<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D. C. 20549

                                Amendment No. 1
                                      to
                                  FORM 10-KSB

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

     For the fiscal year ended               December 31, 2006
                               ----------------------------------------------

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

     For the transition period from                 to
                                   -----------------  -----------------

     Commission file number                      1-6471
                           --------------------------------------------------

                           PGI INCORPORATED
-------------------------------------------------------------------------------
                  (Name of small business issuer in its charter)

               Florida                                 59-0867335
-------------------------------------------------------------------------------
   (State or other jurisdiction of              (IRS Employer Ident. No.)
    incorporation or organization)

212 S. Central, Suite 100           St. Louis, Missouri               63105
-------------------------------------------------------------------------------
        (Address of principal executive offices)                   (Zip Code)

Issuer's Telephone Number, including area code:       (314)512-8650
                                               ---------------------------

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

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

Common Stock, Par Value $.10 per share
6% Convertible Subordinated Debentures due 1992
6.5% Convertible Subordinated Debentures due 1991

         Check whether the issuer is not required to file reports pursuant to
Section 13 or 15 (d) of the Exchange Act. [ ]

         Check whether the Issuer (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                        X    Yes            No
                     -------        -------

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.(x)

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act)

                             Yes       X    No
                     -------        -------

         State the issuer's revenues for its most recent fiscal year: $420,000.
                                                                      --------
         The aggregate market value of voting stock held by non-affiliates of
the registrant cannot be determined. See Item 5 of Form 10-KSB.

         State the number of shares outstanding of each of the Issuer's
classes of common equity as of the last practicable date:

         As of March 30, 2007, 5,317,758 shares of Common Stock, par value
         -----------------------------------------------------------------
$.10 per share were outstanding.
-------------------------------

                                      1

<PAGE>
<PAGE>

<TABLE>
                           PGI INCORPORATED AND SUBSIDIARIES
                                  FORM 10 - KSB - 2006
                          Contents and Cross Reference Index

<CAPTION>
Part   Item                                                                     Form 10-KSB
No.    No.      Description                                                       Page No.
---    ---      -----------                                                       --------

<C>   <C>      <C>                                                                  <C>
I      1        Description of Business
                    General...........................................................3
                    Recent Developments...............................................3

       2        Description of Property...............................................4

       3        Legal Proceedings.....................................................4

       4        Submission of Matters to a Vote of Security Holders...................4

II     5        Market for Common Equity, Related Stockholder Matters and Small
                    Business Issuer Purchases of Equity Securities....................5

       6        Management's Discussion and Analysis or Plan of Operation.............5

       7        Financial Statements.................................................12

       8        Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure..............................29

       8A       Controls and Procedures..............................................29

       8B       Other Information ...................................................29

III    9        Directors, Executive Officers, Promoters, Control Persons,
                    and Corporate Governance:
                  Compliance with Section 16(a) of the Exchange Act..................30

       10       Executive Compensation...............................................31

       11       Security Ownership of Certain Beneficial Owners and
                    Management and Related Stockholder Matters.......................31

       12       Certain Relationships and Related Transactions, and Director
                    Independence.....................................................32

       13       Exhibits.............................................................35

       14       Principal Accountant Fees and Services...............................35

Signatures...........................................................................36

Exhibit Index........................................................................37
</TABLE>

                                      2

<PAGE>
<PAGE>

                                    PART I
                                    ------

Item 1.     Description of Business
-------     -----------------------
GENERAL

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

         The Company, 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 10 years, the Company's business focus
and emphasis changed substantially as it 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.

         Presently, the most valuable remaining asset of the Company is a
parcel of 366 acres located in Hernando County, Florida. The Company also owns
a number of scattered sites in Charlotte County, Florida (the "Charlotte
Property"), but most of these sites are subject to easements which markedly
reduce their value and/or consist of wetlands of indeterminate value. As of
December 31, 2006, the Company also owned eight single family lots, located in
Citrus County, Florida.

         As of December 31, 2006, the Company had no employees, and all
services provided to the Company are through contract services.

RECENT DEVELOPMENTS
         The principal remaining real property asset of the Company is a 366
acre undeveloped parcel in Hernando County, Florida, which property is
encumbered by secured creditor claims. An appraisal dated April 2, 2002 was
performed by the appraisal firm Gillis and Associates, and they reached a
conclusion that the value of this property was $8,000 per acre, and hence
$2,928,000 for the entire parcel.

         External circumstances make it difficult to forecast the timing or
ultimate use of this 366 acre property. Principal among the external factors
is that the property is at the present northern termination of the Suncoast
Expressway. Planning continues for the proposed northward continuation of the
Suncoast Expressway, with the most actively considered routes each predicated
on taking part of the subject property. Until and unless the uncertainty
regarding the future expansion of the Suncoast Expressway is resolved,
planning with respect to this property is difficult.

                                      3

<PAGE>
<PAGE>

Item 2.     Description of Property
-------     -----------------------

         The primary asset of the Company is a 366 acre tract of vacant land
in Hernando County, Florida. The present zoning, and hence the presently
proposed use of this parcel, is for single family residential lot development.
Several factors suggest that this originally planned use may be inappropriate
and/or not the best use given present circumstances.

         Foremost among these factors is that the Suncoast Expressway may be
extended to the north. Such an extension is almost certain to impact the
property, since the probable routes as presently proposed would require a
significant part of the tract. Additional factors include the present lack of
water and sewers on the site, as well as the lack of roads on the site. Also,
about forty acres of the property have been designated in the Hernando
County's future land use plan for commercial use rather than single family
use. Finally, market demand appears to be shifting away from lots with
greenways as originally contemplated in favor of larger estate type lots
and/or higher density condo/townhouse development.

         Other vacant parcels, which could be competitive, do exist in the
immediate area, most of which do not suffer the same planning constraint
concerning the possible extension of the Suncoast Expressway.

         The property is encumbered by mortgages granted by the Company in
connection with the primary lender debt of $539,000 in principal and accrued
interest and the convertible debentures held by Love 1989 Florida Partners,
L.P. ("Love-1989") which total $8,696,000 in principal and accrued interest at
December 31, 2006. The primary lender debt and convertible debentures are past
due (See Notes 7 and 9 to the Consolidated Financial Statements under Item 7).

         The Company also owns a number of scattered sites in Charlotte
County. Substantially all such holdings, however, consist of property that is
subject to development restrictions occasioned by being seriously impacted by
wetlands. The potential purchaser market for such properties is extremely
limited. The Company also owns eight single family lots in Citrus County,
Florida. 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 a party to routine legal proceedings incidental to the
normal operation of its business. The Company does not believe that the
resolution of any such proceedings individually, or collectively, will have a
material effect on its financial position.

Item 4.     Submission of Matters to a Vote of Security Holders
-------     ---------------------------------------------------

         A shareholders meeting was not held during the fiscal year ended
December 31, 2006.

                                      4

<PAGE>
<PAGE>

                                    PART II

Item 5.     Market for Common Equity, Related Stockholder Matters and
-------     ---------------------------------------------------------
            Small Business 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, an affiliate of the
Company, ("PGIP") in 2003 described previously in the Company's annual report
on Form 10-KSB for the fiscal year ended December 31, 2004. No dividends have
ever been paid on the Common Stock, and payment of dividends is restricted
under the terms of the two indentures pursuant to which the Company's
outstanding debentures are issued. As of December 31, 2006 to the Company's
knowledge, there were 605 holders of record of the Company's Common Stock and
approximately 445 debenture holders.

Item 6.     Management's Discussion and Analysis or Plan of Operation
-------     ---------------------------------------------------------

PRELIMINARY NOTE

         Because the liabilities of the Company far exceed the reported value
of its assets, the most important information and analysis concerns the nature
and probable actions of the major holders of the Company's debt. Foremost
among these are the Company's 6.5% subordinated convertible debentures, which
matured June, 1991, with an original face amount of $1,034,000, and its 6.0%
subordinated convertible debentures which matured May, 1992, with an original
face amount of $8,025,000.

         The cumulative amount due for these two issues is as follows:

                                                              12/31/2006
                                                       Principal       Unpaid
                                                       Amount Due     Interest
                                                       ----------     --------
                                                           ($ in thousands)

         Subordinated debentures due June 1, 1991       $ 1,034       $  1,184
         Subordinated debentures due May 1, 1992          8,025         11,923
                                                        -------       --------
                                                        $ 9,059       $ 13,107
                                                        =======       ========

         Both issues have been in payment default for approximately fifteen
years, and there has been little contact with or on behalf of the bondholders
over the past several 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. Further, the Company believes that at least a
portion of such claims might be barred under the applicable statutes of
limitations.

         If such claims are barred, it is possible that the Company would
potentially have to record net income in like amount, without the receipt of
any cash, and could potentially incur a large tax liability. Any such
potential tax liability might be averted and/or mitigated, however, by the
utilization of the Company's tax loss carryforwards, which as of December 31,
2006 totaled approximately $41,000,000.

