<PAGE> 1

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                ---------------
                                  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, 1996
                                -----------------------------------------------

[ ]   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
-------------------------------------------------------------------------------
             (Exact name of Registrant as specified 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)

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

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

                                                     Name of each Exchange
        Title of Each Class                           on which Registered
-------------------------------------        ----------------------------------
              None                                          None
              None                                          None

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

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

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

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

      Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not 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 amendments to this Form 10-KSB. [ ]

      The aggregate market value of voting stock held by non-affiliates of
the registrant can not be determined.  See page 9 of Form 10-KSB.

      Indicate the number of shares outstanding of each of the Registrant's
classes of  common stock as of March 25, 1997.

      Common Stock $.10 par value, 3,317,555 shares outstanding.

The Index to Exhibits is located on pages 52 to 56 of this report.


                                    Page 1 of 58 pages
<PAGE> 2


                       PGI INCORPORATED AND SUBSIDIARIES
                               FORM 10-KSB - 1996
                       Contents and Cross Reference Index
<TABLE>
<CAPTION>
Part  Item                                                         Form 10-KSB
No.   No.   Description                                               Page No.
---   ---   -----------                                               --------
<C>   <C>   <S>                                                       <C>
  I   1     Business
               General                                                    3
               Recent Developments                                       3-7
               Description of Business                                    8
               Industry Segments                                          8
               Sales and Marketing                                        8
               Homesite Sales
                  Contracts Receivable and Cancellation Policy           8-10
               Land Inventory                                             10
               Competition                                                10
               Engineering and Development                                10
               Regulation and Environmental Matters                     11-12
               Executive Officers of the Registrant                       13
      2     Properties                                                    13
      3     Legal Proceedings                                             13
      4     Submission of Matters to a  Vote of Security Holders          13

 II   5     Market for Registrant's Common Equity and
               Related Stockholder Matters                                13
      6     Management's Discussion and Analysis or Plan
               of Operation                                             14-23
      7     Report of Independent Certified Public Accountants            24
            Financial Statements and Supplementary Data                 25-43
      8     Disagreements on Accounting and
            Financial Disclosure                                          43

III    9    Directors and Executive Officers of The  Registrant         43-44
      10    Executive Compensation                                        44
      11    Security Ownership of Certain Beneficial Owners
               and Management                                           44-46
      12    Certain Relationships and Related Transactions              46-49

 IV   13    Exhibits, Financial Statement Schedules and
               Reports on Form 8-K                                      49-50
<S>                                                                   <C>
Signatures and Power of Attorney                                          51

Exhibit Index                                                           52-56
</TABLE>

                                    - 2 -
<PAGE> 3

                                     PART I
                                     ------
Item 1.     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 offices are at 8120 South Suncoast Boulevard,
Homosassa, Florida 34446 and its' executive offices are located at 212 S.
Central, Suite 100; St. Louis, Missouri  63105, and its telephone number is
(314) 512-8650.

      The Company, founded in 1958, engages in the business of building and
selling homes, developing and selling homesites and selling undeveloped or
partially developed tracts of land.  Substantially all of the real estate
sold or presently offered for sale by the Company is situated within
Sugarmill Woods in west central Florida.

      The Company obligated itself to develop its platted homesites by
specified dates in its offering statements and property reports filed with
various governmental agencies.  Development of homesites includes grading,
installing streets and drainage, and where applicable, water distribution
systems, sewage collection and treatment systems, seawalls, waterways, common
grounds or other amenities.  The Company has completed the development
obligations for all sold homesites.  Land and improvement inventories are
reported in the Company's financial statements at the lower of historical
cost or estimated market value.

      As of January 1, 1997 the Company employs a total of 6 persons of
which 4 are on a full-time basis.

RECENT DEVELOPMENTS

      On January 31, 1997, Sugarmill Woods, Inc., a Florida corporation
and a wholly-owned subsidiary of the Company, and Love-PGI Partners, L.P.
("L-PGI") (collectively as "Seller"), entered into an Option Agreement For
Sale and Purchase ("Sale Agreement") with The Nature Conservancy, Inc., an
unrelated nonprofit District of Columbia corporation ("Purchaser"), for the
sale of and purchase of approximately 5,240 acres of certain undeveloped real
estate located in Citrus County and Hernando County, Florida ("Property").
Approximately 4,890 acres of the Property is owned by the Company, and
350 acres is owned by L-PGI.

      Negotiations regarding the Sale Agreement began in January of 1996
after Purchaser first contacted the Company in March of 1994 about its desire
to acquire the land. The Nature Conservancy is a 501(c)(3) corporation that
is sponsoring a conservation project for Florida's Conservation and
Recreation Land program, and often acts as an intermediary for States.  The
Company has been informed that the Nature Conservancy and the State of
Florida are interested in obtaining the Property, which is mostly an upland
sand dune area, in order to preserve the land and to protect the endangered
wildlife on the land.  In addition, the Florida Department of Forestry is
contemplating incorporating the Property into the adjacent Withlacoochee
State Forest.  In late August 1992, the Florida Department of Transportation
announced the route of the Suncoast Expressway.  The Suncoast Express,
Project I is intended to serve as an efficient, high capacity, high speed
transportation facility connecting the Tampa area with destinations to the
north.  The route selected will intersect the Property.  It is estimated that
the Suncoast Expressway, which has been approved by the legislature of the
State of Florida, will shorten the drive from Tampa Airport to the
Property from 80 miles and more than 90 minutes to 44 miles and 45 minutes.

                                    - 3 -
<PAGE> 4

RECENT DEVELOPMENTS (continued)

      The Company suspended the construction of homes and sale of homes
and homesites in 1994.  Starting in January 1996, the Company began
concentrating on disposing in bulk of its undeveloped, platted, residential
real estate in order to decrease its debt obligations.  The Company
envisioned selling off such property and retaining its undeveloped commercial
real estate for future development or bulk sales depending on the
profitability.  The Company has not been successful in selling off its
undeveloped residential real estate and is constantly seeking new
opportunities to sell this property and to decrease its debt and stay in
operation.

      If the proposed sale of the Property occurs, the Company's
remaining assets will consist primarily of approximately 600 acres of
undeveloped property.  The Company intends to decide after the sale whether
it will pursue the development and sale of the property in accordance with
its traditional core business plans or whether it will attempt to sell such
property in bulk.  That decision will depend, in part, on whether the Company
believes it can generate more revenue by developing and selling individual
properties or by selling in bulk.

      The Sale Agreement was executed by the Company but is contingent
upon Shareholder approval.  Moreover, the Purchaser may choose not to
exercise its option under the Sale Agreement.  Purchaser paid an option
payment of $100, and upon exercising the option, the purchase price for
the Property is expected to be approximately $14,759,335 payable in cash
by Purchaser subject to the adjustments below.  Purchaser may assign the Sale
Agreement to the State of Florida and if assigned then such purchase price
may be paid by state warrant.  Of the total purchase price, approximately
$1,220,000 is expected to be allocated to the approximate 350 acres of the
Property being sold by L-PGI, with the remaining $13,539,335 being
allocated to the approximate 4,890 acres being sold by the Company.  Based
upon the above purchase price, the net proceeds to the Company would be
approximately $13,089,335, after payment of approximately $450,000 of
expenses related to the sale.

      The amount of the purchase price was based on a price of
$2,816.43 per acre.  The purchase price is subject to adjustments for the
following: the maximum value per acre permitted to be paid under Florida
statutes, the actual number of acres calculated after a survey, defects in
title or marketability of the Property, and any charges for cleaning up
hazardous materials.  However, if any such adjustment exceeds $100,000,
Seller shall have the right to terminate the Sale Agreement.  Notwithstanding
the final valuation of the Property by the State of Florida, the purchase
price shall not exceed $14,759,335.

      The Company shall pay for and furnish a current boundary survey of
the Property and a marketable title insurance commitment and related
insurance policy to Purchaser.

      The Company shall also pay for and furnish to Purchaser a Phase 1
environmental assessment of the Property and if such assessment recommends a
Phase 2 environmental assessment, then the Company shall pay for and furnish
such a Phase 2 environmental assessment.  If such assessments confirm the
presence of hazardous waste on the Property, then the Company may be liable
for cleanup and monitoring the hazardous waste pursuant to the terms of the
Sale Agreement.

      All real estate taxes and assessments shall be prorated between
the Seller and Purchaser to the date of closing unless the Sale Agreement is
assigned to the State of Florida and then such taxes and assessments shall be
paid by Seller at closing.

                                    - 4 -
<PAGE> 5

RECENT DEVELOPMENTS (continued)

      The option shall expire May 28, 1997 if the Sale Agreement is not
assigned to the State of Florida or not approved by the State of Florida
before such date unless such date is extended.  If the purchase is approved
by the State of Florida, the option shall expire 120 days after the State of
Florida's approval of the Sale Agreement unless extended.

      Closing shall take place 15 days after the Purchaser exercises the
option unless defects in the marketability of title exist or other necessary
actions have not been taken by Seller.

      Under Florida law and the regulations of the Department of
Business and Professional Regulation, Division of Land Sales, Condominiums
and Mobile Homes ("Division"), the Company is required to report the proposed
sale to the Division for its review and approval.  The Company provided the
Division with information and supporting documentation in April 1997, but
there can be no assurance that the approval of the Division will be obtained
or obtained in a timely manner.

      The Company believes the purchase price is equitable because the
Property has been marketed locally and nationally for several years without
bona fide offers.  The Company believes the appraisals, as discussed below,
indicate this is a fair price.  There are two new appraisals to which at
this time only The Nature Conservancy and the State of Florida are privy.
The Company has been assured, however, that the purchase price represents
no less than 90% of appraised value.  The Company believes this is the best
price it will be offered for the Property, because there are thousands of
individual lots and many developments of bulk sale lots in the same general
vicinity that are available at reasonable prices.  They are included in
both golf and non-golf communities.  The cost to acquire, and upgrade the
Property would probably be much greater than purchasing existing improved
property.  The past programs of the Company and other similar companies of
selling lots off premises has virtually ceased.  Therefore, owners of large
tracts must find other uses. The sale to the Nature Conservancy is such a
use.  Any interested buyer of this Property will most likely encounter the
same problems that the Company did with regard to development, platting,
and reselling the Property, including such things as environmental and
conservation laws, and the highly competitive nature of real estate sales
in Florida.  Additionally, it would be difficult to find someone to
purchase the Property in bulk and the acquirer may have a difficult time
obtaining financing given the problems past creditors of the Company had
with respect to the financing of the Property.

      In addition to the State of Florida appraisals, in September 1995,
PGIP L.L.C. ("PGIP")  contracted for an appraisal to update a prior appraisal
conducted seven years ago on the bulk acreage owned by the Company and of
which the Property is a part.  Such updated appraisal reflected a value of
approximately $4,855 per acre.  In 1992, a predecessor of First Union
National Bank of Florida, the Company's former primary bank lender, obtained
an appraisal reflecting a value of approximately $2,930 per acre, and PGIP
obtained another appraisal in September 1995, which reflected a value of
approximately $2,500 per acre.  Although the Company has in prior years
received other appraisals which in some instances reflected a higher value
than the value used to determine the purchase price, the Company believes
that the more recent appraisals particularly those obtained by the State of
Florida reflect a more accurate valuation of the Property.  See "Item 12.
Certain Relationships and Related Transactions."

                                    - 5 -
<PAGE> 6

RECENT DEVELOPMENTS (continued)

      The net proceeds of the sale under the Sale Agreement will be
first applied to retire all or most of the first mortgage
indebtedness held by PGIP on the property proposed to be sold.  See "Item 12.
Certain Relationships and Related Transactions."  As of March 31, 1997, the
principal balance of such indebtedness was $7,323,000 and the accrued
interest with respect thereto was $2,705,000.  Approximately $685,000 will
be used to pay real estate taxes (including interest and penalties) on
the Property. Approximately $2,080,000 of the remaining net proceeds will
be used to reduce the indebtedness under the Company's 1989 Convertible
Secured Debentures and to obtain a release of the mortgage on a portion of
the Property securing those debentures.  Approximately $700,000 will be
used to establish an escrow to substitute for a mortgage in favor of the
Division of Florida Land Sales which encumbers part of the Property in
order to assure completion of certain roads on property developed by the
Company. The establishment of the escrow will be required in order to procure
release of the aforementioned mortgage in order, in turn, to convey good
title to the Property to the Purchaser. See "Item 12. Certain Relationships
and Related Transactions."  Any remaining proceeds will be for general
corporate purposes, which may include retirement of additional
indebtedness, working capital needs, and operating obligations of the
Company.

      The payment in full of accrued interest on the principal balance of
the first mortgage indebtedness held by PGIP would result in an inability
of the Company to make all of the other payments described above in the
amount of approximately $825,000. As a result, the Company has requested
that PGIP consider leaving in place part of the mortgage indebtedness
secured by a first mortgage lien on the approximately 600 acres of real
estate which will continue to be owned by the Company. This would enable
the Company to make all of the payments described above in full and,
depending on the amount of the debt PGIP agrees to leave in place, to
provide additional funds with which the Company can meet operating
expenses and other obligations of the Company. PGIP has indicated to the
Company that it will entertain such request and that when, as and if
approved by the members, it will leave the debt in place, and thereby
make additional funds available to the Company, in such amounts as may
be approved by its members and subject to such other terms and
conditions as shall be determined by PGIP.

      The following table sets forth the unaudited pro forma balance sheet
and statement of earnings of the Company giving effect to the consummation
of the proposed sale of the Property as if the closing was December 31, 1996
and the proceeds are used as described herein.

