PGI INC - Quarter Report: 2019 March (Form 10-Q)

FLORIDA		59-0867335
(State or other jurisdiction of incorporation)		(I.R.S. Employer Identification No.)

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

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	Inapplicable	Inapplicable

 

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of May 15, 2019, there were 5,317,758 shares of the registrant’s common stock, $.10 par value per share, outstanding.

 

 

 

PGI INCORPORATED AND SUBSIDIARIES

 

 

Form 10 – Q

For the Quarter Ended March 31, 2019

 

Table of Contents

 

		Form 10 - Q Page No.
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements Condensed Consolidated Statements of Financial Position March 31, 2019 (Unaudited) and December 31, 2018	3
	Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended March 31, 2019 and 2018	4
	Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, 2019 and 2018	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	18
SIGNATURE		19
EXHIBIT INDEX		20

 

 

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

 

PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
($ in thousands, except share and per share data)
	March 31,	December 31,
	2019	2018
	(Unaudited)
ASSETS
Cash	$419	$526
Land inventory	14	14
Restricted sinking fund	13	13
	$446	$553
LIABILITIES
Accounts payable and accrued expenses	$175	$230
Accrued real estate taxes	1	-
Accrued interest:
Subordinated convertible debentures payable	26,072	25,744
Convertible debentures payable-related party	52,915	52,915
Notes payable	3,321	3,299
Credit agreements:
Notes payable	1,198	1,198
Subordinated convertible debentures payable	8,163	8,163
	91,845	91,549
STOCKHOLDERS' DEFICIENCY
Preferred stock, par value $1.00 per share;
authorized 5,000,000 shares; 2,000,000
Class A cumulative convertible shares issued
and outstanding; (liquidation preference of
$8,000 plus unpaid cumulative dividends of $15,315)	2,000	2,000
Common stock, par value $.10 per share;
authorized 25,000,000 shares; 5,317,758
shares issued and outstanding	532	532
Paid-in capital	13,498	13,498
Accumulated deficit	(107,429)	(107,026)
	(91,399)	(90,996)
	$446	$553

 

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

Part I  Financial Information (Continued)

 

PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share data)
(Unaudited)
	Three Months Ended
	March 31,	March 31,
	2019	2018
REVENUES
Interest income	$1	$1
Interest income-related party	-	4
	1	5
COSTS AND EXPENSES
Interest	350	345
Forgiveness of debt and interest	-	(332)
Taxes and assessments	1	1
Consulting and accounting-
related party	9	9
Legal and professional	29	4
General and administrative	15	21
	404	48
NET LOSS	(403)	(43)
NET LOSS PER SHARE(*)
AVAILABLE TO COMMON
STOCKHOLDERS-Basic and diluted	$(0.11)	$(0.04)
*Considers the effect of dividends on preferred stock for the three months ended
March 31, 2019 and 2018.

 

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

 

Part I  Financial Information (Continued)

 

PGI INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
(Unaudited)
	Three Months Ended
	March 31,	March 31,
	2019	2018
Net cash used in operating activities	$(107)	$(36)
Cash Flows from investing activities:
Payments received on notes receivable-related party	-	560
Net cash provided by investing activities	-	560
Net change in cash	(107)	524
Cash at beginning of period	526	159
Cash at end of period	$419	$683

 

See accompanying notes to Condensed Consolidated Financial Statements (unaudited).

 

 

 

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1)         Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of PGI Incorporated (“PGI”) and its subsidiaries (the “Company”) have been prepared in accordance with the instructions to Form 10 - Q and therefore do not include all disclosures necessary for fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The Company's independent registered public accounting firm included an explanatory paragraph regarding the Company's ability to continue as a going concern in their opinion on the Company's consolidated financial statements for the year ended December 31, 2018.

 

The Company was founded in 1958, and up until the mid 1990’s was in the business of building and selling homes, developing and selling home sites and selling undeveloped or partially developed tracts of land. Over approximately the last 30 years, the Company’s business focus and emphasis changed substantially as it has concentrated its sales and marketing efforts almost exclusively on the disposition of its remaining real estate.