                                      5

<PAGE>
<PAGE>

Item 6.    Management's Discussion and Analysis or Plan of Operation (continued)
------     --------------------------------------------------------------------



         Even if claims by the subordinated convertible debenture holders are
barred in full and there is no cash tax consequence to the Company as a result
of the utilization of the tax loss carry forwards, the Company would
nonetheless have a substantial Stockholder Deficiency.

         Similar defenses would not appear to apply to other creditors of the
Company, and the credit agreements with the Company's primary lender, PGIP,
and with the holder of its secured Convertible Debentures are secured by
mortgages and security interests in assets of the Company.

         Therefore, the Company's major effort and activities have been, and
continue to be, to liquidate assets of the Company to pay the ordinary
on-going costs of operation of the Company, with any large surplus expected to
be used to reduce the balance due to its primary lender (or to the holder of
the secured Convertible Debentures, as required should the asset sale include
their collateral).

         The Company attempts to realize full market value for each such
asset, which may be at substantial variance from its present carrying value.
However, the major assets of the Company that remain are both difficult to
value and difficult to sell. 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.

         Generally, the Company intends to continue to seek the liquidation of
assets and to use the proceeds to fund the normal cost of operations of the
Company and/or to satisfy the requirements of the Company's secured creditors.

                                      6

<PAGE>
<PAGE>

Item 6.    Management's Discussion and Analysis or Plan of Operation (continued)
------     --------------------------------------------------------------------

RESULTS OF OPERATIONS
Revenues
--------

         Revenues for the year ended December 31, 2006 decreased by $47,000 to
$420,000 compared to revenues of $467,000 for the year ended December 31, 2005
primarily reflecting decreased real estate sales revenue of $205,000, offset
by an increase in other income of $130,000. The other income in 2006 includes
$312,000 as a result of the reversal of accrued real estate taxes from 1997,
which had been in litigation with Citrus County, and has been finally
concluded. Other income in 2005 includes primarily proceeds of $154,000 for
delinquent receivables received by the Company from the foreclosure on ten
lots. The Company did not receive proceeds from lot foreclosures in 2006. In
addition, interest income increased by $28,000 during 2006, primarily due to
an increase of $40,000 of interest earned from the Company's investment in
short term notes with an affiliate of the Company. The net loss was $3,038,000
($.69 per share) for 2006 compared to a net loss of $2,637,000 ($.62 per
share) for 2005. Included in the 2006 and 2005 earnings per share computation
is $640,000 ($.12 per share of Common Stock) of annual cumulative preferred
stock dividends in arrears.

Costs and Expenses
------------------

         Expenses for the years 2006 and 2005 were:
                                                2006             2005
                                                ----             ----

         Cost of Real Estate Sales          $       -        $  24,000
         Taxes and Assessments                 21,000           11,000
         Consulting and Accounting             41,000           41,000
         Legal and Professional                46,000           21,000
         General and Administrative            65,000           50,000

         Costs of Real Estate Sales decreased by $24,000 in 2006 as a result
of only one sale of a small parcel of real estate during 2006, which was
carried at no value on the Company's books. Taxes and assessments increased by
$10,000 in 2006 as a result of the 2005 reversal of accrued taxes on lots for
which foreclosure was completed in 2005 by sale for delinquent receivables.
Legal and professional expenses increased by $25,000 in 2006 due to expenses
incurred for a hotel market study and other consulting services. General and
Administrative expenses increased by $15,000 as a result of increased audit
fees and additional records storage expense due to removal of storage
contents.

Interest expense for the two years ended December 31, 2006 and 2005 was:

                                                2006             2005
                                                ----             ----
                                                  ($ in thousands)
         Interest Expense                   $   3,285        $   2,957

         Interest expense in 2006 increased by $328,000 compared to 2005 as a
result of (i) interest accruing on past due balances which increase at various
intervals throughout the year for accrued but unpaid interest, and (ii) an
increase in interest rates during 2006.

                                      7

<PAGE>
<PAGE>

Item 6.    Management's Discussion and Analysis or Plan of Operation (continued)
------     --------------------------------------------------------------------

FINANCIAL CONDITION

         Total assets decreased at December 31, 2006 compared to total assets
at December 31, 2005 reflecting the following changes:

                                                                 Increase
                                 2006              2005         (Decrease)
                                 ----              ----          --------
                                    ($ in thousands)
Cash and Cash Equivalents      $       3        $     147        $    (144)
Restricted Cash                        5              255             (250)
Receivables                          926              633              293
Land and Improvement                 641              637                4
Other Assets                         199              178               21
                               ---------        ---------        ---------
                               $   1,774        $   1,850        $     (76)
                               =========        =========        =========

         Cash decreased by $144,000 to $3,000 at December 31, 2006 compared to
$147,000 at December 31, 2005. Net cash used in operations was $107,000 for
the year ended December 31, 2006 compared to net cash provided by operations
of $212,000 for the year ended December 31, 2005. Net cash used in operations
consists of cash received from operations less cash expended for operations.

         Cash received from operations during 2006 was $78,000, a $384,000
decrease from cash received during 2005 of $462,000.

         Cash expended for operations decreased by $65,000 to $185,000 during
2006 from $250,000 in 2005, reflecting decreases in real estate sales
($24,000), interest payments ($24,000), taxes and assessments ($62,000), and
consulting and accounting ($1,000), while being offset by an increase in legal
and professional ($31,000), and general and administrative ($15,000).

         During 2006, investing activities utilized $37,000 of cash, which
consisted of a $273,000 investment in a short-term note with Love Investment
Company ("LIC"), an affiliate of Love-PGI Partners, L.P. ("L-PGI"), the
Company's preferred shareholder, and $16,000 in expenditures relating to
purchases of inventory and deferred expenditures, which was offset by the
receipt of $252,000 from the release of restricted cash. The $273,000
short-term note with Love Investment Company is the primary reason for the
increase of $293,000 in the Company's receivables as of December 31, 2006 from
December 31, 2005.

         During 2005, $266,000 of cash was used by the Company in investing
activities which included a $ 260,000 investment in a short term note with
LIC, and $6,000 in purchases of inventory and deferred expenditures.


                                      8

<PAGE>
<PAGE>

Item 6.    Management's Discussion and Analysis or Plan of Operation (continued)
------     --------------------------------------------------------------------

         Liabilities were approximately $42,700,000 at December 31, 2006
compared to approximately $39,700,000 at December 31, 2005, reflecting the
following changes:

<TABLE>
<CAPTION>
                                                                               Increase
                                              2006             2005           (Decrease)
                                              ----             ----           ----------
                                                 ($ in thousands)
<C>                                         <C>              <C>              <C>
Accounts payable and accrued expenses       $      52        $      49        $       3
Accrued real estate taxes                          18              312             (294)
Accrued interest                               30,341           27,088            3,253
Credit agreements - primary
  lender                                          500              500                -
Notes payable                                   1,198            1,198                -

Convertible subordinated
  debentures payable                            9,059            9,059                -
Convertible debentures payable                  1,500            1,500                -
                                            ---------        ---------        ---------
                                            $  42,668        $  39,706        $   2,962
                                            =========        =========        =========
</TABLE>

         The $3,253,000 increase in accrued interest at December 31, 2006
compared to year-end 2005 reflects changes in the following:

<TABLE>
<CAPTION>
                                                                              Increase
                                               2006            2005          (Decrease)
                                               ----            ----          ----------
                                                 ($ in thousands)
<C>                                         <C>              <C>              <C>
Primary Lender                              $      39        $       5        $      34
Debentures                                     27,854           24,752            3,102
Other                                           2,448            2,331              117
                                            ---------        ---------        ---------
                                            $  30,341        $  27,088        $   3,253
                                            =========        =========        =========
</TABLE>

         The accrued interest relating to debentures increased due to the
nonpayment of previously accrued interest on the Company's debentures (see
Notes 8 and 9 to the consolidated financial statements under Item 7).

         The Company's accumulated capital deficiency increased to $40,894,000
at December 31, 2006 from a $37,856,000 accumulated capital deficiency at
December 31, 2005, reflecting the 2006 operating loss of $3,038,000.

                                      9

<PAGE>
<PAGE>

New Accounting Standards
------------------------

         In September 2006 the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("SFAS") No. 158 "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans"
effective as of the end of the fiscal year ending after June 15, 2007. The
Company does not expect this statement to have a material impact on the
results of operations or financial position.

         In September 2006 the FASB issued SFAS 157 "Fair Value Measurements"
effective for fiscal years beginning after November 15, 2007, and all interim
periods within those fiscal years. The Company does not expect this statement
to have a material impact on the results of operations or financial position.

         In June 2006 the FASB issued FIN 48 "Accounting for Uncertainty in
Income Taxes-an Interpretation of FASB Statement No. 109" effective for fiscal
years beginning after December 15, 2006. The Company is in the process of
evaluating the impact of this statement on the results of operations or
financial position.

         In March 2006, the FASB issued SFAS No. 156, "Accounting for
Servicing of Financial Assets, an amendment of FASB Statement No. 140". SFAS
No. 156 will become effective for fiscal years beginning after September 15,
2006. SFAS No. 156 requires an entity to recognize a servicing asset or
servicing liability at fair value, if possible, each time it undertakes an
obligation to service a financial asset by entering into a servicing contract
under certain conditions. Management has determined that the implementation of
SFAS No. 156 will not have an effect on the Company's financial statements.