<TABLE>
<CAPTION>
                                                                               Pro Forma Balance Sheet
                                                              ---------------------------------------------------------
                                                              At December 31,            Pro Forma
                                                                    1996                Adjustments         As Adjusted
                                                              ---------------           -----------         -----------

<S>                                                           <C>                     <C>                  <C>
Assets
   Cash and cash equivalents, including
     restricted cash of $1,140,000 and
     a pro forma balance of $1,440,000                         $  1,152,000            $  1,430,000 <Fa>    $  2,582,000
   Receivables on real estate sales - net                           318,000                      -               318,000
   Other receivables                                                 26,000                      -                26,000
   Land and improvement inventories                               9,016,000              (7,748,000)<Fc>       1,268,000
   Property and equipment - net                                      46,000                      -                46,000
   Other assets                                                     759,000                      -               759,000
                                                               ------------            ------------         ------------

                                                               $ 11,317,000            $ (6,318,000)        $  4,999,000
                                                               ============            ============         ============


Liabilities
   Accounts payable                                            $     78,000            $         -          $     78,000
   Other liabilities                                              1,428,000                (636,000)<Fa>         792,000
   Accrued income taxes                                                  -                  107,000 <Fb>         107,000
   Accrued interest:
       Primary lender                                             2,461,000              (2,461,000)<Fa>              -
       Debentures                                                 6,880,000              (1,325,000)<Fa>       5,555,000
       Other                                                      1,449,000                      -             1,449,000
   Credit agreements:
       Primary lender                                             7,307,000              (6,482,000)<Fa>         825,000 <Ff>
       Notes and mortgages payable                                3,667,000                      -             3,667,000
   Convertible debentures payable                                 9,059,000                      -             9,059,000
   Convertible debentures payable                                 1,500,000                (755,000)<Fa>         745,000
                                                               ------------            ------------         ------------
                                                                 33,829,000            $(11,552,000)        $ 22,277,000
                                                               ============            ============         ============


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 $4.00 per share or
     $8,000,000)                                                  2,000,000                                    2,000,000
   Common stock, par value $.10 per share;
     authorized 25,000,000 shares; 3,317,555
     shares issued and outstanding                                  332,000                                      332,000
   Paid-in capital                                               13,698,000                                   13,698,000
   Accumulated deficit                                          (38,542,000)              5,234,000 <Fd>     (33,308,000)
                                                                                                    <Fb>
                                                               ------------            ------------         ------------
                                                                (22,512,000)              5,234,000          (17,278,000)
                                                               ------------            ------------         ------------
                                                               $ 11,317,000            $ (6,818,000)        $  4,999,000
                                                               ============            ============         ============

                                    - 6 -
<PAGE> 7

RECENT DEVELOPMENTS (continued)

<CAPTION>
                                                                           Pro Forma Statement of Earnings
                                                              ---------------------------------------------------------
                                                              At December 31,            Pro Forma
                                                                    1996                Adjustments         As Adjusted
                                                              ---------------           -----------         -----------

<S>                                                           <C>                     <C>                  <C>
Revenue
   Real estate sales                                           $         -             $         -          $         -
   Interest income                                                   87,000                      -                87,000
   Other income                                                     396,000               5,341,000 <Fd>       5,737,000
                                                               ------------            ------------         ------------
                                                                    483,000               5,341,000            5,824,000


Cost and Expenses
   Cost of real estate sales                                             -                       -                    -
   Selling expenses                                                  11,000                      -                11,000
   General and administrative                                       843,000                      -               843,000
   Interest                                                       2,512,000                      -             2,512,000
   Other                                                             12,000                      -                12,000
                                                               ------------            ------------         ------------
                                                                  3,378,000                      -             3,378,000
                                                               ------------            ------------         ------------
(Loss) Earnings before Income Taxes                              (2,895,000)                     -             2,446,000

Income Taxes                                                             -                  107,000 <Fb>         107,000
                                                               ------------            ------------         ------------

Net (Loss) Earnings                                            $ (2,895,000)           $  5,234,000         $  2,339,000
                                                               ============            ============         ============

(Loss) Income per Share Common Stock
   Equivalents after Preferred Stock
   Dividends of 640,000 for 1996
     Primary net loss per share                                      $(1.07)
                                                                     ======

Unaudited Pro Forma Net Income per
   Common Stock Equivalents Considering
   Preferred Stock Dividends of 640,000
   for 1996

Unaudited Pro Forma Earnings per Share                                                                              $.45
                                                                                                                    ====


<FN>
NOTES TO PRO FORMA STATEMENTS:

<Fa>  To give effect of closing the proposed sale of 4,890 acres of
      unimproved land as of December 31, 1996 net of $450,000 of
      estimated closing expenses, less estimated use of such proceeds
      as follows on December 31, 1996:

<S>                                                                 <C>
        Payment to reduce primary lender note payable                $6,482,000
        Payment to holder of mortgage securing 1989 debentures
          for release thereof applied to accrued interest            $1,325,000
        Payment to reduce accrued interest due to primary lender     $2,461,000
        Payment to holder of mortgage securing 1989 debentures
          for release thereof applied to principal                   $  755,000
        Payment to satisfy real estate tax assessments including
          interest and penalties                                     $  636,000

<Fb>  To give effect of estimate tax liability arising from the alternative
      minimum tax due to limitations on utilization of operating loss carry
      forward net of valuation allowance of $107,000.

<Fc>  To give effect of the reduction of the cost of unimproved land as if the
      sale had taken place on December 31, 1996.

<Fd>  To give effect of the net gain on sale of 4,890 acres of unimproved land.

<Fe>  To give effect of a $700,000 escrow to substitute for mortgage to assure
      completion of certain roads on property developed by the Company and
      release of $400,000 restricted cash leaving a pro forma balance of
      $1,440,000 in restricted cash at December 31, 1996.

<Ff>  Assumes that members of PGIP will approve a continued $825,000 first
      mortgage on the remaining 600 acres of real estate remaining in Company
      control.
</TABLE>

      The Company believes that the sale price is fair and represents
the best prospects for the Company to realize proceeds in a prompt bulk sale
at a fair level of value.  The Company has tried for many years to sell
property in bulk or in large tracts to commercial and residential developers
without success.  In addition, its program of retail lot sales had become
increasingly non-viable up until the time it was terminated.  Even if the
Company determines that retail lot sales have again become economically
viable, and it is not the view of the Company that such is the case, the
Company lacks the capital and financial resources to resume a program of
retail lot sales.  A condition of the continued forbearance by PGIP as the
holder of the first mortgage indebtedness, which is in default, is that the
Company proceed with a satisfactory program of land sales.  The Company
believes that, not only does it not have any other reasonable prospects to
satisfy that requirement, but, the existing Sale Agreement does not
represent a distress sale in price and terms but, rather, represents a fair
result for the Company.  In addition, the Company believes that the sale
pursuant to the Sale Agreement represents the Company's best prospect to
meet its financial obligations, in addition to the first mortgage
indebtedness, and to realize a fair market value from the remaining acreage
retained by the Company.  The Company believes that, because of its
proximity to the proposed Suncoast Expressway from Tampa and the proposed
interchange between the Suncoast Highway and Highway 98, the value of the
retained acreage will be enhanced as the highway improvements near
completion.

                                    - 7 -
<PAGE> 8


DESCRIPTION OF BUSINESS

Overview of Company Communities
-------------------------------

      Sugarmill Woods is located (in Citrus County, Florida) five miles south
of Homosassa Springs and 60 miles north of Tampa.  The Sugarmill Woods area
consists of rolling hills covered by cypress, oak and pine trees.  Sugarmill
Woods lies within the "Nature Coast" area which offers both fresh and salt
water fishing and hunting in a state forest.  There are public beaches,
picnic areas and fishing and camping facilities in the immediate vicinity.
Several rivers in the area provide access to the Gulf of Mexico.  Sugarmill
Woods is located on U.S. 19; U.S. 98 runs diagonally through its southern
portion.  Single family homesites in Sugarmill Woods generally range in size
from 10,000 to 24,000 square feet.

      Sugarmill Woods commenced sales operations in 1974.  The subdivision is
platted into homesites, and as of December 31, 1996 the Company retained
ownership of approximately 4,900 acres of undeveloped land and 600 acres of
undeveloped commercial property.

      During the fiscal year ended December 31, 1996, the Company's business
focus and emphasis changed substantially as it concentrated its sales and
marketing efforts almost exclusively on the disposition in bulk of its
undeveloped, platted, residential real estate.  This change was prompted by
its continuing financial difficulties due to the principal and interest owed
on its debt and managements' conclusion that a bulk sale was the best way to
reduce the Company's debt service obligations.  If the Company is successful
in its sale of this undeveloped land, its remaining inventory will consist of
undeveloped commercial property.  There can be no assurance that the Company
will be successful in its efforts to effect a bulk sale.  Assuming a bulk
sale occurs, the Company intends to decide at that point whether it will
pursue the development and sale of the commercial property in accordance with
its traditional core business plans or whether it will attempt to sell such
property in bulk.  That decision will depend, in part, on whether the Company
believes it can generate more revenue by developing and selling individual
commercial properties or by selling in bulk.

INDUSTRY SEGMENTS

      Although in prior years the Company has operated various amenities in
support of community development activities, the Company is currently in one
dominant industry segment--community development.

SALES AND MARKETING

      The focus of the Company's ongoing sales operations has been and will
be concentrated at its Sugarmill Woods project.

HOMESITE SALES CONTRACTS RECEIVABLE AND CANCELLATION POLICY

      Historically, substantially all of the Company's homesite sales were
made pursuant to agreement for deed installment sales contracts whereby the
Company retained title to the homesite until the contract was paid in full.
However, during mid-1990's the Company, in anticipation of requirements from
the regulatory agencies, changed to selling under a deed, note and mortgage.
The deed, note and mortgage program conveys title to the purchaser within 60
days from the sale date, which the  Company considers to be positive from a
marketing viewpoint.  However, should the purchaser default on the mortgage
terms it will be necessary for the Company to go through statutorily required
foreclosure proceedings at a considerably greater expense than incurred in
cancellation of an agreement for deed.  Since the Company cannot reasonably
estimate the increase in such foreclosure costs, no provision is made related
to these sales.  The Company does not conduct a credit investigation of its
purchasers because homesite purchasers have no personal liability and the
Company is not entitled to a personal or deficiency judgment against the
purchaser.

                                    - 8 -
<PAGE> 9

HOMESITE SALES CONTRACTS RECEIVABLE AND CANCELLATION POLICY (cont.)

      While engaged in installment sales, the Company offered lots for sale
to residents of the United States for a 10% down-payment, 10% interest,
principal and interest payable over 10 years.  Sales to residents of foreign
countries require a 20% down payment, 8.5% interest payable over 10 years.

      For sales prior to 1990, the Company provided for losses on future
cancellations of contracts receivable on homesite sales by charges to income
sufficient, in the opinion of management, to maintain an adequate allowance
for such losses.  The charge was based on historical collection experience
and analysis of delinquencies.  Contract receivable balances related to
canceled contracts are charged to the allowance for cancellations.
Contractually, for sales prior  to implementation of the deed, note and
mortgage, the Company may cancel a contract after the following delinquency
periods:

<TABLE>
<CAPTION>
      Percent of Contract                  Delinquency
      Price Collected                        Period
      ---------------                      -----------
<S>                                        <C>
      Less than 25%                            90 days
      25% but less than 50%                   120 days
      50% and over                            150 days
</TABLE>

      Effective January 1, 1990, the Company adopted the installment method
of profit recognition for all homesite sales.  The installment method defers
a portion of the gross profit at point of sale and recognizes the deferred
profit as principal  payments on contracts are received (see Item 6 and Note
3 to the consolidated financial statements under Item 7).

      The mortgage deed currently being utilized has a 30 day grace period
with notice provision for delinquent payments.  Upon expiration of the 30
days the unpaid balance of the mortgage may be accelerated by the Company.
Monies paid by the purchaser may be retained by the Company as liquidated
damages.

      The Company generally considers a contract delinquent if the scheduled
installment payment is over 30 days past due.  Although the Company has no
formal policy for granting payment extensions, extensions have been granted
in certain instances.  The following table sets forth delinquency information
with respect to homesite contracts receivable as of December 31, 1996:

<TABLE>
<CAPTION>
                                     December 31, 1996               Percent of
                                     -----------------               ----------
                                      ($ in thousands)          Total Contracts
                                      ----------------          ---------------
<S>                                   <C>                       <C>
Current                               $            272                    25.3%
                                      ----------------               ---------
31 days to 60 days delinquent                       42                     3.9
61 days to 90 days delinquent                       18                     1.6
Over 90 days                                       744                    69.2
                                      ----------------               ---------
   Total delinquency                               804                    74.7
                                      ----------------               ---------
   Total contracts                    $          1,076                   100.0%
                                      ================               =========
</TABLE>


                                    - 9 -
<PAGE> 10


HOMESITE SALES CONTRACTS RECEIVABLE AND CANCELLATION POLICY (cont.)

      With the July 1992 Secured Lender Transaction (see Item 6 and Note 2 to
the consolidated financial statements under Item 7), the Company has sold all
of its contracts receivable.  The Secured Lender Transaction was without
recourse.  However, in prior years the Company sold or exchanged receivables
on real estate sales.  The receivables were sold or exchanged with recourse
to the Company if a receivable becomes more than 90 to 120 days delinquent
(see Note  17  to  the consolidated financial statements under Item 7).

LAND INVENTORY

      The Company believes its land inventory is adequate to support its
development activities and is offering for sale all or a portion of its
approximately 5,500 acres of its unimproved Citrus County land inventory.
See "Recent Developments".

COMPETITION

      The Company's business is highly competitive.  It is selling bulk land
and brokering lot and home sales.   The Company competes primarily on the
basis of location and quality of its homesites and homes, and the quality of
related amenities.  A large supply of homesites and other subdivided land in
Florida and other states is being offered for sale.  There are several land
development  companies, some of which have greater sales and financial
resources than the Company, operating in the same counties as the Company.
In the sale of homes, the Company competes with many local builders and
contractors and with several major building companies, some of which have
greater sales and financial resources than the Company.

      Adverse market conditions resulting from general or local economic
conditions, increased raw material and labor costs, increased interest rates,
over-building, increased regulation and the availability of acceptable
mortgage financing,  all of which are beyond the control of the Company, may
individually or collectively have a material adverse effect on the Company's
business.

ENGINEERING AND DEVELOPMENT

      The Company plans, engineers and oversees the development of its
communities.  With the completion of its Sugarmill Woods Oak Village
subdivision in 1989, the Company has no remaining contractual development
obligations other than maintenance obligations until roads are accepted by
local governmental entities.


                                    - 10 -
<PAGE> 11

REGULATION AND ENVIRONMENTAL MATTERS

      In the Company's projects, the nature and extent of improvements,
zoning and related matters are subject to the approval of and regulation by
various governmental bodies, including city, county, regional and other
regulatory agencies of the State of Florida and the Federal government.
Sales activities are regulated not only by the State of Florida and the
Federal government, but also by the states in which sales are made or
solicited.