 

The Company’s major efforts and activities have been, and continue to be, to sell assets of the Company, to repay its indebtedness, and to pay the ordinary on-going costs of operation of the Company. The potential values of the land parcels held for sale has been difficult to assess. 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 defacto liquidation of such property by subjecting such property to a tax sale. In management’s judgement, the remaining assets will be insufficient to satisfy much, if any, of the outstanding indebtedness and there will be no recoveries by the shareholders. Consequently, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

 

Certain information and note disclosures normally included in the Company’s annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Form 10-K annual report for 2018 filed with the Securities and Exchange Commission.

 

The condensed consolidated statement of financial position of the Company as of December 31, 2018 has been derived from the audited consolidated statement of financial position as of that date.

 

The Company remains in default under the indentures governing its unsecured subordinated debentures. (See Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes 7, 8, and 9 to the Company's consolidated financial statements for the year ended December 31, 2018, as contained in the Company's Annual Report on Form 10 - K).

 

 

 

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (continued)

 

All adjustments (consisting of only normal recurring accruals) necessary for fair presentation of financial position, results of operations and cash flows have been made. The results for the three months ended March 31, 2019 are not necessarily indicative of operations to be expected for the fiscal year ending December 31, 2019 or any other interim period.

 

(2)         Per Share Data

 

Basic per share amounts are computed by dividing net income (loss), after deducting current period dividends on the Company's preferred stock, by the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for the three months ended March 31, 2019 and 2018 was 5,317,758.

 

Diluted per share amounts are computed by dividing net income (loss) attributable to common shareholders by the weighted average number of common shares outstanding, after adjusting for the estimated effect of the assumed conversion of all cumulative convertible preferred stock and outstanding convertible debentures, if dilutive, into shares of common stock. For the three months ended March 31, 2019 and 2018, the assumed conversion of all outstanding convertible preferred stock and collateralized convertible debentures would have been anti-dilutive.

 

The following is a summary of the calculations used in computing basic and diluted loss per share for the three months ended March 31, 2019 and 2018.

 

	Three Months Ended
	March 31,	March 31,
	2019	2018
	($ in thousands,
	except share and per share data)
Net Loss	$(403)	$(43)
Preferred dividends	(160)	(160)
Loss Available to	$(563)	$(203)
Common shareholders
Weighted Average Number
Of Common Shares
Outstanding	5,317,758	5,317,758
Basic and Diluted Loss
Per Common Share	$(0.11)	$(0.04)

 

 

 

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (continued)

 

(3)          Statement of Cash Flows

 

The Financial Accounting Standards Board Accounting Standards Codification Topic No. 230, “Statement of Cash Flows”, requires a statement of cash flows as part of a full set of financial statements. For quarterly reporting purposes, the Company has elected to condense the reporting of its net cash flows. There were no payments of interest for the three month periods ended March 31, 2019 and March 31, 2018.

 

(4)          Land Inventory

 

Land inventory consisted of

 

	March 31,	December 31,
	2019	2018
	($ in thousands)
Fully improved land	$14	$14

 

 

 

(5)          Accounts Payable and Accrued Expenses

 

Accounts payable and accrued expenses consisted of:

	March 31,	December 31,
	2019	2018
	($ in thousands)
Accounts payable	$11	$18
Accrued audit & professional	9	43
Accrued legal	-	14
Accrued consulting fees-related party	1	1
Accrued debenture fees	153	153
Accrued miscellaneous	1	1
	$175	$230
Accrued real estate taxes consisted of:
Current real estate taxes	$1	$-

 

 

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (continued)

 

 

(6)          Credit Agreements: Notes Payable and Subordinated Convertible Debentures Payable

 

Credit agreements consisted of the following:

 

	March 31,	December 31,
	2019	2018
	($ in thousands)
Notes payable - $1,176,000 bearing
interest at prime plus 2%, the remainder non-interest bearing,
all past due	$1,198	$1,198
Subordinated convertible debentures payable:
At 6.5% interest; due June 1991	138	138
At 6% interest; due May 1992	8,025	8,025
	8,163	8,163
	$9,361	$9,361

 

 

 

The Trustee of the 6.5% subordinated convertible debentures, which matured in June, 1991, with an original face amount of $1,034,000, provided notice of final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee has maintained a debenture reserve fund with a balance of $13,000 as of March 31, 2019 and December 31, 2018, available for final distribution to holders of such debentures who surrender their respective debenture certificates.