         In February 2006, the FASB issued SFAS No. 155, "Accounting for
Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133
and 140" effective for all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15,
2006. Management has determined that the implementation of SFAS No. 155 will
not have an effect on the Company's financial statements.

         In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29" effective for
nonmonetary asset exchanges occurring in the fiscal year beginning January 1,
2006. SFAS No. 153 requires that exchanges of productive assets be accounted
for at fair value unless fair value cannot be reasonably determined or the
transaction lacks commercial substance. Management has determined that the
implementation of SFAS No. 153 will not have an effect on the Company's
financial statements.

                                      10

<PAGE>
<PAGE>

Forward Looking Statements
--------------------------

         The discussion set forth in this Item 6, as well as other portions of
this Form 10-KSB, may contain forward-looking comments. Such comments 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-KSB. When
used in this Form 10-KSB, words such as "anticipates," "estimates,"
"believes," "expects," and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such
statements. Such statements are subject to risks and uncertainties. Actual
results of the Company's operations could materially differ from those
forward-looking comments. 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; continued
failure by governmental authorities to make a decision with respect to the
Suncoast Expressway as described under Item 1; 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.

                                      11

<PAGE>
<PAGE>

Item 7.     Financial Statements
-------     --------------------
            Report of Independent Registered Public Accounting Firm
            -------------------------------------------------------

Board of Directors and Stockholders
PGI, Incorporated
St. Louis, Missouri

We have audited the accompanying consolidated statements of financial position
of PGI Incorporated and Subsidiaries as of December 31, 2006 and 2005, and the
related consolidated statements of operations, stockholders' deficiency and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of PGI
Incorporated and Subsidiaries at December 31, 2006 and 2005, and the results
of its operations and its cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company has a significant accumulated
deficit, and is in default on its primary debt (Note 7), certain sinking fund
and interest payments on its convertible subordinated debentures (Note 8) and
its convertible debentures (Note 9). These matters raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
in this regard are described in Note 8. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

                                            /s/ BKD, LLP

St. Louis, Missouri
March 26, 2007

                                      12

<PAGE>
<PAGE>

<TABLE>
                                      PGI INCORPORATED AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                          December 31, 2006 and 2005

<CAPTION>
                                      ASSETS                                                  LIABILITIES
                                      ======                                                  ===========
                                  2006         2005                                           2006          2005
                                  ----         ----                                           ----          ----

<C>                        <C>           <C>            <C>                             <C>           <C>
Cash and cash equivalents       $3,000     $147,000     Accounts payable and
                                                        accrued expenses (Note 6)          $52,000       $49,000

Restricted cash (Note 3)         5,000      255,000
                                                        Accrued real estate
                                                        taxes (Note 6)                      18,000       312,000
Receivables on real
estate sales- net                    -        1,000


Other receivables (Note 14)    926,000      632,000     Accrued Interest:
                                                        Primary Lender                      39,000         5,000
Land and improvement
inventories (Note 4)           641,000      637,000     Debentures (Notes 8 & 9)        27,854,000    24,752,000

                                                        Other (Note 8)                   2,448,000     2,331,000

Other assets (Note 5)          199,000      178,000     Credit Agreements (Note 7)
                                                        Primary Lender                     500,000       500,000
                                                        Notes payable                    1,198,000     1,198,000
                                                        Subordinated convertible
                                                        debentures payable
                                                        (Note 8)                         9,059,000     9,059,000

                                                        Convertible debentures
                                                        payable (Note 9)                 1,500,000     1,500,000
                                                                                       -----------   -----------

                                                        Commitments and
                                                        Contingencies (Note 13)         42,668,000    39,706,000
                                                                                       -----------   -----------
                                                        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 11)                        2,000,000     2,000,000

                                                        Common stock, par value $.10
                                                        per share; authorized
                                                        25,000,000 shares; 5,317,758
                                                        shares issued and outstanding
                                                        (Note 11)                          532,000       532,000
                                                        Paid-in capital                 13,498,000    13,498,000

                                                        Accumulated deficit            (56,924,000)  (53,886,000)
                                                                                       -----------   -----------

                                                                                       (40,894,000)  (37,856,000)
                           -----------   ----------                                    -----------   -----------
                           $ 1,774,000   $1,850,000                                     $1,774,000    $1,850,000
                           ===========   ==========                                    ===========   ===========

                          See accompanying notes to consolidated financial statements
</TABLE>

                                      13

<PAGE>
<PAGE>

<TABLE>
                          PGI INCORPORATED AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                        Years ended December 31, 2006 and 2005

<CAPTION>
                                                  2006                       2005
                                                  ----                       ----
<C>                                           <C>                        <C>
Revenues:
         Real estate sales (Note 2)           $     10,000               $    215,000
         Interest income                            83,000                     55,000
         Other income (Note 2)                     327,000                    197,000
                                              ------------               ------------
                                                   420,000                    467,000
                                              ------------               ------------

Costs and expenses:
         Cost of real estate sales (Note 2)              -                     24,000
         Interest                                3,285,000                  2,957,000
         Taxes and assessments                      21,000                     11,000
         Consulting and accounting                  41,000                     41,000
         Legal and professional                     46,000                     21,000
         General and administrative                 65,000                     50,000
                                              ------------               ------------
                                                 3,458,000                  3,104,000
                                              ------------               ------------

Net (Loss)                                    $ (3,038,000)              $ (2,637,000)
                                              ============               ============

(Loss) Per Share Available to Common
  Stockholders - Basic and Diluted (Note 16)  $       (.69)              $       (.62)
                                              ============               ============

            See accompanying notes to consolidated financial statements.
</TABLE>


                                      14

<PAGE>
<PAGE>

<TABLE>
                                   PGI INCORPORATED AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF CASH FLOWS
                                Years ended December 31, 2006 and 2005

<CAPTION>
                                                                             2006              2005
                                                                             ----              ----
<C>                                                                      <C>               <C>
Cash flows from operating activities:

Cash received from operations:
      Collections from real estate sales and receivables on such sales   $     10,000      $    215,000
      Interest received                                                        53,000            43,000
      Other operating receipts                                                 15,000           204,000
                                                                         ------------      ------------
                                                                               78,000           462,000
                                                                         ------------      ------------

Cash expended for operations:
      Payments for real estate sales                                                -            24,000
      Interest paid                                                            32,000            56,000
      Taxes and assessments                                                     1,000            63,000
      Consulting and accounting                                                39,000            40,000
      Legal and professional                                                   49,000            18,000
      General and administrative                                               64,000            49,000
                                                                         ------------      ------------
                                                                              185,000           250,000
                                                                         ------------      ------------

      Net cash flow provided by (used in) operating activities               (107,000)          212,000
                                                                         ------------      ------------

Cash flows from investing activities:
      Investment in notes receivables                                        (273,000)         (260,000)
      Purchases of inventory and deferred expenditures                        (16,000)           (6,000)
      Proceeds from release of restricted cash                                252,000                 -
                                                                         ------------      ------------
Net cash flow (used in) investing activities                                  (37,000)         (266,000)
                                                                         ------------      ------------


Net decrease in cash and cash equivalents                                    (144,000)          (54,000)

Cash and cash equivalents at beginning of year                                147,000           201,000
                                                                         ------------      ------------
Cash and cash equivalents at end of year                                 $      3,000      $    147,000
                                                                         ============      ============

Non-cash investing and financing activities:
      Interest earned on restricted cash                                 $      2,000      $      3,000
                                                                         ------------      ------------

                   See accompanying notes to consolidated financial statements.
</TABLE>

                                      15

<PAGE>
<PAGE>

<TABLE>
                                    PGI INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                                 Years ended December 31, 2006 and 2005

<CAPTION>
                                                                           2006                2005
                                                                           ----                ----
<C>                                                                    <C>                 <C>
Reconciliation of net (loss) to net cash provided by (used in)
      operating activities:

Net (loss)                                                             $ (3,038,000)       $ (2,637,000)

Adjustments to reconcile net (loss) to net cash provided by (used in)
      operating activities:
         Earnings capitalized into restricted cash                           (2,000)             (3,000)

(Increase) decrease in assets:
      Other receivables                                                     (19,000)             (5,000)
      Land and improvement inventories-net                                        -               3,000
      Prepaid expenses and deposits                                          (9,000)              6,000
Increase (decrease) in liabilities:
      Accounts payable and accrued expenses                                   2,000                   -
      Accrued real estate taxes                                            (294,000)            (51,000)
      Deferred credits                                                                           (3,000)
      Accrued interest                                                    3,253,000           2,902,000
                                                                       ------------        ------------

Net cash flow provided by (used in) operating activities               $   (107,000)       $    212,000
                                                                       ============        ============

                     See accompanying notes to consolidated financial statements.
</TABLE>

                                      16

<PAGE>
<PAGE>

<TABLE>
                                                 PGI INCORPORATED AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                                               Years ended December 31, 2006 and 2005


<CAPTION>
                                          Preferred Stock                    Common Stock
                                          ---------------                    ------------                               Accumulated
                                      Shares         Par Value          Shares         Par Value     Paid-In Capital      Deficit
                                      ------         ---------          ------         ---------     ---------------      -------

<C>                                 <C>             <C>              <C>              <C>              <C>             <C>
Balances at 1/1/05                   2,000,000       $2,000,000        5,317,758      $   532,000      $13,498,000     $(51,249,000)

Net Loss                                     -                -                -                -                -       (2,637,000)
                                     ---------       ----------        ---------      -----------      -----------     ------------
Balances at 12/31/05                 2,000,000       $2,000,000        5,317,758      $   532,000      $13,498,000     $(53,886,000)

Net Loss                                     -                -                -                -                -       (3,038,000)
                                     ---------       ----------        ---------      -----------      -----------     ------------
Balances at 12/31/06                 2,000,000       $2,000,000        5,317,758      $   532,000      $13,498,000     $(56,924,000)
                                     =========       ==========        =========      ===========      ===========     ============

                                    See accompanying notes to consolidated financial statements.
</TABLE>

                                      17

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       Significant Accounting Policies:
         --------------------------------

Principles of Consolidation
---------------------------

         The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries after eliminating all significant
inter-company transactions.

