17,075,000,000		$ 4,260,000,000
Assigned preferred stock shares					1,875,000
Indebtness converted	$ 500,000
Stock issued upon conversion	125,000
Preferred stock dividend rate per share		$ 0.32
Dividend yield percentage		8.00%
Cmulative preferred stock dividend in arrears for current year		$ 640,000
Common stock issued for dividends		2,000,203
Preferred stock is callable or redeemable at the option of the Company		$ 4.00	$ 4.00
Preferred stock liquidation preference		$ 4.00	$ 4.00
Common shares reserved for the conversion of preferred stock and debentures		3,756,000	3,756,000
Private Placement
Purchase price of stock	$ 7,500,000
Purchase price per share	$ 4.00
Preferred stock issued	1,875,000

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Quarterly Results (Details Narrative)	3 Months Ended
	Dec. 31, 2021 USD ($)
Quarterly Results
Proceeds from sale of lots	$ 80,000

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Related Party Transactions (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2016	Dec. 31, 2015	May 31, 2008
Accrued interest paid	$ 50,000	$ 125,000
Accrued interest remaining	$ 52,740,000	52,790,000
Messrs. Love and Schiffer
Ownership percentage	90.00%
LREC
Consulting fees related party	$ 300	1,000
Carrying value of company assets	68,000	95,000
Service fee paid	$ 24,000	33,600
Description of transaction	the Company receives office space, telephone service and computer service from LREC. A fee of $2,000 per month was accrued in 2021 and $2,800 in 2020
Former Chairman And Family
Outstanding principal plus accrued interest	$ 672,000	663,000
Outstanding principal	176,000	176,000
Accrued interest on outstanding principal	496,000	486,000
Interest accrued	9,000	$ 10,000
LIC
Due to related party					$ 703,000
Love-1989
Due to related party	$ 797,000
PGIP
Due to related party default amount				$ 1,500,000
Payments made to related party			$ 1,500,000

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Cash	$ 58	$ 81
Carrying Amount
Cash	58	81
Accounts payable	0	3
Debt	9,223	9,223
Fair Value
Cash	58	81
Accounts payable	0	3
Debt	$ 0	$ 0

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Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Numerator:
Net Loss	$ (1,412)	$ (1,105)
Preferred dividends	(640)	(640)
Loss available to common shareholders	$ (2,052)	$ (1,745)
Denominator:
Weighted average amount of shares outstanding, basic and diluted	5,317,758	5,317,758
Loss per share
Basic	$ (0.39)	$ (0.33)
Diluted	$ (0.39)	$ (0.33)