 

During the three month period ended March 31, 2019, there were no 6.5% subordinated convertible debentures that were surrendered or escheated by their respective debenture holders and no funds were utilized from the debenture reserve account. During the three month period ended March 31, 2018, $11,000 of the debenture reserve funds were utilized in escheatment to states of respective debenture holders with $115,000 in face amount of debentures were effectively surrendered with escheatment of respective funds to the states of debenture holders. In addition, debentures with a face amount of $3,000 were surrendered by debenture holders. Accordingly, the Company has recognized $107,000 in forgiveness of debt during the three months ended March 31, 2018. In addition, accrued interest of $225,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the three months ended March 31, 2018.

 

As of March 31, 2019 and December 31, 2018, the outstanding principal balance on such 6.5% subordinated convertible debentures that were not surrendered by the respective holders equals $138,000 plus accrued and unpaid interest of $272,000 and $270,000, respectively. If and when such remaining debentures are surrendered to the Trustee, the applicable portion of such principal and accrued interest will be recorded as debt and accrued interest forgiveness. As the Company has consistently stated in prior filings, the Company believes that any potential claims by the respective debenture holders on such 6.5% subordinated convertible debentures would be barred under the applicable statutes of limitations.

 

 

PGI INCORPORATED AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (continued)

 

(7)          Income Taxes

 

At December 31, 2018, the Company had an operating loss carryforward of approximately, $68,476,000 available to reduce future taxable income. These operating losses expire at various dates through 2037.

 

The following summarizes the temporary differences of the Company at March 31, 2019 and December 31, 2018 at the statutory rate:        

 

	2019	2018
	($ in thousands)
Deferred tax asset
Net operating loss carryforward	$17,312	$17,119
Expenses capitalized under IRC 263(a)	37	37
Tax credits (AMT)	57	57
Valuation allowance	(17,406)	(17,213)
Total deferred tax asset	$-	$-

 

(8)          Fair Value of Financial Instruments

 

The carrying amount of the Company’s financial instruments, other than debt, approximates fair value at March 31, 2019 and December 31, 2018 because of the short maturity of those instruments. It was not practicable to estimate the fair value of the Company’s notes payable and its convertible debentures because these debts are in default causing no basis for estimating value by reference to quoted market prices or current rates offered to the Company for debt of the same remaining maturities.

 

PGI INCORPORATED AND SUBSIDIARIES

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

 

Preliminary Note

 

The Company’s remaining land inventory consists of 6 single family lots, an approximate 7 acre parcel and some other minor parcels of real estate consisting of easements in Citrus County Florida, which are owned through its wholly-owned subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximates 60 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

 

The Board of Directors of PGI has concluded that it meets all of the conditions under which a registrant may be deemed an “Inactive Entity” as that term is defined or contemplated in Regulation S-X 3-11 and as the term “Inactive Registrant” is further contemplated in the Securities and Exchange Commission’s Division of Corporation Finance’s Financial Reporting Manual section 1320.2. Under Regulation 3-11 of Regulation S-X, the financial statements required thereunder with respect to an Inactive Registrant for purposes of reports pursuant to the Securities Exchange Act of 1934, including but not limited to annual reports on Form 10-K, may be unaudited. A representative of PGI informally discussed its view that PGI is an Inactive Registrant with a staff member of the Chief Accountant’s Office in the Division of Corporation Finance in February 2019.