      Prior to obtaining approval of plats for recording in a county (a
prerequisite to the sale of homesites), the Company must either complete
various improvements or post a bond with the appropriate regulatory agency to
ensure their completion.

      Additionally, the Company has been required to post cash bonds and at
December 31, 1996 approximately $744,000 was held in escrow to collateralize
bonds  executed by the Company in favor of various Florida counties, the
State of Florida and  certain other states.  The cash bonds are required in
connection with obtaining approvals to sell homesites and maintaining water
quality in certain waterways constructed by the Company.

      In connection with the sale of Florida real estate, the State of
Florida Division of Land Sales, Condominiums and Mobile Homes, ("Division")
requires all sales contract documents, all sales literature and accompanying
data to be filed with it.  Also, the real estate itself must be qualified for
sale by the Division.  All of the Company's promotional material and all of
its subdivisions presently being offered for sale and requiring registration
have been so qualified.

      In addition to Florida, certain states impose additional or different
requirements.  These requirements include inspection of properties by
appropriate authorities, approval of sales literature, disclosures to
purchasers of specified information, assurances of future improvements,
approval of terms of sale and delivery to purchasers of a report describing
the property.  The Company presently has homesites registered for sale in
Florida.  Regulation of land sales and subdivision development has become
increasingly stringent.  In the past the Company has limited or refrained from
advertising and selling in certain states where the expense and delay
associated with regulatory compliance outweigh the anticipated economic
benefits.

      The Company's homesite sales are also subject to Federal regulation.
The Federal Interstate Land Sales Full Disclosure Act (the "Land Sales Act")
requires developers to file with the Office of Interstate Land Sales
Registration a "Statement of Record", including a "Property Report"
disclosing material information regarding the  property offered.  The
Property Report must be

                                    - 11 -
<PAGE> 12

REGULATION AND ENVIRONMENTAL MATTERS (continued)

delivered to each purchaser prior to the execution of the sales contract and
the purchaser has seven days within which to rescind the contract.  A
purchaser may also rescind any purchase contract, or may sue to recover
damages, resulting from any sale in violation of the Land Sales Act or the
Federal Consumer Credit Protection Act (sometimes referred to as the "Truth
in Lending Act"), which requires disclosures to purchasers as to finance
charges and other matters in credit transactions.

      The Company also is subject to various laws and governmental
regulations concerning environmentally related matters and is required to
obtain various permits in its development activities.

      Despite the Company's success in the past in obtaining necessary
permits for its projects, it can be anticipated that increasingly stringent
requirements will be imposed upon the Company.  Although the Company cannot
accurately predict the impact of these requirements, they might result in
time-consuming and costly compliance programs, discontinuance of certain
operations and substantial expenditures for pollution and water quality
control.

      In addition, the continued effectiveness of permits already granted is
dependent upon many factors, some of which are outside the Company's control,
such as changes in policies, rules and regulations, and their interpretation
and application, within governmental agencies.

      With the completion of the Sugarmill Woods Oak Village development
work, the Company has fulfilled its contractual development obligations to
its customers. The Company, however, still owns approximately 4,900 acres of
platted, undeveloped property for which it may have to apply for permits in
the future should its efforts to sell all or a portion of this property in
bulk not be successful.  If such permits are sought and are denied, the
Company might not be able to develop the property as planned which could
impact the property's value.  However, permitting problems which would
materially adversely affect the Company are not anticipated.

      Many of the Federal and State regulatory authorities having
jurisdiction over the Company's activities have broad discretionary powers to
enforce and interpret the statutes and regulations which they administer,
including powers to:  enjoin or suspend sales advertising and other sales
practices; require additional disclosures in sales literature and property
reports; require construction and installation of additional facilities; and
revoke licenses and permits relating to the Company's business activities.
The issuance of orders of suspension by one or more of such regulatory
authorities simultaneously affecting all or a major portion of the Company's
properties would materially adversely affect the Company's operations.  In
addition, the orders of one regulatory authority may conflict with those of
another, thereby complicating compliance.

                                    - 12 -
<PAGE> 13

EXECUTIVE OFFICERS OF THE REGISTRANT

      Information regarding executive officers of the Company is contained in
Item 9 of Part III of this Annual Report on Form 10-KSB (General Instruction G).


Item 2.     Properties
-------     ----------

      The Company's primary investments in properties relates to its
Sugarmill Woods project.  The Company generally has fee simple title to these
properties, but  substantially all of the Company's properties are encumbered
by mortgages under either its primary lender agreement or other financing
arrangements (see Item 6 and Note 10 to the consolidated financial statements
under Item 7).

Item 3.     Legal Proceedings
-------     -----------------

      The Company is a party to a number of lawsuits incidental to the normal
operation of its business.  Based upon information presently available, the
Company does not believe that the resolution of any of the suits
individually, or collectively, will have a material adverse effect on its
financial position (see Note 16 of Item 7).


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

      A shareholders meeting was not held during the year 1996.

                                    PART II
                                    -------

Item 5.     Market for Registrant's Common Equity and Related Stockholder
-------     -------------------------------------------------------------
            Matters
            -------

      The Company's Common Stock was traded on the American Stock Exchange,
Inc. ("AMEX") (trading symbol--PGA) until January 4, 1991 at which time the
Company consented to the removal of its Common Stock and 6% Convertible
Subordinated Debentures from the AMEX.  Subsequent to the AMEX de-listing the
Company attempted to establish relations with a brokerage firm who would
serve as a market maker for the Common Stock.  Based on information received
from The National Quotation Bureau, Inc., there have been no reported
transactions in the Company's  Common Stock since January 29, 1991.  During
the period January 1, 1991 through January 29, 1991 the high and low bid
price for the Common Stock was $.03 and the high and low offer price was
$.10.  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,
1996 there were 676 holders of record of the Company's Common Stock and 453
debenture holders.

                                    - 13 -
<PAGE> 14

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

PRELIMINARY NOTE

      The description of the Company's business in the Annual Report on Form
10-KSB focuses on its traditional core business of selling individual homes
and homesites and the construction of residences.  Readers should understand
as they read the report, however, that the Company is not presently pursuing
its core business until its debt obligations have been substantially
eliminated.  The reason the Company is no longer pursuing its core business
is set forth below.

      During the fiscal year ended December 31, 1996, the Company's business
focus and emphasis changed substantially as it concentrated its sales and
marketing efforts almost exclusively on the disposition in bulk of its
undeveloped, platted, residential real estate.  This change was prompted by
its continuing financial difficulties due to the principal and interest owed
on its debt and managements' conclusion that a bulk sale was the best way to
reduce the Company's debt service obligations.  If the Company is successful
in its sale of this undeveloped land, its remaining inventory will consist of
undeveloped commercial property.  There can be no assurance that the Company
will be successful in its efforts to effect a bulk sale.  Assuming a bulk
sale occurs, the Company intends to decide at that point whether it will
pursue the development and sale of the commercial property in accordance with
its traditional core business plans or whether it will attempt to sell such
property in bulk.  That decision will depend, in part, on whether the Company
believes it can generate more revenue by developing and selling individual
commercial properties or by selling in bulk.

RESULTS OF OPERATIONS

      Revenues for the year ended December 31, 1996 decreased by $478,000 to
$483,000 compared to revenues of $961,000 for the year ended December 31,
1995.  A net loss of $2.9 million ($1.07 per share) was incurred for 1996
compared to a net loss of $2.4 million ($.93 per share) for 1995.  Included
in the 1996 and 1995 earnings per share computation is $640,000 ($.19 per
share of Common Stock) of annual cumulative preferred stock dividends in
arrears.

                                    - 14 -
<PAGE> 15

RESULTS OF OPERATIONS (continued)

Real Estate Activities
----------------------

      Sales revenues by major components for real estate operations
(excluding improvement revenues related to prior sales) for the years 1996
and 1995 were:
<TABLE>
<CAPTION>
                                            1996      1995
                                            ----      ----
                                           ($ in thousands)
<S>                                         <C>       <C>
      Homesite sales-gross                  $  -      $ 44
      Acreage sales                            -        80
                                            ----      ----
                                            $  -      $124
                                            ====      ====
</TABLE>

      Cost  by  major component for real estate operations  (excluding
improve costs related to prior sales) for the years 1996 and 1995 were:
<TABLE>
<CAPTION>
                                            1996      1995
                                            ----      ----
                                           ($ in thousands)
<S>                                         <C>       <C>
      Homesite sales-gross                  $  -      $ 56
      Acreage sales                            -         6
                                            ----      ----
                                            $  -      $ 62
                                            ====      ====
</TABLE>

      Gross  profit margins by major components for real estate operations
for  the years 1996 and 1995 were:
<TABLE>
<CAPTION>
                                1996          %        1995         %
                                ----          -        ----         -
                                            ($ in thousands)
<S>                             <C>         <C>        <C>       <C>
      Homesite sales-gross      $  -         - %       $(12)     (27.3)%
      Acreage sales                -         - %         74       92.5 %
                                ----        ---        ----      -----
                                $  -         - %        $62       50.0 %
</TABLE>

Home Sales
----------

      There were no home sales in 1996 and 1995.

      The Company believes the current economic conditions and increased
competition will continue to negatively impact housing sales and that the
Company will not experience a substantial improvement in either home sales
volume or gross profit margins.  In response to this outlook, the Board of
Directors approved to temporarily suspend the new home construction operation
in Sugarmill Woods.

                                    - 15 -
<PAGE> 16

RESULTS OF OPERATIONS (continued)

Homesite Sales
--------------

      With the closing of the April 1994 Secured Lender Transaction, the
Company's homesite sales efforts came to an end during the middle part of
1994.  After the sale of the Southern Woods development the Company was left
with only a few undeveloped homesites.

      Also, effective January 1, 1990, the Company implemented the
installment method of homesite sales reporting in accordance with Statement
of Financial Accounting Standard No. 66 "Accounting for Sales of Real Estate"
(see Item 1 and Note 3 to the consolidated financial statements under Item
7.).  This method is being  utilized for all installment sales regardless of
the down-payment percentage.  With the Secured Lender Transaction
non-recourse sale of receivables, all previously deferred profits were
recognized during 1992.

Acreage Sales
-------------

      No significant bulk sales were generated in 1996 and 1995.

      The Company intends to continue its efforts to sell a portion or all of
its remaining 4,900 acres of undeveloped platted property and 600 acres of
undeveloped commercial property.

Other Activities
----------------

      The Company's cash accounts are substantially smaller given the
decrease in operations.  Interest income in 1996 decreased by $80,000
compared to a 1995 decrease of $104,000 from 1994.

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

      The relationship of selling expenses and real estate sales was as
follows:
<TABLE>
<CAPTION>
                                      1996        1995
                                      ----        ----
                                      ($ in thousands)
<S>                                   <C>        <C>
      Selling expenses                $ 11       $  39
      Selling expenses as a
        percentage of gross
        sales revenues for real
        estate operations                -%       31.5%
</TABLE>

      Selling expenses decreased by $28,000 (71.79%) during 1996 compared to
1995 and in 1995 they decreased by $139,000 (78.18%) compared to 1994.  The
decreases are a result of the reduction in selling activity.


                                    - 16 -
<PAGE> 17

RESULTS OF OPERATIONS (continued)

      The relationship of general and administrative expenses and real estate
sales was as follows:
<TABLE>
<CAPTION>
                                                  1996              1995
                                                  ----              ----
                                                      ($ in thousands)
<S>                                             <C>               <C>
      General and administrative
        expenses                                 $ 843             $  541
      General and administrative
        expenses as a percentage
        of gross sales revenues for
        real estate operations                       -%             436.3%
</TABLE>

      General and administrative expenses increased by $302,000 in 1996
compared to 1995 as a result of an increase in real estate taxes due to an
adverse decision from the State of Florida on an agricultural exemption
status on Citrus County unimproved land.

      In an effort to conserve cash and reduce overhead, the Company
consolidated its administrative office functions in St. Louis, Missouri in
June, 1994.  The Company has contracted out the services to Love Real Estate
Company ("LREC"), an affiliate of Love-PGI Partners, the Company's Preferred
Shareholder (see note 18), to handle the day-to-day accounting for a fee.  As
a result general and administrative expenses decreased by $539,000 (50.6%) in
1995 compared to 1994.  The decrease reflects lower costs associated with
fewer personnel required to operate the downsized Company.

      Interest expense for the two years ended December 31, 1996 was:

<TABLE>
<CAPTION>
                                                 1996               1995
                                                 ----               ----
                                                     ($ in thousands)
      <S>                                      <C>                 <C>
      Interest expense                         $ 2,512             $2,380
</TABLE>

      Interest expense in 1996 increased by $132,000 (5.55%) compared to 1995
and increased by $261,000 (12.3%) in 1995 compared to 1994 due to the Secured
Lender Transaction.

      Other expenses decreased by $369,000 (46.85%) in 1996 compared to 1995
due to changes in valuation allowances as discussed in Note 3 and decreased
by $160,000 (29.6%) in 1995 compared to 1994 due to real estate valuation
adjustments as discussed in Note 16.

FINANCIAL CONDITION

      Assets totaled $11.3 million at December 31, 1996 compared to $11.7
million at December 31, 1995 reflecting the following changes:

                                    - 17 -
<PAGE> 18


FINANCIAL CONDITION (continued)

<TABLE>
<CAPTION>
                                                               Increase
                                     1996           1995      (Decrease)
                                     ----           ----      ----------
                                            ($ in thousands)
      <S>                          <C>            <C>          <C>
      Cash                         $ 1,152        $ 1,165      $  (13)
      Receivables                      344            693        (349)
      Land and improvement
        inventories                  9,016          9,031         (15)
      Net property and equipment        46             81         (35)
      Other assets                     759            766          (7)
                                   -------        -------      ------
                                   $11,317        $11,736      $ (419)
                                   =======        =======      ======
</TABLE>

      The $344,000 in receivables on real estate sales at December 31, 1996
included a 1988 receivable sale with recourse to Finova Financial Services
("Finova") treated as a financing transaction for accounting purposes.  As a
result of the Secured Lender Transaction, the Company does not have
receivables available for replacement and is therefore unable to meet its
recourse obligations.  However, the Company has requested that Finova permit
the Company to satisfy its replacement obligation by canceling or foreclosing
the delinquent accounts and reselling the property for the lender.  Finova
has not yet responded to this request, and the Company has no assurance that
it will receive a favorable response. The $349,000 decrease in receivables
reflects the continuing paydown of the Finova portfolio.