Accounting Estimates
--------------------

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Revenue and Profit Recognition
------------------------------

Homesites
---------

         The Company adopted the installment method of profit recognition in
accordance with Statement of Financial Accounting Standards No. 66 "Accounting
for Sales of Real Estate".

Acreage
-------

         Sales of undeveloped and developed acreage tracts are recognized, net
of any deferred revenue and valuation discount, when minimum down payment and
other requirements are met.

Land and Improvement Inventories
--------------------------------

         Land held for sale to customers and land held for bulk sale are
stated at cost, which is not in excess of estimated net realizable value.
Homesite costs are allocated to projects based on area methods, which consider
footage, future improvements costs and frontage.

Cash and Cash Equivalents
-------------------------

         For purposes of the statements of cash flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three months
or less to be cash equivalents.

                                      18

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

New Accounting Standards
------------------------

         In September 2006 the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standard ("SFAS") No. 158 "Employers'
Accounting for Defined Benefit Pension and Other Postretirement Plans"
effective as of the end of the fiscal year ending after June 15, 2007. The
Company does not expect this statement to have a material impact on the
results of operations or financial position.

         In September 2006 the FASB issued SFAS 157 "Fair Value Measurements"
effective for fiscal year beginning after November 15, 2007, and all interim
periods within those fiscal years. The Company does not expect this statement
to have a material impact on the results of operations for financial position.

         In June 2006 the FASB issued FIN 48 "Accounting for Uncertainty in
Income Taxes-an Interpretation of FASB Statement No. 109" effective for fiscal
years beginning after December 15, 2006. The Company is in the process of
evaluating the impact of this statement on the results of operations or
financial position.

         In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing
of Financial Assets, an amendment of FASB Statement No. 140". SFAS No. 156 will
become effective for fiscal years beginning after September 15, 2006. SFAS No.
156 requires an entity to recognize a servicing asset or servicing liability
at fair value, if possible, each time it undertakes an obligation to service a
financial asset by entering into a servicing contract under certain
conditions. Management has determined that the implementation of SFAS No. 156
will not have an effect on the Company's financial statements.

         In February 2006, the FASB issued SFAS No. 155, "Accounting for
Certain Hybrid Financial Instruments, an amendment of FASB Statements No. 133
and 140" effective for all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15,
2006. Management has determined that the implementation of SFAS No. 155 will
not have an effect on the Company's financial statements.

         In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets, an amendment of APB Opinion No. 29" effective for
nonmonetary asset exchanges occurring in the fiscal year beginning January 1,
2006. SFAS No. 153 requires that exchanges of productive assets be accounted
for at fair value unless fair value cannot be reasonably determined or the
transaction lacks commercial substance. Management has determined that the
implementation of SFAS No. 153 will not have an effect on the Company's
financial statements.

                                      19

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)


2.       Real Estate Sales and Other Income:
         -----------------------------------

Real estate sales and cost of sales consisted of:

                                             2006              2005
                                             ----              ----

         Homesite/acreage sales            $  10,000        $  215,000
         Cost of Sales                             -            24,000
                                           ---------        ----------
         Gross Profit Margin               $  10,000        $  191,000
                                           =========        ==========

         In the second quarter of 2006, the Company completed the sale of a
         small piece of land at the price of $10,000. This odd remnant of a
         lot was not carried for any value on the Company's books.

         In the first quarter of 2005, the Company completed the sale of an
         unusual real estate parcel, at the price of $175,000. This parcel was
         not carried for any value on the Company's books, inasmuch as it was
         an undevelopable thin strip of mangrove fringe. However, because of
         the height of the mangroves, the adjoining property owner purchased
         this fringe strip in order to be able to enhance the view amenity on
         his proposed developments.

         Other income for the years 2006 and 2005 was $327,000 and $197,000,
         respectively. The other income for 2006 includes $312,000 which
         resulted from the reversal of accrued real estate taxes due to the
         ultimate conclusion of the lawsuit in Citrus County regarding the
         1997 agricultural exemption status of the Company's undeveloped
         Sugarmill Woods property. In 2005, the Company foreclosed on ten lots
         and received proceeds of $154,000 for delinquent receivables.

                                      20

<PAGE>
<PAGE>
                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)


3.       Restricted Cash:
         ----------------

         Restricted cash includes restricted proceeds held by PGIP,LLC
("PGIP"), the Primary Lender, as collateral for debt repayment. (See Note 14)

         The restricted escrow funds at December 31, 2006 and December 31,
2005 was $5,000 and $255,000 respectively. The Company utilized $220,000 of
the primary lender restricted escrow in 2006 to invest in a short-term note
with an affiliate of L-PGI, the Company's preferred shareholder, Love
Investment Company, and utilized $32,000 for interest payments to PGIP on the
primary lender debt. Interest earned on the restricted cash in 2006 was
$2,000.

4.       Land and Improvements:
         ----------------------
         Land and improvement inventories consisted of:

                                                   2006             2005
                                                   ----             ----
                  Unimproved land               $  625,000       $  621,000
                  Fully improved land               16,000           16,000
                                                ----------       ----------
                                                $  641,000       $  637,000
                                                ==========       ==========

5.       Other Assets:
         -------------
         Other assets consisted of:

                                                   2006             2005
                                                   ----             ----
                  Deposit with Trustee of
                    6 1/2% debentures           $  172,000       $  165,000
                  Prepaid Expenses                   5,000            3,000
                  Deferred Charges                  22,000           10,000
                                                ----------       ----------
                                                $  199,000       $  178,000
                                                ==========       ==========

6.       Accounts Payable and Accrued Expenses:
         --------------------------------------
         Accounts payable and accrued expenses consisted of:

                                                   2006             2005
                                                   ----             ----
                  Accounts payable              $   12,000       $   12,000
                  Accrued audit/tax expense         32,000           31,000
                  Accrued consulting fees            2,000            6,000
                  Accrued accounting services        5,000                -
                  Accrued miscellaneous              1,000                -
                                                ----------       ----------
                                                $   52,000       $   49,000
                                                ==========       ==========

         Accrued Real Estate Taxes:
         --------------------------
         Accrued real estate taxes consisted of:
                  Current                       $   18,000       $        -
                  Delinquent                             -          312,000
                                                ----------       ----------
                                                $   18,000       $  312,000
                                                ==========       ==========

                                      21

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

7.       Credit Agreements - Primary Lender and Notes Payable:
         -----------------------------------------------------
         Credit agreements with the Company's primary lender and notes payable
         consisted of the following:
                                                     2006           2005
                                                     ----           ----
         Credit agreements - primary lender
         (Balance is past due, bearing
         interest at prime plus 5.0%):            $  500,000     $  500,000

         Notes payable -
            $1,176,000 bearing interest at prime
            rate plus 2%, the remainder bearing
            interest at 12%, all past due          1,198,000      1,198,000
                                                  ----------     ----------
                                                  $1,698,000     $1,698,000
                                                  ==========     ==========

The prime rate at December 31, 2006 and 2005 was 8.25% and 7.25% respectively.

         At December 31, 2006 assets collateralizing the Company's credit
agreements with its primary lender totaled $646,000, of which $5,000
represented escrow held by the primary lender, and $641,000 represented land
and improvement inventories.

         The overall weighted average interest rate for the Company's credit
agreements with its primary lender and all remaining notes and mortgages was
approximately 10.8% as of December 31, 2006 and 9% as of December 31, 2005.

         Although substantially all of the Company's real and personal
property including all of the stock of the Company's wholly-owned subsidiaries
remains pledged as collateral, the Company negotiated agreements with its
mortgage holders to allow the Company to sell part of its land holdings
without requiring full payment of the secured debt.

         Accrued interest on other notes payable was $2,448,000 and $2,331,000
at December 31, 2006 and 2005, respectively.

         All of the primary lender debt and notes payable are past due.