 

As an Inactive Registrant, PGI currently intends to continue to timely file Annual Reports on Forms 10-K with the Securities and Exchange Commission (the “SEC”). PGI currently intends to include in such Annual Reports all annual consolidated financial statements required to be included therein pursuant to Regulation S-X. However, PGI anticipates that the aforementioned annual consolidated financial statements will be reviewed by a PCAOB registered public accounting firm rather than audited by a PCAOB registered public accounting firm. PGI has engaged Milhouse & Neal to be the PCAOB registered public accounting firm that will review its annual consolidated financial statements that will be included in the Annual Report on Form 10-K for its fiscal year ended December 31, 2019 and for its fiscal years thereafter.

 

PGI meets all of the conditions in Regulation S-X 3-11 for an “Inactive Registrant” which are:

 

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

 

As the Company reviews its circumstances, it has met the conditions as an Inactive Registrant since 2017

 

The Company, formerly a Florida residential developer, is dormant with less than 70 acres of remaining landholdings, much of which has little value due to various restrictions. The Company’s consolidated financial statements show it has a Stockholders’ Deficiency of $90.9 million as of December 31, 2018. BKD, the Company’s PCAOB registered public accounting firm until the date the Company filed its Form 10-K for Fiscal 2018 which was February 25, 2019, expressed a “going concern” opinion with respect to the Company for its Fiscal 2018 financial statements and had expressed such opinions for many years previously. PGI has had no trading of its securities in many years. Any future real estate transactions by the Company will be limited, uncertain as to timing and as to value. Ultimately, PGI expects that proceeds from sales of its remaining real estate, if any, will provide some minimal recoveries for PGI’s senior debtholders. PGI has been an SEC registrant for over 40 years.

 

As an Inactive Registrant, PGI will continue to provide comprehensive updates through its SEC filings.

 

The Trustee of the 6.5% subordinated debentures, which matured in June 1991, with an original face amount of $1,034,000, provided notice of final distribution to holders of such debentures on September 2, 2014. In connection with such final distribution, the Trustee maintained a debenture reserve fund with a balance of $13,000 as of March 31, 2019 and December 31, 2018, respectively, which is available for final distribution to holders of such debentures who surrender their respective debenture certificates.

 

During the three month period ended March 31, 2019, there were no 6.5% subordinated convertible debentures that were surrendered by their respective debenture holders and no funds were utilized from the debenture reserve account.

 

As of March 31, 2019 and December 31, 2018, the remaining outstanding principal balance on such 6.5% subordinated convertible debentures that have not been surrendered by the respective holders equals $138,000 plus accrued and unpaid interest of $272,000 and $270,000, respectively. If and when such remaining debentures are surrendered to the Trustee, the applicable portion of such principal and accrued interest will be recorded as debt and interest forgiveness. As the Company has consistently stated in prior filings, the Company believes that any potential claims by the respective debenture holders on such 6.5% subordinated convertible debentures would be barred under the applicable statutes of limitations.

 

As of March 31, 2019, the Company remained in default under its subordinated convertible debentures and notes payable, as well as the accrued interest with respect to its collateralized convertible debentures.

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

 

Results of Operations

 

Revenues for the three months ended March 31, 2019 decreased by $4,000 to $1,000 from $5,000 for the comparable 2018 period primarily as a result of no related party interest income earned on the short-term note receivable with Love Investment Company (“LIC”), the Company’s primary preferred stock shareholder in 2019. The Company received payment of the note receivable balance from LIC on March 6, 2018. Interest income earned on the Company’s money market account was $1,000 for each of the three month periods ended March 31, 2019 and 2018.

 

Expenses for the three month period ended March 31, 2019 increased by $356,000 when compared to the same period in 2018 primarily as a result of no forgiveness of debt and interest in the three months ended March 31,2019 as compared to $332,000 of forgiveness of debt and interest in the three months ended March 31, 2018. The forgiveness of debt and interest for the three months ended March 31, 2018 is attributed to the 6.5% subordinated convertible debentures which matured in June, 1991. A face amount of $115,000 of debentures were effectively surrendered with escheatment of respective funds to the states of debenture holders. In addition, debentures with a face amount of $3,000 were surrendered by debenture holders. Accordingly, the Company has recognized $107,000 in forgiveness of debt during the three months ended March 31, 2018. In addition, accrued interest of $225,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the three months ended March 31, 2018.