      A comparison of the contracts receivable delinquency status at December
31, 1996 and 1995 follows:

<TABLE>
<CAPTION>
                                  December 31,            December 31,
                                     1996          %         1995          %
                                     ----          -         ----          -
                                                ($ in thousands)
<S>                                <C>           <C>       <C>           <C>
Current                            $   272        25.3%    $   741        46.3%
                                   -------       -----     -------       -----
31 days to 60 days delinquent           42         3.9          91         5.7
61 days to 90 days delinquent           18         1.6          38         2.4
Over 90 days                           744        69.2         729        45.6
                                   -------       -----     -------       -----
      Total delinquency                804        74.7         858        53.7
                                   -------       -----     -------       -----
      Total contracts              $ 1,076       100.0%    $ 1,599       100.0%
                                   =======       =====     =======       =====
</TABLE>

      The Company has experienced a deterioration in the quality of the
contracts receivable portfolio over the past several years.  The Company
believes the deterioration is the result of the decline in the economy, the
adverse publicity regarding community developers as a result of the GDC
bankruptcy, as well as the difficulty of implementing foreign contract
collection activities.

      Other assets at December 31, 1996 decreased by $7,000 compared to year
end 1995 primarily as a result of the normal amortization of prepaid
financing costs and lower prepaid expenses related to receivable exchanges.

      Liabilities were $33.8 million at December 31, 1996 compared to $31.4
million at December 31, 1995, reflecting the following changes:

                                    - 18 -
<PAGE> 19

FINANCIAL CONDITION (continued)

<TABLE>
<CAPTION>
                                                                       Increase
                                                1996        1995      (Decrease)
                                                ----        ----      ----------
                                                       ($ in thousands)
<S>                                           <C>         <C>          <C>
Accounts payable                              $     78    $     91     $   (13)
Other liabilities                                1,428       1,143         285
Accrued interest                                10,790       8,471       2,319
Credit agreements - primary lender               7,307       7,287          20
Notes and mortgages payable                      3,667       3,802        (135)
Convertible subordinated debentures payable      9,059       9,059           -
Convertible debentures payable                   1,500       1,500           -
                                              --------    --------     -------
                                              $ 33,829    $ 31,353     $ 2,476
                                              ========    ========     =======
</TABLE>

      The $2.3 million increase in accrued interest at December 31, 1996
compared to year end 1995 reflects changes in the following:

<TABLE>
<CAPTION>
                                                          Increase
                                     1996        1995    (Decrease)
                                     ----        ----    ----------
                                           ($ in thousands)
<S>                                <C>         <C>         <C>
Primary lender                     $ 2,461     $ 1,541     $   920
Debentures                           6,880       5,628       1,252
Other                                1,449       1,302         147
                                   -------     -------     -------
                                   $10,790     $ 8,471     $ 2,319
                                   =======     =======     =======
</TABLE>

      The increase is primarily due to the nonpayment of interest on the
company's debentures (see Note 11 to the consolidated financial statements
under Item 7).

      The $135,000 reduction in notes and mortgages payable primarily
represents normal principal reductions required to amortize the Finova
mortgage.

      The Company's capital deficiency increased to $22.5 million at December
31, 1996 from a $19.6 million capital deficiency at December 31, 1995,
reflecting the 1996 operating loss.

      To fund operations during the two years ended December 31, 1996, the
Company relied upon a combination of borrowings, sales of land and
improvement inventories and contracts receivables.


                                    - 19 -
<PAGE> 20

FINANCIAL CONDITION (continued)

      On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, a national banking association ("First Union") assigned to
PGIP, LLC., a Missouri limited liability company ("PGIP") all of First
Union's right, title and interest in and to the documents (the "Loan
Documents") evidencing and securing its primary credit agreements with the
Company and the Company's subsidiaries, Sugarmill Woods, Inc., Burnt Store
Marina, Inc. and Gulf Coast Credit Corporation (collectively, the
"Borrowers"), which credit agreements are in default and the maturity of the
indebtedness secured thereby has been accelerated.

      As of December 31, 1996, the Company was in default of its primary
credit agreements with PGIP, LLC.  As of December 31, 1996, the Company was
unsuccessful in consummating a large land sale to meet its obligations and to
make any payments of either principal or interest.  On January 31, 1997, the
Company sold an option for the purchase of approximately 4,900 acres of its
Sugarmill Woods property.  The proceeds of this sale are expected to
aggregate $13,770,000 if the option is exercised.  See Note 19 to the
Consolidated Financial Statements.

      The Company has been advised by PGIP that it will be the policy of PGIP
not to proceed with collection of the principal and interest evidenced and
secured by the Loan Documents so long as PGI pursues satisfactory efforts to
market and sell the Property.  PGIP's policy, but not its contractual
obligation, will be to facilitate sales of the Property by agreeing to the
release of Property to be sold from the lien of the Loan Documents against
payments of the net sale proceeds therefrom, after all expenses, closing
costs and the like incurred by PGI in connection with any such sale, in a
manner to be agreed upon by PGIP and PGI.

      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 slightly more than half of
all the issued and outstanding voting stock of LSHC.  Messrs. Love and
Schiffer serve as executive officers and directors of the Company and the
other Borrowers and the Guarantors.

      Company management has determined that the Company's primary activity
must concentrate on one goal - the sale of sufficient additional acreage as
soon as possible to again substantially reduce the primary lender debt.

      PGIP purchased the Loan Documents for a total purchase price of
approximately $5,548,000 (the "Purchase Price"), including amounts paid by
PGIP to First Union prior to the Closing Date, or approximately 61.1% of the
approximately $9,007,000 owed First Union by the Company under the Loan
Documents.  PGIP borrowed $3,249,521 of the Purchase Price from First Union
(the "Notes").  The Notes bear interest at the prime rate as published in the
Wall Street Journal plus 1% and mature on June 1, 1997.  Interest on the
Notes is payable monthly.  As security for payment of its obligations under
the Notes, PGIP assigned to First Union all of PGIP's right, title and
interest in and to the Loan Documents.

      The assignment of the Loan Documents to PGIP was pursuant to the terms
and conditions of that certain Note and Loan Documents Purchase Agreement
dated as of October 12, 1995, by and between First Union, PGIP and the
Borrowers, as amended by letter agreements dated November 10, 1995, December
15, 1995, January 17, 1996 and February 16, 1996 and

                                    - 20 -
<PAGE> 21

FINANCIAL CONDITION (continued)

as further amended by that certain Modification of Note and Loan Documents
Purchase Agreement dated as of the Closing Date.

      On October 12, 1995, the Company, the other "Borrowers" and the
"Guarantors" (as those terms are defined below) entered into a Forbearance
Agreement (the "Forbearance Agreement") with the Company's primary lender,
First Union National Bank of Florida, a national banking association (the
"Lender" or "First Union"), pursuant to which Lender agreed to forbear
initially through November 15, 1995, but ultimately extended through March
28, 1996, subject to the terms and conditions of the Forbearance Agreement,
from exercising any of its rights and remedies under its primary credit
agreements with Borrowers (the "Loans"), which Loans are currently in
default.  The "Borrowers" consist of the Company and it subsidiaries,
Sugarmill Woods, Inc., Burnt Store Marina, Inc. and Gulf Coast Credit
Corporation.  The "Guarantors" consist of the following subsidiaries of the
Company:  Southern Woods, Incorporated, Punta Gorda Isles Sales, Inc., Deep
Creek Utilities, Inc., Burnt Store Utilities, Inc. and Sugarmill Woods Sales,
Inc.

      On October 12, 1995, the Company also executed a Note and Loan Document
Purchase Agreement (the "Note Purchase Agreement") by and between Lender,
PGIP LLC., a Missouri limited liability company (the "Purchaser") and the
Borrowers.  The Forbearance Agreement and the Note Purchase Agreement provide
that Lender will accept the Discounted Payoff Amount from the Purchaser (as
defined in the  Forbearance Agreement and Note Purchase Agreement) in
immediately available funds as the purchase price of the documents evidencing
and securing the Loans (the "Loan Documents") in exchange for the assignment
to Purchaser of the Loan Documents without recourse, representation or
warranty (except for a warranty that Lender is the owner of said documents
and has not previously sold or assigned them).

      As a condition to Lender's execution of the Forbearance Agreement,
Purchaser paid Lender multiple nonrefundable forbearance fees totaling
$168,000 on December 31, 1995 ($273,000 as of March 28, 1996), which were
applied to the purchase price of the Loan Documents.  In addition, upon
execution of the Note Purchase Agreement, PGIP paid Lender a nonrefundable
initial loan purchase installment of $241,617 (the "Initial Loan Purchase
Payment"), which reduces the Discounted Payoff Amount.  The Initial Loan
Purchase Payment paid to Lender was used by Lender to pay the Company's 1993
property tax owed to Citrus and Hernando Counties, Florida.

      In 1994 the Company successfully completed the Second Secured Lender
Transaction.  The transaction was comprised of a series of agreements
executed in April 1994 wherein the Company sold the remainder of its Southern
Woods developed homesites inventory (approximately 72 homesites), the
remainder of the undeveloped acreage of Southern Woods (approximately 200
acres) and 162 prepaid water and sewer connections in exchange for a $2.4
million reduction in the principal due to its primary lender, a net $310,000
reduction in accrued interest due to the

                                    - 21 -
<PAGE> 22

FINANCIAL CONDITION (continued)

primary lender, the satisfaction of $362,000 in other liabilities and
additional closing costs of $71,000.

      During the two year period ended December 31, 1996, the Company's
financial condition remained weak and it experienced liquidity shortages,
which were at times severe.

      Declining levels of business activities are reflected in declining cash
balances, which at year end 1996 and 1995 were $1.2 and $1.3 million,
respectively.

      Cash decreased by $13,000 to $1,152,000 at December 31, 1996 compared
to $1,165,000 at December 31, 1995.  Net cash flow provided by operations
increased by $36,000 to $102,000 for the year ended December 31, 1996 from
cash provided by operations of $66,000 for the 1995 year.

      Cash received from operations during 1996 was $997,000, a $494,000
decrease from cash received during 1995.  The majority of the decrease is
attributable to reduced principal and interest collections from real estate
sales and receivables.

      Cash expended for operations decreased by $530,000 to $895,000 during
1996 from $1.4 million in 1995, reflecting decreases in the following
classifications; payments for real estate operations ($101,000), general -
administrative ($320,000), interest payments ($57,000) and other of ($52,000).

      Cash expended for operations decreased by $1.6 million to $1.4 million
during 1995 from $1.4 million in 1994, reflecting decreases in the following
classifications; payments for real estate operations ($1.7 million), land
improvements ($5,000), interest expense ($69,000) and other of ($42,000).
The increase in general and administrative ($121,000) is due to payment of
delinquent real estate taxes.

      The $399,000 and $508,000 utilized during 1996 and 1995 by financing
activities represents payments to Finova from collections on the receivables
on  real estate sold to Finova in 1988.

      As of the date of this filing, the Company is in default of the entire
principal plus interest on its subordinated debentures payable in amounts
indicated in the following table:

<TABLE>
<CAPTION>
                                                    12/31/96
                                              Principal     Unpaid
                                              Amount Due   Interest
                                              ----------   --------
                                                 ($ in thousands)
<S>                                            <C>         <C>
Subordinated debentures due June 1, 1991       $ 1,034     $   468
Subordinated debentures due May 1, 1992          8,025       3,808
                                               -------     -------
                                               $ 9,059     $ 4,276
                                               =======     =======
</TABLE>

                                    - 22 -
<PAGE> 23

FINANCIAL CONDITION (continued)

      The Company does not have funds available to make any payments of
either principal or interest on the above debentures.  If a debenture holder
or Trustee institutes action to collect on the debentures, such action could
prohibit the Company from continuing to operate in the normal course of
business (see Notes 10 and 11 to the consolidated financial statements under
Item 7).

      The Company has investigated the consequences of a bankruptcy filing
and believes that such an event is not in the best interest of either the
debenture or equity holders because a bankruptcy filing would negatively
impact the Company's business, as well as cause an acceleration of the PGIP,
LLC., the Company's Primary Lender, Finova and secured debenture debt.
Management believes that a bankruptcy filing would prompt all secured lenders
to initiate foreclosure proceedings.  Since Company assets are encumbered by
mortgages, the secured lenders have a perfected security interest and
priority over the unsecured debenture holders.

      In January 1997, Sugarmill Woods, Inc, the Company's wholly-owned
subsidiary, and Love-PGI Partners, L.P. ("L-PGI") entered into a Sale
Agreement with The Nature Conservancy for the sale of approximately 5,240
acres of undeveloped real estate to The Nature Conservancy.  L-PGI, a Missouri
limited partnership, is managed by the general partner, Love Investment
Company.  Andrew S. Love, Jr. is the Chairman and principal stockholder of
Love Investment Company.  Sugarmill Woods, Inc. owns 4,890 acres of the land
under the Sale Agreement and L-PGI owns the remaining 350 acres. See "Item 1.
Business - Recent Developments."



                                    - 23 -
<PAGE> 24


Item 7.     Financial Statements and Supplementary Data
-------     -------------------------------------------

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

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

We have audited the accompanying consolidated statement of financial position
of PGI Incorporated and subsidiaries as of December 31, 1996 and 1995, 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 and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  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 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, 1996 and 1995, and the results
of their operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming the Company
will continue as a going concern.  As discussed in Note 11 to the financial
statements, the Company is currently in default of certain sinking fund and
interest payments on its convertible subordinated debentures.  As discussed
in Note 2, the Company is also currently in default of interest payment on
its primary debt, as well as property taxes owed on properties serving as
collateral for this obligation.  In addition, the Company has an accumulated
deficit.  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 Notes 10 and 11.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.