8.       Subordinated Convertible Debentures Payable:
         --------------------------------------------
         Subordinated debentures payable consisted of:

                                                     2006           2005
                                                     ----           ----
                  6 1/2%, due June 1991           $1,034,000     $1,034,000
                  6%, due May 1992                 8,025,000      8,025,000
                                                  ----------     ----------
                                                  $9,059,000     $9,059,000
                                                  ==========     ==========

         Since issuance, $650,000 and $152,000 of the 6 1/2% and 6%
debentures, respectively, have been converted into common stock; however, this
conversion feature is no longer in effect.

                                      22

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

         The Company is in default of certain sinking fund and interest
payments on both subordinated debentures totaling $9,059,000 in principal plus
accrued and unpaid interest of $13,106,000 at December 31, 2006 and
$12,093,000 as of December 31, 2005.

         The debentures are not collateralized and are not subordinated to
each other, but are subordinated to senior indebtedness ($3,198,000 at
December 31, 2006). Payment of dividends on the Company's common stock is
restricted under the terms of the two indentures pursuant to which the
outstanding debentures are issued.

         In order to meet liquidity needs for future periods, the Company has
been and intends to continue to actively seek buyers for the remaining portion
of the underdeveloped acreage, when appropriate.

         No assurances can be made that the Company can achieve this
objective.

9.       Convertible Debentures Payable:
         -------------------------------

         In July and September 1989, the Company sold $1,282,000 and
$1,000,000 respectively, of convertible debentures to a partnership affiliated
with the Company's preferred shareholder. In connection with the July 1992
Secured Lender Transaction in partial consideration for the conveyance of 366
acres of property, the principal amount due to convertible debenture holders
was reduced by $782,000 and accrued interest thereon was reduced by $389,000
leaving a balance of $1,500,000. The maturity date on all the remaining
debentures was extended to July 8, 1997 so that the debentures are in default.
The past due debentures accrue interest at 14% compounded quarterly. The
Company's primary lender credit agreements, however, prohibit the payment of
interest until such time as the primary lender loans are repaid. At maturity
the Convertible Debentures purchased on July 24, 1989, were convertible into
868,788 common shares and those purchased on September 29, 1989, were
convertible into 1,726,568 common shares, or a total of 2,595,356 shares of
common stock at an initial conversion price of $1.72 per share. The conversion
price may be adjusted upon the occurrence of certain events. The debentures
held by Love-1989 Florida Partners, L.P., are 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.

         Accrued interest was $14,748,000 and $12,659,000 at December 31, 2006
and 2005 respectively.

                                      23

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

10.      Income Taxes:
         -------------

         Reconciliation of the statutory federal income tax rates, 34% for the
years ended December 31, 2006 and 2005, to the Company's effective income tax
rates follows:

<TABLE>
<CAPTION>
                                                2006                            2005
                                                ----                            ----
                                                        ($ in thousands)
                                                    Percent of                      Percent of
                                   Amount of tax   Pre-tax Loss    Amount of Tax   Pre-tax loss
                                   -------------   ------------    -------------   ------------

<C>                                 <C>             <C>             <C>             <C>
Expected tax (credit)               $   (1,033)          (34.0%)    $     (897)          (34.0%)
State income taxes, net of                (122)           (4.0%)          (105)           (4.0%)
  federal tax benefits
Increase in valuation allowance
                                         1,155            38.0%          1,002            38.0%
                                    ----------      ----------      ----------      ----------
                                    $        -               -      $        -               -
                                    ==========      ==========      ==========      ==========
</TABLE>

         At December 31, 2006, the Company had an operating loss carryforward
of approximately $41,000,000 which will expire at various dates through 2026.

                                                     2006           2005
                                                     ----           ----
                                                       ($ in thousands)
Deferred tax asset:
         Net operating loss carryover             $   15,884     $   14,729
         Adjustments to reduce land to net
            realizable value                              12             12
         Expenses capitalized under IRC 263(a)            56             56
         Valuation allowance                         (15,780)       (14,625)
                                                  ----------     ----------
                                                  $      172     $      172
Deferred tax liability:
         Basis difference of land and
            improvement inventories.              $      172     $      172
                                                  ----------     ----------

Net deferred tax asset                            $        -     $        -
                                                  ==========     ==========

                                      24

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

11.      Capital Stock:
         --------------

         In March 1987, the Company sold, in a private placement 1,875,000
shares of its Class A cumulative convertible preferred stock to L-PGI for a
purchase price of $7,500,000 cash ($4.00 per share). The Company also
converted $500,000 of indebtedness owed to a corporation owned by the
Company's former Chairman of the Board of Directors and members of his family
into 125,000 shares of the cumulative convertible preferred stock.

         The holders of the preferred stock are entitled to one vote per share
and, except as provided by law, will vote as one class with the holders of the
common stock. Class A preferred stockholders are also entitled to receive
cumulative dividends at the annual rate of $.32 per share, an effective yield
of 8%. Dividends accrued for an initial two year period and, at the expiration
of this period, preferred stockholders had the option of receiving accumulated
dividends, when and if declared by the Board of Directors, in cash (unless
prohibited by law or contract) or common stock. At December 31, 2006
cumulative preferred dividends in arrears totaled $7,475,000 ($640,000 of
which related to the year ended December 31, 2006). On May 15, 1997 preferred
dividends accrued through April 25, 1995 totaling $4,260,433 were paid in the
form of 2,000,203 shares of common stock.

         As of December 31, 2006, 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, 2006 the Company had reserved 6,355,356 common shares
for the conversion of preferred stock and debentures.

12.      Quarterly Results:
         ------------------

         There were no significant transactions in the fourth quarter of 2006.

                                      25

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

13.      Commitments and Contingencies:
         ------------------------------

         The Company is a party to various legal proceedings incidental to the
normal operation of its business. The Company does not believe that the
resolution of any such proceedings, individually, or collectively, will have a
material effect on its financial position.

14.      Related Party Transactions:
         ---------------------------

         As of December 31, 2006 the Company was in default of its primary
credit agreements with PGIP, its Primary Lender.

         PGIP is owned and managed by Love Savings Holding Company ("LSHC"),
Andrew S. Love, Jr. and Laurence A. Schiffer. Messrs. Love and Schiffer are
directors and executive officers of LSHC and own 90% of all the issued and
outstanding voting stock of LSHC. Messrs. Love and Schiffer serve as the
executive officers and directors of the Company.

         The Company maintains its administration and accounting offices with
Love Real Estate Company ("LREC"). LREC, which is an affiliate of L-PGI, the
Company's preferred shareholder, is paid a monthly fee for the following:

     1.   Maintain books of original entry;
     2.   Prepare quarterly and annual SEC filings;
     3.   Coordinate the annual audit;
     4.   Assemble information for tax filing, review reports as prepared by
          tax accountants and file same;
     5.   Track shareholder records through transfer agent;
     6.   Maintain policies of insurance against property and liability
          exposure;
     7.   Handle day-to-day accounting requirements

         In addition, the Company receives office space, telephone service and
computer service from LREC. A fee of $2,800 per month was accrued in 2006 and
2005. The Company made payments of $28,000 and $33,600 to LREC in 2006 and
2005 respectively for accounting service fees. As of December 31, 2006 there
was $5,600 in accrued accounting service fees.

                                      26

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

         Effective March 25, 1987, the Company entered into a Management
Consulting Agreement with LREC. As a consultant to the Company and in addition
to the above services, LREC provides other services including, but not limited
to, strategic planning, marketing and financing as requested by the Company.
In consideration for these consulting services, the Company pays LREC a
quarterly consulting fee of one-tenth of one percent of the carrying value of
the Company's assets, plus reasonable out-of-pocket expenses. As of December
31, 2006, the carrying value of the Company's assets was approximately
$1,774,000. Consulting fees totaling $7,000 were accrued during 2006 and 2005,
respectively. The Company made payments of $11,000 and $7,000 in 2006 and
2005, respectively for consulting fees. As of December 31, 2006 and 2005, a
total of $2,000 and $6,000, respectively, of unpaid fees had accrued under
this agreement.

         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,
2006 had an outstanding balance, including accrued interest, of $512,000.
Interest accrued on this loan was $18,000 and $14,000 for the years 2006 and
2005, respectively.

         From time to time, the Company invests in short-term debt obligations
of an affiliate of L-PGI, the Company's preferred shareholder, Love Investment
Company. The balance of this receivable at December 31, 2006 and 2005 was
$873,000 and $600,000, respectively. Interest on the loans was $72,000 and
$32,000 for 2006 and 2005, respectively.

         In 2006 and 2005 the Company incurred expenses totaling $18,000 and
$2,000, respectively, for the services of Hallmark Senior Housing, Inc., a
related entity, to handle analysis of real estate owned and options available.

15.      Fair Value of Financial instruments:
         ------------------------------------

         The following methods and assumptions were used to estimate the fair
value of each class of financial instrument for which it is practicable to
estimate that value:

Cash and Restricted Cash:

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

Debt:

         It was not practicable to estimate the fair value of the Company's
debt with its primary lender, its notes payable and its convertible debentures
because these debts are in default causing no basis for estimating value by
reference to quoted market prices or current rates offered to the Company for
debt of the same remaining maturities.