 

Interest expense relating to the Company’s current outstanding debt, held by non-related parties, increased by $5,000 during the three month period ended March 31, 2019 compared to the same period in 2018, primarily as a result of interest compounding on past due balances. In addition, there was an increase in the prime interest rate to 5.5% as of March 31, 2019 compared to 4.75% as of March 31, 2018.

 

Legal and professional expenses during the three month period ended March 31, 2019 increased by $25,000 when compared to the same period in 2018 primarily as a result of legal expenses incurred in connection with reviewing and editing the Company’s Form 10K and in connection with legal research relating to the Company’s going concern alternatives and SEC Regulation S-X for inactive registrants.

 

General and administrative expenses during the three month period ended March 31, 2019 decreased by $6,000 when compared to the same period in 2018 primarily as a result of a $4,000 decrease in fees relating to the filing of the Company’s periodic reports in 2019 as an inactive registrant. In addition, there was a decrease of approximately $2,000 during the three month period ended March 31, 2019 compared to the same period in 2018 due to 6% subordinated convertible debenture administration fees in 2018.

 

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

 

The Company incurred a net loss of $403,000 during the three month period ended March 31, 2019 compared to a net loss of $43,000 for the comparable period in 2018. After deducting preferred dividends, totaling $160,000 for the three month periods ended March 31, 2019 and 2018, with respect to the Class A Preferred Stock, a net loss per share of $(.11) and $(.04) was incurred for the three month periods ended March 31, 2019 and 2018. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through March 31, 2019 is $15,315,000.

 

Cash Flow Analysis

 

During the three month period ended March 31, 2019, the Company’s net cash used in operating activities was $107,000 compared to $36,000 for the comparable period in 2018. There was no cash provided from investing activities during the three month period ended March 31, 2019 compared to $560,000 of net cash provided from investing activities in the comparable period in 2018 which consisted of note receivable proceeds received from LIC.

 

Analysis of Financial Condition

 

Total assets decreased by $107,000 at March 31, 2019 compared to total assets at December 31, 2018, reflecting the following changes:

 

	March 31,	December 31,	Increase
	2019	2018	(Decrease)
		($ in thousands)
Cash	$419	$526	$(107)
Land inventory	14	14	-
Restricted sinking fund	13	13	-
	$446	$553	$(107)

 

During the three month period ended March 31, 2019, cash decreased by $107,000 compared to December 31, 2018 as a result of the Company funding its operating activities.

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

 

Liabilities were approximately $91,845,000 at March 31, 2019 compared to approximately $91,549,000 at December 31, 2018, reflecting the following changes which resulted in an increase of $296,000 of liabilities:

 

	March 31,	December 31,	Increase
	2019	2018	(Decrease)
		($ in thousands)
Accounts payable and accrued expenses	$175	$230	$(55)
Accrued real estate taxes	1	-	1
Accrued interest	82,308	81,958	350
Credit agreements:
Notes payable	1,198	1,198	-
Subordinated convertible
debentures payable	8,163	8,163	-
	$91,845	$91,549	$296

 

During the three month period ended March 31, 2019, the amount of accounts payable and accrued expenses decreased by $55,000 primarily as a result of timing differences. Accrued real estate taxes increased by $1,000 during the three month period ended March 31, 2019 due to the accrual of real estate taxes for the respective period. Accrued interest during the three month period ended March 31, 2019 increased by $350,000 due to the amount of interest expense for such period. During the three month period ended March 31, 2019, the Company made no interest or principal payments on its outstanding notes payable and subordinated convertible debentures.