St. Louis, Missouri
March 4, 1997



                                    - 24 -
<PAGE> 25

<TABLE>
                                                 PGI INCORPORATED AND SUBSIDIARIES
                                           CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                                                     December 31, 1996 and 1995
                                                            ------------

<CAPTION>
                                    ASSETS                                            LIABILITIES
                                    ======                                            ===========

                                             1996        1995                                         1996           1995
                                             ----        ----                                         ----           ----
<S>                                      <C>          <C>                                        <C>            <C>
Cash and cash equivalents, including
restricted cash of $1,140,000 and
$1,102,000 (Note 4)                      $ 1,152,000  $1,165,000   Accounts payable                   $78,000        $91,000

Receivables on real estate sales - net
(Note 5)                                     318,000     682,000   Other liabilities (Note 9)       1,428,000      1,143,000

Other receivables                             26,000      11,000   Accrued interest:

Land and improvement inventories
(Note 6)                                   9,016,000   9,031,000     Primary lender                 2,461,000      1,541,000

Property and equipment - net (Note 7)         46,000      81,000     Debentures                     6,880,000      5,628,000

Other assets (Note 8)                        759,000     766,000     Other                          1,449,000      1,302,000

                                                                   Credit agreements -
                                                                   (Note 10)

                                                                     Primary lender                 7,307,000      7,287,000

                                                                     Notes and mortgages
                                                                     payable                        3,667,000      3,802,000

                                                                   Convertible debentures
                                                                   payable (Note 11)                9,059,000      9,059,000

                                                                   Convertible debentures
                                                                   payable (Note 12)                1,500,000      1,500,000
                                                                                                 ------------   ------------
                                                                                                   33,829,000     31,353,000
                                                                                                 ------------   ------------
                                                                   Commitments and
                                                                   contingencies (Note 17)

                                                                              STOCKHOLDERS' DEFICIENCY
                                                                              ========================

                                                                   Preferred stock, par value
                                                                   $1.00 per share; authorized
                                                                   5,000,000 shares; 2,000,000
                                                                   Class A cumulative convert-
                                                                   ible shares issued and out-
                                                                   standing; (liquidation
                                                                   preference of $4.00 per
                                                                   share or $8,000,000)
                                                                   (Note 14)                        2,000,000      2,000,000

                                                                   Common stock, par value $.10
                                                                   per share; authorized
                                                                   25,000,000 shares; 3,317,555
                                                                   shares issued and out-
                                                                   standing (Note 14)                 332,000        332,000

                                                                   Paid-in capital                 13,698,000     13,698,000

                                                                   Accumulated deficit            (38,542,000)   (35,647,000)
                                                                                                 ------------   ------------
                                                                                                  (22,512,000)   (19,617,000)
                                                                                                 ------------   ------------
                                         $11,317,000 $11,736,000                                 $ 11,317,000   $ 11,736,000
                                         =========== ===========                                 ============   ============


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


                                    - 25 -
<PAGE> 26

<TABLE>
                          PGI INCORPORATED AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
                       years ended December 31, 1996 and 1995

<CAPTION>
                                                           1996           1995
                                                           ----           ----
<S>                                                    <C>            <C>
Revenues (Note 3):
  Real estate sales                                    $         -    $   124,000
  Interest income                                           87,000        167,000
  Other income                                             396,000        670,000
                                                       -----------    -----------
                                                           483,000        961,000
                                                       -----------    -----------

Costs and expenses:
  Cost of real estate sales                                      -         62,000
  Selling expenses                                          11,000         39,000
  General and administrative expenses (Note 17)            843,000        541,000
  Interest (Notes 10, 11 and 12)                         2,512,000      2,380,000
  Other expenses (Note 3)                                   12,000        381,000
                                                       -----------    -----------
                                                         3,378,000      3,403,000
                                                       -----------    -----------
Net loss                                               ($2,895,000)   ($2,442,000)
                                                       ===========    ===========

Loss per share of common stock and common stock
  equivalents after considering preferred dividends
  of $640,000 for 1996 and 1995:

    Primary net loss per share                              ($1.07)       ($  .93)
                                                            ======        =======

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



                                    - 26 -
<PAGE> 27

<TABLE>
                             PGI INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                          years ended December 31, 1996 and 1995
                                      --------------

<CAPTION>
                                                                         1996           1995
                                                                         ----           ----
<S>                                                                  <C>            <C>
Cash flows from operating activities:

Cash received from operations:
  Collections from real estate sales and receivables on such sales   $   545,000    $   852,000
  Interest on homesite and acreage contracts                              68,000        130,000
  Collections from amenity and other operations                          339,000        277,000
  Other interest received                                                 34,000         42,000
  Other receipts                                                          11,000        190,000
                                                                     -----------    -----------
                                                                         997,000      1,491,000
                                                                     -----------    -----------
Cash expended for operations:
  Payments to subcontractors and vendors for real estate
    operations and sale and marketing activities                           9,000        110,000
  Payments for amenity and other operations                              315,000        327,000
  General and administrative costs                                       352,000        672,000
  Interest paid                                                          193,000        250,000
  Other disbursements                                                     26,000         66,000
                                                                     -----------    -----------
                                                                         895,000      1,425,000
                                                                     -----------    -----------

  Net cash flow provided by (used in) operating activities               102,000         66,000
                                                                     -----------    -----------

Cash flows from investing activities:
  Proceeds from fixed asset sales                                              -          1,000
                                                                     -----------    -----------
  Net cash flow used in investing activities                                   -          1,000
                                                                     -----------    -----------

Cash flows from financing activities:
  Proceeds from borrowings                                               284,000        345,000
  Principal payments on debt                                            (399,000)      (508,000)
                                                                     -----------    -----------
  Net cash flow used in financing activities                            (115,000)      (163,000)
                                                                     -----------    -----------

Net decrease in cash and cash equivalents                                (13,000)       (96,000)

Cash and cash equivalents at beginning of year                         1,165,000      1,261,000
                                                                     -----------    -----------

Cash and cash equivalents at end of year                             $ 1,152,000    $ 1,165,000
                                                                     ===========    ===========

              See accompanying notes to consolidated financial statements.



                                    - 27 -
<PAGE> 28


</TABLE>
<TABLE>
                                PGI INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
                             years ended December 31, 1996 and 1995
                                        --------------

<CAPTION>
                                                                         1996           1995
                                                                         ----           ----
<S>                                                                  <C>            <C>
Reconciliation of net loss to net cash provided by
  operating activities:

Net loss                                                             $(2,895,000)   $(2,442,000)

Adjustments to reconcile net loss to net cash provided
  by operating activities:

  Depreciation and amortization                                           31,000         36,000
  Net allowance and valuations related to real estate sales             (374,000)       (86,000)
  Loss on sale or disposition of property, plant & equipment               4,000          1,000
  (Increase) decrease in:
    Contracts and mortgages receivable                                   550,000        561,000
    Other receivables                                                    (12,000)        29,000
    Land and improvement inventories - net                                15,000        123,000
    Loan costs and other prepaid expenses                                  7,000         22,000
  Increase (decrease) in:
    Accounts payable                                                     (13,000)        12,000
    Accrued interest                                                   2,319,000      2,130,000
    Other accrued expenses                                               471,000       (248,000)
    Deposits and advances                                                 (1,000)       (72,000)
                                                                     -----------    -----------
                                                                       2,997,000      2,508,000
                                                                     -----------    -----------

Net cash flow provided by operating activities                       $   102,000    $    66,000
                                                                     ===========    ===========

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

                                    - 28 -
<PAGE> 29

<TABLE>
                                                 PGI INCORPORATED AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY
                                               years ended December 31, 1996 and 1995
                                                           --------------

<CAPTION>

                                     Preferred Stock                Common Stock                          Retained
                                     ---------------                ------------            Paid-In       Earnings
                                 Shares       Par Value        Shares      Par value        Capital       (Deficit)
                                 ------       ---------        ------      ---------        -------       ---------
<S>                            <C>           <C>             <C>           <C>           <C>            <C>
Balances at
   January 1, 1995             2,000,000     $ 2,000,000     3,317,555     $ 332,000     $ 13,698,000   ($33,205,000)

Net loss                           -              -              -             -               -          (2,442,000)
                               ---------     -----------     ---------     ---------     ------------   ------------

Balances at
   December 31, 1995           2,000,000     $ 2,000,000     3,317,555     $ 332,000     $ 13,698,000   ($35,647,000)

Net loss                           -              -              -             -               -          (2,895,000)
                               ---------     -----------     ---------     ---------     ------------   ------------

Balances at
   December 31, 1996           2,000,000     $ 2,000,000     3,317,555     $ 332,000     $ 13,698,000   ($38,542,000)
                               =========     ===========     =========     =========     ============   ============

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

                                    - 29 -
<PAGE> 30

                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
intercompany 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
      ---------

      Prior to July 1992, homesites were generally sold under contracts for
deed or deed,  note and mortgage which provide for a down payment and monthly
installments, including interest, for periods up to ten years.  Prior to 1990
income from sales of homesites was recorded when minimum down payment
(including interest) and other requirements were met.  However, because of
collectibility problems with certain off-site broker/foreign sales programs,
effective January 1, 1990, the Company adopted the installment method of
profit recognition in accordance with Statement of Financial Accounting
Standard No. 66 "Accounting for Sales of Real Estate".

      Homes Units
      -----------

      Home sales are recorded at closing.

      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.

Provision for Cancellations
---------------------------

      For sales prior to January 1, 1990, the Company provided for estimated
future cancellations of receivables on real estate sales by charges to
operations based on historical collection experience and analysis of
delinquencies.  Balances related to canceled receivables are charged to the
allowance for cancellations.



                                    - 30 -
<PAGE> 31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

      Land held for sale to customers is 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 square footage, future
improvement costs and frontage.

Property and Equipment
----------------------

      Property and equipment are stated at cost.  Depreciation is provided
principally by the straight-line method over the estimated useful lives of
the related assets.  Gains or losses resulting from the disposition of
property and equipment are respectively included in other income or other
expense.

Per Share Data
--------------

      Primary loss per share is computed by dividing net loss, after
including dividends on the Company's preferred stock, by the average number
of common shares.  For this purpose, the Company's convertible debentures are
not deemed to be common stock equivalents, which are only considered when
their effect is dilutive.  The average number of common shares outstanding
was 3,317,555 for 1996 and 1995.

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

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

2.    Secured Lender Transactions:
      ----------------------------

      As of December 31, 1996 the Company was in default of it primary credit
agreements with PGIP, LLC.  As of December 31, 1996, the Company was
unsuccessful in consummating a large land sale to meet its obligations and to
make any payments of either principal or interest.  On January 31, 1997, the
Company sold an option for  the  purchase  of  approximately 4,900 acres of
its Sugarmill Woods property.  The proceeds of this sale are expected to
aggregate $13,770,000 if the option is exercised.  See Note 19 to the
consolidated financial statements.

      On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, a national banking association ("First Union") assigned to
PGIP, LLC., a Missouri limited liability company ("PGIP") all of First
Union's right, title and interest in and to the documents (the "Loan
Documents") evidencing and securing its primary credit agreements with the
Company and the Company's subsidiaries, Sugarmill Woods, Inc., Burnt Store
Marina, Inc. and Gulf Coast Credit Corporation (collectively, the
"Borrowers"), which credit agreements are in default and the maturity of the
indebtedness secured thereby has been accelerated.


                                    - 31 -
<PAGE> 32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      The Company has been advised by PGIP that it will be the policy of PGIP
not to proceed with collection of the principal and interest evidenced and
secured by the Loan Documents so long as PGI pursues satisfactory efforts to
market and sell the Property.  PGIP's policy, but not its contractual
obligation, will be to facilitate sales of the Property by agreeing to the
release of Property to be sold from the lien of the Loan Documents against
payments of the net sale proceeds therefrom, after all expenses, closing
costs and the like incurred by PGI in connection with any such sale, in a
manner to be agreed upon by PGIP and PGI.

      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 slightly more than half of
all the issued and outstanding voting stock of LSHC.  Messrs. Love and
Schiffer serve as executive officers and directors of the Company and the
other Borrowers and the Guarantors.

      Company management has determined that the Company's primary activity
must concentrate on one goal - the sale of sufficient additional acreage as
soon as possible to again substantially reduce the primary lender debt.

      PGIP purchased the Loan Documents for a total purchase price of
approximately $5,548,000 (the "Purchase Price"), including amounts paid by
PGIP to First Union prior to the Closing Date, or approximately 61.1% of the
approximately $9,007,000 owed First Union by the Company under the Loan
Documents.  PGIP borrowed $3,249,521 of the Purchase Price from First Union
(the "Notes").  The Notes bear interest at the prime rate as published in the
Wall Street Journal plus 1% and mature on June 1, 1997.  Interest on the
Notes is payable monthly.  As security for payment of its obligations under
the Notes, PGIP assigned to First Union all of PGIP's right, title and
interest in and to the Loan Documents.

      The assignment of the Loan Documents to PGIP was pursuant to the terms
and conditions of that certain Note and Loan Documents Purchase Agreement
dated as of October 12, 1995, by and  between  First  Union,  PGIP and the
Borrowers, as amended by letter agreements dated November 10, 1995, December
15, 1995, January 17, 1996 and February 16, 1996 and as further amended by
that certain Modification of Note and Loan Documents Purchase Agreement dated
as of the Closing Date.

3.    Real Estate Sales, Other Income and Other Expense:
      --------------------------------------------------

Real estate sales and cost of sales consisted of:

<TABLE>
<CAPTION>
                                                                       1996               1995
                                                                       ----               ----
<S>                                                                 <C>                <C>
Revenues:
     Homesite sales                                                 $        -         $  44,000
     Acreage sales                                                           -            80,000
                                                                    ----------         ---------
                                                                    $        -         $ 124,000
                                                                    ==========         =========


                                    - 32 -
<PAGE> 33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Cost of Sales:
     Homesites                                                      $        -         $  56,000
     Acreage                                                                 -             6,000
                                                                    ----------         ---------
                                                                    $        -         $  62,000
                                                                    ==========         =========
Other income consisted of:
    Commission income                                                  325,000           277,000
    Timber income                                                            -           138,000
    Other income                                                        71,000           255,000
                                                                    ----------         ---------
                                                                       396,000           670,000
Other expense consisted of:
    Reduction in allowance for cancellations of contracts
         receivable (See Quarterly Results under Note 15)             (170,000)                -

    Reduction in estimated recourse liability for
        receivables sold (See quarterly results under Note 15)        (185,000)                -
    Other expenses                                                     367,000           381,000
                                                                    ----------         ---------
                                                                    $   12,000         $ 381,000
                                                                    ==========         =========
</TABLE>

4.    Restricted Cash:
      ----------------

      Restricted cash included cash and certificates of deposit pledged to
agencies in various states and local Florida governmental units related to
land development and environmental matters, escrowed receipts related to
pledged receivables on real estate sales and the servicing of sold
receivables and, as a result of sales agreements and Company policies,
customer payments and deposits related to home site and housing contracts.