                                      27

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES
            Notes to Consolidated Financial Statements (continued)

Accounts Payable:

         The carrying amount approximates fair value because of the short-term
maturity of those debts. The estimated fair values of the Company's financial
instruments are as follows:

<TABLE>
<CAPTION>
                                      2006                          2005
                                      ----                          ----
                             Carrying        Fair          Carrying        Fair
                              Amount         Value          Amount         Value
                              ------         -----          ------         -----

<C>                        <C>            <C>            <C>            <C>
Cash and Restricted Cash   $     8,000    $     8,000    $   402,000    $   402,000
Other Receivables              926,000        926,000        633,000        633,000
Accounts Payable                12,000         12,000         12,000         12,000
Debt                        12,257,000              -     12,257,000              -
</TABLE>

16.      (Loss) Per Share:
         -----------------

         The following is a summary of the calculations used in computing basic
and diluted (loss) per share:
                                             2006           2005
                                             ----           ----
Numerator:
Net (Loss)                                $(3,038,000)   $(2,637,000)
Preferred Dividends                          (640,000)      (640,000)
                                          -----------    -----------
(Loss) Available to
  Common Shareholders                     $(3,678,000)   $(3,277,000)
                                          ===========    ===========

Denominator:
BASIC
Weighted average amount of shares
         outstanding                        5,317,758      5,317,758
                                          ===========    ===========

DILUTED
Weighted average amount of shares
         outstanding                        5,317,758      5,317,758
Dilutive effect of assumed conversion
         of Preferred Stock                         -              -
                                          -----------    -----------
Dilutive common shares                      5,317,758      5,317,758
                                          ===========    ===========

(Loss) per share
         Basic                            $      (.69)   $      (.62)
         Diluted                                 (.69)          (.62)

                                      28

<PAGE>
<PAGE>

Item 8.     Changes in and Disagreements with Accountants on Accounting and
-------     ---------------------------------------------------------------
            Financial Disclosure
            --------------------

         Not Applicable.

Item 8A.    Controls and Procedures
-------     -----------------------

         The Company has evaluated the effectiveness of the design and
operation of our 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, 2006. There have been no
changes in the Company's internal control over financial reporting during the
Company's fourth fiscal quarter ending December 31, 2006, that have materially
affected, or are reasonably likely to materially affect, the Company's
internal control over financial reporting.

Item 8B.    Other Information
--------    -----------------

         Not Applicable

                                      29

<PAGE>
<PAGE>

                                   PART III
                                   --------

Item 9.     Directors, Executive Officers, Promoters, Control Persons, and
-------     --------------------------------------------------------------
            Corporate Governances; Compliance with Section 16(a) of the
            -----------------------------------------------------------
            Exchange Act
            ------------

         The following information, regarding executive officers and directors
of the Company, is as of March 25, 2007.

                                  Position with Company and Business Experience
Name and Age                      During the Last Five Years
------------                      ---------------------------------------------

Laurence A. Schiffer              Director of the Company since April 1987;
     (age 67)                     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; Chairman of Heartland Bank and
                                  President of LSHC, the parent company of
                                  Heartland Bank since December 1985; Manager
                                  of PGIP since 1995; member of the Real
                                  Estate Board of Metropolitan St. Louis and
                                  the National Association of Real Estate
                                  Boards.

Andrew S. Love Jr.                Director and Chairman of the
     (age 63)                     Company's Board of Directors since
                                  May 1987; Secretary since February
                                  1994; Chairman of the Board of Love
                                  Real Estate Company and Secretary of
                                  Love Investment Company since 1973;
                                  Partner in St. Louis based law firm
                                  of Bryan, Cave, McPheeters &
                                  McRoberts until 1991; Director of
                                  Heartland Bank and Chairman of LSHC,
                                  the parent company of Heartland Bank
                                  since December 1985; Manager of PGIP
                                  since 1995.

         Executive officers of the Company are appointed annually by the Board
of Directors to hold office until their successors are appointed and qualify.

         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; (iii) the board of directors of the Company consists of
only two directors; and (iv) the same person serves as the Company's chief
executive officer and chief financial officer.

                                      30

<PAGE>
<PAGE>

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

         The Company was not furnished any Forms 3, 4 or 5, or any amendments
thereto, during our most recent fiscal year. Accordingly, the Company is not
aware of any officer, director or beneficial owner of more than 10 percent of
the Company's registered securities that failed to file on a timely basis
Forms 3, 4 and 5 required under Section 16(a) of the Securities Exchange Act
of 1934, as amended, during fiscal year ended 2006.

Item 10.    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. Management services are provided to the Company by
LREC pursuant to that certain Management Consulting Agreement by and between
the Company and LREC dated March 25, 1987 (the "Management Agreement"). Mr.
Schiffer is an employee of, and receives an annual salary from LREC. Mr. Love
receives only a nominal salary from LREC. Neither the Company nor LREC
maintains records, which would allow either of them to attribute any portion
of the remuneration Mr. Schiffer receives from LREC to the management services
he performs for the Company. See Item 12. "Certain Relationships and Related
Party Transactions, and Directors Independence" for additional information
about the Management Agreement.

         Neither Mr. Schiffer nor Mr. Love received fees from any source
directly attributable to their services as directors of the Company during
2006.

Item 11.    Security Ownership of Certain Beneficial Owners and Management and
--------    ------------------------------------------------------------------
            Related Stockholder Matters
            ---------------------------

         The table below provides certain information as of March 25, 2007
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.

<TABLE>
<CAPTION>
                                                                                  Percent of Total
                                                                                  ----------------       Percent of
                                              Common            Preferred        Common    Preferred    Total Voting
            Name                              Stock               Stock         Stock (1)    Stock        Power (1)
            ----                              -----               -----         ---------    -----        ---------

<C>                                         <C>                 <C>               <C>         <C>            <C>
Estate of Harold Vernon                       998,777(2)(3)             -         18.8%          -           13.7%
Alfred M. Johns                               426,514(4)          125,000(4)       8.0%        6.3%           7.5%
Love-PGI Partners, L.P.                     2,260,706(5)        1,875,000(5)      42.5%       93.8%          56.5%
Andrew S. Love, Jr.                         2,263,215(6)        1,875,000(6)      42.5%       93.8%          56.5%
Laurence A. Schiffer                        2,263,215(7)        1,875,000(7)      42.5%       93.8%          56.5%
All executive officers and directors
as a group (2 persons)                      2,263,215(8)        1,875,000(8)      42.5%       93.8%          56.5%

<FN>
1.       The above table does not include 2,595,356 shares that may be
         received upon conversion of the Company's secured convertible
         debentures.

2.       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.

                                      31

<PAGE>
<PAGE>

         Vernon, which was secured by these shares. The loan is in default and
         the Company understands that the FDIC has the right, pursuant to a
         pledge agreement, to vote the shares at any annual or special meeting
         of shareholders.

3.       Information obtained from filings made with the Securities and
         Exchange Commission.

4.       Sole voting and investment power over 405,613 shares of Common Stock;
         shared voting and investment power over 20,901 shares of Common Stock
         included in the table which are owned by Mr. John's wife; sole voting
         and investment power over the 125,000 shares of Preferred Stock.

5.       The controlling general partner of L-PGI is Love Investment Company,
         a Missouri Corporation owned by Mr. Love, Love family members and
         trusts, the Estate of Martha Love Symington and Mr. Schiffer. Messrs.
         Love and Schiffer serve as the executive officers and directors of
         Love Investment Company.

6.       These shares are the same shares owned by L-PGI and PGIP, LLC
         (2,509). Mr. Love is an indirect owner of L-PGI and PGIP, LLC. See
         Footnote 5 above and Item 12. "Certain Relationships and Related
         Transactions, and Directors Independence" for more information.

7.       These shares are the same shares owned by L-PGI and PGIP, LLC
         (2,509). Mr. Schiffer is an indirect owner of L-PGI and PGIP, LLC.
         See Footnote 5 above and Item 12. "Certain Relationships and Related
         Transactions, and Directors Independence" for more information.

8.       These shares are the same shares reflected in Footnotes 5, 6 and 7.
         See Footnote 5 above and Item 12. "Certain Relationships and Related
         Transactions, and Directors Independence" for more information.

9.       Addresses for beneficial owners are as follows:

         <C>                                <C>                                 <C>
         Estate of Harold Vernon            Love-PGI Partners, L.P              Laurence A. Schiffer
         3201 W. Rolling Hills Circle       212 So. Central, Suite 100          212 So. Central, Suite 201
         Fort Lauderdale, FL 33328          St. Louis, MO 63105                 St. Louis, MO 63105

         Alfred M. Johns                    Andrew S. Love, Jr.
         One Woodland Drive                 212 So. Central, Suite 201
         Punta Gorda, FL 33950              St. Louis, MO 63105
</TABLE>

         As of December 31, 2006, the Company did not have a compensation plan
under which its equity securities may be issued.