 

PGI INCORPORATED AND SUBSIDIARIES

 

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

 

The Company remains in default on the entire principal amount plus interest (including certain sinking fund and interest payments with respect to the subordinated convertible debentures) of its subordinated convertible debentures and notes payable as well as the remaining accrued interest owed with respect to the collateralized convertible debentures.

 

The principal and accrued interest amounts due as of March 31, 2019 are as indicated in the following table:

 

	March 31, 2019
	Principal	Accrued
	Amount Due	Interest
	($ in thousands)
Subordinated convertible debentures:
At 6.5%, due June 1991	$138	$272
At 6%, due May 1992	8,025	25,800
	$8,163	$26,072
Collateralized convertible debentures-related party:
At 14%, due July 8, 1997	$-	$52,915
Notes payable:
At prime plus 2%, all past due	$1,176	$3,321
Non-interest bearing	22	-
	$1,198	$3,321

 

The Company does not have sufficient funds available (after payment of, or the reserving for the payment of, anticipated future operating expenses) to satisfy the principal or interest obligations on the above debentures and notes payable or any arrearage in preferred dividends.

 

The Company remains totally dependent upon the sale of parcels of its various remaining properties with respect to its ability to make any future debt service payments.

 

The Company’s independent registered public accounting firm included an explanatory paragraph regarding the Company’s ability to continue as a going concern in their opinion on the Company’s consolidated financial statements for the year ended December 31, 2018.

 

PGI INCORPORATED AND SUBSIDIARIES

 

Forward Looking Statements

 

The discussion set forth in this Item 2, as well as other portions of this Form 10-Q, may contain forward-looking statements. Such statements are based upon the information currently available to management of the Company and management’s perception thereof as of the date of the Form 10-Q. When used in this Form 10-Q, words such as “anticipates,” “estimates,” “believes,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties. Actual results of the Company’s operations could materially differ from those forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in the real estate market in Florida and the counties in which the Company owns any property; institution of legal action by the bondholders for collection of any amounts due under the subordinated convertible debentures (notwithstanding the Company’s belief that at least a portion of such actions might be barred under applicable statute of limitations); changes in management strategy; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under the supervision and with the participation of its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2019. There have been no changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PGI INCORPORATED AND SUBSIDIARIES

 

 

PART II OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company, to its knowledge, currently is not a party to any material legal proceedings.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Not applicable.

 

Item 3. Defaults Upon Senior Securities

 

See discussion in Item 2 of Part I with respect to defaults under the Company's subordinated convertible debentures, collateralized convertible debentures and other indebtedness and with respect to cumulative preferred dividends in arrears, which discussions are incorporated herein by this reference.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Not applicable.

 

Item 6. Exhibits

 

Reference is made to the Exhibit Index hereof for a list of exhibits filed or furnished under this Item.

 

 

  PGI INCORPORATED AND SUBSIDIARIES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

	PGI INCORPORATED  (Registrant)
Date: May 15, 2019	By:	/s/ Laurence A. Schiffer
		Laurence A. Schiffer
		President (Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)

 

PGI INCORPORATED AND SUBSIDIARIES

 

2	Inapplicable.
3.(i)	Inapplicable.
3.(ii)	Bylaws of PGI Incorporated and all amendments thereto.
4	Inapplicable.
10	Inapplicable.
11	Statement re: Computation of Per Share Earnings (Set forth in Note 2 of the Notes to Condensed Consolidated Financial Statements (Unaudited) herein).
15	Inapplicable.
18	Inapplicable.
19	Inapplicable.
22	Inapplicable.
23	Inapplicable.
24.	Inapplicable.
31(i).1	Principal Executive Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
31(i).2	Principal Financial Officer certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	Chief Executive Officer certification pursuant to 18 U.S.C. Section 1350.
32.2	Chief Financial Officer certification pursuant to 18 U.S.C. Section 1350.
95	Inapplicable.
99	Inapplicable.
100	Inapplicable.
101	Instance Document, Schema Document, Calculation Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document and Definition Linkbase Document.*