5.    Receivables on Real Estate Sales:
      ---------------------------------

      Net receivables on real estate sales consisted of:

<TABLE>
<CAPTION>
                                                                      1996              1995
                                                                      ----              ----
<S>                                                               <C>               <C>
Contracts receivable on homesite sales                            $ 1,076,000       $ 1,599,000
Other                                                                  98,000           128,000
                                                                  -----------       -----------
                                                                    1,174,000         1,727,000
Less:    Allowance for cancellations                                 (806,000)         (976,000)
         Unamortized valuation discount                               (50,000)          (69,000)
                                                                  -----------       -----------
                                                                  $   318,000       $   682,000
                                                                  ===========       ===========
</TABLE>

      Stated interest rates for contracts receivable on homesite sales, as
well as contracts and mortgages receivable on acreage sales, ranged up to 10%
with payment terms varying from seven to ten years.  The weighted average
interest rate for such receivables outstanding at December 31, 1996 and 1995
was 9.32% and 9.35%, respectively.

      The Company generally considers receivables on real estate sales
delinquent if the scheduled installment payment is over 30 days past due.  At
December 31, 1996 and 1995 delinquent receivables approximated $804,000 and
$858,000, respectively.

      Contracts receivable on homesite sales and contracts and mortgages
receivable on acreage sales have been discounted to yield an effective
interest rate of 14%.  Contracts receivable on homesite sales recorded under
the installment method have not been discounted.


                                    - 33 -
<PAGE> 34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      The estimated scheduled principal collections for receivables on real
estate sales at December 31, 1996 are:

<TABLE>
            <S>                      <C>
            1997 (Including past-
                 due balances)       $   921,000
            1998                         143,000
            1999                          40,000
            2000                          23,000
            2001                          25,000
            Thereafter                    22,000
                                     -----------
                                     $ 1,174,000
</TABLE>

      In March 1988 the Company sold contracts receivable on homesite sales
totaling approximately $9,246,000, before consideration of a related
unamortized valuation discount of approximately $1,197,000 at the time of the
sale.  For financial reporting purposes this transaction has been treated as
a financing transaction (see Note 10), since the Company may be required to
repurchase the contracts receivable on homesite sales under conditions other
than the recourse provision of the sales agreement.  At December 31, 1996,
and 1995, contracts receivable on homesite sales of approximately $1,076,000
and $1,599,000, respectively, and related unamortized valuation discount of
approximately $50,000 and $69,000, respectively, related to this transaction
have been included in the Company's reported receivables on real estate
sales.

      At December 31, 1996, 56% of the Company's gross receivables from real
estate sales were generated by a broker in two geographic regions, certain
districts in New York City and Taiwan.  These sales were under contract for
deed with terms similar to sales to other customers.  This concentration of
credit risk has been considered by management in determining the allowance
for cancellations.

6.    Land and Improvements:
      ----------------------

      Land and improvement inventories consisted of:

<TABLE>
<CAPTION>
                                                     1996           1995
                                                     ----           ----
            <S>                                  <C>            <C>
            Unimproved land                      $ 8,724,000    $ 8,724,000
            Fully improved land                      292,000        307,000
                                                 -----------    -----------
                                                 $ 9,016,000    $ 9,031,000
                                                 ===========    ===========
</TABLE>

7.    Property and Equipment:
      -----------------------

      Property and equipment consisted of:

<TABLE>
<CAPTION>
                                                         1996          1995
                                                         ----          ----
            <S>                                        <C>           <C>
            Furniture, fixtures and other equipment    $363,000      $405,000
            Less accumulated depreciation              (317,000)     (324,000)
                                                       --------      --------
                                                       $ 46,000      $ 81,000
                                                       ========      ========
</TABLE>

            Depreciation was:

<TABLE>
<CAPTION>
                                                          1996          1995
                                                          ----          ----
            <S>                                         <C>           <C>
            Charged to expense                          $ 31,000      $ 36,000
</TABLE>


                                    - 34 -
<PAGE> 35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8.    Other Assets:
      -------------

<TABLE>
<CAPTION>
            Other assets consisted of:                       1996       1995
                                                             ----       ----
              <S>                                          <C>        <C>
              Guaranteed future connections related to
              sale of utility plants and equipment, net    $621,000   $621,000
              Prepaid loan and debenture costs                    -     13,000
              Deposit with Trustee of 6-1/2% debentures     125,000    120,000
              Other                                          13,000     12,000
                                                           --------   --------
                                                           $759,000   $766,000
                                                           ========   ========
</TABLE>

      The guaranteed future connections are reflected net of discount of
$274,000 and deferred gain of $101,000 in 1996 and 1995.

9.    Other Liabilities:
      ------------------

<TABLE>
<CAPTION>
            Other liabilities consisted of:                          1996         1995
                                                                     ----         ----
              <S>                                                 <C>          <C>
              Accrued property taxes
                - current                                         $  208,000   $   37,000
                - delinquent                                         476,000      249,000
              Other accrued expenses                                 316,000      243,000
              Deposits, advances and escrows                         346,000      346,000
              Estimated recourse liability for receivables sold       66,000      252,000
              Other                                                   16,000       16,000
                                                                  ----------   ----------
                                                                  $1,428,000   $1,143,000
                                                                  ==========   ==========
</TABLE>

10.   Credit Agreements - Primary Lender and Notes and Mortgages Payable:
      -------------------------------------------------------------------

      Credit agreements with the Company's primary lender and notes and
mortgages payable consisted of the following:

<TABLE>
<CAPTION>
                                                                 1996            1995
                                                                 ----            ----
            <S>                                              <C>             <C>
            Credit agreements - primary lender
            (maturing July 8, 1997, bearing
            interest at prime plus 5.0%):                     $7,307,000      $7,287,000

            Notes and mortgages payable -
            $1,385,000 bearing interest at 12-1/4%,
            $1,176,000 bearing interest at prime
            plus 2%, the remainder bearing interest
            at varying rates to 23%; maturing
            through 1999                                       3,667,000       3,802,000
                                                             -----------     -----------
                                                             $10,974,000     $11,089,000
                                                             ===========     ===========
</TABLE>

The prime rate at December 31, 1996 was 8.25%.

      At December 31, 1996 assets collateralizing the Company's credit
agreements with its primary lender and notes and mortgages payable were
carried at $10,162,000, of which $1,174,000 represented gross


                                    - 35 -
<PAGE> 36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

receivables on real estate sales, $26,000 represented other receivables,
$8,916,000 represented land and improvement inventories, and $46,000
represented property and equipment.

      The overall weighted average interest rate for the Company's credit
agreements with its primary lender and all remaining notes and mortgages was
approximately 12.3% as of December 31, 1996 and 11.1% as of December 31,
1995.

      As discussed in Note 5, the Company's March 1988 sale of receivables on
real estate sales has been treated as a financing transaction for financial
reporting purposes since the Company may be required to repurchase these
receivables under conditions other than the recourse provision of the sales
agreement.  Principal and interest payments are recorded by the Company based
on the collections from receivables applicable to the sale and the
application of the 12 1/4% interest rate used to calculate this sale's
discounted present value.  At December 31, 1996 and 1995, the outstanding
principal balance for this financing transaction was approximately $1,385,000
and $1,783,000, respectively, and based on estimated collections of the
associated receivables on real estate sales, full repayment should be made by
1999.

      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 it's mortgage
holders to allow the Company to sell part of it's land holdings without
requiring full payment of the secured debt.

      Scheduled payments applicable to the reduction of principal amounts of
all primary lender debt based on the terms of the Company's primary lender
credit agreements, and all other notes and mortgages payable (without giving
effect to various cross-default provisions which could, upon formal notice,
accelerate payment of substantially all of the Company's debt) will be
required approximately as follows:

<TABLE>
            <S>               <C>
            1997                 9,162,000
            1998                 1,112,000
            1999                   700,000
                              ------------
                              $ 10,974,000
                              ============
</TABLE>

      In March 1996, the debt with First Union, the previous primary lender,
was purchased by PGIP, LLC.  See Note 2 for the details of the transaction.

      During the fiscal year ended December 31, 1996, the Company's business
focus and emphasis changed substantially as it concentrated its sales and
marketing  efforts almost exclusively on the


                                    - 36 -
<PAGE> 37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

disposition in bulk of its undeveloped, platted, residential real estate.
This change was prompted by it continuing financial difficulties due to the
principal and interest owed on its debt and managements' realization that a
bulk sale was the best way to reduce the Company's debt service obligations.
If the Company is successful in its sale of this undeveloped land, its
remaining inventory will consist of undeveloped commercial property.  There
can be no assurance that the Company will be successful in its efforts to
effect a bulk sale.  Assuming a bulk sale occurs, the Company intends to
decide at that point whether it will pursue the development and sale of the
commercial property in accordance with its traditional core business plans or
whether it will attempt to sell such property in bulk.  That decision will
depend, in part, on whether the Company believes it can generate more revenue
by developing and selling individual commercial properties or by selling in
bulk.  (See Note 19 for a bulk sale option sold in 1997.)

11.   Subordinated Debentures Payable:
      --------------------------------

      Subordinated debentures payable consisted of:

<TABLE>
<CAPTION>
                                         1996           1995
                                         ----           ----
            <S>                       <C>           <C>
            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
                                      ==========    ===========
</TABLE>

      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.

      The Company is currently in default of certain sinking fund and
interest payments on both subordinated debentures, $9,059,000 in principal
plus accrued and unpaid interest totaling $4,276,000 at December 31, 1996.

      The debentures are not collateralized and are not subordinated to each
other, but are subordinated to senior indebtedness ($12,474,000 at December
31, 1996).  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 satisfy the obligation to debenture holders, the Company
has been and intends to continue to:

      -     actively seek buyers for all or a portion of the undeveloped
            acreage;
      -     search for additional sources of equity; and
      -     determine if potential merger or joint venture candidates exist.

      No assurances can be made that the Company can achieve any of the three
above alternatives.


                                    - 37 -
<PAGE> 38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12.   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 350 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 debentures, with a maturity of July 8,
1997 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.  Each month, to the extent
interest on the Convertible Debentures is not paid in cash, the number of
shares into which the Convertible  Debentures are convertible will increase.
If no interest is paid prior to maturity, at maturity the Convertible
Debentures purchased on July 24, 1989, will be convertible into 868,788
shares and those purchased on September 29, 1989, will be convertible into
1,726,568 shares, or a total of 2,595,356 shares of common stock.  The
debentures are convertible into common stock at an initial conversion price
of $1.72 per share.  The conversion price may be adjusted upon the occurrence
of certain events.

      Accrued interest was $2,604,000 and $2,076,000 at December 31, 1996 and
1995, respectively.  The debentures are collateralized by a second mortgage
on an approximately 650-acre tract of land in Citrus County, Florida.

13.   Income Taxes:
      -------------

      Reconciliation of the statutory federal income tax rates, 34% for the
years ended December 31, 1996 and 1995, to the Company's effective income tax
rates follows:

<TABLE>
<CAPTION>
                                                                  1996                               1995
                                                                  ----                               ----
                                                            ($ in thousands)                   ($ in thousands)

                                                                        Percent of                           Percent of
                                                                        ----------                           ----------
                                                    Amount of Tax      Pre-tax Loss       Amount of Tax     Pre-tax Loss
                                                    -------------      ------------       -------------     ------------
<S>                                                    <C>                <C>                <C>               <C>
Expected tax (credit)                                  $ (984)            (34.0%)            $(830)            (34.0%)
State income taxes, net of federal tax benefits          (105)             (3.6)               (89)             (3.6)
Current year unused book operating loss                 1,089              37.6                919              37.6
                                                       ------             -----              -----             -----
                                                       $    -                 -%             $   -                 - %
</TABLE>

      At December 31, 1996, the Company had an operating loss carryforward of
approximately $34,000,000 which will expire at various dates through 2011.
In addition, the Company had unused investment tax credits of approximately
$215,000 which will expire at varying dates through 2004.



                                    - 38 -
<PAGE> 39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

<TABLE>
<CAPTION>
                                                                1996           1995
                                                                ----           ----
<S>                                                        <C>             <C>
Deferred tax asset:
     Net operating loss carryover                          $ 12,531,000    $11,529,000
     Adjustments to reduce land to net realizable value          12,000         12,000
     Expenses capitalized under IRC 263(a)                       56,000         50,000
     ITC carryforward                                           215,000        250,000
    Other                                                         2,000          3,000
    Valuation allowance                                     (10,347,000)    (9,364,000)
                                                           ------------    -----------
                                                              2,469,000      2,480,000
Deferred tax liability:
   Basis difference of land and improvement inventories       2,453,000      2,453,000
   Excess tax over book depreciation                             16,000         27,000
                                                           ------------    -----------
                                                              2,469,000      2,480,000

Net deferred tax asset                                     $          0    $         0
</TABLE>

14.   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 a limited
partnership ("Partnership") 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, 1996 cumulative preferred dividends in arrears totaled
$5,336,000 ($640,000 of which related to the year ended December 31, 1996).

      As of December 31, 1996, 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, 1996 the Company had reserved 6,684,341 common shares
for the conversion of debentures.

15.   Quarterly Results:
      ------------------

      During the fourth quarter of 1996, the provision for cancellation of
contracts  receivable was reduced by $170,000 to allow for


                                    - 39 -
<PAGE> 40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

receivable balances which are past due only.  In addition, the estimated
recourse liability for receivables sold was reduced by $85,000.  Another,
similar reduction was made in a prior quarter.

16.   Commitments and Contingencies:
      ------------------------------

      The Company is a party to various legal proceedings incidental to the
normal operation of its business.

      One instance of litigation involves Sugarmill Woods, Inc. and Citrus
County Tax Collector.  In 1994, the Citrus County Tax Appraiser denied
agricultural exemption status for the undeveloped Sugarmill Woods property
and the Company was forced to sue the County to reclaim the tax benefit.  In
1995, the Citrus County Tax Appraiser again denied agricultural exemption
status for the undeveloped Sugarmill Woods property, but was overruled by the
Value Adjustment Board.  As a result, the Tax Appraiser sued Sugarmill Woods,
and was again successful in denying the agricultural exemption for the
property.  The Company has filed an appeal to reinstate the exemption.  At
this time the outcome of the appeal cannot be determined.