Item 12.    Certain Relationships and Related Transactions, and
--------    ---------------------------------------------------
            Directors Independence
            ----------------------

         The Company's primary lender debt of $500,000 during and as of
December 31, 2006, is with PGIP and is secured by substantially all of the
Company's real estate. PGIP became the primary lender in March 1996, with the
assignment by First Union, the Company's former primary bank lender, of all
its right, title and interest in and to the loan documents. PGIP is 100% owned
by LSHC. Messrs. Love and Schiffer own approximately 90% of all of the issued
and outstanding voting stock of LSHC and serve as the directors and officers
of LSHC. LSHC along with Messrs. Love and Schiffer are the managers of PGIP.

         As further security to the primary lender indebtedness with PGIP, a
restricted proceeds escrow was established with the closing of the bulk
acreage sale in May 1998. The escrow agreement permits funds to be paid (i) as
requested by PGI and agreed to by PGIP, or (ii) as deemed necessary and
appropriate by PGIP to protect its interest in the remaining real estate,
including its right to receive principal and interest payments on the
indebtedness, or (iii) to PGIP to pay any other obligations owed to PGIP by
the Company. At December 31, 2006 and 2005, the restricted escrow balance was
$5,000 and $255,000, respectively. The Company utilized $220,000 of the
primary lender restricted escrow in 2006 to invest in a short-term note with
an affiliate of L-PGI, the Company's preferred shareholder, Love Investment
Company, and utilized

                                      32

<PAGE>
<PAGE>

$32,000 for interest payments to PGIP on the primary lender debt. Interest
earned on the restricted cash in 2006 was $2,000.

         The Company maintains its administration and accounting offices with
the offices of LREC in St. Louis, Missouri. LREC, a Missouri Corporation, is
an affiliate of L-PGI, and is located at 212 South Central Avenue, Suite 100,
St. Louis, Missouri 63105. A fee of $2,800 per month was accrued in 2006 and
2005. The Company made payments of $28,000 and $33,600 to LREC in 2006 and
2005 respectively for accounting service fees. As of December 31, 2006 there
was $5,600 in accrued accounting service fees.

     The following is a list of services provided:

         1.       Maintain books of original entry;
         2.       Prepare quarterly and annual SEC filings;
         3.       Coordinate the annual audit;
         4.       Assemble information for tax filing, review reports as
                  prepared by tax accountants and file same;
         5.       Track Shareholder records through transfer agent;
         6.       Maintain policies of insurance against property and
                  liability exposure;
         7.       Handle day-to-day accounting requirements; and
         8.       Provide telephone and computer service.

         Although an amount is paid to LREC as reimbursement for expenses and
as a fee for providing management services to the Company, neither the Company
nor LREC maintain records which would allow them to attribute any portion of
the aforementioned monthly fee to reimbursement of particular expenses or to
payment for the management services performed for the Company by individual
employees of LREC, including Messrs. Love and Schiffer.

         Effective as of March 25, 1987, the Company entered into the
Management Agreement with LREC. As a consultant to the Company and in addition
to the above services, LREC provides other services including, but not limited
to, strategic planning, marketing, and financing as requested by the Company.
In consideration for these consulting services, the Company pays LREC a
quarterly consulting fee of one-tenth of one percent of the book value of the
Company's assets, plus reasonable out-of-pocket expenses. As of December 31,
2006, the book value of the Company's assets was approximately $1.8 million.
Consulting fees totaling $7,000 were accrued during 2006 and 2005,
respectively. The Company made payments of $11,000 and $7,000 in 2006 and
2005, respectively for consulting fees. As of December 31, 2006 and 2005, a
total of $2,000 and $6,000, respectively, of unpaid fees had accrued under the
Management Agreement.

         The Management Agreement will continue in effect until terminated
upon 90 days prior written notice by a majority vote of the Company's
directors who have no financial interest in LREC or in any LREC affiliated
entity. Currently all directors have a financial interest in LREC or one of
its affiliates.

         Mr. Love receives a nominal salary from LREC. Although Mr. Schiffer
receives a salary from LREC, such salary compensates him for his services to
LREC, which provides consulting services for numerous other entities
affiliated with the Company, and none of the amount earned by LREC under the
Management Agreement is intended to be allocated or attributable to any

                                      33

<PAGE>
<PAGE>

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.

         In 1989, the Company sold an aggregate $2,282,451 principal amount of
the Convertible Debentures ("Debentures") in a private placement to Love-1989.
The general partner of Love-1989 is Love Investment Company, which is owned by
Mr. Love, Love family members and trusts, the Estate of Martha Love Symington
and Mr. Schiffer. The above purchase by Love-1989 of the Debentures was funded
in part with a loan from L-PGI. Love-1989 repaid the debt to L-PGI in full, in
part by transferring a portion of the Debentures held by Love-1989 to L-PGI.
In July 1992, as partial consideration for the Company's conveyance of 350
acres of property to L-PGI, the Company retired $782,000 in principal amount
of the Debentures held by L-PGI together with $389,000 in accrued interest.
The maturity date on all of the remaining Debentures was extended to July 8,
1997. The Debentures are past due and in default.

         The Debentures were in part collateralized by a second mortgage in
favor of Love-1989 on 650 acres of the property owned by the Company, which
was sold in May 1998. The 350 acres transferred to L-PGI as described above
were also included in the property sold. Messrs. Love and Schiffer have caused
the Company to grant a second mortgage on the 366 acre parcel of property
located in Hernando County, Florida to Love-1989 and in their capacities as
control persons of Love-1989, they caused Love-1989 to release its second
mortgage on the 650 acres of the property sold and they caused the Company to
grant a security interest to Love-1989 behind that held by PGIP in the
restricted proceeds escrow which is under the control of Messrs. Love and
Schiffer since they and a company they control are the managers of PGIP.

         As of and during December 31, 2006, Love-1989 held $796,950 in
principal amount of the Debentures with respect to which there was as of
December 31, 2006 accrued and unpaid interest in the amount of $7,899,000. In
1990, $703,050 principal amount of the Debentures was transferred by Love-1989
to one of its (now former) limited partners. That former limited partner
continues to hold such Debentures and as of December 31, 2006 there was
accrued and unpaid interest with respect thereto in the amount of $6,849,000.
Interest on the Debentures accrues at the rate of fourteen percent compounded
quarterly, and no interest payments were made during December 31, 2006.

         In 1985, a corporation owned by Alfred M. Johns, the former Chairman
of the Company, and his family made an uncollateralized loan to the Company,
which during and at December 31, 2006 had an outstanding balance, excluding
accrued interest, of $176,000. This loan is past due. Besides being a direct
owner of Common and Preferred Stock, Mr. Johns has no other direct or indirect
affiliations with the Company.

         From time to time, the Company invests in short term debt obligations
with an affiliate of L-PGI, the Company's preferred shareholder, Love
Investment Company. The balance of this receivable at December 31, 2006 and
2005 was $873,000 and $600,000, respectively. Interest on such receivables was
$72,000 and $32,000 for 2006 and 2005, respectively.

         In 2006 and 2005, the Company incurred expenses totaling $18,000 and
$2,000, respectively, for the services of Hallmark Senior Housing, Inc., a
related entity, to provide analysis of real estate owned and options
available.

                                      34

<PAGE>
<PAGE>

         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 definition of "independent director" set forth in the American Stock
Exchange 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.

Item 13.    Exhibits
--------    --------

         Reference is made to the Exhibit Index contained on page 37 herein
         for a list of exhibits required to be filed under this Item.

Item 14.    Principal Accountant Fees and Services
--------    --------------------------------------

         Audit and tax fees rendered by BKD, LLP, the principal accountant of
the Company, for the fiscal years ended December 31, 2006 and December 31,
2005 were:

                                              2006                 2005
                                              ----                 ----

                Audit Fees                  $  28,600           $  26,400
                Audit Related Fees                  0                   0
                Tax Fees                        4,100               3,800
                All Other Fees                      0                   0
                                            ---------           ---------
                                            $  32,700           $  30,200
                                            =========           =========

         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-approves all audit and
other permissible services to be provided by BKD, LLP and the estimated fees
for these services.

                                      35

<PAGE>
<PAGE>

                       PGI INCORPORATED AND SUBSIDIARIES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                            PGI INCORPORATED
                                            (Registrant)

Date:  May 4, 2007                          By:/s/ Laurence A. Schiffer
       -----------                          --------------------------------
                                            Laurence A. Schiffer, President
                                            (Duly Authorized Officer and
                                            Principal Executive Officer)

In accordance with the Exchange Act, 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              May 4, 2007
---------------------------   Secretary
Andrew S. Love


/s/ Laurence A. Schiffer      Vice Chairman of the Board,        May 4, 2007
---------------------------   President, Principal Executive
Laurence A. Schiffer          Officer, Principal Financial
                              Officer, and Principal Accounting
                              Officer

                                      36

<PAGE>
<PAGE>

 EXHIBIT INDEX

2.       Inapplicable.

3.1      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).

3.2      Certificate of the Designation, Powers, Preferences and Relative
         Rights, and the Qualifications, Limitations or Restrictions Thereof,
         which have not been set forth in the Articles of Incorporation, of
         the Class A Cumulative Convertible Preferred Stock, effective as of
         March 24, 1987 (filed as Exhibit 3.2 to Registrant's Form 10-K Annual
         Report for the year ended December 31, 1986 ("1986 Form 10-K") and
         incorporated herein by reference).