      The aggregate outstanding balances of receivables sold or exchanged
with recourse by the Company, not including those receivables associated with
the March 1988 financing transaction previously discussed in Notes 5 and 9,
totaled approximately $246,000 and $384,000 at December 31, 1996 and 1995,
respectively.  Based on its collection experience with such receivables, the
Company maintained an allowance at December 31, 1996 and 1995 classified in
other  liabilities, of approximately $66,000 and $252,000 respectively for
the recourse provisions related to all receivables sold.

      Under the terms of the receivables sale agreements the Company must
repurchase contracts greater than 90 days past due or exchange current
contracts owned by the Company.  The repurchase price is equal to the
outstanding principal balance of the delinquent contract plus accrued
interest.  At December 31, 1996, sold  contracts receivable greater than 90
days past due totaled approximately $66,000.  The related accrued interest is
considered immaterial.

17.   Related Party Transactions:
      ---------------------------

      On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, a national banking association ("First Union") assigned to
PGIP, LLC., a Missouri limited liability company ("PGIP") all of First
Union's right, title and interest in and to the documents (the "Loan
Documents") evidencing and securing its primary credit agreements with the
Company and the Company's subsidiaries.  See Note 2 for further details of
this transaction.


                                    - 40 -
<PAGE> 41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      During 1995, a certified public accounting firm in which the former
President of the Company is a partner was paid for rendered services totaling
$25,000.  To conserve operating cash, the Company negotiated an agreement
whereby property was transferred at the same prices as would be paid by third
party purchasers for comparable property.  Additional property to cover the
cost of delinquent and current year taxes, as well as transfer costs was also
conveyed at the same value paid by third party purchasers for comparable
property.

      In 1994, the Company moved its administration and accounting offices to
the offices of LREC.  LREC, which is an affiliate of Love-PGI, the Company's
preferred shareholder is paid a fee of $8,350 per month 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 payroll and benefits for Sugarmill location; and
      8.    Handle day-to-day accounting requirements.

      In addition, the Company receives office space, telephone service and
computer service from LREC.

      In 1996 and 1995, an affiliate of Love-PGI, the Company's Preferred
Shareholder, Love Investment Company made  uncollateralized loans to the
Company, which at December 31, 1996 and 1995 had a total outstanding balance,
excluding accrued interest, of $325,000 and $60,000, respectively.  Interest
charged on these loans was $17,700 and $300 for 1996 and 1995 respectively.

      In September, 1995, the Company sold Promissory Notes and Mortgages
with principal balances of $180,000, to Love Real Estate Company Profit
Sharing Plan (1994), an affiliate company of Love-PGI Partners, the Company's
Preferred Shareholder.

      Pursuant to the terms of the 1987 preferred stock private placement
agreement, the Company accrued $46,000 and $49,000 in management consulting
fees during 1996 and 1995, respectively, to a company affiliated with the
Partnership's managing general partner.  Only $10,000 of these fees were paid
in 1995.  See Secured Lender Transaction under Note 2.

      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,
1996 had an outstanding balance, including accrued interest, of $357,000.
Interest accrued on this loan was $18,000 and $19,000 for 1996 and 1995
respectively.



                                    - 41 -
<PAGE> 42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

      In April 1985 the Company sold its former administration building,
located in Punta Gorda, Florida, to a corporation owned and operated by the
husband of the Company's former President, Secretary-Treasurer and
subsequently entered into a leaseback of a portion of the building on terms
similar to those negotiated by other tenants.  During 1995, the Company paid
$7,000 in rent, common area cost and utilities related to this leased office
space.

18.  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 Short-Term Investments:

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

Real Estate Receivables:

      The fair value of real estate receivables is estimated by discounting
the future cash flows using current rates at which similar receivables would
be made to borrowers with similar credit ratings and for the same remaining
maturities.

Long-Term Debt:

      The fair value of the Corporation's long-term debt with its primary
lender is estimated based on the 1996 purchase price by PGIP as discussed in
Note 2.  It was not practicable to estimate the fair value of the remaining
notes payable because the other notes are in default and no basis for
estimating value by reference to quoted market prices or on current rates
offered to the Corporation for debt of the same remaining maturities.

Accounts Payable:

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

<TABLE>
<CAPTION>
                                                   Carrying         Fair
                                                   --------         ----
           1996                                     Amount         Value
           ----                                     ------         -----
<S>                                              <C>            <C>
Cash and short-term investments                   $1,152,000     $1,152,000
Principal plus accrued interest
   receivable on real estate                      $  318,000        318,000
Accounts payable                                  $   78,000     $   78,000
Long-term debt
   Primary Lender                                 $9,768,000     $5,548,000
   Other                                         $22,555,000              -
</TABLE>


                                    - 42 -
<PAGE> 43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Subsequent Events
      -----------------

      On January 31, 1997, the Company and an unrelated, nonprofit
corporation entered into an agreement in which the corporation purchased an
option to acquire certain real estate owned by the Company.  The exclusive
option is to purchase an estimated 4,900 acres of real property located in
Florida for $2,816.43 per acre.  The aggregate purchase price based on the
option price and the estimated acres is $13,770,000.  The Corporation, at its
discretion, can exercise the option prior to May 28, 1997.

Item 8.     Disagreements on Accounting and Financial Disclosure
-------     ----------------------------------------------------

      Not Applicable.

                        PART III
                        --------

Item 9.     Directors and Executive Officers of the Registrant; Compliance
-------     --------------------------------------------------------------
            with Section 16(a) of the Exchange Act
            --------------------------------------

      The following table indicates Directors of the Company as of March 25,
1997:

<TABLE>
<CAPTION>
                                                Position with Company and Business
                                                ----------------------------------
Name and Age                                    Experience During Last Five Years
------------                                    ---------------------------------
<C>                                             <S>
Andrew S. Love, Jr. (age 53)                    Chairman  of  the 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 since
                                                December 1985.

Laurence A. Schiffer (age 57)                   Vice Chairman of the Company's Board of Directors since May 1987;
                                                President and Chief Executive Officer since February 1994;
                                                President and Chief Executive Officer of Love Real Estate Company
                                                and Love Investment Company since 1973; Member of the Real Estate
                                                Board of Metropolitan St. Louis and the National Association of
                                                Real Estate Boards; Chairman of Heartland Bank since
                                                December 1985.

</TABLE>

                                    - 43 -
<PAGE> 44


EXECUTIVE OFFICERS OF THE REGISTRANT

      The following information, regarding executive officers of the Company
at March 25, 1997, is provided pursuant to Instruction 3 to Item 401(b) of
Regulation S-B, as amended, and General Instruction G(3) to Form 10-KSB.

<TABLE>
<CAPTION>
                                                Position with Company and Business
                                                ----------------------------------
Name and Age                                    Experience During Last Five Years
------------                                    ---------------------------------
<C>                                             <S>
Laurence A. Schiffer (age 57)                   Director of the Company since April 1987; President and Chief
                                                Executive 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.

Andrew S. Love, Jr. (age 53)                    Chairman of the 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 since
                                                December 1985.
</TABLE>

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

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      As of March 25, 1995, the rights of the holders to convert the
Preferred Stock into Common Stock expired pursuant to the terms of the
Certificate of Designation.  The Preferred Shareholders failed to file Forms
4 to reflect the change in beneficial ownership as a result of the expiration
of such conversion rights.

Item 10.    Executive Compensation
--------    ----------------------

      The following table summarizes the total compensation paid to the Chief
Executive Officer for fiscal years 1996, 1995 and 1994.

<TABLE>
<CAPTION>
                                                                        Other Annual        Long Term          All Other
   Name & Position              Year          Salary       Bonus        Compensation       Compensation       Compensation
   ---------------              ----          ------       -----        ------------       ------------       ------------
<S>                             <C>            <C>          <C>              <C>                <C>             <C>
Laurence A. Schiffer            1996            0            0                0                  0                 0<F1>
                                1995            0            0                0                  0                 0<F1>
                                1994            0            0                0                  0                 0<F1>
Paula F. McQueen                1994            0            0                0                  0              $25,000

<FN>
<F1> See "Certain Relationships and Related Transactions" relating to
compensation paid to Mr. Schiffer by Love Real Estate Company.
</TABLE>

      There are no outstanding options under any Company stock option
plan.

      No fees were paid to directors for attending meetings during 1996.

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

      The table below sets forth as of March 25, 1997 the names and addresses
of  the  only persons of whom the Company is aware

                                    - 44 -
<PAGE> 45

SECURITY OWNERSHIP OF MANAGEMENT (continued)

beneficially own more than 5% of the outstanding Common Stock, par value
$.10, of the Company, except that certain brokerage houses may hold of record
more than 5% of such outstanding shares for the accounts of their various
customers.  It also contains as of the same date, the names and addresses of
the only persons of whom the Company is aware beneficially own more than 5%
of the outstanding Preferred Stock, $1.00 par value, of the Company.

<TABLE>
<CAPTION>
                                                                            Amount and
                                                                            ----------
                                                                            Nature of                         Percent of
                                                                            ---------                         ----------
                                                                            Beneficial          Percent of    Company
                                                                            ----------          ----------    -------
Title of Class                Name and Address of Beneficial Owner          Ownership<F1>       Class         Vote
--------------                ------------------------------------          -------------       -----         ----
<S>                           <C>                                           <C>                   <C>           <C>
Common Stock                  Estate of Harold Vernon                         998,777<F2><F3>     30.1%         18.8%
($.10 par value)              3201 W. Rolling Hills Circle
                              Fort Lauderdale, FL  33328

                              Alfred M. Johns                                 312,401<F4>          9.4%          5.9%
                              One Woodland Drive
                              Punta Gorda, FL  33950

                              Love-PGI Partners, L.P.                         385,516<F5>         11.6%          7.3%
                              212 South Central, Suite 100
                              St. Louis, MO  63105

                              All officers and directors as a group           385,516             11.6%          7.9%
                              (3 persons)

Preferred Stock               Love-PGI Partners, L.P.                       1,875,000<F5>         93.75%        35.3%<F5>
(Class A) ($1.00 par value)   212 South Central, Suite 100
                              St. Louis, MO  63105

                              Alfred M. Johns                                 125,000<F6>          6.25%         2.4%
                              One Woodland Drive
                              Punta Gorda, FL  33950

<FN>
----------------------------

<F1>The above table does not include 2,595,356 shares that may be received
upon conversion of the Company's Convertible Secured Debentures or 2,004,382
shares related to unpaid dividends on the issued and outstanding shares of
the Company's Preferred Stock.  The Board of Directors has indicated it may
authorize the issuance of the additional Common Stock, representing the
dividends on the Class A Preferred Stock unpaid as of April 25, 1995.  If
such shares are issued, L-PGI would receive 1,861,069 of the shares and would
control approximately 56.3% of the Company vote and L-PGI together with Mr.
Johns would control approximately 64.2% of the Company vote.  See Item 12.
"Certain Relationships and Related Transactions".

<F2>The shares are currently in the possession of the Federal Deposit
Insurance Corporation ("FDIC") which is the receiver for First American Bank
and Trust, Lake Worth, Florida ("First American").  First American previously
made a loan to Mr. Vernon which was secured by these shares.  The loan is in
default and the Company understands the FDIC has the right, pursuant to a
pledge agreement, to vote the shares at any annual or special meeting of
Shareholders.  See also "Item 11. Security Ownership of Certain Beneficial
Owners and Management" for other beneficial ownership.

<F3>Information obtained from filings made with the Securities and Exchange
Commission.

<F4>Sole voting and investment power, except for 10,100 shares included in the
table which are owned by Mr. Johns' wife.

<F5>The controlling general partner of L-PGI is Love Investment Company, a
Missouri corporation owned by Mr. Love, Love's family members, the Estate of
Martha Love Symington and Mr. Schiffer.  Messrs. Love and Schiffer serve as
the executive officers and directors of Love Investment Company.  These
shares are pledged to the FDIC, as successor in interest to Germania Federal
Savings and Loan ("Germania"), as security for a loan made by Germania to
L-PGI.  L-PGI has the right to vote these shares.  See also "Item 11.
Security Ownership of Certain Beneficial Owners and Management" for other
beneficial ownership.

<F6>Sole voting and investment power.
</TABLE>

                                    - 45 -
<PAGE> 46

SECURITY OWNERSHIP OF MANAGEMENT (continued)

      The following table sets forth as of March 25, 1997 the amount and
nature of beneficial ownership of the Common Stock and Preferred Stock of the
Company held by the Company's directors and by all executive officers and
directors as a group.

<TABLE>
<CAPTION>
                                 Amount and Nature of                  Amount and Nature of
                                 Beneficial Ownership                  Beneficial Ownership
                                 of Common Stock At         % of       of Preferred Stock At     % of       % of Company
Name and Age                     March 25, 1997             Class      March 25, 1997            Class      Vote
------------                     --------------             -----      --------------            -----      ----
<S>                                  <C>                     <C>           <C>                   <C>         <C>
Andrew S. Love, Jr.<F2>              385,516<F2>             11.6%         1,875,000             93.75%      42.5%<F3>

Laurence A. Schiffer<F2><F3>            None                   --               None                --         --

All Officers and Directors as
a Group (2 persons)                  385,516                 11.6%         1,875,000             93.75%      42.5%

<FN>
------------

<F1> The above table does not include 2,595,356 shares that may be received
upon conversion of the Company's Convertible Secured Debentures or 2,004,382
shares related to unpaid dividends on the issued and outstanding shares of
the Company's Preferred Stock.  The Board of Directors has indicated it may
authorize the issuance of the additional Common Stock, representing the
dividends on the Class A Preferred Stock unpaid as of April 25, 1995.  If
such shares are issued, L-PGI would receive 1,861,069 of the shares and would
control approximately 56.3% of the Company vote.  See "Item 12. Certain
Relationships and Related Transactions".

<F2> Reflects shares owned by L-PGI.

<F3> These numbers do not reflect any indirect ownership that Mr. Schiffer
has in the Common Stock and Preferred Stock through L-PGI.

</TABLE>

Item 12.  Certain Relationships and Related Transactions
-------   ----------------------------------------------

      The Company in order to conserve cash and permit management to
concentrate on achieving a sale of all or a portion of the acreage has moved
its administration and accounting offices to the offices of the Love Real
Estate Company in St. Louis, Missouri.  Love Real Estate Company, which is
an affiliate of Love-PGI, the Company's preferred shareholder, is located
at 212 South Central Avenue, Suite 100, St. Louis, Missouri  63105. A fee
of $8,350 per month is paid to Love Real Estate Company for the following
services:

      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;


                                    - 46 -
<PAGE> 47

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (continued)

      7.    Handle payroll and benefits for Sugarmill location; and
      8.    Handle day-to-day accounting requirements.
      9.    Telephone services and computer services.

      Effective as of March 25, 1987, the Company also entered into a Management
Consulting Agreement with Love Real Estate Company ("Management Agreement").
As a consultant to the Company and in addition to the above services, Love
Real Estate Company provides 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 Love Real
Estate Company 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, 1996 the book value of the Company's assets was
approximately $11.0 million.  Consulting fees totaling $46,000 and $49,000
were accrued during 1996 and 1995 respectively, of which $10,000 was paid
in 1995.  In July 1992 accrued management fees were reduced by $1,042,000
as partial consideration for the conveyance by the Company of 350 acres of
property to L-PGI.  Such property is part of the Property to be sold
pursuant to the Sale 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 Love Real
Estate Company or in any Love Real Estate Company affiliated entity.
Mr. Schiffer receives an annual salary from Love Real Estate Company but none
of such salary is directly allocated to management services to the Company
under the Management Agreement.

      In 1989, the Company sold an aggregate $2,282,451 of its Convertible
Secured Debentures due April 30, 1991 (the "1989 Debentures"), in a private
placement to Love-1989 Florida Partners, L.P., a limited partnership.  The
general partner of Love-1989 Florida Partners, L.P. is Love Investment
Company, which is owned by Mr. Love, Mr. Love's family members, the Estate of
Martha Love Symington and Mr. Schiffer.  The above purchase by Love-1989
Florida Partners, L.P. of the 1989 Debentures held by Love-1989 Florida
Partners, L.P. was funded in part with a loan from L-PGI.  Love-1989
Florida Partners, L.P. has since repaid the debt to L-PGI in full, in part
by transferring a portion of the 1989 Debentures held by Love-1989
Florida Partners, L.P. to L-PGI.  In July 1992, as partial consideration
for the conveyance of 350 acres of property, the Company was able to
retire the 1989 Debentures held by L-PGI in the principal amount of $782,000
together with $389,000 in accrued interest.  The maturity date on all of
the remaining 1989 Debentures was extended to July 8, 1997.  The 1989
Debentures are in part collateralized by a second mortgage in favor of
Love-1989 Florida Partners, L.P. on approximately 650 acres of property
owned by the Company. The 350 acres and the 650 acres referred to above are
included in the Property.

      As of December 31, 1996, Love-1989 Florida Partners, L.P. held
$796,950 principal amount of the 1989 Debentures with respect to which
there was at that date accrued and unpaid interest in the amount of
$1,399,397. Pursuant to a transfer in 1990, $703,050 principal amount
of the 1989 Debentures were transferred by Love-1989 Florida Partners, L.P.
to one of its (now former) limited partners. That former limited partner
continues to hold such debentures and as of December 31, 1996 there was
accrued and unpaid interest with respect thereto in the amount of
$1,204,277. The Company's primary lender credit agreements held by PGIP,
however, prohibit the payment of interest on the 1989 Debentures until
such time as the primary lender loans are repaid. Each month, to the extent
interest on the 1989 Debentures are not paid in cash, the number of shares
into which they are convertible will increase. If no interest were paid
prior to maturity, at maturity the 1989 Debentures would be convertible
into 2,595,356 shares of Common Stock. If the conversion rights of the 1989
Debentures were exercised in full, Love-1989 Florida Partners, L.P. and
the former limited partner would together directly control 61.6% of the
Company's voting stock, assuming no other conversions of convertible
securities.

                                    - 47 -
<PAGE> 48

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (continued)

      In 1985, a corporation owned by Alfred M. Johns, the former chairman,
and his family made an uncollateralized loan to the Company which at December
31, 1996 had an outstanding balance, excluding accrued interest, of $176,000.

      On March 28, 1996, the Company's primary lender, First Union National
Bank of Florida, assigned to PGIP L.L.C., a Missouri limited liability
company, ("PGIP") all of its right, title and interest in its loan documents
evidencing and securing its credit agreements with the Company, and the
Company's subsidiaries, Sugarmill Woods, Inc., Burnt Store Marina, Inc., and
Gulf Coast Credit Corporation.  PGIP is owned and managed by Love Savings
Holding Company. Andrew S. Love, Jr. and Laurence A. Schiffer own more than
50% of all the issued and outstanding voting stock of Love Savings Holding
Company and serve as the directors and officers of the company.  At the time
of the assignment, the Company owed First Union $9,007,000 in principle
and accrued interest.  PGIP purchased such right, title and interest for
approximately $5,548,000.  As the purchaser of the loan documents, PGIP
has a first mortgage on the part of the Property owned by the Company
proposed to be sold under the Sale Agreement.  PGIP accepted assignment of
the credit agreements, which were in default with respect to which the
maturity of the indebtedness secured by the loan documents had been
accelerated, and advised the Company that so long as the Company markets
and sells its remaining undeveloped land with satisfactory efforts and
results, including payments out of sale proceeds to PGIP, PGIP does not
intend to proceed with collection of the principal and interest due
under the loan documents. PGIP will agree to release the Property as
payments of the net sales proceeds are made to PGIP.  PGIP, as first
mortgage holder of the Property, shall be paid first from the proceeds from
such sale, except to the extent otherwise agreed, and may profit if such
sale takes place and the funds remitted to PGIP exceed the above purchase
price of $5,548,000.

                                    - 48 -
<PAGE> 49

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (continued)

      In January 1997, Sugarmill Woods, Inc, the Company's wholly-owned
subsidiary, and L-PGI entered into a Sale Agreement with The Nature
Conservancy for the sale of a approximately 5,240 acres of undeveloped real
estate to The Nature Conservancy.  L-PGI, a Missouri limited partnership, is
managed by the general partner, Love Investment Company.  Andrew S. Love, Jr.
is the Chairman and principal stockholder of Love Investment Company.
Sugarmill Woods, Inc. owns approximately 4,890 acres of the land under the
Sale Agreement and L-PGI owns the remaining 350 acres. See "Item 1.
Business - Recent Developments."

      Messrs. Love and Schiffer have varying degrees of personal financial
stakes in the Company, Love-PGI Partners, L.P., Love-1989 Florida Partners,
L.P., Love Investment Company, Love Real Estate Company, Love Savings Holding
Company, and PGIP.

      The Company believes that the foregoing transactions were on terms
comparable to those which would have been obtained from unaffiliated persons.

Item 13.  Exhibits, Financial Statement Schedules & Reports on Form 8-K
-------   -------------------------------------------------------------

                                                                Form 10-KSB
(a)   1.    Financial Statements                                Page No.
                                                                --------
      Report of Independent Accountants                              24
      Consolidated Statements of Financial Position December
      31, 1996 and 1995                                              25
      Consolidated Statements of Operations Years Ended
      December 31, 1996 and 1995                                     26
      Consolidated Statements of Cash Flows Years Ended
      December 31, 1996 and 1995                                    27-28
      Consolidated Statements of Stockholders' Deficiency
      years Ended December 31, 1996 and 1995                         29
      Notes to Consolidated Financial Statements                    30-43

(a)   2.    Exhibits
      Reference is made to the Exhibit Index contained on pages 52 to 56
      herein for a list of exhibits filed under this Item.

(b)   Reports on Form 8-K.

      None were filed in the fourth quarter of 1996.


                                    - 49 -
<PAGE> 50

Exhibits, Financial Statement Schedules & Reports on Form 8-K (cont.)
-------------------------------------------------------------

(c)   See the Exhibit Index contained on pages 52 to 56 herein for a list of
      each management contract,  compensatory plan or arrangement required to
      be filed pursuant to Item 14(c) of this report:  Exhibits 10.1, 10.2,
      and 10.5.

(d)   None

                   CONSENT OF INDEPENDENT ACCOUNTANTS

      We consent to the incorporation by reference in the registration
statement of PGI Incorporated and subsidiaries on Form S-8 (File 2-77149) of
our report dated March 4, 1997 relating to the consolidated financial
statements and financial statement schedule of PGI Incorporated and
subsidiaries which report is included in this Annual Report on Form 10-KSB.
Our report contains an explanatory paragraph regarding uncertainty as to the
ability of the Company to continue as a going concern.

St. Louis, Missouri
March 31, 1997                                              BDO Seidman


                                    - 50 -
<PAGE> 51


                                SIGNATURES
                                ----------

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
St. Louis, State of Missouri, on this 15th day of April, 1997.

                                          PGI INCORPORATED
                                          (Registrant)

                                          By: /s/Laurence A. Schiffer
                                              ------------------------------
                                          Laurence A. Schiffer, President


                        POWER OF ATTORNEY
                        -----------------

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Laurence A. Schiffer and Andrew S.
Love, Jr., and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and re-substitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments to this Report, and to file the same, with all exhibits thereto,
and other documents in connection there with, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full
power and authority to do and  perform each and every act and thing requisite
and necessary to be done in and about the premises, as  fully to all intents
and purposes as they might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or
their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

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

<TABLE>
<CAPTION>
Signature                           Title                               Date
---------                           -----                               ----
<S>                                 <C>                                 <C>
/s/Andrew S. Love, Jr.              Chairman of the Board               April 15, 1997
-------------------------------     Secretary
Andrew S. Love, Jr.

/s/Laurence A. Schiffer             Vice Chairman of the                April 15, 1997
-------------------------------     Board
Laurence A. Schiffer                President
                                    Principal Executive
                                    Officer since February 1994

/s/Gloria D. Clement                Chief Financial                     April 15, 1997
-------------------------------     Officer
Gloria D. Clement

/s/Annette M. Kovarik               Chief Accounting                    April 15, 1997
-------------------------------     Officer
Annette M. Kovarik
</TABLE>


                                    - 51 -
<PAGE> 52

<TABLE>
<CAPTION>
                                                                               Sequential
EXHIBIT INDEX                                                                  Page Number
-------------                                                                  -----------
<C>    <S>                                                                        <C>
3.1    Articles of Incorporation (filed as Exhibit 3.1 to Registrant's Form
       10-K Annual Report for the year ended December 31, 1980 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 Articles of Incorporation effective March 13, 1990
       and July 27, 1990, dated as of November 13, 1990 (filed as Exhibit
       19 to the September 30, 1990 Form 10-Q and incorporated herein by
       reference).

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

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).


                                    - 52 -
<PAGE> 53

<CAPTION>
                                                                               Sequential
EXHIBIT INDEX (Continued)                                                      Page Number
-------------------------                                                      -----------
<C>    <S>                                                                        <C>
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 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).


                                    - 53 -
<PAGE> 54

<CAPTION>
                                                                               Sequential
EXHIBIT INDEX (Continued)                                                      Page Number
-------------------------                                                      -----------
<C>    <S>                                                                        <C>
4.11   Eleventh Mortgage and Loan Modification 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 Registrants Form 10-K dated March 30, 1994 and
       incorporated herein by reference).

4.13   Twelfth mortgage and loan modification 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).


                                    - 54 -
<PAGE> 55

<CAPTION>
                                                                               Sequential
EXHIBIT INDEX (Continued)                                                      Page Number
-------------------------                                                      -----------
<C>    <S>                                                                        <C>

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.

9.     Inapplicable.

10.1   PGI Incorporated Restated 1981 Incentive Stock Option
       Plan, as amended (filed as Exhibit 10.1 to the Original
       1987 Form 10-K and incorporated herein by reference).

10.2   PGI Incorporated 1987 Non-Qualified Stock Option and Stock
       Appreciation Rights Plan (filed as Exhibit 10.2 to the Original
       1987 Form 10-K and incorporated herein by reference).

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   Employment Agreement between PGI Incorporated and Paula F. McQueen,
       dated as of March 25, 1987 (filed as Exhibit 10.6 to the 1986 Form
       10-K 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).

10.6   Asset Purchase Agreement, as amended, between PGI Incorporated, Punta
       Gorda Developers, Inc., Burnt Store Utilities, Inc., Deep Creek
       Utilities, Inc., Twin County Utility Company and Southern States
       Utilities, Inc., dated as of August 16, 1988 (filed as Exhibit
       28.1 to the Registrant's Form 10-Q Quarterly Report for the
       quarter ended September 30, 1988 and incorporated herein by
       reference).

10.7   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).

10.8   Option Agreement For Sale and Purchase dated January 31, 1997 between
       Sugarmill Woods, Inc., Love-PGI Partners, L.P., and The Nature
       Conservancy.


                                    - 55 -
<PAGE> 56

<CAPTION>
                                                                               Sequential
EXHIBIT INDEX (Continued)                                                      Page Number
-------------------------                                                      -----------
<C>    <S>                                                                        <C>

11.    Statements re:  Computation of Per Share Earnings,
       filed herein on page 56 of this Annual Report on
       Form 10-KSB.

12.    Inapplicable.

13.    Inapplicable.  No information in Registrant's Annual Report to
       Stockholders for the year ended December 31, 1988 has been
       incorporated by reference as part of this Amended Annual Report on
       Form 10-K.

16.    Coopers and Lybrand's letter to the SEC dated February 9, 1995 (filed
       as Exhibit 16 to the Registrant's From 8-K dated February 9, 1995
       and incorporated herein by reference).

18.    Inapplicable.

19.    Inapplicable.

21.    Subsidiaries of the Registrant, filed herein on page 57 of this Annual
       Report on Form 10-KSB.

23.    Consent of Independent Accountants, filed herein on page 50 of this
       Annual Report on Form 10-KSB.

24.    Power of Attorney for Directors filed herein on page 51 of this Annual
       Report on Form 10-KSB.

27.    Financial Data Schedule.

28.    Inapplicable.

29.    Inapplicable.
</TABLE>

      The Registrant agrees to furnish to the Securities and Exchange
Commission upon request, pursuant to Item 601(b)(4)(iii) of the Regulation
S-B, copies of Registrant and its consolidated subsidiaries.


                                    - 56 -