3.3      Bylaws of Registrant, as amended September 1987 (filed as Exhibit 3.3
         to Registrant's original Form 10-K Annual Report for the year ended
         December 31, 1987 ("Original 1987 Form 10-K") dated as of March 29,
         1987 and incorporated herein by reference).

3.4      Amendments to the Bylaws of the Registrant by the Board of Directors
         of PGI Incorporated by the Unanimous Written Consent, dated as of
         March 17, 1995 (filed as Exhibit 3.5 to the December 31, 1995 Form
         10-KSB and incorporated herein by reference).

4.1      Extension and Forbearance Agreement among PGI Incorporated, Punta
         Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast
         Credit Corporation and BancFlorida (formerly Naples Federal Savings
         and Loan Association), dated as of March 25, 1987 (filed as Exhibit
         4.4 to the 1986 Form 10-K and incorporated herein by reference).

4.2      Seventh Mortgage and Loan Modification Agreement among PGI
         Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc.,
         and Gulf Coast Credit Corporation and BancFlorida, dated as of March
         25, 1987 (filed as Exhibit 4.5 to the 1986 Form 10-K and incorporated
         herein by reference).

                                      37

<PAGE>
<PAGE>

EXHIBIT INDEX (continued)


4.3      Eighth Mortgage and Loan Modification Agreement among PGI
         Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc.,
         and Gulf Coast Credit Corporation and BancFlorida, dated as of March
         25, 1987 (filed as Exhibit 4.6 to the 1986 Form 10-K and incorporated
         herein by reference).

4.4      Restated Loan and Security Agreement among PGI Incorporated, Punta
         Gorda Developers, Inc., Burnt Store Marina, Inc., and Gulf Coast
         Credit Corporation and BancFlorida, as well as Restated Consolidating
         Substituted Renewal Note and Future Advance Mortgage Note related
         thereto, dated as of March 25, 1987 (filed as Exhibit 4.7 to the 1986
         Form 10-K and incorporated herein by reference).

4.5      Forbearance Agreement among PGI Incorporated, Punta Gorda Developers,
         Inc., Burnt Store Marina, Inc., and Gulf Coast Credit Corporation and
         BancFlorida (Restated Loan Agreement No.1), dated as of October 19,
         1985 (filed as Exhibit 4.1 to the Registrant's Form 10-Q Quarterly
         Report for the quarter ended September 30, 1985 and incorporated
         herein by reference).

4.6      Amendment to Restated Loan Agreement No. 1 (Receivables Loan), as
         well as Restated Consolidating Substituted Renewal Note relating
         thereto, dated as of March 25, 1987 (filed as Exhibit 4.9 to the 1986
         Form 10-K and incorporated herein by reference).

4.7      Extension, Forbearance and Modification Agreement between PGI
         Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc.,
         and Gulf Coast Credit Corporation, and BancFlorida, dated as of May
         20, 1988 (filed as Exhibit 4.1 to the Registrant's Form 10-Q
         Quarterly Report for the quarter ended June 30, 1988 and incorporated
         herein by reference).

4.8      Ninth Mortgage and Loan Modification Agreement between PGI
         Incorporated, Punta Gorda Developers, Inc., Burnt Store Marina, Inc.,
         and Gulf Coast Credit Corporation, and BancFlorida, dated as of May
         20, 1988 (filed as Exhibit 4.2 to Registrant's Form 10-Q Quarterly
         Report for the quarter ended June 30, 1988 and incorporated herein by
         reference).

4.9      Purchase Agreement among Finova Financial Services, PGI Incorporated
         and Punta Gorda Developers, Inc., as well as certain Exhibits and the
         Mortgage related thereto, dated March 15, 1988 (filed as Exhibit 1 to
         Registrant's Form 8-K dated as of March 28, 1988 and incorporated
         herein by reference).

4.10     Tenth Mortgage and Loan Modification Agreement between PGI
         Incorporated, Punta Gorda Developers, Inc., as well as certain
         Exhibits and the Mortgage related thereto, dated May 30, 1989 (filed
         as Exhibit 1 to Registrant's Form 8-K dated as of June 8, 1989 and
         incorporated herein by reference).

                                      38

<PAGE>
<PAGE>

EXHIBIT INDEX (continued)

4.11     Eleventh Mortgage and Loan Modification Agreement among PGI
         Incorporated (formerly Punta Gorda Isles, Inc.), Sugarmill Woods,
         Inc. (formerly Punta Gorda Developers, Inc.), Burnt Store Marina,
         Inc. and Gulf Coast Credit Corporation and BancFlorida (formerly
         Naples Federal Savings and Loan Association), dated as of June 1,
         1990 (filed as Exhibit 4.2 to Registrant's Form 10-Q Quarterly Report
         for the quarter ended June 30, 1990 and incorporated herein by
         reference).

4.12     Loan Forbearance Agreement among PGI Incorporated (formerly Punta
         Gorda Isles, Inc.), Sugarmill Woods, Inc, (formerly Punta Gorda
         Developers, Inc.), Burnt Store Marina, Inc. and Gulf Coast Credit
         Corporation and BancFlorida (formerly Naples Federal Savings and Loan
         Association), dated as of October 17, 1991 (filed as Exhibit 4.12 to
         Registrant's Form 10-K dated March 30, 1994 and incorporated herein
         by reference).

4.13     Twelfth Mortgage and Loan Modification Agreement among PGI
         Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc. and
         Gulf Coast Credit Corporation and BancFlorida, dated as of July 8,
         1992 (filed as Exhibit 4.1 to Registrant's Form 8-K dated as of July
         24, 1992, and incorporated herein by reference).

4.14     Thirteenth Mortgage and Loan Modification Agreement among PGI
         Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc., Gulf
         Coast Credit Corporation and First Union, dated as of May 13, 1994
         (filed as Exhibit 4.1 to Registrant's Form 8-K dated May 27, 1994 and
         incorporated herein by reference).

4.15     Forbearance Agreement dated as of October 12, 1995 by First Union
         National Bank of Florida, PGI Incorporated, Sugarmill Woods, Inc.,
         Burnt Store Marina, Inc., Gulf Coast Credit Corporation, Southern
         Woods, Incorporated, Punta Gorda Isles, Inc., Deep Creek Utilities,
         Inc., Burnt Store Utilities, Inc., and Sugarmill Woods Sales, Inc.
         (filed as Exhibit 4(i) to Registrant's Form 8-K on November 1, 1995
         and incorporated herein by reference).

4.16     Note and Loan Document Purchase Agreement dated as of October 12,
         1995 by First Union National Bank of Florida, PGIP, L.L.C., PGI
         Incorporated, Sugarmill Woods, Inc., Burnt Store Marina, Inc., and
         Gulf Coast Credit Corporation (filed as Exhibit 4 (ii) to
         Registrant's Form 8-K on November 1, 1995 and incorporated herein by
         reference).

4.17     Note Purchase and Loan Transaction dated as of March 28, 1996, by
         First Union National Bank of Florida, PGIP, LLC, PGI Incorporated,
         Sugarmill Woods, Inc., Burnt Store Marina, Inc. and Gulf Coast Credit
         Corporation (filed as Exhibit 4.17 to Registrant's Form 10-KSB/A
         dated August 27, 1997, and incorporated herein by reference).

9.       Inapplicable.

                                      39

<PAGE>
<PAGE>

EXHIBIT INDEX (continued)

10.3     Preferred Stock Purchase Agreement by and between PGI Incorporated
         and Love Development and Investment Company, dated as of February 16,
         1987 (filed as Exhibit (i) to the Registrant's Form 8-K Current
         Report dated February 25, 1987 and incorporated herein by reference).

10.4     Form of Convertible Debenture Agreement due April 30, 1992 between
         PGI Incorporated and Love-1989 Florida Partners, L.P. and Mortgage
         and Security Agreement dated July 28, 1989 between Sugarmill Woods,
         Inc. and Love-1989 Florida Partners, L.P. (filed as Exhibit 10.9 to
         the Registrant's Form 10-K Annual Report for the year ended December
         31, 1989 and incorporated herein by reference).

10.5     Consulting Agreement between PGI Incorporated and Love Real Estate
         Company, dated as of March 25, 1987 (filed as Exhibit 10.7 to the
         1986 Form 10-K and incorporated herein by reference).

11.      See Note 16 to the consolidated financial statements.

13.      Inapplicable.

14.      Inapplicable (See discussion regarding code of ethics under Item 9.
         of this Form 10-KSB).

16.      Inapplicable.

18.      Inapplicable.

20.      Inapplicable.

21.      Subsidiaries of the Registrant, filed herein.

22.      Inapplicable.

23.      Inapplicable.

24.      Inapplicable.

31.1     Principal Executive Officer certification pursuant to Rule 13a-14(a)
         under the Securities Exchange Act of 1934, as amended, filed herein.

31.2     Principal Financial Officer certification pursuant to Rule 13a-14(a)
         under the Securities Exchange Act of 1934, as amended, filed herein.

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<PAGE>
<PAGE>

EXHIBIT INDEX (continued)

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.

99.      Not applicable.

100.     Not applicable.

                                      41